M/S. D.B.H. INTERNATIONAL LTD. vs. THEIR WORKMEN REPRESENTED BY THE TR. & DOCK WORKER

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2005:BHC-AS:4577-DB
IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY
CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION
LETTERS PATENT APPEAL NO.170 of 1996
IN
WRIT PETITION NO.1347 OF 1996
M/s. DBH International Ltd.,
a Company incorporated under the
Companies Act, 1956, with its
Bombay Office formerly situated at 30,
Imperial Chambers, Wilson Road,
Ballard Estate,
Bombay-400038, and its
registered office at N-75,
Connaught Circus,
NEW DELHI-110 001. Appellant
(Orig. Petitioner)
Vs
1. Their Workmen,
represented by the Transport
& Dock Workers’ Union,
P. D’Mello Bhavan, P.D’Mellow Road,
Carnac Bunder,
Bombay-400 038.
2. Hon’ble Shri S.B.Panse,
Presiding Officer, Central Government,
Industrial Tribunal No.2,
having his office at 4th Floor,
City Ice Bldg., 298, Perin Nariman Street,
Fort, Bombay-400 001. Respondents.
(Orig. Respondents)
Mr C.U.Singh i/by M/s Haresh Mehta & Co for the
Appellant-Management.
Mr S.M.Dharap, for Respondent No.1-Union/workmen.
CORAM : S.B.MHASE & D.B.BHOSALE, JJ. CORAM : S.B.MHASE & D.B.BHOSALE, JJ. CORAM : S.B.MHASE & D.B.BHOSALE, JJ.
DATED : 9th MARCH, 2005. DATED : 9th MARCH, 2005. DATED : 9th MARCH, 2005.

JUDGMENT: (PER D.B.BHOSALE, J.) JUDGMENT: (PER D.B.BHOSALE, J.) JUDGMENT: (PER D.B.BHOSALE, J.)
1. This Letters Patent Appeal is directed
against the order dated 1.7.1996 passed by the
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learned Single Judge in Writ Petition No.1347 of
1996, rejecting the petition in limine. The writ
petition was filed against the Award dated 31.7.1995
passed by the Central Government Industrial Tribunal
No.II (for short, "the Tribunal") in Reference No.
CGIT-2/55 of 1993, by which the impugned retrenchment
was held to be illegal and void. The Government of
India, Ministry of Labour, by its letter dated
3.6.1993, had referred the following industrial
dispute to the Tribunal for adjudication:
"Whether the action of the Management of
M/s DBH International Ltd is justified
in retrenching S/Shri A.M.Ghosalkar,
S.R.Parab, E.T.Deshmukh, Chiman Sawant,
Baban Vethebkar, Mrs D.D.’ Mello and Mrs
Rajalakshmi H.Pillai with effect from
16.9.1991? If not, to what relief the
workmen are entitled to?".
The aforesaid reference was made in pursuance of the
failure report submitted by the Conciliation Officer
to whom the dispute was referred pursuant to the
demand notice dated 18.9.1991 given by the Secretary
of Port and Dock Workers’ Union, Bombay (for short,
"the Union"), which was representing the workmen
before the concerned authority.
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2. The background facts sans unnecessary details
are as follows.
. M/s DBH International Ltd - the appellant in
this appeal, was a Clearing and Forwarding Agent (for
short, "the Management") and they were holding
Customs House Agent Licence for the said business
since 1965. Till 1987, they conducted their business
in the name and style of Dadabhoy Hornusjee and Sons
Ltd. The case set up by the Management was that in
1990, on account of steady decline in business, a
Voluntary Retirement Scheme (for short, "VRS") was
announced by the Management in response of which few
employees had availed it and left. 10 workmen only
had remained in the employment consisting of the
workmen named in the aforesaid reference (for short,
"the workmen"). The VRS was objected to by the
Union. The matter was carried into conciliation in
which the Management was persuaded to withdraw the
VRS. According to the Management, in 1991 due to
national foreign exchange crisis, severe import
restrictions were introduced in the Finance Act, 1991
with the result their business declined even further.
By August, 1991 gross revenue earned by the
Management was not even sufficient to pay the wage
bill of 10 remaining workmen and, therefore, they
were left with no option but to retrench the 7
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workmen out of the remaining 10. On 16.9.1991, the
retrenchment notices were offered to the concerned 7
workmen together with notice pay, retrenchment
compensation, gratuity, leave encashment and salary
for 16 days of September. The workmen refused to
accept the notices as well as payment offered. A
notice to the Government, as required under section
25F(c) of the Industrial Disputes Act, 1947 (for
short, "I.D.Act"), was also given. The Union
challenged the retrenchment vide their letter/demand
notice dated 18.9.1991. The Conciliation Officer
held the meeting with the Union and the Management on
20.9.1991 and having failed to conciliate, issued a
failure report on 9.10.1991. In April, 1992, 2 out
of the remaining 3 workmen resigned from the service
and the last one was retrenched. Thus, according to
the Management, the business and establishment was
effectively closed down as no workmen were employed
after April, 1992. Against this backdrop, the
aforesaid dispute was referred under section 10(1) of
the I.D. Act by the Government of India for
adjudication.
3. The Tribunal decided the reference vide its
Award dated 31.7.1995, holding that though the action
of the Management was justified in retrenching the
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workmen with effect from 16.9.1991, the action was
illegal and void and, therefore, the workmen were
entitled to reinstatement with full back wages and
continuity in service. A categoric finding was
recorded by the Tribunal that the amount tendered as
retrenchment compensation was less than what ought to
have been offered under section 25F (b) of the I.D.
Act relying on the Judgment of this Court in Trade Trade Trade
Wings Limited Vs. Prabhakat Dattararam Phodkar, 1992 Wings Limited Vs. Prabhakat Dattararam Phodkar, 1992 Wings Limited Vs. Prabhakat Dattararam Phodkar, 1992
I CLR 480 I CLR 480. I CLR 480
4. Feeling aggrieved by the Award dated 31.7.1995
passed by the Tribunal, the Management preferred Writ
Petition No.1347 of 1996. The writ petition was,
however, rejected summarily by the learned Single
Judge vide order dated 1.7.1996, which is impugned in
the present Letters Patent Appeal. The order passed
by the learned Single Judge (S.H.Kapadia, J.) dated
1.7.1996 reads thus :
"In the present matter, retrenchment
compensation has not been paid as per
provisions of Section 25F of the
Industrial Disputes Act. It is true the
Reference made by the Government is only
regarding justifiability and not
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illegality, but in this case, issue No.2
indicates that parties went before the
Industrial Court on both the questions.
Hence, I do not wish to interfere.
. The second contentions raised by the
petitioners that the case on illegality
is hypertechnical because the workers
have been paid under the head
"Retrenchment Compensation". The amount
offered is short and there is
noncompliance of Section 25F. Hence
Lower Court was right in its findings.
However, Company claims that it has
closed down and, therefore,
reinstatement cannot be granted.
. In this connection, Mr Dharap for the
workers states that if company offers
the wages upto 31-12-95 (the date on
which offer was made by the workmen to
accept wages) and if all other dues are
paid upto date on 31-12-95, then, he
will not press for reinstatement.
. In the circumstances, if the company
pays the dues upto date on the basis of
cut off date being 31-12-95 then the
award will be marked satisfied. The
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company will comply with Award within
eight weeks.
. If the Award is not satisfied, then
the workers will be free to enforce the
impugned Award. Subject to above, Writ
Petition is rejected."
5. We heard the learned counsel appearing for the
parties at great length, perused the impugned order,
the Award dated 31.7.1995 and other material placed
before us. To avoid repetition, we propose to make
reference to the submissions advanced by the learned
counsel for the parties at an appropriate stage/s in
a later part of the Judgment. However, after hearing
the arguments advanced by the learned counsel for the
parties, in our opinion, the following questions fall
for our consideration in the instant appeal. Let us
make it absolutely clear that the learned counsel for
the parties did not advance arguments on any other
issue/s except the following legal issues formulated
by us.
