Full Judgment Text
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PETITIONER:
THE SINDHU RESETTLEMENT CORPORATION LTD.
Vs.
RESPONDENT:
THE INDUSTRIAL TRIBUNAL OF GUJARAT & ORS.
DATE OF JUDGMENT:
13/09/1967
BENCH:
BHARGAVA, VISHISHTHA
BENCH:
BHARGAVA, VISHISHTHA
HIDAYATULLAH, M.
VAIDYIALINGAM, C.A.
CITATION:
1968 AIR 529 1968 SCR (1) 515
CITATOR INFO :
E 1970 SC1205 (9)
RF 1972 SC1352 (9)
R 1978 SC1088 (7)
D 1979 SC1709 (13A)
D 1984 SC1467 (4)
ACT:
Industrial Disputes-Employee of a company employed in its.
subsidiary company-Termination with retrenchment
compensation by subsidiary company-If retrenchment
compensation, payable by parent company also-Demand for by
payment of retrenchment compensation, not for reinstatement-
Reference, if competent.
HEADNOTE:
The services of respondent No. 3- a permanent employee of
appellant-corporation, were placed at the disposal of
appellant’s subsidiary company. The subsidiary company by
an order appointed respondent No. 3. on probation and stated
that he would be confirmed after the end of probation
period. After respondent No. 3 had worked with the
subsidiary company for more than the probationary period,
his services were terminated and he was paid retrenchment
compensation. Respondent No. 3 asserted continuance of his
employment under the appellant, which was declined, There-
upon he demanded retrenchment compensation from the
appellant also, which, too, was refused. The matter was
referred for adjudication by the State Government, and
the Tribunal directed reinstatement of respondent No. 3
with back wages. In appeal to this Court,the appellant
Corporation contended that (i) respondent No. 3 having been
given permanent appointment in the subsidiary company, and
having obtained retrenchment compensation from that company,
could not claim that he was still holding a post in the
appellant-corporation and could not, therefore, claim
reinstatement; and (ii) the dispute that was raised was
confined to compensation.for retrenchment and did not relate
to the validity of the retrenchment or reinstatement, so
that the State Government had no jurisdiction to refer the
dispute to the Industrial Tribunal.
HELD: (i) Respondent No. 3 could not claim reinstatement in
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the appellant-corporation.
Though he did not cease to be an employee of the appellant
when his services were first placed at the disposal of the
subsidiary company by the appellant, he ceased to be an
employee of the appellant later when he was confirmed in the
subsidiary company. He also accepted the retrenchment
compensation at the time of termination of the employment in
the subsidiary company. In case he had continued to be in
the service of the appellant, he would. not have been
entitled to retrenchment compensation from the subsidiary
company and, even if the subsidiary company had any legal
liability to contribute towards his retrenchment compen-
sation which might have become ultimately payable to him on
his retrenchment from the appellant-corporation, that amount
would have been paid by the subsidiary company to the
appellant and not to respondent No. 3 himself. Further he
was not entitled to any retrenchment compensation when he
left the service of the appellant willingly for there was no
compulsion on him to go to the subsidiary company. [519C-F]
Nokes v. Doncaster Amalagamated Collieries Ltd., [1940] A.C.
1014 held inapplicable.
(ii) The respondents. in their claims Put forward before the
management of the appellant requested for payment of
retrenchment compensation and did not raise any dispute for
reinstatement.
516
Since no such dispute about reinstatement was raised by
the respondents before the management of the appellant, the
State Government was not competent to refer a question of
reinstatement as an industrial dispute for adjudication by
the Tribunal . The dispute that the State Government could
have referred competently was the dispute relating to
payment of retrenchment compensation by the appellant to
respondent No. 3 which had been refused. A mere "demand to
a Government without a dispute being raised by the workmen,
with their employee cannot become an industrial dispute.
[522H-523D].
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 656 of 1966.
Appeal by special leave. from the judgment and order dated
June 29/30, 1964 of the Gujarat High Court in Special Civil
Application No. 589 of 1961.
