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Judgment
Shelat, C.J.—The petitioner-corporation has filed this petition for a writ of certiorari or other appropriate writ and for quashing the award of
the industrial tribunal, Gujarat, dated 10 August, 1961, and published in the Gujarat Government Gazette, dated 14 September, 1961.
The petitioner-corporation had employed respondent 3 as an accounts clerk in its office at Gandhidham on 13 December, 1950 in the pay-scale
of Rs. 150-10-200 on a monthly salary of Rs. 200 and had agreed to pay in addition 20 per cent of the salary as site allowance. The corporation
was formed with the object of rustling refugees from Sind. It has developed Gandhidham by constructing houses which were sold to the refugees
on easy installment terms and had also established certain industries with a view to provide employment to the refugees. In 1953, the Government
of India decided to develop Kandla as a major port and the corporation set up a company by the name of Makenzies Heinrich Butzer (India),
Ltd., in which the corporation was one of the principal shareholders. The other principal shareholder was German company which had secured a
contract for constructing port work at Kandla. Sometime thereafter, the name Makenzies Heinrich Butzer (India), Ltd., was changed to Sindhu
Hotchief (India), Ltd., hereinafter referred to as the subsidiary company. After the subsidiary company was formed, it required trained personnel to
carry on its administration. Consequently, the corporation agreed to transfer or loan the services of some of its employees to the subsidiary
company. The case of the corporation, however, was that the employees whose services were, as aforesaid, loaned or transferred, were
permanently transferred to the subsidiary company and that after such transfer, those employees ceased to be the servants of the corporation. On
the other hand, the case of respondent 3 was that his services were merely loaned to the subsidiary company and that he did not cease at any time
to be the employee of the corporation It would seem that on 2 September, 1953 the corporation issued an order relieving respondent 3 to enable
him to work for the subsidiary company. On 2 September, 1953, respondent 3 reported at the office of the corporation that he was leaving charge
there to take up his duties with the subsidiary company in accordance with the directions of the managing director of the corporation. On that very
day, he also reported at the office of the subsidiary company that he had taken over charge there. Though orders for relieving him were issued by
the corporation, on 2 September, 1953, owing to a difficulty having arisen regarding his application for leave for ten days on account of the death
of his father he was not considered as having joined duty at the subsidiary company on 2 September, 1953 and was held to have continued to
work for the corporation until 18 September, 1953. On 3 September, 1953 he filed an application for leave for ten days with the corporation
which granted him leave up to 17 September, 1953. On returning from leave, he commenced working for the subsidiary company on and from 18
September, 1953 in the capacity of an accounts clerk. It would seem that while he was on leave, the subsidiary company issued an order of
appointment, Ex. 8, dated 5 September, 1953. It is an admitted fact that from 18 September, 1953 till 20 February, 1958 when his services were
terminated by the subsidiary company, respondent 3 was actually working in the subsidiary company as an accounts clerk. It is also an admitted
position that on 21 February, 1958 he reported for duty at the office of the corporation, requesting for a suitable posting, but no such posting was
given to him and ultimately the corporation informed him that as he was relieved from the service of the corporation at his own request to join the
service of the subsidiary company, no question of absorbing him after his services were terminated by the subsidiary company arose. The case of
the corporation thus was that there was a cesser of the relationship of master and servant between the corporation an respondent 3 when he
started working for the subsidiary company and that that being so, he was not entitled to be absorbed in the services of the corporation.
Respondent 3, therefore, made a complaint to his union, respondent 2 herein, and the union thereupon presented a demand to the corporation,
being demand 1, which was in the following terms :
R. S. Ambwaney should be reinstated in the service of Sindhu Resettlement Corporation, Ltd., and he should be paid his wages from 21
February, 1958.
Conciliation proceeding thereafter followed and on a certificate of failure by the conciliation officer, the Government made a reference under S.
10(1) of the Industrial Disputes Act, 1947, to the tribunal.
According to respondent 3, he was entitled to be reinstated on his original post as his services with the corporation were at no time terminated.
He denied that he had at any time resigned from the service of the corporation or that any such resignation was accepted by the corporation. As
aforesaid, he prayed for reinstatement and also for his salary for the period of his unemployment. During the course of the hearing before the
tribunal, it was conceded that during the period of his unemployment he had joined service of another company and had earned Rs. 1,458. The
case, on the other hand, of the corporation was that respondent 3 had of his own accord left service of the corporation in order to join the
subsidiary company. In Para. 3 of its written statement, the corporation averred that it had invited the members of its own staff to opt for service in
the subsidiary company if they so desired, and the corporation had promised to relieve such of them as were desirous of taking up their service
with the subsidiary company. The corporation also averred that respondent 3 as also some other members of its staff had in fact opted for the
subsidiary company. The corporation further averred in its written statement that respondent 3 and certain other members of its staff had not
actually tendered their resignations but had definitely left the service of the corporation of their own accord in order to be able to join the service of
the subsidiary company. The contention, therefore, of the corporation was that respondent 3 had ceased to be the employee of the corporation on
and from 18 September, 1953 and had, therefore, no right to be absorbed in its service after his services were terminated by the subsidiary
company.