I) Whether the Tribunal travelled beyond the clear
terms of the order of reference, holding that the
word "justified" included within its scope "legality"
of the action, while dealing with the dispute
referred to under section 10 of the I.D.Act as to
’whether the action of the management was ’justified’
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in retrenching the workmen with effect from
16.9.1991?
II) Whether the workmen had confined their allegation
to justification and the employer’s motive in
retrenching them and had never at any stage prior to
the order of reference sought to challenge or even
questioned the legality of the action, i.e.
compliance with the regulatory requirement laid down
in section 25F of the I.D.Act? If yes, whether the
Tribunal was justified in examining the legality of
the action?
III) Whether, in the absence of the pleadings and /or
sufficient notice to the Management in respect of the
alleged short fall in the payment of retrenchment
compensation, the Tribunal was justified in holding
that the payment offered by the Management as
retrenchment compensation under section 25F of the
I.D.Act was inadequate and hence it was illegal and
void and, therefore, the workmen are entitled to
reinstatement in service with full back wages and
continuity in service?
IV) While computing the retrenchment compensation
under section 25F of the ID Act, the principle
evolved by the Supreme Court while interpreting the
provisions contained in section 4(2) of the Payment
of Gratuity Act, 1990 in Jeewanlal Limited Vs.The Jeewanlal Limited Vs.The Jeewanlal Limited Vs.The
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Appellate Authority, (1984) 65 FJR 204 Appellate Authority, (1984) 65 FJR 204 and which was Appellate Authority, (1984) 65 FJR 204
followed by this Court in Trade Wings Limited Vs. Trade Wings Limited Vs. Trade Wings Limited Vs.
Prabhakar Dattaram Phodkar, 1991-II LLN 500 Prabhakar Dattaram Phodkar, 1991-II LLN 500, could be Prabhakar Dattaram Phodkar, 1991-II LLN 500
applied to hold that there was a short payment of
retrenchment compensation which is equivalent to no
payment and hence the impugned retrenchment is
invalid. In other words, whether the retrenchment
compensation under section 25F is payable on the
basis of monthly wages for 26 working days and his
average rate of daily wages should be ascertained on
that basis and not by taking the wages for 30 days or
fixing his daily wages by dividing his monthly wages
by 30?
V) Whether the amount offered to in the retrenchment
notice under other heads, which was not required to
be offered as a condition precedent under section 25F
of the ID Act, could be taken into account to make up
a shortfall, if any, in paying the amount required as
a condition precedent to retrenchment. In other
words, if the retrenchment was justified and that a
tender of much larger amount was in fact made at the
time of retrenchment, whether the Tribunal was
justified in ignoring the excess amount, which was
not required to be offered as condition precedent,
and holding that there was a shortfall in offering
the retrenchment compensation under section 25F?
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VI) Whether the Tribunal erred in awarding
reinstatement with full back wages after having
accepted that all work had come to an end, merely
because the question of closure was not referred to
him?
VII) If it is accepted, that the management was
liable to tender an amount as retrenchment
compensation under section 25F of the ID Act on the
basis of the monthly wages for 30 days, whether the
amount actually offered as retrenchment compensation
was adequate?
6. We would like to start with the legal Issues
nos IV, V and VI raised in this petition. Mr Singh,
learned counsel for the Management, submitted that
the Tribunal erred in holding that there was a
shortfall in calculation of retrenchment compensation
based on the Judgment of this Court in Trade Wings Trade Wings Trade Wings
Ltd Vs. Prabhakar Dattaram Phodkar 1991 -II LLN 500 Ltd Vs. Prabhakar Dattaram Phodkar 1991 -II LLN 500. Ltd Vs. Prabhakar Dattaram Phodkar 1991 -II LLN 500
According to Mr Singh, this Court in the case of
Trade Wings Trade Wings has applied the principle evolved by the Trade Wings
Apex Court while interpreting the provisions of
Section 4(2) in the Payment of Gratuity Act, 1970
(for short, "Gratuity Act") in Jeewanlal Limited Vs. Jeewanlal Limited Vs. Jeewanlal Limited Vs.
The Appellate Authority, (1984) 65 FJR 204 The Appellate Authority, (1984) 65 FJR 204 The Appellate Authority, (1984) 65 FJR 204
overlooking the material differences in the two
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statutes, i.e. I.D.Act and Gratuity Act. He drew
our attention to paragraph 10 of the Jeewanlal’s Jeewanlal’s case Jeewanlal’s
and in particular the words "rate of wages" used in
section 4 of Gratuity Act and contended that such
words have not been used in section 25F of the
I.D.Act and, therefore, it cannot be said that the
retrenchment compensation was payable on the basis of
monthly wages for 26 working days. In support of
that submission he also invited our attention to the
definition of "average pay" in section 2(aaa) of the
I.D.Act and contended that such definition does not
exist in Gratuity Act. He further submitted that the
Court can compare the words used in two different
statutes framed by the same Legislature to find out
whether the words used in the earlier statute are
missing in later statute and, if so, it may be fair
to presume that the omission of such words in later
statute or use of clearly different words was
deliberate. In support of that submission, he
invited our attention to section 4(2) of Gratuity Act
and sections 25F and 2(aaa) of the I.D.Act and
further contended that Gratuity Act not only omits
the concept of "average pay" and introduces a new
concept of "rate of wages" but further the Gratuity
Act was amended in 1987 to add an explanation in
section 4(2) based on Jeewanlal case. In support of
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his contentions, he placed reliance upon the
Judgments of the Apex Court in ESIC Vs. Tata ESIC Vs. Tata ESIC Vs. Tata
Engineering and Locomotive Company, AIR 1976 SC 66, Engineering and Locomotive Company, AIR 1976 SC 66, Engineering and Locomotive Company, AIR 1976 SC 66,
and UOI Vs. Raman Iron Foundry, 1974 (2) SCC 231 and and UOI Vs. Raman Iron Foundry, 1974 (2) SCC 231 and and UOI Vs. Raman Iron Foundry, 1974 (2) SCC 231 and
in MSCO Vs. Union of India, (1985) (1) SCC 51 and in MSCO Vs. Union of India, (1985) (1) SCC 51 and in MSCO Vs. Union of India, (1985) (1) SCC 51 and
Sri Narakesari Prakashan Vs.ESIC, 1985 -I LLJ 1 (SC) Sri Narakesari Prakashan Vs.ESIC, 1985 -I LLJ 1 (SC). Sri Narakesari Prakashan Vs.ESIC, 1985 -I LLJ 1 (SC)
It was further submitted that even if it is assumed
for the sake of argument that the amount towards the
retrenchment compensation under section 25F was
short, the Tribunal failed to appreciate that the
total amount offered to the workmen was more than
what they were required to be paid as a condition
precedent under that section and hence it ought to
have been treated as substantial compliance with the
underlying requirement of the statute. In any case,
according to Mr Singh, it was not open to the workmen
to raise an issue of short payment since they had
refused to accept envelops without even examining
their contents so as to contend that the amount
tendered was short.
7. On the other hand, Mr Dharap, learned counsel
for the Union, submitted that the Tribunal has
rightly relied on the Judgment of this Court in Trade Trade Trade
Wings Wings case which applied the principle evolved in Wings
Jeewanlal’s Jeewanlal’s case while interpreting the provisions Jeewanlal’s
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contained in section 4 of the Gratuity Act. Though
the language of the provisions contained in section
25F read with 2(aaa) in I.D.Act and section 4(2) of
the Gratuity Act is different to some extent, the
principle for arriving at the average pay is one and
the same and, therefore, the action of retrenchment
is rightly held to be illegal on the ground of short
payment. Mr Dharap further submitted that the
Judgment of this Court in Trade Wings case Trade Wings case has not Trade Wings case
yet been set aside and it is followed by our High
Court in several other cases. He took us through
section 2 (aaa) and urged that independent of the
Jeewanlal’s case, the basis for calculation and
division by 26 is the correct, legal and appropriate
method. In so far as the excess payment is
concerned, he submitted that the provisions of
section 25F (b) is imperative in character and,
therefore, the requirement to comply with these
provisions has been held to be mandatory before the
retrenchment of a workman is given effect to in in in
Krishna Bahadur Vs. M/s. Purna Theatre & Ors Krishna Bahadur Vs. M/s. Purna Theatre & Ors, JT Krishna Bahadur Vs. M/s. Purna Theatre & Ors JT JT
2004 (7) SC 13 2004 (7) SC 13. He also placed reliance upon the 2004 (7) SC 13
Judgment of Orissa High Court in Utkal Asbestos Vs. Utkal Asbestos Vs. Utkal Asbestos Vs.
