Full Judgment Text
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PETITIONER:
THE CACHAR CHAH SRAMIK UNION SILCHAR, ASSAM
Vs.
RESPONDENT:
THE MANAGEMENT OF THE TEA ESTATE OF CACHAR,ASSAM
DATE OF JUDGMENT:
26/10/1965
BENCH:
RAMASWAMI, V.
BENCH:
RAMASWAMI, V.
GAJENDRAGADKAR, P.B. (CJ)
WANCHOO, K.N.
HIDAYATULLAH, M.
CITATION:
1966 AIR 987 1966 SCR (2) 344
ACT:
Industrial Disputes-Standing Orders-cl. 8(a) (i) and (iii),
and Cl. 9-Slump in market-Lay off; Retrenchment-whether
justified Amount of compensation; when can be gone into.
HEADNOTE:
In pursuance of the recommendation of a Committee, appointed
on a representation by the Tea Producers in the Cachar
District to investigate into the difficulties of the
Industry as a result of steep fall in prices, a notification
was issued providing that there shall be no issue of food-
stuffs at concessional rates and no cash compensation as
such in lieu thereof, but the existing dearness allowance
was raised temporarily for all estates in the district.
Thereupon the condition of the industry which was on the
verge of collapse improved; many gardens which had closed
down started refunctioning and many of the workmen who were
retrenched were taken back in employment. Upon rival
contentions, the Industrial Tribunal held that, (i) the
financial crisis was genuine and was not a result of any
manipulation and that the management was entitled under cl.
8(a)(i) and (iii) of the Standing orders to lay off the
workmen for an indefinite period, (2) the management was
also entitled to. retrench workmen under cl. 9 of the
Standing orders, and (3) even if the lay off and
retrenchment were bona fide and justified, the workmen were
entitled to a reasonable compensation, and the Tribunal
fixed the quantum of compensation. In appeal to this Court
:
HELD : (i) The lay off in the present case, was justified by
cl. 8 (a) (i) and (iii) of the Standing orders. The last
part of cl. 8 (a) (i) which refers to "other cases beyond
his control" would cover a case of sudden slump in the world
market and consequent financial difficulties of the tea
industries [350 B]
Workmen of Dewan Tea Estate v. Their Management. [1964] 5
S.C.R. 548, distinguished.
(ii) The management had also the additional power to
retrench workmen under cl. 9 of the standing orders. [350 C]
(iii) In the present case, the Tribunal had not
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committed any error of law or legal principle in deciding
the amount of compensation. [351 G]
The quantum of compensation is a matter primarily for the
Tribunal to estimate and it is not open to this Court to go
into this question unless it is shown that the Tribunal has
committed any error of law or legal principle indeciding it.
[352 B-C]
JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 969 of 1963.
345
Appeal by special leave from the award dated November 13,
1959 of the Industrial Tribunal, Assam in Sub-References
Nos. 25 to 39, 41, 43 to 45, 47 to 51, 54 to 57, 59 to 61,
63 to 67, 69 to 73, 76 and 91 of 1957 and 15 of 1958.
C. B. Agarwala, D. L. Sen Gupta and K. P. Gupta, for the
appellant.
M. C. Setalvad, Purnendu Choudhri, R. C. Dutta and D. N
Mukherjee for the respondents Nos. 1-5, 7, 9, 11, 14, 15,
21, 22 25-28, 31(1), 31(4), 31(6), 31(8), 31(10), to 31(14),
32, 33(2), 34, 35, 37-:40, 42(2)-42(10), 43 and 44.
R. C. Dutta and D. N. Mukherjee, for respondents Nos. 8,
12 23 and 42(1).
D. N. Mukherjee and D. N. Gupta,, for respondents Nos. 6
and 31(5).
Dipak Chaudhry, for respondent No. 33(1).