A. K. Sen and N. H. Hingorani, for the appellant.
R. Gopalakrishnan, for respondent No. 3.
The Judgment of the Court was delivered by
Bhargava, J. R. S. Ambwaney, respondent No. 3, was employed
by the Sindhu Resettlement Corporation Ltd., the appellant.
as an Accounts Clerk at Gandhidham on 13th December, 1950 in
the pay-scale of Rs. 150-10-250 on a salary of Rs. 200 plus
20 per cent as site allowance. This site allowance was
discontinued in March, 1952. In the year 1953, the
Government of India decided to develop Kandla as a port and
a subsidiary company was formed by the appellant under the
name of Makenzies Heinrich Bulzer (India) Ltd. in which one
of the principal shareholders was the appellant. This
Company later came to be known as Sindhu Hotchief (India)
Ltd. For convenience, both Makenzies Heinrich, Bulzer
(India) Ltd., and Sindhu Hotchief (India) Ltd. shall
hereinafter be referred to as "Sindhu Hotchief". This
subsidiary Company, Sindhu Hotchief, wanted some trained
employees and; amongst others the services of respondent
No..3 were placed at its disposal by the appellant. The
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case of respondent No., 3 was that he was told orally by the
officers of the appellant on 2nd September, 1953 that he was
to work in the subsidiary company. Respondent No. 3 was
appointed in Sindhu Hotchief by its order dated 5th
September,,1953 on a salary of Rs. 240 p.m. as an Accounts
Clerk -on the conditions of service laid down in that order.
It appears that, just about this time, the father of
respondent No. 3 died and he was granted leave by the
appellant for the period from 2nd September to 17th
September, 1953. With effect from 18th September 1953, his
services were placed at the’ disposal of Sindhu Hotchief and
an order to that effect was issued in writing on behalf of
the appellant on 24th September, 1953. Respondent No. 3
worked with Sindhu Hotchief up to 20th February, 1958 ’when
his’ services were terminated after payment. of retrenchment
compensation and all other dues payable to him. On 21st
February, 1958, respondent No. 3 went to the office of the,
appellant, reported himself for duty and requested that he
might,
517
be given posting orders in, the appellant. Corporation.
The appellant informed respondent NO. 3 of I its inability,
to re-employ him on the ground that the post, -which he had
been occupying in 1953 had been permanently filed up.
Thereupon, respondent No. 3 demanded retrenchment
compensation’, from the appellant also.This was also
refused.His case was taken up by Mazdoor Mahajan Sangh,
Gandhidham, Kutch,’ respondent No.2. The Secretary of
respondent No. 2 also, wrote a letter to the, management of
the appellant, asking for payment of retrenchment com-
pensation to respondent No. 3 on the ground that the
appellant had refused to take him back in its employment.
It seems that, thereafter, there were some conciliation
proceedings and, subsequently, on the report of the
Conciliation Officer, the Government of the State of
Gujarat, by its notification dated 15th November, 1960,
referred the dispute to the, Industrial Tribunal,, Gujarat,
for adjudication. The matter referred for adjudication was
described in the notification as follows: -
"Demand No. 1-Shri R. S. Ambwaney should be
reinstated in the service of M/s.
Sindhu
Resettlement Corporation Ltd., and he should
be paid his wages from 21st February, 1958."
The Triunal, after hearing the parties, gave its Award on
10th August, 1961, directing reinstatement of respondent No.
3 and payment of back wages from 21st February, 1958. The
appellant challenged this award before the High Court of
Gujarat by a petition under Articles 226 and 227 of the
Constitution, but the petition was dismissed. Consequently,
the appellant has come up to this Court in this appeal by
special leave.