T.S.Rao, 1991-II CLR 941 T.S.Rao, 1991-II CLR 941. T.S.Rao, 1991-II CLR 941
8. In order to decide these questions, it will be
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useful to notice the provisions of Section 25F and 2
(aaa) of the I.D.Act and sub-section (2) of section 4
of Gratuity Act which are quoted below.
"25F. Conditions precedent to
retrenchment of workmen.--No workman
employed in any industry who has been in
continuous service for not less than one
year under an employer shall be
retrenched by that employer until--
(a) the workman has been given one
month’s notice in writing indicating the
reasons for retrenchment and the period
of notice has expired, or the workman
has been paid in lieu of such notice,
wages for the period of the notice;
(b) the workman has been paid, at the
time of retrenchment, compensation which
shall be equivalent to fifteen days’
average pay (for every completed year of
continuous service) or any part thereof
in excess of six months; and
(c) notice in the prescribed manner is
served on the appropriate Government
(for such authority as may be specified
by the appropriate Government by
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notification in the Official Gazette)".
"2(aaa) "average pay" means the
average of the wages payable to a
workman--
(i) in the case of monthly paid
workman, in the three complete calendar
months,
(ii) in the case of weekly paid workman,
in the four complete weeks,
(iii) in the case of daily paid
workman, in the twelve full working
days, preceding the date on which the
average pay becomes payable if the
workman had worked for three complete
calendar months or four complete weeks
or twelve full working days, as the case
may be, and where such calculation
cannot be made, the average pay shall be
calculated as the average of the wages
payable to a workman during the period
he actually worked".
"4(2) For every completed year of
service or part thereof in excess of six
months the employer shall pay gratuity
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to an employee at the rate of fifteen
days’ wages based on the rate of wages
last drawn by the employee concerned:
. Provided that in the case of a
piece-rated employee, daily wages shall
be computed on the average of the total
wages received by him for a period of
three months immediately preceding the
termination of his employment, and, for
this purpose, the wages paid for any
overtime work shall not be taken into
account:
. Provided further that in the case
of (an employer in a seasonal
establishment and who is not so employed
throughout the year), the employer shall
pay the gratuity at the rate of seven
days’ wages for each season".
9. This Court in Trade Wings Trade Wings case had an occasion Trade Wings
to consider similar situation and deal with the
aforesaid provisions in both the statutes. After
having considered the relevant provisions and the
Judgment of the Apex Court in Jeewanlal’s Jeewanlal’s case, this Jeewanlal’s
Court in Trade Wings Trade Wings case applied the principle Trade Wings
evolved by the Apex Court and held that the
retrenchment compensation is payable on the basis of
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monthly wages for 26 working days and not 30. It
will be useful to quote relevant observations in
paragraph 15 of the Judgment in Trade Wings Trade Wings case, Trade Wings
which reads thus:
"15. ... ... ... In my judgment,
there is no significant distinction
between the provisions of Section 4(2)
of the Payment of Gratuity Act and
Section 25F of the Industrial Disputes
Act, so as not to make applicable the
above decision which is rendered under
the Payment of Gratuity Act to the case
at hand. Merely because the phrase
"average pay" has been separately
defined under Section 2 (aaa) of the
Industrial Disputes Act, that does not
detract from the view that retrenchment
compensation should be computed on the
basis of the monthly pay in respect of
26 working days. I see no reason why
the said principle should not apply to
the provisions of Section 25F of the
Industrial Disputes Act. Hence I hold
that the retrenchment compensation
payable under Section 25F (b) of the
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Industrial Disputes Act is required to
be computed on the basis of workman’s
monthly wages for 26 working days. The
fifteen days average pay has to be
worked out on the basis of his monthly
wages drawn by him for working days.
His daily rate of wages should be
ascertained on the basis of the wages
earned for 26 working days".
The Apex Court in Jeevanlal’s Jeevanlal’s case had observed thus: Jeevanlal’s
"For the purpose of computation of
"fifteen days wages" of a monthly rated
employee under Sub-section (2) of S.4
the monthly wages last drawn by him
should be treated as wages for 26
working days and his daily rate of wages
should be ascertained on that basis and
not by taking the wages for a month of
30 days or fixing his daily wages by
dividing his monthly wages by 30".
10. The thrust, in Jeewanlal’s case Jeewanlal’s case for taking Jeewanlal’s case
aforesaid view, was on the expressions "at the rate"
and "on the rate" as occur in sub-section (2) of
section 4 of the Gratuity Act. In paragraph 10 of
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the judgment in Jeewanlal’s case Jeewanlal’s case, the Apex Court had Jeewanlal’s case
observed that the word "rate" occurs twice in that
provision and it necessary involves the concept of
"actual working days". It was further observed that
for the purpose of computation of 15 days wages of a
monthly rated employee under sub-section (2) of
section 4 of Gratuity Act, the monthly wages last
drawn by him should be treated as wages for 26
working days and his daily rate of wages should be
ascertained on that basis and not by taking the wages
for a month of 30 days or fixing his daily wages by
dividing his monthly wages by 30. In paragraph 10 of
the judgment a specific reference to the Judgment in
Shri Digvijay Woollen Mills Ltd Vs. Mahendra Shri Digvijay Woollen Mills Ltd Vs. Mahendra Shri Digvijay Woollen Mills Ltd Vs. Mahendra
Prataprai Buch reported in AIR 1980 SC 1944 Prataprai Buch reported in AIR 1980 SC 1944 was made Prataprai Buch reported in AIR 1980 SC 1944
in which the observations made by the Gujarat High
Court were quoted with a rider that the view
expressed by Gujarat High Court appears to be
legitimate and reasonable. The relevant observations
made by Gujarat High Court read thus :
"The employee is to be paid gratuity for
every completed years of service and the
only yardstick provided is that the rate
of wages last drawn by an employee
concerned shall be utilised and on that
basis at the rate of fifteen days’ wages
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for each year of service, the gratuity
would be computed. In any factory it is
well known that an employee never works
and could never be permitted to work for
all 30 days of the month. He gets 52
Sundays in a year as paid holidays and,
therefore, the basic wages and dearness
allowance are always fixed by taking
into consideration this economic
reality..... A worker gets full month’s
wages not by remaining on duty for all
the 30 days within a month but by
remaining on work and doing duty for
only 26 days. The other extra holidays
may make some marginal variation into 26
working days, but all wage boards and
wage fixing authorities or Tribunals in
the country have always followed this
pattern of fixation of wages by this
method of 26 working days".
The Madras High Court also had an occasion to deal
with similar question in Mgmt of Shadlow India Ltd, Mgmt of Shadlow India Ltd, Mgmt of Shadlow India Ltd,
Madras Vs. Presiding Officer, Principal Labour Madras Vs. Presiding Officer, Principal Labour Madras Vs. Presiding Officer, Principal Labour
Court, Madras and in 2000 II CLR 510 Court, Madras and in 2000 II CLR 510, which applied Court, Madras and in 2000 II CLR 510
the same principle relying on the judgement in Trade
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Wings’ case.
11. It is against this backdrop we proceed to
consider the provisions contained in section 25F and
section 2(aaa) of the I.D.Act to find out as to
whether in the present case it is possible to apply
the principle evolved by the Apex Court in
Jeewanlal’s case Jeewanlal’s case or to take similar view independent Jeewanlal’s case
of that principle. Before we go to the said
provisions, we may note the basic difference between
the Gratuity Act and the I.D. Act. In Gratuity Act,
the subject of payment of gratuity is restricted only
to a particular section of employees who were
entitled to the payment of gratuity because of their
length of service. The Gratuity Act, therefore,
operated in a restricted sphere in contradistinction
with the I.D.Act which is a broader enactment in the
sense that it takes into consideration the industrial
disputes of all kinds including those who are the
workmen even for a short duration. It will be seen
that the difference can be noted because of the
peculiar provisions, where a workman merely having
worked for 240 days in a year is clothed with some
rights in total contradistinction to the Gratuity
Act, where such a person may not be entitled to any
rights.
