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Judgment
S. Ramachandra Iyer, C.J.—The appeal and the writ petition referred to above arise out of applications filed u/s 33-C(2) of the Industrial
Disputes Act, 1947, by Elumalai and Mohamed Khan, respectively, who were originally employed by the South Arcot Electricity Distribution Co.,
Ltd., to be referred to hereafter as the company. The questions that fall to be considered in the two cases are common and it will be convenient to
deal with them together. The company was incorporated in 1943 and having secured a licence from the Government for the purpose, it was doing
business in distributing electric energy in the South Arcot District. The undertaking was taken over by the State Government with effect from 1-6-
1957 u/s 4(1) of the Madras Electricity Supply Undertakings (Acquisition) Act, 1954. The Act enables the Government to declare any
undertaking not previously taken over by them to vest in itself. On such acquisition, the licencee became entitled to compensation. There are three
alternative modes for computing the compensation payable, referred to in Section 5 of the Act as Basis A, B and C, it being left to the option of
the licencee to choose on which basis he should be paid. Basis A fixes the compensation payable at twenty times the average net annual profit of
the undertaking, the average being arrived at by taking the profits of five years immediately preceding the date of vesting. In this method of
awarding compensation, the value of the assets owned by the undertaking and transferred to the Government do not enter into the account; nor
does its existing or future liabilities affect the compensation thus calculated.
Section 6 of the Act provides inter alia that if compensation were to be paid on basis A, the property belonging to the undertaking including
fixed assets, cash, securities, investment documents and the like and all its rights and liabilities (liability not incurred bona fide being excepted) and
obligations, as on the vesting date shall vest in the Government. The company chose that it should be paid compensation under Basis A. There is
however a different provision with respect to the company''s employees. The statute itself has made provision in regard to the tenure of the service
of the persons till then employed by the undertaking. Generally stated the Government is under no obligation to employ all or any of the persons till
then in service of the licencee. Section 16 of the Act states that the Government have the power to terminate the services of any person after giving
him three months'' notice in writing or paying him three months'' pay in lieu of such notice. But the services of those whom the Government thinks fit
to retain will be governed by such rules as may be framed from time to time by it. In accordance with the powers given Under the section, rules
have been framed. We will have to refer to the relevant rule at a later stage of this judgment. Suffice to say for the present that in the first instance
all the former employees of the company were taken over by the Government on a provisional basis.
Meanwhile the Madras Electricity Board was constituted under the Central Electricity Supply Act, 1948. The Board came into existence on 1-
7-1957. The Government duly directed the personnel who were till then in the Electricity Department of the Government (certain categories of
them being excepted) to serve under the Madras State Electricity Board. The Board was authorised to frame regulations relating to its staff in such
a way as not to prejudicially affect their interests. As a consequence of these proceedings the employees of the South Arcot Electricity Distribution
Corporation Ltd., became the employees under the State Electricity Board.
Very soon thereafter, 363 employees who were then only entertained on a provisional basis as aforesaid, filed applications before the Labour
Court at Madras claiming that the transfer of ownership of the electricity undertaking from the company to the Government resulted in a
retrenchment of their services by their former employer and that they were entitled to obtain from it in accordance with Section 25-FF of the
Industrial Disputes Act retrenchment compensation. Since then all the employees have been taken over on a permanent basis by the Madras
Electricity Board. It is not disputed that the provisions of the Industrial Disputes Act will apply to the case of their wdrkers vis a vis the
Government or the Board and they will be employers within the meaning of that legislation. The company was certainly an employer and the relief
claimed in the applications is directed against it alone. Indeed the company alone figured as a respondent in the first instance; it was only later that
the Government and the Board were impleaded.
The applications of the workers were resisted by all the respondents on the ground that the Labour Court had no jurisdiction to entertain the
claim and that even on the merits the same was not sustainable as there was no retrenchmnet of the workers either in fact or in law.