In this appeal, three points have been urged on behalf of
the appellant to challenge the orders of the Industrial
Tribunal and the High Court. The points are :
(1) that respondent No. 3, having been given
permanent appointment in Sindhu Hotchief and
having obtained retrenchment compensation from
that Company, could not claim that he was
still holding a post in the appellant
Corporation and could not, therefore, claim
reinstatement,
(2) that the dispute that was raised by
respondent No. 3 as well as respondent No. 2
with the management of the appellant was
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confined to compensation for retrenchment and
did not relate to the validity of the
retrenchment or reinstatement, so that the
Government of Gujarat had no jurisdiction to
refer the dispute to the Industrial Tribunal
which it did-, and
(3) that, in any case. since the validity of
the retrench
of respondent No. 3 by the appellant was not
518
challenged, the, Tribunal committed a manifest
error in directing reinstatement instead of
awarding retrenchment compensation.
After hearing learned counsel for parties, we have come to
the conclusion that the first two grounds urged on behalf of
the appellant must be ’accepted, while the third does not
arise.
The lease put forward on behalf of the respondents before
,the Industrial Tribunal was that respondent No. 3 was a
permanent employee of the appellant and, when he joined the
service of Sindhu Hotchief in the year 1953, he only went
there on deputation -or transfer, so that he continued to
hold a lien on his permanent post in the appellant
Corporation. Two facts, no doubt, support this plea. One
is that Sindhu Hotchief was only a Subsidiary Company of the
appellant, and the other is that, in its order dated 24th
September, 1953, the appellant merely stated that, with
effect from the 18th September, 1953, the services of res-
pondent No. 3 were placed at the disposal of Sindhu
Hotchief. No specific ;order was passed terminating his
services in the appellant Corporation Though this
circumstance would raise a presumption that respondent No. 3
did not cease to be an employee 0 the appellant when this
order was issued on 24th September 1953, this presumption is
rebutted by two circumstances. The first is that respondent
No. 3 was appointed in Sindhu Hotchief under the order dated
5th September, 1953, which-laid down that in that Company he
would be on a probation for a period of three months
in the first instance. The probationary period may have to
be further extended by any period upto three months. The
confirmation of his appointment would be considered at the
end of his probationary period and would depend on the
efficiency and utility of his services to the Company.
Thereafter, respondent No. 3 continued to serve in that
Company until 20th February, 1958, i.e. for a, period of
about 4 1/2 yars. Clearly, he must have been confirmed in
his appointment in that company. Once he was confirmed in
Sindhu Hotchief, he could obviously not continue to be an
employee of the appellant-corporation simultaneously. The
High Court did not attach any value to this order of
appointment dated 5th September, 1953, issued by Sindhu
Hotchief, on the ground that no evidence was tendered before
the Tribunal to show that this order was actually served on
respondent No. 3. In proceeding on this basis, the High
Court clearly fell into an error, because, in this case,
when the adjudication of the industrial dispute was, taken
up by the Tribunal, all the parties contented themselves
with filing documentary evidence and no oral evidence was
given by any party. At no stage was it challenged that the
documents filed could not be taken into account until proved
formally in the manner ’required to be proved in a regular
civil proceeding in accordance with the provisions of the
Indian Evidence Act. This order of Sindhu Hotchief dated
5th September, was addressed to respondent No. 3 himself
and, when there
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519
was no challenge on behalf of respondent No. 3 that he did
not receive this order, there was no justification for the
High Court to hold that this.,order had not been served on
him. In proceedings before the Industrial Tribunal, strict
proof of documents in accordance with the provisions of the
Indian Evidence Act is not required. Parties having agreed
to base their case on the documents filed, this order issued
to respondent No. 3 could not be ignored on the ground that
no oral evidence had been tendered to prove that respondent
No. 3 actually received it. It was in accordance with the
conditions of service laid down in, this order that
respondent No. 3 was appointed -in Sindhu Hotchief and, by
joining service there and continuing in that service for 4
1/2 years, respondent No. 3 clearly agreed to work in that
Company on these conditions. As -we have indicated earlier,
one of the conditions was that he would be confirmed at the
end of the: probationary period and, once he was confirmed,
he would become a permanent employee of Sindhu Hotchief and
would cease to be the employee of the appellant. Thus,.