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12. Section 25F (b) of the I.D.Act, provides that
a workman who has been in continuous service in any
industry for not less than one year shall not be
retrenched until he has been paid, at the time of
retrenchment, compensation which shall be equivalent
to "fifteen days average pay" for every completed
year of continuous service or any part thereof in
excess of six months as a condition precedent to
retrenchment. Section 2 (aaa) of the I.D.Act defines
"Average Pay" and that definition is provided in the
Act only for determining the amount of retrenchment
compensation. Section 2 (aaa) set forth the three
categories of the workman in its clauses (i), (ii)
and (iii) as monthly, weekly and daily paid workman
and further a "residual category". The residual
category is that of a workman whose average pay
cannot be calculated upon any of the cases fall in
the three categories. For instance the monthly
workman, who during three months or part thereof,
preceding the date on which average pay becomes
payable, if did not work, such workman or quarterly
paid or fortnightly paid workman would fall in the
residual category. The pay of a workman falling in
the residual category is required to be calculated as
the average of the wages payable to him during the
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period that he "actually worked". Similarly, clause
(iii) of section 2 (aaa) provides the wages payable
to ’daily paid workman’ on the basis of the average
of the wages paid to in twelve "full working days"
preceding the date on which the average pay becomes
payable. The expression "actually worked" and "full
working days" as occur in the residual category of
workmen and daily paid workmen, in our opinion,
clearly and necessarily involves the concept of
"actual working days". Clauses (i) and (ii) of
section 2 (aaa), which speak about monthly and weekly
paid workman, though do not use the expressions "full
working days" or "actually worked", while
interpreting the definition of "average pay" as a
whole we find no reason to make any distinction
between the different categories covered by section
2(aaa). The difference in the language of the
sections 25F of the I.D.Act and 4(2) of the Gratuity
Act would not have any effect on the interpretation
of section 25F. The concept of "actual working days"
is clear in these two different enactments. It is
thus clear that the definition of "Average Pay"
itself, independent of the principle evolved in
Jeewanlal’s case Jeewanlal’s case, would clearly and necessarily Jeewanlal’s case
involves the concept of "actual working days’. In
other words, from the days on which workmen remain on
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work or do their duty only require to be taken into
account for computing the average pay. In case of
monthly workmen, the computation of "fifteen days
average pay", therefore, will have to be made by
using a divider of 26 days and not 30 days. In the
instant case indubitably, the workmen in question
were monthly paid workmen. The correct method for
computing "fifteen days average pay" under clause (b)
of section 25F, therefore, would be first to arrive
at day’s pay and then to multiply by 15 and for that
purpose, the average monthly salary of the workman be
divided by 26. It is not disputed that in the
present case the retrenchment compensation that was
tendered by the Management was computed by using a
divider of 30 days. We have, therefore, no
hesitation in holding that the retrenchment
compensation tendered by the Management was short.
In view of the observations made herein above, the
Judgments relied upon by the learned counsel for the
Management are of no avail the appellant.
13. This takes us to consider the next submission
of the learned counsel for the Management that since
the retrenchment was held to be justified and that
tender of much larger amount was in fact made at the
time of retrenchment, it cannot be held that there
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was a short payment. It is true that along with the
retrenchment compensation, other amounts such as
gratuity, salary due in lieu of leave and salary
earned for September, 1991 was also tendered. The
notice salary of one of the workmen viz. Anant
Ghosalkar was mentioned as Rs.2265.30 and taking
divider of 30 days the total retrenchment
compensation worked out was Rs.10,264.00. However,
the actual amount that was tendered was Rs.24372.30.
It was, therefore, contended that since the actual
amount was much larger than what Management was
liable to pay as retrenchment compensation as a
condition precedent, the excess amount ought to have
taken into account for making a shortfall good. Mr
Dharap on the other hand contended that the
provisions of section 25F(b) of I.D.Act being
mandatory in nature, it was obligatory on the part of
the Management to tender the correct amount as
required under section 25F (b) and short payment, if
any, makes the action of retrenchment illegal and
void. The aforementioned facts and figures are not
disputed by either of the parties. The question is
only whether the excess amount can be adjusted to
make the short payment good. Keeping that in mind
and considering the provisions of section 25F(b) of
I.D.Act, it is clear that the Management ought to
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have tendered the amount as retrenchment compensation
equivalent to 15 days average pay for every completed
year of continuous service and it ought to have
arrived at the average pay dividing the salary by 26
days and not by 30 days. Admittedly, the Management
while tendering the retrenchment compensation had
used the divider of 30 days. It is well settled that
the provisions contained in Section 25F are mandatory
in nature and noncompliance thereof in any manner
whatsoever would render the action of retrenchment
illegal and void. It would be useful to make
reference to the judgment of the Apex Court in
Krishna Bhadur case (supra) wherein while considering
Krishna Bhadur case Krishna Bhadur case
the provisions of section 25F(b), the Apex Court in
paragraphs 12 and 13 thereof held thus :
"12. It is neither in doubt nor in
dispute that the provision of section
25F(b) is imperative in character. The
provision postulates the fulfilment of
the following three conditions:
(i) One month’s notice in writing
indicating the reasons for retrenchment
or wages in lieu of such notice;
(ii) Payment of compensation equivalent
to fifteen days, average pay for every
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completed year of continuous service or
any part thereof in excess of six
months; and
(iii) Notice to the appropriate
government in the prescribed manner.
13. The requirement to comply with the
provision of section 25F(b) has been
held to be mandatory before retrenchment
of a workman is given effect to. In the
event of any contravention of the said
mandatory requirement, the retrenchment
would be rendered void ab initio".
The Apex court in that case was dealing with the
submission that there was non-compliance of
requirements of section 25F(b). Keeping the
observations made by the Apex Court in the aforesaid
paragraphs in Krishna Bahadur’s Krishna Bahadur’s case in view and the Krishna Bahadur’s
plain reading of section 25F (b), it is clear that
the said provision is mandatory and, therefore, the
action of retrenchment cannot be justified if there
is a short payment of retrenchment compensation and
in the event of any contravention of the said
mandatory requirement, the retrenchment would be
rendered void ab initio. The amount tendered under
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other heads, under any circumstances, cannot form a
part of retrenchment compensation. If the submission
that the excess amount paid under other heads, which
was not a condition precedent, is taken into account
to make the short payment good, that will not only
frustrate the very object of section 25F but it would
encourage the employer to play mischief while
retrenching/terminating the services of the workmen.
Therefore, it would not be possible for us to hold
that the excess payment made under different heads
can be adjusted to make shortfall, if any, in the
payment of retrenchment compensation good and thereby
validate the action. It is mandatory to comply with
the requirements in section 25F (b) by tendering the
correct amount of retrenchment compensation and no
other amount paid along with retrenchment notice,
which is not a condition precedent for the action of
retrenchment, can be adjusted to make the short
payment good. The Tribunal was justified in ignoring
the excess amount, which was not required to be
offered as a condition precedent.
14. We would now like to consider the submission
of the learned counsel for the Union that the amount
tendered by the Management as retrenchment
compensation was short even if it is calculated on
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the basis of monthly wages for 30 days. Mr Dharap
placed on record a chart showing that the amount
tendered to all the workmen was short even by using a
divider of 30 days. Mr Singh, learned counsel for
the Management, strongly objected to the chart
tendered by Mr Dharap contending that it cannot be
taken into consideration since the Management did not
have an opportunity to either verify the correctness
of the figures mentioned in the chart or to meet that
allegation before the Tribunal. Though prima facie
we found that the figures mentioned in the chart, if
were taken as correct, the amount tendered as
retrenchment compensation under section 25F even by
using a divider of 30 days was wrong. However, we
refrain from recording positive finding to that
effect for the following reasons: firstly, the chart
was not placed on record before the Tribunal giving
an opportunity to the Management to verify the
figures mentioned therein, secondly, we have already
recorded a finding that the average pay ought to have
been computed by using a divider of 26 days and not
30 days, and thirdly it was not disputed that if the
divider of 26 days is used for computing "15 days
average pay" then the payment offered towards
retrenchment compensation was short. In view thereof
we leave this question raised by Mr Dharap as it is.