The first of the two questions, namely, whether the Labour Court had jurisdiction to entertain the applications was tried as a preliminary issue in
six of the workers'' petitions. By its order dated 3-10-1958 the Labour Court overruled the objection as to its jurisdiction and posted the cases for
disposal on the merits to a later date. The company thereupon filed W. P. Nos. 820 and 842 of 1958 in this Court under Article 226 of the
Constitution challenging the correctness of the decision. Balakrishna Aiyar, J. by his judgment dated 5-3-1959 upheld the view taken by tne
Labour Court and dismissed the writ petitions. The judge ment of the learned Judge is reported in South Arcot Electricity Distribution Co. Ltd. Vs.
Elumalai and Others, . Against that judgment in South Arcot Electricity Distribution Co. Ltd. Vs. Elumalai and Others, , the present appeal, W. A.
No. 113 of 1959 has been filed.
As a consequence of the judgment given by Balakrishna Iyer, J. the petitions filed by the workers for retrenchment compensation etc. came up
before the Labour Court for disposal on merits. It was agreed between the contending parties that one of the petitions might be taken up first as a
test case, and accordingly C. P. No. 81 of 1957 was taken up for trial. The Labour Court by its order dated 4-2-1960 held that the workmen
concerned in the petition would be entitled to compensation as prescribed by Section 25-FF of the Industrial Disputes Act, 1947, and after
assessing the same passed an order directing the company to pay that amount to the workmen concerned. W. P. No. 254 of 1960 has been filed
by the company for the issue of a writ of certiorari to quash the order of the Labour Court.
We shall first deal with the appeal. Mr. Rajah Aiyar appearing for the company has raised three contentions in support of the case that the
Labour Court is not competent to deal with the applications filed u/s 25-FF, namely, (1) that the Labour Court is not competent to take
cognisance of a case involving adjudication of a monetary claim u/s 33-(2) of the Industrial Disputes Act; (2) the payment of compensation u/s 25-
FF involving as it does the determination of the further question whether there had been a retrenchment in law of the concerned worker, the
Industrial Tribunal alone and not the Labour Court would be competent to adjudge the dispute; and (3) that u/s 6 of the Madras Electricity Supply
Undertakings Acquisition Act, all the liabilities of art undertaking taken over and paid on Basis A, will have to be borne by the Government. Again,
the claim of the workers if well founded would be a statutory liability of the company. Justice could be rendered to the parties only if the Labour
Court is made competent to decide and apportion the liability as between the Government and the company and as the Labour Court has no
power in that behalf, it could not be held entitled to decide the application.
We shall consider the objections seriatim. (1) The argument in support of the first point is that a claim u/s 25-FF of the Industrial Disputes Act
by its very nature will be a monetary claim and as Section 33-C(2), on its terms will cover only the case of computation of non-monetary benefits,
there will be no jurisdiction In the Labour Court under that provision to adjudicate upon the former. The contention that Section 33-C(2) covers
only the jurisdiction of a non-monetary claim and not a monetary one depends on the true construction of the provision. We shall therefore set out
Section 33-C first:
Where any money is due to a workman from an employer under a settlement or an award or under the provisions of Ch. V-A the workman
may without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to
him, and if the appropriate Government is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall
proceed to recover the same in the same manner as an arrear of land revenue.
Where any workman is entitled to receive from the employer any benefit which is capable of being computed in> terms of money, the amount at
which such benefit should be computed may, subject to any rules that may be made under this Act, be determined by such Labour Court as may
be specified in this behalf by the appropriate Government, and the amount so determined may be recovered as provided for in sub-section (1).
For the purposes of computing the money value of a benefit, the Labour Court may, if it so thinks fit, appoint a Commissioner who shall, after
taking such evidence as may be necessary, submit a report to the Labour Court and the Labour Court shall determine the amount after considering
the report of the Commissioner and other circumstances of the case.