S. N. Mukherjee, for respondent No. 6(1).
Sukumar Ghose, for respondents Nos. 10, 13(2), 13(3), 19,
30, 31(2)(1), 31(5)(1), 31(6)(1), 31(14)(1), 35(1),
35(2)(1), 35(3)(1), 38(1)(1), 38(2)(1) and 43(11).
B. P. Maheshwari and S. Murthy, for respondents Nos. 8(1),
31(9)(1) and 35(6)(1).
The Judgment of the Court was delivered by
Ramaswami, J. This appeal is brought, by special leave,.
against the award of the Industrial Tribunal, Assam,
published in Assam Gazette dated January 13, 1960, vide
Assam Government Notification No. 361/55/690 dated December
29, 1959, in References Nos. 25 to 39, 41, 43 to 45, 47 to
51, 54 to 57, 59 to 61, 63 to 67, 69 to 73, 76 and 91 of
1957 and 15 of 1958.
During the period from June, 1951 to March, 1953 the entire
tea industry in the Cachar district of Assam was subject to
an unusual economic crisis. There was a steep rise in the
cost of production due to increase of wages and introduction
of subsidised rations. In October, 1949, a Tripartite
Conference was held at Silchar and it was decided in this
Conference that nearly 20 Tea Estates had become uneconomic
and should be allowed to convert food concessions into cash
at the rate of 0-4-6 per
34 6
head per day. The need for re-adjustment of labour force
was also recognised in this Conference. The financial
position of the Tea Estates however continued to cause
anxiety to the Government. On February 12, 1949, an Ad hoc
Committee was appointed which submitted its report on
September 13, 1950. In this report the Committee stressed
the inability of the tea industry to bear the burden of
subsidised food-stuffs. The Committee further found that
the increase in production cost was considerable and the tea
estates were compelled to borrow more money and the
Scheduled Banks were finding it difficult to meet the
demand. The Committee found that the yield of tea in
Cachar district was 7 mds. per acre and in its view the
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absolute minimum yield which could be economic in Cachar
was 8 mds. per acre. In view of the critical condition of
the tea industry in Cachar another Committee named as ’The
Cachar Plantation Committee’ was constituted on April 4,
1.950. The report of the Committee was submitted on January
4, 1951. The Committee recommended abandonment of
uneconomic areas under tea and suggested offer of
alternative employment to the surplus labour or provision of
whet land, if available. The Committee also recommended a
seven annas conversion rate per day in lieu of food
concession for all estates and it was proposed that Gov-
ernment should undertake to supply foodgrains to tea estates
at controlled wholesale rates. The Committee also reached
the finding that the average return to the shareholder was
2-2/3% and the remuneration to the managerial staff
constituted a very small fraction of the total cost of
production. Even according to the labour representatives on
this Committee the labour costs represented 47 per cent of
the total cost of production of tea.
In the year 1 951 there was a sudden recession in the world
price of tea. Fluctuations commenced in the middle of June,
1 951 and there was a rather rapid decline in prices of tea
in November, 1951. Cachar prices came down from 1-10-1 per
lb. on October 30, 1951 to 1-2-11 per lb. on March 17, 1952.
’The prices of Cachar tea ranged between 0- 1 4-4 per lb. to
0-12-11 per lb. between June, and August 1952. In May the
price came down to 0-12-3. After June 1952 the price of
Cachar tea ranged between 1-1-0 to 0-12-2. The decline in
prices covered a long period and was unprecedented in its
character. To add to the difficulties of the tea industry
there was a notification under the Minimum Wages Act dated
March 11, 1952 raising wages of labour substantially. A
representation was made to the Government of India by
Associations of Tea Producers in March and April, 1952
regarding the difficulties of the industry
347
as a result of the steep fall in prices. The Government of
India appointed a two-member Committee (known as the
Official Team) to investigate into the matter. Before the
team concluded its investigation the situation had taken a
critical turn and the tea industry in Cachar was on the
verge of a total collapse. By January 22, 1953, 82 out of
Ill gardens in Cachar district had closed down. The
Official team recommended conversion of food concessions
into cash, arrangement for credit facilities through suit-
able co-operative banks and postponement of the
implementation of the Plantation Labour Act for a period of
two years. As regards the question of the revision of the
Minimum Wage the tea industry was asked to make necessary
representation to the State concerned. In its report dated
January 31, 1953 the Minimum Wage Committee observed that
the estates in Cachar District stood on an entirely
different footing and expressed a fear that almost all of
them were likely to go out of business if the existing low
prices of tea continued for any length of time. Even at the
time of the Minimum. Wage Notification a number of estates
were known to be uneconomic and the increase in wage rates
resulting from the Notification. was a severe blow to them.