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15. That takes us to consider point no. III. Mr
Singh contended that in the absence of any pleading
whatsoever either in the statement of claim or even
in the rejoinder to the effect that there was a
shortfall in the amount of retrenchment compensation
offered, the Tribunal erred in allowing evidence on
this aspect, and even if the evidence had come on
record, erred in examining and relying upon the same.
In support of that submission, he placed heavy
reliance upon the judgments of the Apex Court in
Shankar Chakravarti Vs. Britannia Biscuit Company, Shankar Chakravarti Vs. Britannia Biscuit Company, Shankar Chakravarti Vs. Britannia Biscuit Company,
the Management of Hindustan
(1979) 3 SCC 371 (1979) 3 SCC 371 and the Management of Hindustan (1979) 3 SCC 371 the Management of Hindustan
Steel Vs. The Workmen, AIR 1973 SC 878 Steel Vs. The Workmen, AIR 1973 SC 878. On the Steel Vs. The Workmen, AIR 1973 SC 878
other hand Mr Dharap, learned counsel for the Union,
took us through the statement of claim, affidavits
filed by both sides and contended that the plea of
short payment was raised in the pleading and the
parties went before the Industrial Tribunal on this
question also and in view thereof it cannot be said
that there was no pleading.
16. It is well settled that allegation which is
not pleaded, even if there is evidence in support of
it, cannot be examined because other side has no
notice of it and, if entertained, it would be
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tantamount to granting an unfair advantage to the
first mentioned party. In other words, the rules of
fair play demand that where a party seeks to
establish a contention which if proved would be
sufficient to deny relief to the opposite side, such
a contention has to be specifically pleaded and then
proved. But if there is no pleading, there is no
question of proving something which is not pleaded.
The Apex Court has reiterated the aforesaid principle
in Shankar Chakaravarti’s case Shankar Chakaravarti’s case (supra). In Shankar Chakaravarti’s case
Management of Hindustan Steel case Management of Hindustan Steel case (supra) while Management of Hindustan Steel case
considering the plea of infirmity of retrenchment
notice, it was observed that a general plea that the
grounds of retrenchment were false, is not specific
and precise enough to enable the employer to meet it.
Keeping the proposition of law laid down by the Apex
Court in the aforesaid judgments in view, we examined
the pleadings.
17. It is true that the demand notice dated
18.9.1991, though states that the retrenchment was
illegal and unjustified, except the word ’illegal’ no
illegality was alleged in the demand notice or
reference to the noncompliance with regulatory
requirements laid down in Section 25F or any other
provision of I.D.Act for that matter was made
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therein. The failure report under section 12 (4) of
I.D.Act also does not make any reference to the short
payment. However, from the perusal of the statement
of claim that was filed by the workmen clearly states
that "abrupt termination of services of seven workmen
by way of retrenchment is illegal, improper, uncalled
for and unjustified". Further in paragraph ten
thereof the categoric statements were made to the
following effect:
"That the company issued retrenchment
notice dated 16/9/1991 and offered one
month’s notice wages and retrenchment
compensation as provided in clause (a)
and (b) of section 25F of Industrial
Disputes Act, 1947, but the company has
not clarified for how many years of
service the retrenchment compensation is
paid and, therefore, the said notice is
defective. And, therefore, the
retrenchment of the workmen is illegal.
Also the company has failed to comply
with Section 25F (C) i.e. serving
notice in prescribed manner on the
appropriate Government. The Union
States that clauses (a), (b) and (c) of
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Section 25 F should be complied with
simultaneously before effecting
retrenchment".
It was further stated in the statement of claim that
the Management failed to comply with the mandatory
provisions of law and, therefore, the retrenchment of
workmen was illegal. Per contra, what the Management
in their written statement in reply to paragraph 10
had stated was that they complied with all the
requirements of law including serving the notice to
the government authorities. They had not stated
anything in reply to the aforesaid averments in
paragraph 10 of the statement of claim. The
Management in paragraph 11 of the written statement
had stated that "the Court cannot go beyond
justifiability or fairness of retrenchment and the
Court has no jurisdiction to adjudicate upon the
legality of retrenchment" and further that "Union had
no right to raise an issue of legality of
retrenchment and the Tribunal ought to have confined
to the terms of reference and had no power to enlarge
its scope". In rejoinder filed by the Union, they
had reiterated the statements made in the statement
of claim and had categorically denied that the
Management has complied with all the provisions of
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law. From the perusal of the affidavit of one of the
workmen Mrs Dammer D’Mello filed before the Tribunal
in lieu of her examination in chief in paragraph 9
thereof she had stated thus ;
"9. I say that the amount of
retrenchment compensation offered by the
Company as per provisions of Industrial
Disputes Act, Sec.25(F) to all the
retrenched workmen is less than they are
entitled. For example, I have put in 25
years’ continuous service and my monthly
salary was Rs.3,044.65 and, therefore,
my retrenchment compensation amount
should be Rs.38,058.12 but I was offered
only Rs.33,597.00".
There was no cross-examination by the Management in
respect of the statements made in paragraph 9. The
Management in their affidavit dated 14.6.1995 filed
by one Raman Mistry had stated that "dues offered
were offered as per the law after averaging three
months salary of each workman and if there is any
difference it was unintentional and the company had
complied with the substantial requirement of law".
From the perusal of the aforementioned pleadings and
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the evidence, we are of the considered opinion, that
it cannot be said that there was no pleading or no
evidence was led by the parties in respect of the
alleged shortfall in the amount of retrenchment
compensation tendered by the Management. We proceed
to record our reason for arriving at this conclusion.
In the statement of claim, the Union had
categorically stated that the company had not
clarified for how many years of service the
retrenchment compensation was paid and, therefore,
the said notice was defective. They had further
stated that clauses (a), (b) and (c) of section 25F
are mandatory and have not been complied with. Since
the particulars as sought in paragraph 10 were not
given by the Management, in our opinion, except the
general statement that the provisions of clause (b)
of section 25F had not been complied with by the
Management, the Union could not have stated anything
more than what had been stated in the statement of
claim. Had the Management given all the particulars
in the retrenchment notice, probably the Union could
have made positive statement to the effect that there
was a short payment. Since the retrenchment notice
itself was vague which did not clarify as to for how
many years of service the retrenchment compensation
was offered, it was not possible to state anything
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more than what had been stated in the statement of
claim. Moreover, from the perusal of the written
statement, it is clear that the Management did have
sufficient notice of the stand of the Union. As a
matter of fact, in paragraphs 5 and 11 of the written
statement, they had categorically stated that the
Court can only adjudicate as to the justifiability or
fairness and not the legality of the notice and that
it was not open for the Union to allege that the
retrenchment is illegal. That shows that the
pleadings were absolutely clear to understand or to
mean that the grievance of incorrect tendering of the
amount as retrenchment compensation was made by the
Union and that the parties went before the Tribunal
on both the questions. The evidence of D’Mello, one
of the workmen, shows that the grievance about the
short payment was made. Under the circumstances, it
is not open to make a grievance that the Management
had no opportunity and that the issue was discussed
and considered by the Tribunal without any notice.
As a matter of fact, from the evidence of Mistry, the
witness of the Management, wherein he has stated that
"if there is any difference, it was unintentional"
shows that the Management was not sure as to whether
the amount offered was accurate. From the contents
of the written statement and the affidavit, as also
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the contentions advanced before the Tribunal and this
Court it is clear that the objection of the
Management was not as whether there existed pleadings
but to the jurisdiction of the Tribunal to examine
the legality by expanding the scope of the reference.