This section was first introduced in the Industrial Disputes Act, by the Amending Act 36 of 1956. The object of conferring a power to the
authority designated as the Labour Court is to facilitate an adjudication between the individual worker and the employer in regard to the liability of
the latter to the former. It is argued that as the effect of Section 33-C is to take away the jurisdiction of ordinary Courts and vest the same in a
statutory Court, the provisions thereof should be strictly construed and that if so construed Sub-section (2) would only comprehend cases of non-
monetary benefits to which a worker is entitled either under the law or under the terms of the contract between the parties. Emphasis is laid in this
connection on the use in the section of the words ""benefit which is capable of being computed in terms of money"" to show that they impliedly
exclude money-compensation cases, as the phrase ""capable of being computed in terms of money"" would be inappropriate where a case involves
only an arithmetical calculation ot a money benefit. Reference is then made to Sub-section (3) which vests a power in the Labour Court to appoint
a Commissioner for making a report as to the monetary equivalent of the benefit claimed, and it is argued that it should be taken as indicating that
the previous sub-section is concerned only with non-monetary benefits. We can reject the last part of the argument even at the outset for, if the
word ""benefit"" in Sub-section (2) is taken to comprehend both monetary and non-monetary benefits, the fact that sub-section (3) provides a
machinery for assessment of the latter cannot cut down the scope of the provision.
The word ""benefit"" used in Sub-section (2) means ""an advantage"" and will obviously include monetary as well as non-monetary one. In the
case of monetary benefits also, computation will sometimes be necessary as in the case of retrenchment compensation which has got to be worked
our in accordance with Section 25-F of the Act, although it will be comparatively easy. That cannot mean that it is not a benefit within the meaning
of Sub-section (2). In Rajamani Transports Ltd. v. Collector of Tiruchirapalli, 1956 I LLJ 37, Rajagopalan J. while construing a similar provision
In Section 20 of the Industrial Disputes (Appellate Tribunal) Act, 1950 held that the expression ""benefit"" was wide enough to include within its
ambit any benefit which has accrued to the worker under the terms of a valid and enforceable award, pecuniary or otherwise.
It is then contended that the provisions of Section 33-C(2) should be confined only to cases of non-monetary benefits as Sub-section (1)
provides expressly for monetary benefits. But as Balakrishna Aiyar J. has pointed out, Subsection (1) is only a provision for recovery of an
ascertained liability. That cannot clothe the Government with a right to determine whether the employer is liable to the employee in regard to any
sum of money.
The argument of Mr. Rajah Aiyar is no doubt supported by an observation contained in Sree Behariji Mills Ltd. Vs. State of Bihar and Others,
to the effect that the provisions of Section 33-C(1) conferred a power on the Government to make an enquiry about the legal liability of the
employer to pay compensation under any of the provisions of Ch. V-A of the Industrial Disputes Act. This was only by way of obiter. In Bengal
Nagpur Cotton Mills Ltd. Vs. State of Madhya Pradesh and Others, a Bench of the High Court of Madhya Pradesh did not agree with that
opinion. We consider that the terms of Sub-section (1) are clear and show that the authority granted to the Government is only to enforce recovery
of the amount already ascertained and does not empower it to ascertain the amount duo to the workman from the''employer, which in many cases
might be a disputed question.
It is then argued that though Section 33-C(1) might not empower the Government to decide a monetary claim, its authority being only to
enforce an already ascertained claim, the terms of Sub-section (2) under which the application in the instant case have been filed, are insufficient to
confer a power to adjudge a claim for money. Reliance is placed in this connection on the decision of the Supreme Court In S.S. Shetty Vs. Bharat
Nidhi, Ltd., where the scope of Section 20 (2) of the Industrial Disputes (Appellate Tribunal) Act, 1950--a provision similar in terms to Section
33-C was considered. The Court observed:
Where, however, any benefit which is not expressed In terms of money is awarded to the workman under the terms of the award it will be
necessary to compute in terms or money the value of that benefit before the workman can ask the appropriate Government to help him in such
recovery. Section 20, Sub-section (2) provides for the computation in terms of money of the value of such benefit and the amount at which such
benefit should be computed is to be determined by the Industrial Tribunal to which reference would be made by the appropriate Government for
the purpose.