The hope that prices of tea would rise was completely belied
and events so conspired that most of the, estates turned out
to be uneconomic. The Committee further observed that it
was realised that labour could ill-afford to agree. to any
Suggestion to reduce the existing minimum wage but the
situation was such that drastic measures had to be
considered in, the interest of the laborers themselves. It
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is to be noted also in this connection that Cachar labourers
who have been settled on the estates for generations had
alternative sources of income in common with the village
folk in the neighbourhood. In pursuance, of the
recommendation of the Committee there was a revised noti-
fication dated February 9, 1953, under the Minimum Wages Act
with regard to all the tea estates in the district of Cachar
and the uneconomic tea estates in the Assam Valley. The
notification provided that there shall be no issue of food-
stuffs at concessional rates and no cash compensation as
such in lieu thereof. But with a view to mitigate the
hardship of labour due to suspension of food concessions,
the existing dearness allowance was raised temporarily for
all Cachar tea estates at the rate of one anna for adults
and’ six pies for minors for each working day. After the
issue of the revised notification the economic condition of
the tea estates improved and many tea estates started
refunctioning. Many of the workmen who were retrenched were
taken back in employment and’ others were provided
alternative employment in tea estates outside Cachar
district in the Assam Valley district or elsewhere.
348
The case of the Cachar Chah Sramik Union (hereinafter called
-the Union) before the Industrial Tribunal was that there
was no genuine crisis which could justify retrenchment, lay
off or even reduction of working days in a week. According
to the Union the financial crisis was manipulated by the
management because of the notification under the Minimum
Wages Act issued in March, 1952. The object of the
management was to force the Government to revise that
notification and at the same ,time to crush the growing
trade union movement. It was contended that the
introduction of short working hours and retrenchment were
unfair labour practice. The Union claimed compensation on
the ,ground that the measures taken by the management were
wholly unjustified. It was alternatively contended that
even if the measures ’were justified, the workmen were
entitled to compensation on account of involuntary
unemployment which they had suffered for no fault of theirs.
The opposite view was put forward by the management and it
was contended on its behalf that it was compelled to reduce
the number of working days and, in some cases, to resort to
retrenchment because there was a real and sudden financial
crisis in the industry and the industry could not be run
with profit without resort to these measures.
Upon these rival contentions the Industrial Tribunal held,
in the first place, that the financial crisis was genuine
and was not a result of any manipulation and that the
management was entitled under cl. 8(a)(i) and (iii) of the
Standing Orders to lay off the workmen for an indefinite
period. The Tribunal further held that the management was
also entitled to retrench workmen under cl. 9 of the
Standing Orders. The Tribunal considered that even if the
lay off and retrenchment were bona fide and justified, the
workmen were entitled to a reasonable compensation and fixed
the quantum of compensation at the rate of one week’s pay
for every four months of unemployment. Finally the Tribunal
held that the provision of khet land and other amenities
like housing and medical facilities available to the workmen
should be taken to adequately represent one week’s wages.
After laying down these principles the Industrial Tribunal
examined the case of each individual garden and awarded
compensation in some cases while refusing to grant any
compensation in others.
