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Judgment
P.K. Misra, J.—Petitioner, Kanyakumari District Co-operative Spinning Mills Limited has filed this writ petition challenging the award dated
13.4.1994 in I.D.No.85 of 1984.
Petitioner is established under aegis of the Government of Tamil Nadu to make available cotton yarn to handloom weavers. The Mill of the
petitioner consist of several departments like blow-room, carding, preparatory, simplex, spinning, winding reeling, bundling and baling. The work in
the departments being inter-related, if the workmen in any particular department resort to strike or slow down, work in other departments are
inevitably affected. Keeping in view the work load and other factors, a settlement u/s 12(3) of the Industrial Disputes Act, 1947 (hereinafter called
the Act) had been arrived on 6.8.1975 laying down the details of the work assignments, efficiency, basic wages, etc. The workload for the blow
room scutcher attendant had been fixed at one man for two scutchers with automatic doffing upto 3000 kgs at the basic wage of Rs.67.08/- and
one man to attend three scutchers with automatic doffing with basic wage of Rs.78/-. The tenure of settlement was for a period of three years. Said
settlement continued even after 6.8.1978. Even though at the time of settlement there are only two scutchers, anticipating installation of additional
automatic scutcher and keeping in view the normal work load it had been fixed one man to attend three scutchers with automatic doffing.
In 1978, an automatic additional scutcher was acquired and accordingly the Management allocated three automatic scutchers to the attendants
with effect from 2.11.1978 as per the terms of the 12(3) settlement. However, the scutcher attendants refused to operate the third scutcher and the
Management was constrained to mark Refused to Work in the Time Cards of the concerned scutcher attendants. The workmen concerned
thereafter refused to operate even two scutchers with effect from 2nd shift on 6.11.1978 and thus the work in the blow room, where raw cotton is
cleaned,and thereafter supplied to carding section was stopped on account of the scutcher attendants to operate. Ultimately the work in other
departments such as carding, bundling and baling came to a stand still from 8.11.1978. The Management was not able to provide any work to the
employees of other departments due to the situation created by the scutcher attendants in the blow room section. Thereafter the Management was
constrained to lay-off the workmen of the other departments stage by stage.
Ultimately the matter came to be referred to the Industrial Tribunal to consider the following issues:-
Whether the limit of the workmen mentioned below to pay wages from 6.11.1978 to 17.12.1978 which was treated as the period in which the
workmen refused to work / consequential layoff is justified. If so, to give appropriate direction.
After filing of the claim petitions by the workmen and the reply by the management, the Industrial Tribunal raised the following issues for
determination:-
Whether the 8 workmen . . . refused to do work and whether they were justified in doing so ?
Whether the Management was justified in laying off all other workers mentioned in the annexure to the reference and whether the lay off is legal
?
3 Whether the workmen are not entitled to the wages for the period from 6.11.1978 to 17.12.1978 ?
The Industrial Tribunal on consideration of the materials available on record held that the workmen had refused to run even two scutchers from
6.11.1978 onwards and refusal to run three scutchers was not justified and there was absolutely no justification for refusing to run even two
scutchers. It further concluded that "" the management laid off the workers in other departments when they could not provide work to them and
stage by stage. So, I find that the action of the Management in laying off the workmen is not only bonafide but is also justified"". However, after
having arrived at such conclusion, the Industrial Tribunal held that since no permission as contemplated u/s 25-M had been obtained from the
appropriate Government, the lay off of the workmen of other departments from 6.11.1978 to 17.12.1978 is illegal and those workmen were
entitled to wages for the aforesaid period even though the lay off itself might have been justified. It had also held that the workmen who refused to
work in the blow room were not entitled to any wages for the aforesaid period.
The direction of the Tribunal to pay wages to the workmen of other departments is being questioned by the Management in this writ petition.
Learned counsel appearing for the petitioner has contended that the expression '' lay-off'' is defined in Section 2(kkk) of the Act and since the
lay-off in the present case which is found to be factually justified was not on account of any of the causes indicated in 2(kkk), there was no
question of adjudicating such lay-off as illegal u/s 25-M of the Act.
Section 2(kkk) is extracted hereunder :-
2(kkk) ""lay-off"" (with its grammatical variations and cognate expressions) means the failure, refusal or inability of an employer on account of
shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or natural calamity or for any other
connected reason to give employment to a workman whose name is borne on the muster-rolls of his industrial establishment and who has not been
retrenched;
In Management of Kairbetta Estate, Kotagiri Vs. Rajamanickam and Others, while considering the claim of the workmen for payment of
compensation during a lock out, it was observed,
Section 2(kk) defines a lay off as meaning the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or
the accumulation of stocks or the breakdown of machinery or for any other reason to give employment to a workman whose name is borne on the
muster rolls of his industrial establishment and who has not been retrenched. There is an explanation to the definition which it is unnecessary to set
out. It is clear that the lay off takes place for one or more of the reasons specified in the definition. Lay off may be due to shortage of coal or
shortage of power or shortage of raw materials or accumulation of stocks or breakdown of machinery or any other reason. ""Any other reason"" to
which the definition refers must, we think, be a reason which is allied or analogous to reasons already specified. It has been urged before us on
behalf of the respondents that ""any other reason"" mentioned in the definition need not be similar to the preceding reasons but should include any
other of whatsoever character for which lay off may have taken place; and in support of this argument reliance is placed on Section 25E(iii).