The foregoing observations only mean that a non-monetary benefit will come under that section. That does not mean that a monetary benefit
due to a worker will not come within it. The two aspects of the argument, namely, that Section 33-C(1) applies to a power to adjudicate a claim to
monetary benefit and that Section 33-C(2) in terms is wide enough to cover a case of monetary benefit as well, was considered by the Supreme
Court in a case which arose under the Working Journalists (Conditions of Service) and Miscellaneous Provisions Act, 1955, where
Gajendragadkar J. observed:
These provisions indicate that where an employee makes a claim for some money by virtue of a benefit to which he is entitled an enquiry into the
claim is contemplated by the Labour Court and it is only after the Labour Court has decided the matter that the decision becomes enforceable u/s
33-C(1) by a summary procedure"" Vide Kasturi and Sons (Private) Ltd. Vs. N. Salivateeswaran and Another, . The view thus expressed by the
Supreme Court will be sufficient to dispose of the present objection to the jurisdiction of the Labour Court. But Mr. Rajah Aiyar has pressed
before as for our accepianco the opinion of the Madhya Pradesh High Court on the same subject in Bengal Nagpur Cotton Mills Ltd. Vs. State of
Madhya Pradesh and Others, to the effect that a claim for retrenchment compensation could not come within the term ""benefit"" in Section 33-C(2).
The observations were made by way of obiter but with great respect to the learned Judges we find ourselves unable to agree with what they have
said. We are supported in this by two cases that cams before the Bombay High Court recently, namely, Shree Amarsinhji Mills Ltd. Vs.
Nagrashna (M.N.) and Others, and Abdul Rahaman D. Lambe and Another Vs. R.N. Kulkarni and Another, , it was expressly held in those cases
that the Labour Court would have jurisdiction u/s 33-C(2) to entertain an application to determine the amount due to a workman in respect of lay
off, closure, compensation etc. which are also claims arising under Ch. V-A of the Industrial Disputes Act. The Punjab High Court has also taken a
similar view in The Malout Transport Company (Private) Ltd. Vs. The State of Punjab and Others, . One of us sitting alon3 had to consider the
precise point now argued in W. P. No. 960 of 1959 (Mad) and again in Management of the Tiruchi-Srirangam Transport Co. Private Ltd. Vs.
Labour Court, Madurai and Another, . It was held, a view which we now affirm, that Section 33-C(2) will comprehend claims concerning
monetary as well as non-monetary benefits.
It is then argued that even so, the Labour Court could only compute a monetary claim where there is no controversy but would have no power
to decide where the claim is disputed. This is untenable. Section 33-C(2) empowers the Labour Court to determine the question, which implies a
power to decide in case of dispute.
We then come to the next contention namely whether a claim u/s 25-FF by the worker, would be cognisable only by the Industrial Tribunal
and not by the Labour Court.
Section 7 of the Act empowers the State Government to constitute labour Courts for adjudication of Industrial disputes relating to matters
specified in the second schedule to the Act. Retrenchment of workmen is not one of the subjects mentioned in that schedule. On the other land,
retrenchment and closure of establishments come under he third schedule over which the Industrial Tribunal alone Mould have jurisdiction (see
Section 7. A). From this it is argued that any dispute which concerns a question relating to retrenchment should go only before the Industrial
Tribunal. This contention fails to take note of the fact that the jurisdictions conferred by Section 7 and Section 7-A are with reference to industrial
disputes, collective and not individual. But Ch. V-A creates certain rights in the individual worker. Such rights if disputed cannot be agitated as
industrial disputes unless a substantial number of workers espouse the cause and the Government deem it fit to refer it for adjudication. The rights
created in favour of industrial workers under Ch. V-A are such, that the individual concerned should have a remedy, irrespective of the fact
whether the other workers are prepared to sponsor his case or not. Section 33-C(2) has provided for it i.e., a machinery for enforcing individual
rights. The labour Court is thus invested with jurisdiction in regard to such claims.
That the Labour Court is not competent to decide any question of indemnity that may arise between the company and the Government in case
the former were made t) pay retrenchment compensation is hardly a reason for holding that Section 33-C(2) would not apply to the case. The
statuts which authorises the taking over of electricity undertakings itself provides for reference to arbitration in case of dispute and the company is
not left without a remedy. Balakrishna Aiyar J. has held that the disputes inter se between the company and the Government would not come
within the purview of the Labour Court. We respectfully agree. u/s 25-FF the jurisdiction of the Labour Court will be confined to investigating the
claim of the worker against his quondam employer. That Court is not concerned with any question of indemnity in respect of or the apportionment
of the liability under that section between the latter and the person to whom the business or undertaking has been transferred.