On behalf of the appellant-Union Mr. Aggarwala submitted, in
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the, first place, that cl. 8(a) of the Standing Orders had
no application to the present case and the Tribunal was not
justified in holding that the financial difficulty facing
the tea estates was a matter beyond the control of the
management, and the workmen
349
could not, therefore, be laid off by the management under
this clause. The relevant portion of cl. 8 reads as follows
:
"Closing and re-opening of sections of the
industrial establishments, and temporary
stoppages of work, and the rights and
liabilities of the employer and workmen
arising Therefrom.
(a) (i) The manager may at any time in the
event of fire, catastrophe, break down of
machinery, stoppage of power or supply,
epidemic, civil commotion, strike, extreme
climate conditions or other causes beyond his
control, close down either the factory or
field work or both without notice.
(iii) In cases where workmen are laid off for
short periods on account of failure of plant
or a temporary curtailment of production, the
period of unemployment shall be treated as
compulsory leave either with or without pay,
as the case may be; when, however workmen have
to be laid off for an indefinitely long period
their services may be terminated after giving
them due notice or pay in lieu thereof."
In support of this argument Mr. Aggarwala referred to the
decision of this Court in Workmen of Dewan Tea Estate v.
Their Management(1). But the ratio of that decision has no
application to the present case in which the material facts
are different. In Workmen of Dewan Tea Estate v. Their
Management(1) there was no sudden slump in the price of tea
but there was difficulty experienced by the management in
obtaining financial facilities from banks. It was an
individual case of management experiencing financial diffi-
culty, and it was, therefore, held by this Court that the
stoppage of financial assistance will not fall within the
phrase "stoppage of power or supply" in cl. 8(a)(i) of the
Standing Orders. It was also pointed out in that case that
there was no evidence produced on behalf of the management
to substantiate its plea of non-availability of finance.
There was also no evidence on the record to justify the
assumption of the management that the financial difficulty
faced by it was beyond its control. The material facts in
the present case are different. It has been found by the
Industrial Tribunal that there was a sudden slump in the
price of tea in the world markets, that the recession of
prices of tea commenced in the middle of 1951 and continued
during the whole of 1952 for a
(1) [1964] 5 S.C.R. 548.
350
period of about 18 months. The low level of prices reached
in May, 1952, was unprecedented. The Tribunal has also
found that the economic crisis of the tea industry in Cachar
region was real and was caused by reasons beyond the control
of the management of the tea estates. In our opinion, the
last part of cl. 8(a)(i) which refers to "other causes
beyond his control" would cover a case of sudden slump in
the world market and the consequent financial difficulties
of the tea estates. We accordingly hold that the Jay off in
the present case was justified by cl. 8(a)(i) and (iii) of
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the Standing Orders and the argument of Mr. Aggarwala on
this aspect of the case is not warranted.
As regards retrenchment, we are satisfied that the manage-
ment had also the additional power of retrenching workmen
under cl. 9 of the Standing Orders which reads as follows :
"Termination of employment and notice thereof
to be given by the employer and workmen.
Notice of termination of employment, whether
by Manager or by worker, shall be given equal
to the wageperiod of the worker concerned.
Provided that-
(a) The Manager may terminate the employment
of a worker forthwith and pay his wages for
the wageperiod (equivalent to his average
earnings over the preceding period of three
months) in lieu of notice.
(b ) Notice of termination of employment shall
be necessary only in case of permanent workers
and not in the case of outside or temporary
workers except insofar as is laid down in any
agreement entered into between the Manager and
such outside or temporary workers.
(c)......................................
(d) Where the employment of any worker is
terminated the wages earned by him and other
dues, if any, shall be paid before the expiry
of the second working day on which his
employment is terminated.