though respondent No. 3 did not cease to be an employee of
the appellant when his services were first placed at the
disposal of Sindhu Hotchief by the appellant witheffect
from 18th September, 1953, he ceased to be an employee of
the appellant later when he was confirmed in Sindhu
Hotchief. The other circumstance that bears out this
conclusion is that, at the time of termination of the
employment of respondent No. 3 in Sindhu Hotchief, he was
given retrenchment compensation which he accepted. In case
he had continued to be in the service of the appellant. he
would not have been entitled to retrenchment compensation
from Sindhu Hotchief and, even if Sindhu Hotchief had any
legal liability to contribute towards his retrenchment
compensation which might have become ultimately payable to
him on his retrenchment from the appellant Corpn., that
amount would have been paid by Sindhu Hotchief to the
appellant and not to respondent No. 3 himself. It appears
that respondent No. 3 very well knew that he had become a
permanent employee of Sindhu Hotchief and, consequently, on
retrenchment, he accepted the compensation but, thereafter,
he seems to have decided to assert his claim to continuance
of employment under the appellant. This claim. was also,
however, very halfhearted. No doubt, at the first stage on
21st February, 1958, he demanded reinstatement in the
appellant Corpn., but very soon thereafter, when that
request was refused, he demanded retrenchment compensation
and one month’s salary in lieu of notice. This demand was
put forward by him in his letter dated 7th March, 1958,
wherein he stated that, if the appellant refused to
recognise Sindhu Hotchief as a sister concern and did not
take him back in its Organisation, where he had a genuine
claim of service, the appellant should please pay off his
legal claims in respect of retrenchment compensation and one
month’s pay in lieu of notice. This position taken up by
respondent No. 3 himself thus shows that he was aware that
his services under the appellant Corpn. had already
520
come to an end. Learned counsel appearing for the
respondents urged that we should not hold that services of
respondent no. 3 in teh appellant Corpn. had come to an end
when he was absorbed in Sindhu Hotchief, because no
retrenchment compensation was given to respondent No. 3 by
the appellant Corporation at the stage, when his services
-ended in that Corporation. The submission ignores the,
circumstances that, when respondent No.3 went to Sindhu
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Hotchief, be did so willingly. There was no compulsion on
him to,. go, to that Company. His terms of service with the
appellant did not entitle The appellant to transfer his
services to the Subsidiary Company and the mere office order
placing his services at the disposal of Sindhu Hotchief
could not have been made effective unless respondent No. 3
also voluntarily agreed to take service in Sindhu Hotchief.
At no stage was it asserted on behalf -of respondent - No. 3
that he did not go voluntarily or with his consent to Sindhu
Hotchief. In case he took the service in Sindhu Hotchief
and accepted permanent appointment there willingly, it
cannot be held that his services were retrenched by the
appellant Corporation. He was not entitled to any
retrenchment compensation when he left the service of the
appellant willingly. The nonpayment of retrenchment
compensation by the appellant at that stage does not,
therefore, indicate that the services of respondent No. 3
with the appellant had not come to an end. On the facts of
this case, it is clear that the Tribunal committed an error
in drawing the legal inference that respondent No. 3
continued to be in the service of the appellant Corporation
even after he had received permanent appointment in Sindhu
Hotchief. On a correct inference, it is clear that the
services of respondent No. 3 under the appellant Corporation
had come to an end and, when he was retrenched by Sindhu
Hotchief, he could not claim reinstatement in the appellant
Corporation. In this connection, Mr. Gopalakrishnan,
learned counsel for the respondents, relied on some remarks
of the House of Lords in Nokes v. Doncaster Amalgamated
Collieries Ltd.(1), where it was held:
"Counsel for the appellant argued that a
contractual right to personal service was a
personal right of the employer and was
incapable of being transferred by him to
anyone else, and that a duty to serve a
specific master could not be part of the
property-or rights of that master capable of
becoming, by transfer, a duty to serve some-
,one else. It is, of course indisputable that
(apart from statutory provision to the
contrary) the benefit of a contract entered
into by A to render personal service to X
cannot be transferred by X to Y without A’s
consent, which is the same thing as saying
that, in order to produce the desired result,
the old contract between A and X would r have
to be terminated by notice or by mutual
consent and a. new contract of service entered
into by agreement between A and Y."