But that does not prohibit the company from contending that u/s 6 of the Act the liability to pay retrenchment compensation had been
transferred to the Government. Such a plea amounts only to saying, the company will not be liable as the statute has made somebody else, namely,
the Government, liable. We shall however consider later whether Section 6 provides such an answer. From what we have stated above it follows
that there are no merits in the appeal which is dismissed with costs.
We shall now turn to the writ petition. The Labour Court has held that the workmen concerned in the case will be entitled to one month''s
salary in lieu of notice and by way of retrenchment compensation, half a month''s salary for every year of service rendered to the company in
accordance with the provisions of Sections 25-F and 25FF of the Industrial Disputes Act. It was contended before the Labour Court, a contention
reiterated before us in a rather faint manner, that the workman concerned would not be entitled to retrenchment compensation as there had been in
fact no retrenchment, he continuing to work as before, with his emoluments undiminished mere is a fallacy underlying the argument. For a claim to
Se made u/s 25-FF it is not necessary that the worker should have been actually ousted from service, under the section, a transfer of the business
in which the worker had been till then employed would itself be deemed to result in a retrenchment (except in the case covered by the proviso).
The right to retrenchment compensation u/s 25-FF therefore arises on account of the fiction created by the section and not on any factual
retrenchment as would be a case u/s 25-F.
Section 25-FF was introduced in its original form in to the main Act by an amendment which came into force on 4-9-1956. The circumstances
which necessitated the introduction of the amendment has been referred to in Hariprasad v. A.D. Divelkar, AIR 1957 SC 121. Prior to the
amendment, every transfer or closure of business and any change of employer or management was regarded as effecting a retrenchment of the
employees of the transferor with the consequence they became entitled to retrenchment compensation. The Supreme Court however held in the
case cited above that as the true import of the word retrenchment was discharge of surplus labour, a discharge of workers by reason of a bona
fide closure or transfer of business from one employer to another would not amount to a retrenchment. The decision was presumably considered
by the legislature to cause hardship and requires its intervention. There was perhaps another reason as well. The law if left alone might enable
employers to adopt the device of transfer of the business to thwart benefits accrued to the employees in case they were retrenched, those benefits
that depended on the length of their service. Such transfer must no doubt be bona fide, but it will not always be easy for the worker to prove it was
not so.
23-24. The amendment of 1956 was recast and re-enacted by Central Act 18 of 1957, which was preceded by an Ordinance to the same effect.
Section 25-FF stales:
Where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation
to that undertaking to a new employer, every workman who has been in continuous service for not less than one year in that undertaking
immediately before such transfer shall be entitled to notice and compensation in accordance with the provisions of Section 25-F as if the workman
had been retrenched;
Provided that nothing in this section shall apply to a workman in any case where there has been a change of employers by reason of the transfer, if
(a) the service of the workman has not been interrupted by such transfer; (b) the terms and conditions of service applicable to the workman after
such transfer are not in any way less favourable to the workmen than those applicable to him immediately before the transfer; and (c) the new
employer is, under the terms of such transfer or otherwise, legally liable to pay to the workman in the event of his retrenchment, compensation on
the basis that his service has been continuous and has not been interrupted by the transfer.
The effect of the section is that so long as the employee under the old management is continued in. service by the new one as if there were no
break at all and the service conditions under the transferee is no less favourable to him, there would be n-o right to retrenchment compensation, but
if any one of the three conditions of the proviso ;s not satisfied, the worker would be entitled to such compensation by reason of the transfer of
business. Let us now proceed to consider whether the terms of the proviso are satisfied in the present case.
25-26. 1. Whether there has been an interruption by reason of the transfer?