The principle question before the tribunal thus was whether respondent 3 had left the service of the corporation, terminating thereby the
relationship of master and servant between him and the corporation and had entered into a fresh contract of service with the subsidiary company,
as from 18 September, 1953, or whether the corporation had merely transferred his services as a loan to the subsidiary company, retaining thereby
the relationship of master and servant between the corporation and respondent 3. The case before the tribunal proceeded only upon documentary
evidence tendered by the parties as no oral evidence was led by either side. On the evidence before it, the tribunal came to the conclusion that
respondent 3 had not, by virtue of any agreement or under any statutory provision, become an employee of the subsidiary company and had not
ceased to be the employee of the corporation and therefore he had a right as an employee of the corporation to a suitable posting order when he
reported for service to the corporation on 21 February, 1958. The tribunal also held that in the circumstances of the case, respondent 3 had a right
to raise a dispute and since that dispute was sponsored by respondent 2, the dispute became an industrial dispute and the Government was,
therefore, entitled to make a reference under S. 10(1) of the Act. On these findings, the tribunal directed that respondent 3 should be posted to the
same post which he was holding before his services were loaned to the subsidiary company and that his salary should be fixed on the basis that his
services had been continuous all throughout. The tribunal also directed that respondent 3 should be paid arrears of salary from 21 February, 1958
to the date of his reinstatement less the amount of Rs. 1,458 which he had earned during the period of his unemployment and lastly, that he should
be posted within a fortnight from the date of the publication of its award. It is this award which has been challenged by Sri Mankad on behalf of the
petitioner corporation on certain contentions which we shall now deal.
The first contention raised by Sri Mankad was that the industrial tribunal had no jurisdiction as the question referred to it and which it was called
upon to adjudicate was that respondent 3 should be reinstated in the service of the corporation. Sri Mankad urged that though the demand related
to reinstatement, such a demand would not fall within the scope of item 3 in Sch. II which deals with reinstatement arising from an order of
discharge or dismissal of a workman, and since respondent 3 was neither discharged nor dismissed by the petitioner corporation, the question of
relief or reinstatement would not arise under that item and there being no item under which the present demand would fall, the State Government
had no jurisdiction to refer such a demand for adjudication to the tribunal and the Tribunal correspondingly would have no jurisdiction to adjudicate
such a demand for reinstatement of a workman would be included in item 3 of Sch. II, such reinstatement would be in the case only of a workman
who was either discharged or dismissed from service and not the kind of reinstatement demanded by and on behalf of respondent 3 where the
employee claimed to have a lien on a particular post. He also argued that such a question did not fall under any other item, either in Sch. II or III
and since the only question which can be referred under S. 10 to the tribunal are matters falling under these two schedules, no reference could be
validity made by the Government to the tribunal, nor had the tribunal jurisdiction to adjudicate such a matter. This very contention was urged on
behalf of the petitioner corporation before the tribunal, but the tribunal rejected it on the ground that the demand would fall, if not under item 3,
under the residuary item 6 in Sch II. The question is, whether the tribunal''s conclusion in this regard was correct.
In order to appreciate the arguments urged on behalf of the corporation, it would be necessary to examine the items in the two schedules as also
the provisions of Ss. 7, 7A and 10 of the Act. Section 7 empowers an appropriate Government to constitute labour courts for the adjudication of
industrial disputes relating to any matter specified in Sch. II and for performing such other functions as may be assigned to them under the Act.
Under S. 7A, the appropriate Government has the power to constitute industrial tribunals for adjudication of industrial disputes relating to any
matter specified in Sch. II or III. Thus, whereas a labour court can adjudicate an industrial dispute relating to matters in Sch. II, a tribunal can
adjudicate disputes relating to matters in both Schs. II and III. Under S. 10(1), the appropriate Government has been empowered to refer a
dispute or any matter connected with or relating to such a dispute to a labour court for adjudication if it relates to any of the items in Sch. II, and
under Clause (d), to a tribunal where such a dispute or matter relates to any of the items in Sch. II or III. The first proviso to Sub-section (1) of S.
10 lays down, however, that where the dispute relates to a matter specified in Sch. III, if it is not likely to affect more than one hundred workmen,
it can be referred to a labour court. Thus, whereas questions arising under Sch. II can be adjudicated both by a tribunal and labour court,
questions arising from matters in Sch. III can be referred for adjudication to a tribunal alone unless the case falls under the said proviso. The policy,
therefore, of the legislature while enacting these sections was to confer jurisdiction to adjudicate questions arising from items in Sch. II to the labour
court as also the tribunal, while it wanted to give jurisdiction to the tribunal alone on matters arising from the items enumerated in Sch. III. In other
words, except for matters enumerated in Sch. III, the legislature wanted to confer jurisdiction upon both the labour court and the tribunal in cases
of industrial disputes arising from or relating to the rest of the matters and therefore, while framing Sch. II it included therein the residuary item 6
whereunder except for matters specified in Sch. III, in respect of which the tribunal has the exclusive jurisdiction, both the labour court and the
tribunal would have jurisdiction to adjudicate. This construction, in our opinion, is consistent with and is in consonance with the provisions of Ss. 7,
7A and 10 and the two schedules and the policy of the legislature indicated in the division of jurisdiction of the two bodies constituted under Ss. 7
and 7A. In this view, though the demand referred to the tribunal may not strictly fall under item 3 in Sch. II, it would certainly fall under the
residuary item 6 in that schedule and, therefore, no question of want of jurisdiction either in the tribunal to adjudicate or want of authority in the
State Government to refer, can possibly arise.
The next question that was raised by Sri Mankad was that assuming that the dispute fell under item 6 in Sch. II, it was not an industrial dispute
as defined by the Act, and since it is only an industrial dispute which can be referred for adjudication, the tribunal had no jurisdiction to adjudicate
upon it, nor had the Government the power to make a reference thereof. Under Clause (k) of S. 2, an ""industrial dispute"" means any dispute or
difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with
the employment or non-employment or the terms of employment or with the conditions of labour, of any person. The argument was that a dispute
wherein a single workman is involved is not an industrial dispute and the mere fact that a union sponsored such a dispute does not convert it from
an individual dispute into an industrial dispute in respect of which only the machinery set up in the Act for conciliation and adjudication is available.