Section 25E deals with three categories of cases where compensation is not liable to be paid to a workman even though he may have been laid off.
One of these is prescribed by Section 25E(iii); f the laying off is due to a strike or slowing down of production on the part of workmen in another
part of the establishment no compensation has to be paid. The argument is that laying off which is specified in this clause has been excepted
because, but for the exception, it would have attracted the definition of Section 2(kkk) and would have imposed an obligation on the employer to
pay lay off compensation. That no doubt is true; but we do not see how the case specified in this clause is inconsistent with the view that "" any
other reason: must be similar to the preceding reasons specified in the definition. If there is a strike or slowing down of production in one part of the
establishment, and if lay off is the consequence, the reason for which lay off has taken place would undoubtedly be similar to the reasons specified
in the definition. We are, therefore, satisfied that the expression "" any other reason"" should be construed to mean reason similar or analogous to the
preceding reasons specified in the definition. That is the view taken by the Allahabad High Court in J.K. Hosiery Factory Vs. Labour Appellate
Tribunal of India and Another,
In Workmen of Dewan Tea Estate and Others Vs. The Management, it was observed,
It is, however, significant that when Section 25C deals with workmen who are laid off and proceeds to prescribe the manner in which
compensation should be paid to them, it is inevitably referring to the layoff as defined by Section 2(kkk) of the Act. The said section defines a ""lay-
off"" (with its grammatical variations and cognate expressions) as meaning:
the failure, refusal, or inability of an employer on account of shortage of coal,m power of raw materials or the accumulation of stocks or the
breakdown of machinery or for any other reason to give employment to a workman whose name is borne on the muster rolls of his industrial
establishment and who has not been retrenched.
It would be legitimate to hold that lay off which primarily gives rise to a claim for compensation u/s 25C must be a lay off as defined by Section
2(kkk). If the relevant clauses in the Standing Orders of industrial employers make provisions for lay off and also prescribe the manner in which
compensation should be paid to them for such lay off, perhaps the matter may be covered by the said relevant clauses; but if the relevant clause
merely provides for circumstances under which layoff may be declared b6y the employer and a question arises as to how compensation has to be
paid to the workmen thus laid off, Section 25C can be invoked by workman provided, of course, the lay off permitted by the Standing Order also
satisfies the requirements of Section 2(kkk). Whether, or not Section 25C can be invoked by workmen who are laid 8off for reasons authorised
by the relevant clause of the Standing Order applicable to them when such reasons do not fall u/s 2(kkk), is a matter with which we are not directly
concerned in the present appeal. The question which we are concerned with at this stage is whether it can be said that Section 25C recognisers a
common law right of the industrial employer to lay off his workmen. This question must, in our opinion, be answered in the negative. When the
laying off the workmen is referred to in Section 25C, it is the laying off as defined by Section 2(kkk), and so, workmen who can claim the benefit
of Section 25C must be workmen who are laid off and laid off for reasons contemplated by Section 2(kkk); that is all that Section 25C means. If
any case is not covered by the Standing Orders, it will necessarily be governed by the provisions of the Act, and layoff would be permissable only
where one or the other of the factors mentioned by Section 2(kkk) is present, and for such layoff compensation would be awarded u/s 25C.
Therefor, we do not think that the Tribunal was right in holding that Section 25C recognise the inherent right of the employer to declare layoff for
reasons which he may regard as sufficient or satisfactory in that behalf. No such common law right can be spelt out from the provisions of Section
25C.
In The Workmen of Firestone Tyre and Rubber Co. of India (P) Ltd. Vs. The Firestone Tyre and Rubber Co., it was observed as follows :-
There are two small matters which present some difficulty in the solution of the problem. In explanation (i) appended to sub-section (2) of Section
25-B the words used are:
he has been laid-off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946,
or under this Act or under any other law applicable to the industrial establishment.
indicating that a workman can be laid-off under the Industrial Disputes Act also. But it is strange to find that no section in Chapter VA in express
language or by necessary implication confers any power, even on the management of the Industrial Establishment to which the relevant provisions
are applicable, to lay-off a workman. Clause (ii) of Section 25E says :
No compensation shall be paid to a workman who has been laid-off -
If he does not present himself for work at the establishment at the appointed time during normal working hours at least once a day.