The Labour Court has answered this question in the affirmative on the ground that there had been a change of management by virtue of the
transfer, as service under the company was different from the one under the Government. We are however unable to accept that view. For the
application of Clause (a) of the proviso, what all is necessary to consider, is whether there has been a factual continuity in the service. The
existence of the other conditions in the proviso makes this clear. To hold otherwise would even be to nullify the effect of the entire proviso as no
case of transfer would then be exempted. In the present case it is admitted that there has been no factual discontinuity in the service. The first part
of the proviso must be held to be satisfied.
Whether the terms and conditions of the service wider the Government are no less favourable to the employee compared with those under the
company?
It is essential for the consideration of this point that we must refer to certain facts attending the taking over of the employees of the company by the
Government, immediately on taking the undertaking, the Government (as said before) entertained the employees of the company on a provisional
basis and subject to provisions of Section 15 of the Act. That section authorises the Government to terminate the services of any one of the
workers under the old management whom they do not want, either by giving him three months notice or paying him salary for that period. These
whom the Government desire to continue in their service will be governed by such rules as the Government may from time to time make. Such
rules have been made u/s 15. Rule 17 provides that such of those who were provisionally continued in service will be allowed the same pay and
allowance which they were entitled to receive under the old management before the vesting date. But this is net intended to go on forever.
Provisional service is of limited duration.
Sub-rule (4) to Rule 17 deals with the conditions on absorption into Government service. That runs thus:
Rule 17 (4) : ""During the period of provisional continuance the Government or the Chief Operation Engineer concerned as the case may be shall
examine the suitability of every employee for absorption into Government service. If the Government or the Chief Operation Engineer concerned
as the case may be decide that the employee is suitable, an order shall be issued declaring the employee to be a member of the class category
grade or cadre as the case may be of the Government service in which it is decided to absorb him. In respect of all the employees so absorbed
service under the Government shall be counted from the vesting date.
Provided that if in the case of any employee it is necessary to relax the relevant rules before absorbing him into Government service, no such order
shall be issued unless the rules have been relaxed in his favour and unless the Madras Public Service Commission has been consulted in regard to
his absorption, where such consultation is necessary."" From these provisions it follows that till the Government decide to absorb an employee in
their regular service, his service will be a precarious one and even if he is absorbed in the permanent service, he would be put in such grade or
category as the Government decides proper. The emoluments may even be less. If the employee does not agree, he can only leave the service.
Section 15 makes it clear that the conditions and rules made thereunder will supersede any agreement to the contrary in any contract or in any law
for the lime being in force. The section and the rules framed thereunder are only consistent with the view that service under the Government is a
new service unconnected with the one under the licencee.
Now what about the conditions of service themselves? The Labour Court has taken great pains to analyse the terms of service obtaining in the
company and under the Government after absorption and finding that the service under the Government though more beneficial in certain respects
was not so in regard to others, held that proviso (b) could not be said to be satisfied. The Court appears to have been of the view that in order that
a case can come under that provision, each one of the terms of service under the Government should either be more advantageous or at least the
same, from the point of view of the worker. Mr. Rajah Aiyar contends that this is a wrong approach to the question and that what one has to see is
whether the conditions of service compared as a whole could be considered more disadvantageous to the worker.
We are of the opinion that neither of the two views is correct. The phrase ""in any way less favourable to the workmen"" does not mean, not less
favourable to the workman in any one particular. Small infractions in the benefits or conditions of service till then enjoyed by the workman under
the former employer would not mean that the conditions of service are less favourable to the workmen. To some extent the quest on has got to be
viewed objectively taking the conditions of service as a whole. But at the same time it will be wrong to come to a conclusion on a comparison of
the terms of service as a whole. That would not be giving effect to the words ""in any way"". In our opinion the proper method of approach is to see
whether any of the material conditions is less favourable to the worker than before. Judged by that test it must be held that the conditions of service
under the rules framed u/s 15 are less favourable to the employee. For one thing the previous service however long it might have been is ignored
and service is reckoned as starting from the date of re-employment. This is a vital matter. We have also referred to the tact that for a period of time
the workers themselves could not know whether they would be retained in service or not and if retained on what salary.