Therefore, argued Sri Mankad, the dispute in the present case was not an industrial dispute which could be referred to the tribunal and the
reference therefore and its adjudication by the tribunal were in excess of jurisdiction under Ss. 7A and 10. Fortunately, the questions as to the
meaning of an industrial dispute and the scope of Clause (k) of S. 2 have been the subject-matter of decision by the Supreme Court and therefore
it will not become necessary for us to examine in detail the clause itself or the object and policy of the legislature in enacting the Act. In Central
Provinces transport services Ltd. v. Raghunath Gopal Patwardhan [1957 - I L.L.J. 27], though the question which directly arose was whether a
dismissed workmen was an employee within the meaning of S. 2(10) of the Central Provinces and Berar Industrial Disputes Settlement Act, 1947,
the Supreme Court considered the definition of an ""industrial dispute"" given in S. 2(k) of the Industrial Dispute Act and examined the three views
held till than thereupon by different High Courts and the industrial tribunals After considering these different views the supreme court observed that
notwithstanding that the language of S. 2(k) was wide enough to cover a dispute between an employer and a single employee the scheme of the
Industrial Disputes Act did not appear to contemplate that the machinery provided thereunder should be set in motion to settle only disputes which
involve the rights of workmen as a class and that a dispute touching the individual rights of a workman was not intended to be the subject matter of
adjudication under the Act when the same had not been taken up by the union or a number of workman Therefore a dispute touching the individual
rights of a workman would not constitute an industrial dispute within the meaning of S. 2(k) unless the workmen in the industry had adopted his
dispute as their own and chosen to treat it as their casus belli with the employer. In The Newspapers Ltd. Vs. The State Industrial Tribunal, U.P., ,
the Supreme Court had again the occasion to consider the connotation of the expression ""industrial dispute"". In that case a linotypist was dismissed
from service by the appellant company on the ground of incompetence. His case was not taken up by any union of workers of the appellant
company nor by any of the unions or workmen employed in similar or allied trades, but the Uttar Pradesh Working Journalists'' Union, Lucknow,
with which he had no connexion Whatsoever took the matter to the conciliation board and ultimately the Uttar Pradesh Government made a
reference to the industrial tribunal The Supreme Court there held that on a construction of the provisions of the Uttar Pradesh Industrial Disputes
Act, 1947, and the rules framed thereunder, the dispute did not fall within the definition of ""industrial dispute"" as used either in that Act or S. 2(k)
of the Industrial Disputes Act, 1947, and that therefore the reference of that dispute by the Government was bad in law. At p. 6, the Supreme
Court confirmed its observation in an earlier case in D. N. Banerji v. P. R. Mukherjee [1953 I L.L.J. 195] and where it had discussed the meaning
of the expression ""industrial dispute"" and where it had stated that it conveyed the meaning to the ordinary mind
that the dispute must be such as would affect large on opposite sides But at the same time, having regard to the modern conditions of society
where capital and labour have organized themselves into groups for the purpose of fighting their disputes and setting them on the basis of the theory
that union is strength and collective bargaining has come to stay single employee''s case migh develop into an industrial dispute when as often
happens it is taken up by the trade union of which he is a member and there is a concerted demand by the employees for redress.
The Supreme Court also referred with approval the observations made in certain English and Australian decisions, whereas in Conway v. Wade
[1909 A.C. 506 at 520] it was observed that though a particular dispute would not include the case of a personal difference between any one
workman and any one or more of his followers it was true that after a certain stage even such a dispute although originally grounded it may be upon
personal enormously may come to be a subject in which sides are taken, and may develop into a situation of a general aspect containing the
characteristics of a trade dispute; but until it reached that stage a trade dispute would not necessarily exist and further as observed by Griffiths,
C.J., in Federated Saw Mills & Co. Employees of Australasia v. James Moore and Sea Proprietary, Ltd. [(1909) 8 C.L.R. 465 487], that the
word ""industrial"" denotes two qualities which distinguish them from ordinary private disputes between individuals, namely, (sic) :
(2) that on one side at least of the dispute the disputants are a body of men acting collectively and not individually.
The Supreme Court also observed that the view taken in cases cited there that an industrial dispute arises where a case of an individual
workman is espoused by a union or by an employees association was correct and in accord with the view expressed by it in previous decisions.
Similarly, in Associate Cement Companies Ltd., Porbandar v. Their workmen and others [1960 - I L.L.J. 491] , the Supreme court again
emphasized that the definition in S. 2(k) of an industrial dispute emphatically brought out the essential characteristics of the dispute with which the
Act purported to deal. Such a dispute must relate to the terms of employment or with the conditions of labour and they must arise inter alia
between workman and their employer. Ordinarily, an individual dispute which is not sponsored by the union or is otherwise not supported by any
group of workmen is not regarded as an industrial dispute for the purposes of the Act therefore a dispute which relates to an individual employee
cannot ordinarily be regarded as industrial dispute but it would take the form of an industrial dispute if it is sponsored or made a common cause by
an appreciable number of workman. Sri Mankad, however, relied upon the decision in The Bombay Union of Journalists and Others Vs. The
''Hindu'', Bombay and Another, where the learned Judges have observed that persons supporting such an individual dispute of a workman must
themselves be directly and substantially interested in the dispute. On advocate argued that there must be a community of interest between the
workman concerned and his supporters and since the workmen employed in the petitioner corporation were not likely to take any interest in the
dispute whether respondent 3 continued to be an employee or not of the petitioner-corporation after he commenced working for the subsidiary
company the dispute would not become an industrial dispute. It may however, be observed that these remarks by the Supreme Court were made
in the light of the facts of the case which they were dealing with. In that case the ""Hindu"" had an office in Bombay since 1937. At the material time
the ""Hindu"" Bombay besides appellant 3 who claimed to be a full-time employee of the ""Hindu"" Bombay only nine employees seven serving on the
administrative side and two journalists. Salivateeswaran appellant 3, and another journalist were members of the Bombay Union of Journalists. The
Bombay Union of journalists was a trade union, the membership of which was open to all persons who depended or their livelihood upon the
practice of the profession of journalism, including press-photographers artists cartoonists and free-lance writers. Admittedly this union was not a
union of the employees of the ""Hindu"" Bombay but was a union of all persons who depended for their livelihood upon journalism in Bombay. By its
resolution the Bombay Union of Journalists supported the claim of Salivateeswaran in an application filed by him under S. 17 of Act 45 of 1955.