18. Thus, it will be seen that, though, there is a
definite injunction against the Court not to
entertain the questions which are specifically not
raised, the Apex Court has permitted to raise certain
questions which were directly covered by the
provisions in this beneficial legislation. Looking
to the overall material placed before us, we are of
the considered opinion that the workmen had
undoubtedly raised the question of short payment and
it was correctly understood by the Management and
rightly entertained by the Tribunal. Having so
observed, in our opinion, the judgments relied upon
by the learned counsel for the Management are of no
avail to the Management.
19. In so far as legal issues I and II are
concerned, Mr C.U. Singh submitted that by now it is
well settled that the Tribunal cannot enlarge the
scope of the reference by deciding matters not
referred to it. In other words, the reference made
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in the instant case was only to examine as to whether
the action was justified and, therefore, going into a
legality of the action was wrong and amounts to
enlarging the scope of the reference. He placed
heavy reliance upon the following judgements in
support of his submission. (i) Delhi Cloth and Delhi Cloth and Delhi Cloth and
General Mills Vs Their Workmen, 1967 - I LLJ 423, General Mills Vs Their Workmen, 1967 - I LLJ 423, General Mills Vs Their Workmen, 1967 - I LLJ 423,
(ii) Firestone Tyre & Rubber Company Vs Workmen, (ii) Firestone Tyre & Rubber Company Vs Workmen, (ii) Firestone Tyre & Rubber Company Vs Workmen,
(1981) 3 SCC 451 (iii) Pottery Mazdoor Panchayat V/s (1981) 3 SCC 451 (iii) Pottery Mazdoor Panchayat V/s (1981) 3 SCC 451 (iii) Pottery Mazdoor Panchayat V/s
The Perfect Pottery Company, AIR 1979 SC 1356 and The Perfect Pottery Company, AIR 1979 SC 1356 and The Perfect Pottery Company, AIR 1979 SC 1356 and
(iv) Sitaram Vishnu Shirodkar Vs The Administrator, (iv) Sitaram Vishnu Shirodkar Vs The Administrator, (iv) Sitaram Vishnu Shirodkar Vs The Administrator,
Govt. of Goa, 1985 - I LLJ 480 Govt. of Goa, 1985 - I LLJ 480. It was further Govt. of Goa, 1985 - I LLJ 480
submitted that legality and justifiability have
always been differently understood in industrial
adjudication, the former referring to compliance with
regulatory provisions of the Act while latter refers
to the justification for taking a decision or action
against the workmen. Reliance was placed on Agra Agra Agra
Electric Company Vs Workmen (1983) 1 SCC 436 and Electric Company Vs Workmen (1983) 1 SCC 436 and Electric Company Vs Workmen (1983) 1 SCC 436 and
Syndicate Bank Vs K.Umesh Nayak, AIR 1995 SC 319 Syndicate Bank Vs K.Umesh Nayak, AIR 1995 SC 319 in Syndicate Bank Vs K.Umesh Nayak, AIR 1995 SC 319
support of this submission. In view of the law
settled by the Apex court in the aforesaid judgments
and in several other judgments, it was not open to
the Tribunal to fall back upon the dictionary meaning
of the word "justify" or "justifiable". Reliance was
also placed on the judgment of Workmen of Coimbatore Coimbatore Coimbatore
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Pioneer "B" Mills Vs. Labour Court, 1980-I LLJ 503; Pioneer "B" Mills Vs. Labour Court, 1980-I LLJ 503; Pioneer "B" Mills Vs. Labour Court, 1980-I LLJ 503;
(1979) 54 FJR 236 (SC); Shankar Kishan Nikam Vs. (1979) 54 FJR 236 (SC); Shankar Kishan Nikam Vs. (1979) 54 FJR 236 (SC); Shankar Kishan Nikam Vs.
Bhide & Sons Bhide & Sons (1983) 46 FLR 95 (Bom-DB); Bhide & Sons 1983) 46 FLR 95 (Bom-DB); 1983) 46 FLR 95 (Bom-DB);
International Industries Vs. K.G.Sawant (1984) 48 International Industries Vs. K.G.Sawant (1984) 48 International Industries Vs. K.G.Sawant (1984) 48
FLR 376 (Bom) and Shiv Kumar Vs State of Haryana FLR 376 (Bom) and Shiv Kumar Vs State of Haryana FLR 376 (Bom) and Shiv Kumar Vs State of Haryana
(1994) 4 SCC 445 (1994) 4 SCC 445 in support of this submission. (1994) 4 SCC 445
20. On the other hand, Mr Dharap, learned counsel
for the respondent submitted that the word
"justified" included within its scope "legality" of
the action and, therefore, while dealing with the
dispute referred to under section 10 of the ID Act,
the Court can also examine the legality of the
action. According to Mr Dharap, in the present case,
what was referred to was the action of the management
and, therefore, the term "action of the Management"
includes action in law as well as action on fact.
The term "justified" is, therefore, liable to be
interpreted to mean whether the action of retrenching
the workmen is justified in law as well as on fact.
He further submitted that in industrial jurisprudence
while interpreting the provisions of law, one cannot
be too technical or pedantic and the Court is not
expected to interpret the words in the strictest
sense of the term. In support, Mr Dharap placed
reliance upon the judgment of the Madras High Court
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in Enfield India Limited Vs. Second additional Enfield India Limited Vs. Second additional Enfield India Limited Vs. Second additional
Labour Court, Madras, Vol.59 F.J.R. 365 Labour Court, Madras, Vol.59 F.J.R. 365 which has Labour Court, Madras, Vol.59 F.J.R. 365
relied on the observations made by the Apex Court in
Express Newspapers (P) V. The Workers, (1992) 23 FJR Express Newspapers (P) V. The Workers, (1992) 23 FJR Express Newspapers (P) V. The Workers, (1992) 23 FJR
1. According to Mr Dharap, the Tribunal while
deciding the reference has sufficient power as also a
duty to find out what was the real dispute and decide
it and not to throw it out on a mere technicality.
In short, according to Mr Dharap, the Tribunal was
justified in considering the legality of the action.
Our attention was also drawn to the provisions of
section 11A of the ID Act which, according to Mr
Dharap, comes into effect only on the reference made
by the appropriate Government under section 10.
Section 11A uses the two terms: "discharge" and
"dismissal". Mr Dharap further submitted that the
word "discharge" cannot be taken in the sense as
punitive discharge or dismissal only but has to be
interpreted to mean "discharge" of any kind of
termination including "retrenchment" and, therefore,
the legality can be gone into while considering the
justifiability of the action. In support of this
submission, he placed reliance upon The Workmen of The Workmen of The Workmen of
M/s firestone Tyre & Rubber Co of India (Pvt) Ltd Vs. M/s firestone Tyre & Rubber Co of India (Pvt) Ltd Vs. M/s firestone Tyre & Rubber Co of India (Pvt) Ltd Vs.
The Management and Ors, (1973) I LLJ 278 The Management and Ors, (1973) I LLJ 278. In short, The Management and Ors, (1973) I LLJ 278
Mr Dharap submitted that the Tribunal’s power in an
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adjudication proceeding relating to discharge or
dismissal of a workman should not be limited.
21. Mr Singh, learned counsel for the appellant, in
reply to the submissions made by Mr Dharap in respect
of section 11A of the ID Act, submitted that section
11A was introduced only to remove the vice of lack of
power to x-ray disciplinary actions, firstly, by
re-evaluating the evidence led at a domestic enquiry
and secondly by substituting a lighter punishment
where the Court or Tribunal felt the punishment was
not proportionate to the proved misconduct. In other
words, section 11A was introduced solely to deal with
disciplinary cases and this is the manner in which
the section has consistently been interpreted and
applied for all these years. In other words,
punitive action is by way of "discharge" or
"dismissal" as contemplated in section 11A and,
therefore, the interpretation placed by Mr Dharap of
the provisions of section 11A is uncalled for. Both
the learned counsel appearing for the parties placed
reliance upon the few judgments of the Apex Court in
support of their submissions on the provisions of
section 11A of the Act to which we will make
reference in the latter part of the judgment, if we
find it necessary.