The question whether Clause (b) of the proviso has been satisfied or not is to be considered with reference to each individual worker and
although in the case before us the sum total of the emoluments of the worker had remained unchanged, at least one material condition of service--
namely his forfeiting the credit of past services--will affect him seriously, e.g. if the Government were to retrench him in this view it is not necessary
to consider whether this Court could interfere under Article 226 with the finding arrived at by the labour Court essentially on a question of fact, or
put at its highest, a mixed question of fact and law.
We shall then go into the question whether Clause (c) of the proviso has been satisfied. A substantial part of the argument under this head
turned on the construction of Section 6 of the Electricity Undertakings Acquisition Act. It is urged on behalf of the appellant that the new employer,
namely, the Government will in the event of retrenchment of any worker be liable to pay retrenchment compensation on the basis of his previous
service as well. The argument is put thus: For the purpose of payment of retrenchment compensation the period of service of the worker can be
divided into two parts (1) under the Company and (2) under the Government. There is and can be no question of the Government''s liability for the
latter. As regards the former it is said that by virtue of Section 25-FF of the Industrial Disputes Act the company will be liable and by virtue of
Section 6 of the Act that liability of the company will stand transferred to the Government. It is further allowed that a liability of the kind created by
Section 25-FF is a contingent one arising on transfer of the business and will be comprehended within the term liability in Section 6 which is wide
enough to include contingent and statutory liability.
Our attention'' is then invited to the meaning of the term ""liability"" given in Jowitt''s Dictionary of English law where it is defined as a condition of
being actually or potentially subject to an obligation either generally as including every kind of obligation or in a more special sense to denote
inchoate future unascertained or imperfect obligations as opposed to debts the essence of which is that they are ascertained and certain. In Asher
v. Beaford Court Estates Ltd., 1950 AC 508 the use of the word liability in a statute was held to have reference to legal obligations.
But wide as the meaning of the word liability may be, we are unable to see how it can be said that Government would be liable--that means
directly liable--to the workman to pay retrenchment compensation on the basis of a continuity of the service. We have already pointed out that u/s
15 and the rules made thereunder service under the Government counts only from the vesting date. It cannot therefore be said that the Government
will be directly liable to the worker in case they retrench him, to pay the retrenchment compensation on the basis of service under the company.
There is a further error in the argument; for the purpose of showing that the company will not be liable by virtue of Clause (c) to the proviso, it
assumes that there is a legal liability on the company u/s 25-FF which is transferred to the Government u/s 6 and kept alive so that in the event of
any retrenchment by the latter, the worker would obtain compensation as if his service had been continuous. If the contention were to be accepted
it would mean that even though the Government never retrench the worker, they would be liable to pay retrenchment compensation for the period
prior to the vesting date. This is opposed to the provisions of Section 16 and Rule 17 made under the Act, which give complete authority to
Government to prescribe the conditions service to the worker taken over by them.
It is finally argued that even if one or more of the provisos to Section 25-FF do not apply, such liability as may arise under, that section on the
company will stand transferred by virtue of Section 6 of the Act to the Government and that the company would no longer be liable. There are
several difficulties in the way of accepting the argument. For one thing the liability u/s 25-FF arises on transfer or it may be simultaneously with it. It
will be a matter for consideration when the question arises whether such a liability could be held to come within Section 6 of the Act. That however
is one on which the Government and the company might not agree and which should in the case of such disagreement be settled by arbitration.
More important than this, is that there is no scope for such investigation u/s 25-FF. Once its terms are satisfied there is a statutory liability on the
quondam employer. Whether such employer has a right of indemnity against the Government in respect of whatever he pays to the worker will
really be beside the point. It may also be noticed that the Electricity Undertakings Acquisition Act, 1954 had been enacted earlier than Section 25-
FF of the Industrial Disputes Act. The latter provision has expressly made the previous employer liable; it will be doing violence to its language if
by reason of any taking over of the liability u/s 6 of the former enactment, the new employer were to be made liable.
The result is that the case does not satisfy two out of the three conditions set out in the proviso to Section 25-FF. The petitioner will therefore
be liable to pay retrenchment compensation to the concerned worker u/s 25-FF of the Industrial Disputes Act. The rule nisi will be discharged.
Petitioner will pay the costs of respondent 1. Order accordingly.