The ""Hindu"" Bombay challenged the competence of the State Government to refer the dispute inter alia on the ground that there was no dispute
between the working journalists of the ""Hindu,"" Bombay, on the one hand and the management on the other and the dispute raised by appellant 3
was merely an individual dispute which was not supported by an appreciable number of employees of the ""Hindu,"" Bombay. It was in connexion
with this contention that the Supreme Court observed that the dispute being prima facie an individual dispute in order that it may become an
industrial dispute it had to be established that it had been taken up by the union of the employees of the ""Hindu,"" Bombay, or by an appreciable
number of employees of the ""Hindu,"" Bombay and negativing the contention on behalf of the appellants that the dispute was supported by the
Bombay Union of Journalists of which appellant 3 was a member the court observed that the Bombay Union of Journalists was a union not of all
employees of one employer but of all employees in the industry of journalism in Bombay. The Supreme Court held that support of the cause by the
union would not convert the individual dispute of one of its members into an industrial dispute that as the dispute between ""Hindu,"" Bombay, and
appellant 3 was in respect of alleged wrongful termination of employment it would acquire the character of an industrial dispute only if it was
proved that it was before it was referred supported by the union of the employees of ""Hindu,"" Bombay, or by an appreciable number of its
employees. It was in these circumstances that the Supreme court applied the principle that the persons who seek to support the case of a workman
must themselves be directly and substantially interested with the dispute in order that such a dispute may convert itself into an industrial dispute. It is
difficult to see how these observations can be relied upon by Sri Mankad for it cannot be gainsaid that the dispute though relating to an individual
employee had been sponsored by respondent 2, a union of which respondent 3 has been member In the present case unlike the case of ""Hindu,
the dispute relating to responded 3 has need sponsored and made a common cause by the union of which he is a member. No dispute was raised
before the tribunal that the members in the union were not the directly and substantially interested in the dispute it is possible that there might be an
appreciable number of persons whose services were transferred to the subsidiary company or whose services might in future be transferred to
some other allied or the subsidiary company Such persons would obviously be directly interested in the present dispute. If the petitioner-
corporation had disputed before the tribunal that the union, which sponsored the dispute of respondent 3, did not have members in appreciable
number who were directly or substantially interested in the present dispute respondent 3 would have led evidence to the contrary. The tribunal was
careful in specifically setting out the contentions raised before it and if such a contention had been raised by the petitioner corporation we are sure
that the tribunal would have discussed such a contention and the respondent might have had an opportunity of leading evidence to show to the
contrary. The decision in the case of Bombay Union of Journalists v. ""Hindu,"" [1961 - II L.L.J. 436] (vide supra) does not therefore support the
contention of Sri Mankad that the dispute referred to the tribunal was not an industrial dispute nor does it in any way negative the case of
respondent 3. Sri Mankad also relied upon the case of Workmen of Dimakuchi Tea Estate Vs. The Management of Dimakuchi Tea Estate, where
the dispute pertained to a medical employee whose case was taken up by other workmen. Obviously, these workmen had no interest direct or
substantial in the dispute of an employee who was not one of them. It would not be said even assuming that he was a member of some trade-union
that the dispute regarding his termination of services was an industrial dispute within the meaning of S.2(k). This decision also cannot help Sri
Mankad as the considerations which prevailed in that case do not exist in the present petition where the petitioner-corporation refused to absorb
respondent 3. Such a refusal would fall within the words ""employment and non-employment"" used in the definition of an ""industrial dispute"" in S.
2(k) which, as observed in Western India Automobile Association v. Industrial Tribunal Bombay and others [1949 L.L.J. 245], are of widest
amplitude and have been put in juxtaposition to make the definition thoroughly comprehensive. The words ""in connexion with"" widen the scope of
the dispute and do not restrict it by any means. Any dispute connected with employment or non-employment would therefore, ordinarily cover all
matters that require settlement between workmen and employers whether those matters concern the cause of their being out of service or any other
question and it would also include within its scope the reliefs necessary for bringing about harmonious relations between the employers and the
workers. The failure to employ or the refusal to employ are actions on the part of an employer which would be covered by the term ""employment
or non-employment."" Reinstatement is connected with non-employment and is therefore within the words of the definition. It there arises
nonemployment by reason of the termination of employment by an employer, it would be within the jurisdiction of the tribunal to determine whether
the termination was justifiable Therefore when respondent 3 applied for being absorbed in the post which he previously held and the petitioner-
corporation declined so to do, i.e., to employ him or to continue to employ him on the ground that his employment had ceased when he
commenced working for the subsidiary company the dispute which arose between the parties was a dispute relating to non-employment. If such a
dispute though relating to an individual member is sponsored by a union of which the employee is a member or by an appreciable number of
workmen who have directly or substantially interest in such a dispute such a dispute becomes an industrial dispute within the meaning of S. 2(k)
and if such a dispute is referred for adjudication under S. 10(1), it cannot be gainsaid that the tribunal has jurisdiction to adjudicate it.