The Tribunal has found that there was no victimisation or
unfair labour practice or mala fide on the part of the
management in closing the gardens or in making the retrench-
ment. Mr. Aggarwala on behalf of the appellant did not
challenge the finding of the Tribunal on this point, but
learned Counsel
3 5 1
argued that even if the management was justified, the
workmen were entitled to payment of compensation according
to the scale laid down in s. 25F of the Industrial Disputes
Act. It was conceded by learned Counsel that Ch. VA which
contains s. 25F came into force on October 24, 1953 by
amending Act 43 of 1953 and the retrenchment in the present
case was effected long before that date. It was, however,
contended that the principle embodied in s. 25F should be
applied in the present case. It was said that by enacting
Ch. VA the legislature was merely recognising the practice
of payment of compensation by Labour Tribunals before the
date of the amendment and the legislature decided, by the
amendment, to standardise the payment of compensation by
prescribing a statutory rule in that behalf (See The Indian
Hume Pipe Co. Ltd. v. The Workmen and another) (1). There
is substance in the argument put forward on behalf of the
appellant and the Tribunal has also applied this principle
in granting compensation to the retrenched workmen even
though the case was not attracted by s. 25F of the
Industrial Disputes Act. But the Tribunal has taken the
view that one week’s wages for every four months of
unemployment was adequate compensation. The contention of
the appellant is that the compensation should have been
awarded on the scale laid down in s. 25F of the Industrial
Disputes Act. We are unable to accept this argument as
correct. As pointed out by this Court in The Indian Hume
Pipe Co. Ltd. v. The Workmen, and another(1), Industrial
Tribunals had been awarding compensation even before the
enactment of s. 25F but there was no uniformity or certainty
in the matter and in determining the, amount of compensation
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the Tribunals considered a variety of relevant factors. It
is manifest that in determining the amount of compensation
the Tribunals exercised complete discretion and took into,
account whatever factors they considered relevant. In the
present case, the Tribunal has estimated the amount of
compensation as one week’s wages for every four months of
unemployment and it is not shown on behalf of the appellant
that in making this estimate the Tribunal has committed any
error of law or applied any wrong principle.
As regards the compensation to retrenched workmen, the Tri-
bunal has stated in para 135 of the Award that the amenities
granted to them included undisturbed possession of
residential quarters and khet lands. They were also granted
medical relief, fuel and other forest produce even during
the period of suspension of work. The Tribunal did not
attempt to evaluate accurately the pecuniary value of all
these concessions but it has expressed the-
(1) [1960] 2 S.C.R. 32 at p. 42.
Sup CI/66-9
3 5 2
view that the value of these concessions would be roughly
equal to one week’s, wages for every four months of
unemployment and therefore the retrenched workmen were not
entitled to any compensation in cash apart from any right to
wages in lieu of a week’s notice under cl. 9 of the Standing
Orders. On behalf of the appellant Mr. Aggarwala said that
the retrenched workmen were entitled to get a larger amount
of compensation than that awarded by the Tribunal. The
quantum of compensation is, however, a matter primarily for
the Tribunal to estimate and it is not open to this Court to
go into this question unless it is shown that the Tribunal
has committed any error of law or legal principle in
deciding it. As regards the workmen who were subjected to
short hours of work, the Tribunal has observed that they
have been granted ex gratia payments which were, in several
cases in excess of the total loss of wages by reason of the
revision of the daily wages under the notification of
February 9, 1953 under the Minimum Wages Act. On behalf of
the appellant reference was made by Mr. Aggarwala to the
deposition of Mr. R. M. Bipan at page 97, Part 1 that the ex
gratia payment compensated merely, for the minimum wages cut
and not the loss to labour by the short workweek. But the
Tribunal having examined the entire evidence reached the
conclusion that the ex gratia payment was in several cases
in excess of total loss of remuneration on account of the
notification under the Minimum Wages Act. There is also
undisputed evidence in this case to show that even in normal
times short hours had to be imposed by employers upto a
period of three days in a week in Cachar tea gardens. In
this state of facts it is not possible for us to hold that
the Tribunal was in error in holding that the ex gratia
payment made by the management was sufficient compensation
to the workmen who were not retrenched outright but who were
put on short hours of work.
For the reasons expressed we hold that there is no merit in
this appeal which is accordingly dismissed. We do not
propose to pass any order as to costs.
Appeal dismissed.
353