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22. It would be useful to reproduce the provisions
contained in section 10(4) of the ID Act, which deals
with Reference of disputes to Boards, Courts or
Tribunals, for better appreciation of the submissions
advanced by the learned counsel appearing for the
parties. Section 10(4) reads thus:
"10. Reference of disputes to Boards,
Courts or Tribunals:- ... ..
(4) Where in an order referring an
industrial dispute to a Labour Court,
Tribunal or National Tribunal under this
section or in a subsequent order, the
appropriate Government has specified the
points of dispute for adjudication, the
Labour Court or the Tribunal or the
National Tribunal, as the case may be ,
shall confine its adjudication to those
points and matters incidental thereto."
It clearly provides that an industrial dispute which
has been referred to by the appropriate Government
has to specify the points of dispute for adjudication
and the Tribunal shall confine its adjudication to
those points and the matter incidental thereto. This
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only means that the Tribunal must confine its
attention to the points specifically mentioned and
matter which is incidental thereto. However, it
would be useful to see as to how the Apex Court,
while dealing with this section in Express Newspapers Express Newspapers Express Newspapers
(P) Ltd Vs The Workers, (1962) 23 FJR 1 (P) Ltd Vs The Workers, (1962) 23 FJR 1, had looked (P) Ltd Vs The Workers, (1962) 23 FJR 1
at it which observed as follows:
".... ... Since the jurisdiction of
the Industrial Tribunal in dealing with
industrial disputes referred to it under
section 10 is limited by section 10(4)
to the points specifically mentioned in
the reference and matters incidental
thereto the appropriate Government
should frame the relevant orders of
reference carefully and the questions,
which are intended to be tried by the
Industrial Tribunal should be so worded
as to leave no scope for ambiguity or
controversy. An order of reference
hastily drawn or drawn in a casual
manner often gives rise to unnecessary
disputes and thereby prolongs the life
of industrial adjudication which must
always be avoided. Even so, when the
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question of this kind is raised before
the Courts, the Courts must attempt to
construe the reference not too
technically or in a pedantic manner, but
fairly and reasonably .. ..".
(emphasis supplied)
The appropriate Government is, thus, expected to
frame the order of reference carefully and the
questions, which are intended to be dealt with by the
Industrial Tribunal, should be worded as to leave no
scope for ambiguity. In other words, the appropriate
Government, while framing the order of reference, the
questions which are raised and intended to be tried
by the Tribunal should be framed carefully and not in
a casual manner. Even if such questions are raised
the Tribunal is not liable to construe them too
technically and in a pedantic manner. In the instant
case, the demand notice dated 18.9.91 given by the
Union had clearly indicated that the retrenchment in
question was illegal and unjustified, though
particulars of illegality were not referred to in the
notice of demand. However, as observed earlier, the
pleadings i.e Statement of claim filed by the Union
made, makes it absolutely clear that even the
question of legality of the action of retrenchment
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was also raised by the Union and that the Management
was not taken by surprise. However, the Management
chose to challenge the question of legality, as
raised in the Statement of claim, contending that the
Tribunal cannot enlarge the scope of reference and it
was binding on the Tribunal to decide only as to
whether the action of retrenchment was "justified".
Therefore, in any case, the Management cannot claim
that the Tribunal considered the question of legality
also without giving an opportunity to the Management
or that the Management was taken by surprise. It is
thus clear that the Tribunal attempted to construe
the reference fairly and reasonably and in a
pragmatic manner. The Apex Court in Agra Electric Agra Electric Agra Electric
supply Company Limited supply Company Limited (supra), while considering the supply Company Limited
terms "justified" and "legal" has clearly held that
it is plain that industrial jurisprudence is an alloy
of law and social justice, and one cannot be too
pedantic in construing the terms of a reference
respecting a dispute for industrial adjudication.
Undoubtedly, the Apex Court in that judgment has also
observed that the words "justified" and "legal" are
differently understood in the industrial
jurisprudence and when the reference is comprehensive
enough to cover both these concepts, it is within the
jurisdiction of the Tribunal to investigate into
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whether the retrenchment is legal, if legal, whether
it is also justified. However, what is further
observed in that judgment is more relevant, which
reads thus :
"In the ordinary law of contracts, when
a thing done is legal there is an end of
the matter but in industrial law the
rigid rules of contract do not govern
the situation and an amount of
flexibility in the exercise of powers
taking liberties with the strict rights
of parties is permitted to Tribunals.
Relying on a series of decisions of this
Court for this wider ambit of
jurisdiction permissible in industrial
adjudication, the Tribunal has held that
the grievance of the workmen that their
services should come to an end by way of
retirement without payment of gratuity
is real and substantial and that
pragmatic considerations justify a
direction for payment of gratuity more
or less prevalent in many industries in
the region. This approach is informed
by social justice, and it is not for us
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to fault the Tribunal when it makes a
direction for payment of gratuity. We
read the award in a composite and
comprehensive sense as an award that the
retirement is justified if it is
accompanied by payment of gratuity.The
dissection attempted in the submission
made by the learned counsel is a
distortion of the true intendment of the
award".
In the present case, the Tribunal has considered the
legality of the action holding that the grievance of
the workmen was not only against the action but it
was against its validity. Action may be justified
but it was found to be illegal. The Management did
not make any attempt either before the Tribunal or
even before this Court to justify the action as
legal. On the contrary, the stand of the Management
all throughout was that the retrenchment compensation
was rightly computed by the Management by applying a
divider of 30 days. We have already held that the
application of divider of 30 days for computing the
retrenchment compensation was not only wrong but it
was patently illegal. We have also held that the
excess payment made under other heads cannot be taken
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into account for making the shortfall good. Thus,
the Tribunal was justified in considering the
question of legality or validity of the action. The
legality of the action touches the provisions of
section 25F (a) and (b) of the ID Act. Clause (a)
mandates the Management to give a notice before
termination and clause (b) mandates the Management to
offer retrenchment compensation which shall be
equivalent of 15 days average pay for every completed
year of continuous service or any part thereof in
excess of six months. These provisions are not only
mandatory but imperative in nature. It is against
this backdrop the Tribunal, has held that the action
was illegal. In any case, in view of the stand of
the Management that they rightly applied a divider of
30 days, they cannot now claim that they were taken
by surprise and that they did not get an opportunity
to meet the question of legality. The learned Single
Judge has rightly observed in the impugned order
while dismissing the writ petition that "though the
reference made by the Government is only regarding
justifiability and not legality but in this case
finding on Issue no.2 indicates that the parties went
before the Tribunal on both the questions". Mr
Singh, placed reliance upon several judgments of the
Apex Court in support of his submission that the
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Tribunal enlarged the scope of the reference by
entering into a question of legality of the action
which, in our opinion, are of no avail to the
appellant in view of the peculiar facts and
circumstances of this case. We have already held
that in the facts of the present case, the Tribunal
was justified in entering into a question of legality
also and the Tribunal cannot be said to have enlarged
the scope of the reference. The submission made by
Mr Singh that though the words "legal" and
"justified" are differently understood in industrial
adjudication, does not mean that the Tribunal in the
present case was not justified, in entering into a
question of legality of the action which ultimately
was found to be patently illegal. In so far as the
submission of Mr Dharap, learned counsel, based on
section 11A of the ID Act is concerned, we do not
propose to examine that submission, though we have
our reservations about its correctness, in view of
the fact we have already upheld the findings of the
Tribunal and which have been affirmed by the learned
Single Judge.
23. The submission of Mr Singh that the workmen
had confined their allegations to justification and
the Management’s motive while retrenching them is
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factually incorrect. We have considered the
pleadings in the earlier part of the judgment. They
are absolutely clear. The Union had categorically
raised an issue of legality in their pleadings and
had also led evidence in support thereof. Moreover,
the Management chose not to meet the allegation of
the Union in respect of legality of the action. It
cannot be said that the Union had never at any stage
prior to the order of reference sought to challenge
or even question the legality of action. As a matter
of fact, though the illegality was not spelt out in
the demand notice, the action was described as
illegal. In the circumstances, we have no hesitation
in holding that the Tribunal was justified in
examining the legality of the action.