30 June, 1964
It was next argued that the tribunal would have no jurisdiction to enter into or adjudicate complicated questions of fact or law. For that
proposition reliance was placed on the decision in Workmen of Dahingeapar Tea Estate v. Dahingeapar Tea Estate [1958 - II L.L.J. 498], where
the Supreme court has observed that the industrial tribunal cannot deal with questions as mere abstract questions of law. What the decision,
however, laid down was that it was doubtful whether the Tribunal in that case could have decided an abstract question of law, namely whether on
a transfer of management consequent on sale of an undertaking the services of workmen were automatically put an end to It was in connexion with
such a question that the Supreme Court stated that since an abstract question must depend on diverse circumstances relating to and arising from
contractual relations between the parties unless those questions also were referred in industrial tribunal should not and cannot decide a mere
abstract question. If however a specific demand is referred to for adjudication and such a demand involves leading of evidence and a decision even
on a complicated question of fact the tribunal obviously cannot refuse to decide it merely on the ground that such a question is a complicated
question or that it involves a complicated question of law. If a reference is complicated though it might involve complicated questions of fact and
law, the tribunal for that reason alone cannot decline to adjudicate such questions. The contention, therefore, has to be rejected.
It was next argued that respondent 3 could not be said to be a workman within the meaning of the Act and therefore even though the dispute
relating to him is held to be sponsored by a union or an appreciable number of workmen the dispute and consequently the tribunal would have no
jurisdiction to adjudicate such a dispute in relation to such an employee. Such a question does not strictly speaking arise for it is now well-settled
that where a workman raises a dispute as against his employer, the person regarding whose employment or non-employment the dispute is raised
need not himself be a workman within the meaning of the Act but must be a person is whose employment or non-employment the workmen as a
class have direct or substantial interest. [See workmen of Dahingeapar Tea Estate v. Dahingeapar Tea Estate (1958 II L.L.J. 498 at 503).] The
dispute that was referred to in the present case to the tribunal was whether respondent 3 ceased to be an employee of the petitioner-corporation in
September, 1953, and whether the petitioner corporation was justified in refusing to absorb him in its employment in 1958 when his services were
terminated by the subsidiary company. The contention was that the expression ""such persons who were dismissed, discharged or retrenched in
connexion with or as a consequence of, that dispute"" in Clause (s) of S. 2 must mean that the dismissal, discharge or retrenchment must be pending
the dispute, and since that was not so, respondent 3 cannot be regarded as a workman in relation to whom a reference could be made. It was also
argued that respondent 3 was not an existing employee of the petitioner corporation and therefore again, the dispute regarding him could not be
referred to. Reliance was placed on Corporation of the City of Nagpur v. N. H. Majumdar and others [1958 I L.L.J. 761] where Mudholkar and
Kotval, JJ., observed that where a reference deals with ""employees"" it means the employees who must necessarily be existing employees or
employees ""dismissed, discharged or removed on account of any industrial dispute"" and does not include persons who have ceased to be
employees on account of superannuation, dismissal, discharge or removal. This observation, however, must be considered in the light of the facts
of that case. The question there was whether gratuity could be directed to be paid to persons who had retired from service before the reference
was made, and it appears that the High Court held that on the terms of the reference, it was concerned with the existing employees on the date of
reference. Looking to the words in Clause (s) of S. (2) it is clear that there are three classes of persons who would fall within that definition -
(1) a person employed in any industry, (2) any such person who has been discharged, dismissed or retrenched in connexion with or as a
consequence of the dispute, and (3) whose dismissal, discharge or retrenchment has led to the dispute.
The last two categories of persons are workmen in addition to the first category, for it is a well-settled rule of construction that a part of a
definition which is an inclusive definition adds to the persons relating to whom a definition is given other persons who otherwise would not be
included. In this view, respondent 3 would be a workman falling in the first and the third categories for, he was a person employed in an industry
and whose non-employment led to the present dispute. A similar contention was raised before the High Court of Bombay in P. L. Mayekar v.
Amichand Narayan [1956 I L.L.J. 492], and the High Court there held that a workman as defined in S. 2(s) meant any person who was employed
at any time in an industry. If he satisfied the definition of ""workman,"" then whether he could raise an industrial dispute or not must be judged by the
definition of ""industrial dispute"" given in S. 2(k) of the Act. A person, therefore, who is dismissed or whom his employer declines to employ prior
to the date when the dispute relating to his dismissal or non-employment is referred to by the Government under S. 10(1), is a workman within the
meaning lot S. 2(s) of the Act. In our view, there is therefore no validity in the contention raised by Sri Mankad.