(1) [1940] A.C. 1014.
521
This principle laid down by teh House of Lords is not
applicable to the facts of teh case before us,because
we have already held that respondent No.3 joined the service
of Sindhu Hotchief villingly and with his consent, and it
was not a case where he was transferred to Sindhuy Hotchief
by the appellant without his consent. This case does not
help ,the respondents.
The second ground urged on behalf of the appellant is that
in this case no. dispute relating relating to reinstatement
was’ actually raised either by respondent No. 2 or
respondent No. 3 before. the reference was made to the
Industrial Tribunal by the Government of Gujarat and,.
consequently. that reference itself was , without
jurisdiction. When Mr. A. K. Sen, counsel for the.
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appellant, raised this ground, it Was urged by" Mt.
Gopalakrishnan on behalf of the respondents that this ground
was being taken for the first time in this Court and had not
been raised at any earlier stage, so that it should not be
allowed to be taken in this Court. It, however,appears that
the question of jurisdiction of the State Government to
refer the demand for reinstatement for adjudication to the
Tribunal was specifically urged in the High Court and the
High Court actually dealt with it in its judgment,
dismissing the petition filed on behalf of the appellant.
The High Court clearly mentions that the counsel for the
appellant contended that the Industrial Tribunal had no
jurisdiction as the question referred to it and which it was
called upon to adjudicate relating to reinstatement of
respondent No. 3 in the service of the Corporation would not
fall within the scope of item 3 in the Second Schedule to
the Industrial Disputes Act, 1947. It was further urged
that, since the third respondent was neither discharged nor
dismissed by the appellant, the question of relief of
reinstatement would not arise under that item and, there
being no item under which the demand would fall, the State
Government had no jurisdiction to refer such a demand for
adjudication to the Tribunal. These points urged before the
High Court would cover the ground now urged by Mr. Sen
before us. It is true that the form in which it was urged
before the High Court was slightly different. There, the
point raised was that a demand for reinstatement, when there
had been retrenchment only and no discharge or dismissal,
could not be held to constitute an industrial dispute. On
the facts of the case as they appeared from the material
before the Tribunal, it is now urged that, in fact, the
demand, which was being pressed with the management by both
the respondents, was in respect of retrenchment compensation
and not reinstatement. The demand for reinstatement seems
to have been given up, because the respondents realised that
the services of respondent No. 3 had not been terminated by
discharge or dismissal, but by retrenchment only, and that
retrenchment not being. the result of any unfair labour
practice or victimization, respondent No. 3 could only claim
retrenchment compensation. In the evidence given before the
Tribunal, there were included two letters written by the two
respondents containing the demand for retrenchment
compensation.
522
We have already referred to one of these letters which was
sen on 7th March, 1958 by respondent.No. 3 to the
Administrative Officer of the. appellant. The other letter
was sent on 10th July 1959 by the General Secretary of
respondent No. 2 in which again it was stated that Sindhu
Hotchief had paid retrenchment dues to respondent No. 3 in
respect of the services he had rendered in than Company, but
the appellant Corporation was responsible for his
retrenchment dues for the service which had been rendered by
respondent No. 3 in the, appellant Corpn., The prayer was
that, as the appellant had refused him re-employment,
arrangement should be made to pay his retrenchment dues
according to section 25F of the Industrial Disputes Act,
1947. Thus, both the respondents, in their claims put
forward before the management of the appellant, requested
for payment of retrenchment compensation and did not raise
any dispute for reinstatement. Since no such dispute about
reinstatement was raised by either of the respondents before
the management of the appellant, it is clear that the State
Government was not competent to refer a, question of rein-
statement as ’an industrial dispute for adjudication by the
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Tribunal. The dispute that the State Government could have
referred competently was the dispute relating to payment of
retrenchment compensation by the appellant to respondent No.