24. This takes us to consider the last question as
to whether the Tribunal erred in awarding the
reinstatement with full back wages after having
accepted that all work had come to an end, merely
because the question of closure was not referred to
it. Mr Singh submitted that once having found that
there was no business transacted after 18.9.1991 and
even CHA Licence had also expired on 31.12.1993 it
was clearly not proper for the Tribunal to award
reinstatement with full back wages. He further
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submitted that no relief can be granted beyond the
date of closure and that no industrial dispute can
survive after the closure. In support of his
submission, he placed reliance upon the judgment of
the Apex Court in J.K.Synthetics Vs. Rajasthan Trade J.K.Synthetics Vs. Rajasthan Trade J.K.Synthetics Vs. Rajasthan Trade
Union Kendra , (2001) 2 SCC 87 Union Kendra , (2001) 2 SCC 87. On the other hand, Union Kendra , (2001) 2 SCC 87
Mr Dharap submitted that the Tribunal was wrong in
considering the issue of closure and by doing so it
travelled beyond the scope of the reference. The
reference was only in respect of retrenchment and no
case was made out by the Management about the closure
of the company. He further submitted that since the
action of retrenchment under section 25F (b) was void
ab initio, the workmen deemed to be continued in the
employment and, therefore, they are entitled for
reinstatement with full back wages.
25. There was no dispute that after the
retrenchment of remaining three workmen on 20.4.1992
there was a total closure of the establishment from
30.4.1992. It is against this backdrop, we would
like to examine the issue raised by Mr Singh. The
Apex Court in J.K.Synthetics (supra) J.K.Synthetics (supra) was considering J.K.Synthetics (supra)
the powers and jurisdiction of the Tribunal while
dealing the question as to whether or not the
retrenchment was justified. The company in that case
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was seeking justification of retrenchment of the
workmen on the basis that there was a closure of
section of its plant. The Tribunal, therefore, went
into the question as to whether or not there was a
closure for deciding the question as to the legality
of retrenchment which the Apex Court in that judgment
held that there was no error in considering the issue
of closure. Paragraph 24 in that judgment may be
useful. Paragraph 24 reads thus ;
"24. Thus, in our view, the Division
bench erred in coming to the conclusion
that the Tribunal could not have gone
into the question of closure as it was
not referred to it. In our view, on the
disputes which have been referred,
particularly Dispute No.2 (set out
hereinabove) it became absolutely
necessary for the Tribunal to first
ascertain whether there was a closure
and whether such closure was bonafide."
The Apex Court in yet another judgment in Hindustan Hindustan Hindustan
Steel works Construction Ltd Steel works Construction Ltd (supra) considered the Steel works Construction Ltd
question as to whether the reinstatement is must
where retrenchment is held to be illegal and/or
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unjustified. In that case the Tribunal had moulded
the relief and granted compensation instead of
reinstatement. The Apex Court after considering the
question involved in that judgment held that the
Management was groaning under the weight of surplus
and excessive man-power and as such the Industrial
Tribunal was entitled to mould the relief to suit the
justice of the case. It would be advantageous to
quote paragraph 27 of the judgment which reads thus :
"27. The appellants have not been able
to satisfy us that the several reasons
given by the Tribunal for not directing
reinstatement of the appellants-workmen
are incorrect as a fact or that they are
irrelevant or impermissible in law.
That the respondent-Corporation is
groaning under the weight of surplus and
excessive man-power is not denied as a
fact; indeed, it is an indeniable fact.
The Industrial Tribunal is entitled to
take note of the said fact and to mould
the relief to suit the justice of the
case. In exercise of this Court’s power
under Article 136 of the Constitution,
it is not open to us to substitute our
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opinion for that of the Industrial
Tribunal unless we find that the reasons
given by it in the paras aforesaid are
either incorrect factually or irrelevant
or impermissible in law. Since we are
not able to say so, these appeals are
dismissed. The appeals filed by the
Management also fail and are dismissed.
No costs."
Therefore, in our opinion, once it is found that
though the retrenchment was illegal it was justified,
it is for the Tribunal to consider what relief the
retrenched workers are entitled to. It is open for
the Tribunal, in exercise of its jurisdiction, to
take note of the circumstances in a particular case
and decide not to grant the relief of reinstatement,
but grant a relief of compensation to the workmen.
In other words, whenever retrenchment is held to be
justified, though it is illegal and improper and if
their reinstatement is impossible and/or likely to
cause great hardship on the Management, then the
Court can mould the relief to suit the justice and
award compensation to such workmen. In the present
case, we have no hesitation in holding that the
Tribunal was wrong in awarding reinstatement with
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full back wages after having accepted that all work
had come to an end inasmuch as there was a total
closure of the establishment and, therefore, the
order of Tribunal granting reinstatement was
unjustified and liable to be set aside.
26. After having observed that the order of
reinstatement was not justified in view of the total
closure of the establishment, in our opinion, the
ends of justice would be met if the relief of
compensation to the workmen is granted. According to
Mr Singh, learned counsel for the appellant, no
business was transacted after 18.9.1991 and the CHA
Licence also expired on 31.12.1993 and, therefore, in
any case the workmen are not entitled for any relief
beyond the date of closure and/or the date on which
the licence had expired. The learned Single Judge,
however, while disposing of the writ petition, had
observed that if the Management pays the dues upto
date on the basis of cut off date being 31.12.1995
then the Award will be marked satisfied. This
observation was made on the basis of the statement of
Mr Dharap, learned counsel for the workmen. Keeping
the submissions advanced by the learned counsel
appearing for the parties in view and considering
that this Court, while admitting the Letters Patent
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Appeal, had directed the management to deposit the
arrears of salary upto 31.12.1995 in this Court,
in our opinion, that amount should be paid to the
workmen as compensation.
27. In the result, this Letters Patent Appeal is
partly allowed. The order of reinstatement is
quashed and set aside. The appellant-Management is
directed to pay the amount, which they have deposited
in this Court in pursuance of the order dated
5.9.1996, as compensation to the workmen. The
Letters Patent Appeal is, accordingly, stands
disposed of.
28. Mr C.U.Singh, learned counsel for the appellant,
at this stage, submitted that the interim stay
granted by this Court on 5.9.1996 be continued for a
period of six weeks. Mr Dharap, learned counsel for
the respondent, opposed the prayer and submitted that
the workmen be allowed to withdraw atleast 50 percent
of the amount deposited by the appellant. Having
regard to the submissions of the learned counsel
appearing for the parties and the overall facts and
circumstances of the case, the interim order granted
by this Court on 5.9.1996, shall remain operative for
a further period of six weeks from today.
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(D.B.BHOSALE,J.) (S.B.MHASE,J.) (D.B.BHOSALE,J.) (S.B.MHASE,J.) (D.B.BHOSALE,J.) (S.B.MHASE,J.)
/home/rrt/db-0/lpa170-96
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HIGH COURT HIGH COURT HIGH COURT
CIVILI APPELLATE SIDE CIVILI APPELLATE SIDE CIVILI APPELLATE SIDE
LETTERS PATENT APPEAL NO.170 OF 1996
IN
WRIT PETITION NO.1347 OF 1996
M/s DBH International Ltd.. Vs. 1. Their Workmen & Anr.
Date of Judgment: Date of Judgment: Date of Judgment:
9th March, 2005
For approval and signature For approval and signature For approval and signature
THE HON’BLE MR.JUSTICE S.B.MHASE. THE HON’BLE MR.JUSTICE S.B.MHASE. THE HON’BLE MR.JUSTICE S.B.MHASE.

THE HON’BLE MR.JUSTICE D.B.BHOSALE. THE HON’BLE MR.JUSTICE D.B.BHOSALE. THE HON’BLE MR.JUSTICE D.B.BHOSALE.
1. Whether Reporters of Local Papers may be
allowed to see the judgment?
2. To be referred to the Reporter or not?
3. Whether Their Lordships wish to see the
fair copy of the Judgment?
4. Whether this case involves a substantial
question of law as to the interpretation of
the Constitution of India, 1950 or
any Order made thereunder?
5. Whether it is to be circulated
to the Civil Judges?
6. Whether the case involves an important
question of law and whether a copy of
the judgment should be sent to Nagpur
Aurangabad or Goa offices?
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