Sri. Mankad then urged that in September, 1953, when the services of respondent 3 were transferred to the subsidiary company respondent 3
voluntarily opted for service in the subsidiary company and therefore ceased thenceforth to be the employee of the petitioner-corporation. That
being the position, the petitioner- corporation was entitled to refuse to absorb him in 1958 and the tribunal was wrong in ordering the corporation
to absorb and reinstate him in its service, The argument was that on and from September, 1953, the subsidiary company and control over the
work of respondent 3, wages were paid to him by that company, respondent 3 was actually working for that company and it was that company
which had control and the right of supervision over his work and that therefore, there was termination of the relationship of master and servant
between the petitioner-corporation and respondent 3 as from the date of the aforesaid transfer. Sri Mankad very strongly relied upon the Supreme
Court decision in Jeshtamani Gulabrai Dholkia and others v. Scindia Steam Navigation Company, Bombay, and others [1961 - I L.L.J. 318]. This
decision in our view, cannot apply and therefore cannot assist the petitioner corporation. The facts there was that the appellants were originally in
the service of the Scindia Steam Navigation Company, Ltd. In 1943, the Scindias purchased another company known as Air Services of India,
Ltd., and by 1946 the Air Service of India was a full subsidiary of the Scindias. Between 1946 and 1951, a large number of employees of Scindias
were transferred to Air Services of India for indefinite periods. The appellants were to get the same scale of pay as other employees of the
Scindias and the same terms and conditions of service were to apply. The Scindias however retained the right to recall these employees when their
services were lent to the Air Services of India, and the appellants were entitled to go beck to Scindias if they so desired. In 1953, the Air
Corporations Act, XXVII of 1953, was passed. Thereunder, all the existing airlines, including the Air Services of India, became vested in the
Indian Air Lines Corporation as from the appointed day set out therein. Section 20(1) of the Act provided that every officer or other employee of
an existing air company employed by that company prior to July, 1952 and still in its employment immediately before the appointed day shall, in so
far as such officer or other employee is employed in connexion with the undertaking which has vested in either of the corporations by virtue of the
Act, become as from the appointed day an officer or other employee, as the case may be, of the corporation in which the undertaking has vested
and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and conditions as he would have
held the same under the existing air company if its undertaking had not vested in the corporation. The proviso to that sub-section stated that nothing
contained in the section should apply to any officer or other employee who has, by notice in writing given to the corporation concerned prior to
such date as may be fixed by the Central Government by notification in the official gazette intimated his intention of not becoming an officer or other
employee of the corporation. It was common ground that the appellants had not given the notice as required by the proviso to S. 20(1). On 1
August, 1953, that being the appointed day under the Act, the Air Services of India vested in the corporation and as none of the appellants and
exercised the option given to them under the aforesaid proviso they became the employees lot the corporation. The contention on behalf of the
appellants was that they were not governed by S. 20(1), and in any event the contract lot service between the appellant and the Scindias was not
assignable or transferable by law and further that even if S. 20(1) applied, the Scindias were bound to take back the appellants. The Supreme
Court negatived these contentions and said that though it was true that the appellants were not originally recruited by the Air Services of India and
were transferred on loan to the Air Services of India, for the purposes of S. 20(1), two questions would have to be considered, namely - (1)
whether an officer or an employee was employed by the existing air company on 1 July, 1952, and
(2) whether he was still in its employment on the appointed day, namely, 1 August, 1953.
The Supreme Court observed that it was not disputed that the appellants were working for the Air Services of India and were being paid by it,
that hours of work as well as control over their work was all by the Air Services of India and that from these facts it would naturally follow that
they were the employees of the Air Services of India even though they might not have been directly recruited by it. The Supreme Court then
observed that the appellants were governed by the same terms and conditions of service as were enjoyed by the employees of the Scindias in the
matter remuneration, leave, bonus, etc., that they could also be recalled by Thousands and further that they might have the option to go back to the
Scindias. These three conditions, however, were special terms of their employment with the Air Services of India and subject to these special
terms, they would for all purposes, be in the employment of Air Services of India and thus would in law be in the employment of Air Services of
India both on 1 July, 1952 and 1 August, 1953. The existence of these special terms in the case lot these appellants would not make them any the
less employees of the Air Services of India for whom they were working and who were paying them, who had power of control and direction over
them, who could grant them leave, fix their hours of work and so on, and therefore, subject to the aforesaid special terms the appellants were in the
employ of the Air Services of India in law. The Supreme Court also held that there was no substance in the contention that even if S. 20(1)
applied, the Scindias were bound to take up the appellants. Since the epaulets became by force of law the employees of the corporation, as they
did so become on 1 August, 1953, in the circumstances of the case they had no further right against the Scindias and could not claim to be taken
back in their employment on the ground that they were still their employees in spite of the operation of S. 20(1) of the Act. Since they became by
operation of law the employees of the corporation, the appellations could have no rights whatsoever against the Scindias. On the analogy of this
decision, it was urged that on the transfer of the services of respondent 3 to the subsidiary company, respondent 3 became an employee of that
company, that it for that company that respondent 3 actually worked from September, 1953 to February, 1958 and was paid wages by that
company and it was that company who controlled his work and supervised it and therefore he ceased to be the employee of the petitioner-
corporation and the petitioner-corporation was not bound to take him back when his services were terminated by the subsidiary company. The
observation made in Scindias case that the right of the Scindias to recall their employees who were transferred to Air Services of India and the
right of those employees to go back to the Scindias were special terms of their service with the Air Services of India were presumably made on the
assumption that when their services were transferred to Air Services of India there was an agreement, express or limited between the parties which
provided for their transfer and those special terms of their employment with the Air Services of India for, without such an agreement to which those
employees had had to be parties, the Scindias would not in law be entitled to transfer to the Air Services of India their services unilaterally. For the
transfer of their services to the Air Services of India there would have to be termination of their contract of service with the Scindias and a fresh
contract of service with the Air Services of India. The observations relied upon by Sri Mankad must, therefore, mean that when the services of the
appellants were transferred to the Air Services of India they became the servants of the Air Services of India subject to the special terms under
which the Scindias had a right to recall them and the appellants had a right to go back to the Scindias. It would seem that it was on the basis of
such an assumption that the appellant were held to be the employees of the Air Services of India or 1 July, 1952 and to be still in the employment