This indicates that there is neither a temporary discharge of the workman nor a temporary suspension of his contract of service. Under the general
law of Master and Servant, an employer may discharge an employee either temporarily or permanently but that cannot be without adequate notice.
Mere refusal or inability to give employment to the workman when he reports for duty on one or more grounds mentioned in clause (kkk) of
Section 2 is not a temporary discharge of the workman. Such a power, therefore, must be found out from the terms of contract of service or the
Standing Orders governing the establishment. In the instant case the number of workmen being only 30, there were no Standing Orders certified
under the Industrial Employment (Standing Orders) Act, 1946. Nor was there any term of contract of service conferring any such right of lay-off.
In such a situation the conclusion seems to be inescapable that the workmen were laid-off without any authority of law or the power in the
management under the contract of service. In Industrial Establishments where there is a power in the management to lay-off a workman and to
which the provisions of Chapter VA apply, the question of payment of compensation will be governed and determined by the said provisions.
Otherwise Chapter VA is not a complete Code as was argued on behalf of the respondent company in the matter of payment of lay-off
compensation. This case therefore, goes out of Chapter VA. Ordinarily and generally the workmen would be entitled to their full wages but in a
reference made u/s 10(1) of the Act, it is open to the Tribunal or the Court to award a lesser sum finding the justifiability of the lay-off.
. . .
In Kanhaiya Lal Gupta v. Ajeet Kumar Dev 1967 (2) LLJ 761 (All) a learned single Judge of the Allahabad High Court seems to have rightly held
that in the absence of any term in the contract of service or in the statute or in the statutory rules or standing orders an employer has no right to lay
off a workman without paying him wages. A learned single Judge of the Punjab and Haryana High Court took an identical view in the case of Steel
and General Mills Co. Ltd. v. Addl. District Judge, Rohtak (1972) 1 LLJ 284 = (1971 LIC 1356 P&H. The majority view of the Bombay High
Court in K.T. Rolling Mills Private Ltd. and Another Vs. M.R. Meher and Others, that it is not open to the Industrial Tribunal under the Act to
award lay-off compensation to workmen employed in an ''Industrial Establishment'' to which Section 25C does not apply, is not correct. The
source of the power of the employer to lay-off workmen does not seem to have been canvassed or discussed by the Bombay High Court in the
said judgment.
In the case of the Delhi Office of the respondent the Tribunal has held that the lay-off was justified. It was open to8 the Tribunal to award a lesser
amount of compensation than the full wages. Instead of sending back the case to the Tribunal, we direct that 75% of the basic wages and dearness
allowance would be paid to the workmen concerned for the period of lay-off. As we have said above this will not cover the case of those
workmen who have settled or compromised their disputes with the Management.
Though the aforesaid decisions were rendered in the context of applicability of Chapter VA, similar considerations may arise considering the
applicability of Chapter VB. Nothing has been indicated that under the standing orders applicable to the establishment, the Management has got
the absolute right to ""lay-off"" any workman without following the procedure contemplated under the Industrial Disputes Act nor any thing has been
indicated about the right of the Management to suspend the workmen and if so regarding the amount of compensation / wages paid to such
workmen.
Keeping in view the ratio of the decisions of the Supreme Court and particularly the last one reported in The Workmen of Firestone Tyre and
Rubber Co. of India (P) Ltd. Vs. The Firestone Tyre and Rubber Co., it cannot be said that the Management has absolute right in the facts and
circumstances of the case to lay-off the workmen without paying them any compensation/wages for the period concerned. As has been observed
by the Supreme Court in The Workmen of Firestone Tyre and Rubber Co. of India (P) Ltd. Vs. The Firestone Tyre and Rubber Co., : in the
absence of any specific provision in the Standing Orders, the Management is required to pay the wages for the entire period. As has been further
observed in the aforesaid Supreme Court decision, when the matter comes for adjudication in an Industrial Dispute, the Labour Court has a
discretion to consider the quantum of amount to be paid to the workmen. In the present case the findings of the Labour Court which have already
been extracted indicate that the Labour Court has found that there was factual justification for laying off the workmen. In such view of the matt er,
it was unjust on the part of the Labour Court to give direction for payment of entire wages.
Having regard to the facts and circumstances of the case, I think interest of justice would be served by directing that the Management would be
liable to pay 75 per cent of the wages during the period in which the workmen of other departments had been laid off. The award of the Industrial
Tribunal is modified to the aforesaid extent.
In the result, the writ petition is allowed in part and in modification of the award, it is directed that the workmen concerned in other Departments
were entitled to 75% of the wages for the period in question. Direction of the Labour Court regarding non-payment of any wages to the persons
operating scutchers having not been challenged, shall remain unaltered. No order as to costs.