3 which had been refused. No doubt, the order of the State
Government making the reference mentions that the Government
had considered the report submitted by the Conciliation
Officer under sub-section (4) of section 12 of the
Industrial Disputes Act, in respect of the dispute between
the,appellant and workmen employed under it over the demand
mentioned in the Schedule appended to that order; and, in
the Schedule, the Government mentioned that the dispute was
that of reinstatement of respondent No. 3 in the service of
the appellant and payment of his wages from 21st February,
1958. It was urged, by Mr. Gopalakrishnan on behalf of the
respondents that this Court cannot examine whether the
Government, in forming its opinion that an industrial
dispute exists, came to its view correctly or incorrectly on
the material before it. This proposition is, no doubt,
correct; but the aspect that is being examined-is entirely
different. It may be that the Conciliation Officer reported
to the Government that an industrial dispute did exist
relating to the reinstatement of respondent No. 3 and
payment of wages to him from 21st February, 1958, but when
the dispute came up for adjudication before the Tribunal,
the evidence produced clearly showed that no such dispute
had ever been raised by either respondent with the
management of the appellant. If no dispute at all was
raised by the respondents with the management, any request
sent by them to the Government would only be a demand by
them and not an industrial dispute between them and their
employer. An industrial dispute, as defined, must be a
dispute between employers and employers, employers and
workmen, and workmen and workmen. A mere demand to a
Government, without a dispute being raised by the workmen
with
523
their employer cannot become an industrial dispute
Consequently, the material before the Tribunal clearly
showed that no such industrial dispute, as was purported to
be referred by the State Government to the Tribunal, had
ever existed between the appellant Corpn. and the
respondents and the State Government in making a reference,
obviously committed an error in basing its opinion ’on
material which was not relevant to the formation of opinion.
The Government had to come to an opinion that an industrial
dispute did exist and that opinion could only be formed on
the basis that there was a dispute between the appellant and
the respondents relating to reinstatement. Such material
could not possibly exist when, as early as March and July,
1958, respondent No. 3 and respondent No. 2 respectively had
confined their demands to the management to retrenchment
compensation only and did not make any demand for
reinstatement. On these facts, it is clear that the
reference made by the Government was not competent. The
only reference that the Government could have made had to be
related to payment of retrenchment compensation which was
the only subject-matter of dispute between the appellant and
the respondents.
So far as the third ground is concerned, it loses force and
(toes not arise in view of our decision relating to the
first ground. We have already held, when dealing with the
first ground, that the appellant had neither dismissed
respondent No. 3, nor had it discharged him from service.
There was no question of wrongful dismissal or discharge by
the appellant. It was not even a case of retrenchment.
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because respondent No. 3 had willingly gone to join the
service under Sindhu Hotchief. He obviously joined the
service in Sindhu Hotchief because of the financial
advantages that were to accrue to him. In September, 1953,
he was drawing a salary of Rs. 200 P.m. in the scale of Rs.
150-10--250 while serving the appellant. The site allowance
of 20 per cent, which he had been receiving earlier, had
been discontinued from March, 1952 and he was not getting it
at the time when he went to join Sindhu Hotchief, where he
was given a start of Rs. 240 in the grade of Rs.
200--20-400. Consequently, in addition to the immediate
rise in salary of Rs. 40 P.m., he had the advantage of
working in the higher grade, in which, within two years, he
exceeded the maximum of the scale in which he had been
working with the appellant. He served Sindhu Hotchief for a
period of’ about 4 1/2 years and became confirmed there in
accordance with the terms and conditions which were offered
to him by Sindhu Hotchief. In these circumstances, the
respondents cannot’ urge that the services of respondent No.
3 were retrenched by the appellant, either when he went and
joined Sindhu Hotchief, or when he wanted to get back to his
post with the appellant. His appointment in the service of
the appellant having terminated, no question could arise of
retrenching him at the stage when he wanted to come back
after serving Sindhu Hotchief. His services,
524
were in fact retrenched by his employer Sindhu hotchief and
from that Company he received retrenchment compensation.
The third ground, therefore, needs consideration
The appeal succeeds and is allowed. The award of the Tri-
bunal is quashed. In the circumstances of this case there
will be no order as to costs,,
Y.P.
Appeal allowed.
525