of the Air Services of India on 1 August, 1953, and therefore, S. 20(1) of the Act applied to them. Since the appellants did not exercise the option
under the proviso to S. 20(1), they became, by operation of law, the employees of the corporation constituted under the Act and had then no right
to go back to the Scindias. In the present case, there is no such statutory provision whereunder the contract of service could be said to have been
transferred. Nor was it at any time the contention of the petitioner-corporation that there was any agreement, express or implied, between the three
parties whereunder there was first the termination of service and the taking over of respondent 3 by the subsidiary company in its service. The
simple contention that was raised by the petitioner-corporation before the tribunal was that respondent 3 had opted voluntarily to the service of the
subsidiary company and had in consequence terminated the relationship of master and servant between him and the petitioner-corporation. The
question whether respondent 3 opted for the service of the subsidiary company is essentially a question of fact. The tribunal on a consideration of
the documentary evidence which was the only evidence before it, came to a finding that the services of respondent 3 were simply lent to the
subsidiary company, that there was no cesser of relationship of master and servant between respondent 3 and the petitioner-corporation and that
therefore, respondent 3 was entitled to be absorbed in the service of the petitioner-corporation when were no longer required by the subsidiary
company. On a petition under Art. 226, the High Court would not ordinarily interfere with the findings of fact arrived at by the tribunal unless of
course there is no evidence whatsoever upon which it could be founded. [See Dhrangadhra Chemical Works, Ltd. v. State of Saurashtra and
others [1957 I L.L.J. 477 at 482]. That cannot be said in this case and it was in fact not so urged even by Sri Mankad. But assuming that we were
to go behind that finding, the question is whether the present case is on a par with the case of the Scindias, and can it be said, as was said in that
case, that the right to be taken back and the corresponding obligation to take back were special terms of the contract of transfer ? If it can be
shown that respondent 3 was not a party to such an agreement of transfer, can one say that the petitioner-corporation had a right to transfer his
services and thereupon unilaterally bring about termination of the relationship of master and servant ? In the case of contracts of master and
servant, a servant is under the control of the master and owes him the duty of faithful service so that a master and a servant each contracts on the
basis of personal qualities of the other and a performance by a third party cannot be relied upon as a performance of the contract. In Nokes v.
Doncaster Amalgamated Collieries, Ltd. [(1939) 2 A.E.R. 668], the House of Lords negatived the contention that by virtue of S. 154 of the
Companies Act, 1929, whereby the responded company had become the transfer of all property, rights powers, liability and duties of a number of
colliery companies the services of the plaintiff were thereby automatically transferred to the respondent-company under whom, therefore, he
became a servant, without having himself either expressly or impliedly entered into any contract of service with it, and held that such an order under
S. 154 did not automatically transfer contracts of personal service which are in their nature incapable of being transferred or that a contract of
service which are in their nature incapable of being transferred or that a contract of service did not therefore exist between the appellant and the
respondent-company. In Scindias case [1961 L.L.J. 318] (vide supra), the Supreme Court cited with approval the observations in Nokes case
[(1939) 2 A.E.R. 668] (vide supra), namely that it was indisputable that (apart from statutory provision to the contrary) the benefit of a contract
entered into by A to render personal service to X cannot be transferred by X to Y without the consent of A, which is something saying that in
order to produce the desired result, the old contract between A and X would have to be terminated by notice or by mutual consent and a new
contract of service would have to be entered into by agreement between A and Y. As already pointed out, in the present case, there is not such
statutory provision and therefore, the only question that would arise would be whether there was any contract express or implied, between the
parties whereby the contract of service between respondent 3 and the petitioner-corporation was terminated and a fresh contract of service was
entered into between respondent 3 and the subsidiary company. The facts show that on 2 September, 1953 the petitioner-corporation passed an
order directing respondent 3 to report for work to the subsidiary company. Accordingly, respondent 3 reported for work to the subsidiary
company, but could not actually commence work for the subsidiary company as a difficulty arose on account of his having applied for leave for ten
days due to the death of his father. Since the subsidiary company could not grant the leave as desired by respondent 3, respondent 3 was regarded
as having reported back to the petitioner-corporation for work, and on 3 September, 1953 it was the petitioner-corporation and not the subsidiary
company which granted him leave for ten days. It would appear that on 5 September, 1953, the financial manager of the subsidiary company
which granted an order of appointment in the subsidiary company addressed to respondent 3, whereby he purported to appoint the petitioner as
an accounts clerk on a salary of Rs. 240 per month on the terms and conditions therein contained. One of the terms was that respondent 3 would
be on probation for a period of three months in the first instance, that the subsidiary company would have the power to extend the period of
probation and during the probationary period it would rest with the company to dispense with the services of respondent 3 at any time without
assigning any reasons and that confirmation of the appellant would be considered at the end of the probationary period, depending upon the
efficiency and utility of his services to the subsidiary company. The order of appointment was issued by the subsidiary company obviously during
the time that respondent 3 was on leave. There was in fact on evidence before the tribunal either that this order was served upon respondent 3 or
that respondent 3 at any time accepted the said order. At best, therefore the order dated 5 September, 1953, can be regarded as an offer of a
contract of service by the subsidiary company to respondent 3 but cannot be said to have the effect of terminating the relationship of master and
servant between respondent 3 and the petitioner-corporation. In point of fact, on 2 September, 1953 when respondent 3 reported to the
petitioner-corporation, it was specifically stated that he was reporting his departure from that office in accordance with the transfer order issued by
the petitioner-corporation. This report would show that his case even at that time was that he was going to subsidiary company for work in
consequence of the order of transfer issued by the petitioner-corporation and not that that order had terminated his contract of service with the
petitioner-corporation. It was, however, urged by Sri Mankad that if respondent 3 had continued to be in the service of the petitioner-corporation,
he could not have applied for leave to the subsidiary company as respondent 3 did on 3 September, 1953. The leave, as aforesaid, was not
granted by the subsidiary company on the ground that that company could not grant ten days'' leave on account of respondent 3 having started
work for it only the previous day, with the result that respondent 3 was allowed to report back to the petitioner-corporation and the petitioner
corporation then granted him leave and, as the record shows, actually paid his salary from 4 to 16 September, 1953. These facts clearly indicate
that there was no termination of service with the petitioner corporation either expressly or impliedly. On 17 September, 1953 when respondent 3
returned after his leave, he reported to the petitioner corporation and thereupon the petitioner-corporation issued a fresh order directing him to
report to the subsidiary company. On 24 September, 1953, the petitioner-corporation issued an office order which was to the effect that from 18
September, 1953
the services of R. S. Ambwaney are placed at the disposal of Makenzies Heinrich Butzer (India), Ltd.
The words that the services of respondent 3 were placed at the disposal of the subsidiary company could not have been used as late as 24
September, 1953, had it not been the case of a mere transfer of service to the subsidiary company and if there was termination of survives of
respondent 3 with the petitioner-corporation. Even on 3 October, 1953 when the petitioner-corporation paid to respondent 3 his salary for the
leave period i.e., from 4 to 16 September, 1953, the words used in the endorsement were that his services had been placed at the disposal of the
subsidiary company. These facts indicate that there was no question of the petitioner corporation having terminated the services of respondent 3 or
of their having been terminated by mutual consent or respondent 3 having voluntarily opted for the service of the subsidiary company. There is no
indication of any such result from any of the documents produced before the finding of fact of the tribunal was that there was no such termination of
respondent 3''s service with the petitioner-corporation. In these circumstances it cannot be legitimately urged that the tribunal was wrong in coming
to the conclusion that it had not been establishment before it, as alleged by the petitioner corporation, that respondent 3 had opted for the service,
of the subsidiary company. The fact that respondent 3 received his wages from the subsidiary company as also the fact that the company exercised
the right of supervision over his work would be consistent with his services having been lent, as the petitioner, corporation had a vital interest in the
subsidiary company and was therefore interested in supplying skilled employees to facilitate smooth working of the subsidiary company A servant
who is lent by his master to a third person for the purpose of being employed in a particular way may be deemed while thus employed, a servant of
the person to whom he is lent though for other purposes he remains the servant of his master. Whether or not in any given case the relationship of
master and servant exists or not is a question of fact. A person may be the servant of another although a third party has the power of appointing or
dismissing him or of requiring his dismissal or has powers of direction and control in regard to his work, or pays him his wages. [See Halsbury''s
Laws of England, 3rd End., Vol. 5, pp. 447-448.] On the facts and circumstances of this case and for the reasons aforesaid, it would not,
therefore, be possible to accede to the contention urged by Sri Mankad either that the decision in Scindias case [1961 - I L.L.J. 318] (vide supra)
applied to the facts and circumstances of this case or that merely because the subsidiary company, during the period that respondent 3 worked for
it, exercised the right of control and supervision over respondent 3''s work, there was, therefore, termination of the contract of service with the
petitioner-corporation or that it could be inferred that respondent 3 had opted voluntarily for the service of the subsidiary company.
Finally, it was urged by Sri Mankad that respondent 3 admittedly received retrenchment compensation from the subsidiary company and that
fact indicated the he had at any rate impliedly accepted the subsidiary company as his master and therefore petitioner-corporation was no longer
his employer. Two facts, however, have to be noted in connexion with this contention :
(1) that there was no evidence whatsoever, and none was attempted to be lad, that respondent 3 had demanded retrenchment compensation from
the subsidiary company and that it was as a consequence of that demand that the subsidiary company paid the compensation, and
(2) that the compensation that was paid to respondent 3 was only for the period during which he had worked for the subsidiary company, i.e.,
from 18 September, 1953 to 20 February, 1958.
It is clear that if respondent 3 had worked for the petitioner corporation all throughout and if his services were terminated by the petitioner-
corporation, he would have become entitled to retrenchment compensation in respect of the entire period for which he had worked, but since he
had admittedly worked for the subsidiary company from September, 1953 to February, 1958 and the subsidiary company had derived the benefit
of his work during that period, it would be possible for the petitioner-corporation to say that as between the two companies it would be fair and
proper that retrenchment compensation for that period should be borne by the subsidiary company. It is also possible to say that when an
agreement is arrived at between two companies whereunder the services of an employee are lent by one to the other for the benefit of the other, it
could be made a term of such an agreement, express or implied, that the company to whom the services of the employees are lent must bear the
burden of the proportionate retrenchment compensation. The fact, therefore, that respondent 3 received compensation for the period he worked
for the subsidiary company cannot be said to be so inconsistent with the concept of transference of his services as an lead to an inference that there
was termination of his services with the petitioner-corporation, nor can that fact be regarded as an estoppel, as was suggested by Sri Mankad,
against him, for the payment to respondent 3 by the subsidiary company cannot be said to have in any way adversely affected the petitioner
corporation. In any event, what happened five years after the transfer of his services to the subsidiary company cannot be regarded as affecting the
character of the transaction, namely, the transfer of services by the petitioner-corporation to the subsidiary company. As in the case of the other
contentions, this contention also, therefore, has to be rejected. In the result, the petition fails and has to be dismissed. Rule discharged with costs.
Sri Mankad at this stage applied for have to appeal to the Supreme Court. Application rejected.