Full Judgment Text
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PETITIONER:
THE ASSOCIATED CEMENT COMPANIES LIMITED,CHAIBASSA CEMENT WO
Vs.
RESPONDENT:
THEIR WORKMEN
DATE OF JUDGMENT:
11/09/1959
BENCH:
DAS, S.K.
BENCH:
DAS, S.K.
DAS, SUDHI RANJAN (CJ)
HIDAYATULLAH, M.
CITATION:
1960 AIR 56 1960 SCR (1) 703
CITATOR INFO :
R 1960 SC1213 (5)
R 1962 SC1221 (17)
R 1963 SC1710 (8)
R 1964 SC 864 (13)
F 1974 SC1132 (10,11)
ACT:
Industrial Dispute-Lay-off compensation-Disqualification-
Cement factory-Limestone quarry -Whether both Parts of one
establishment--Lay-off of workers in cement factory due to
strike in limestone quarry-" In another Part of the
establishment " meaning of-Test for determining whether a
particular unit is Part of a bigger establishment-Factories
Act, 1948 (63 of 1948), s. 2(m)-Plantations Labour Act, 1951
(69 of 1951), s. 2(f)-Mines Act, 1952 (35 of 1952), ss. 2(j)
17-Industrial Disputes Act, 1947 (14 of 1947), ss. 2(kkk),
18(3), 25C, 25E, 33.
HEADNOTE:
The cement factory in question which is in the State of
Bihar belonged to the appellant company and a limestone
quarry owned by the same company As situate about a mile and
a half from the factory. Limestone being the principal
rawmaterial for the manufacture of cement, the factory
depended exclusively for the supply of limestone on the said
quarry. On behalf of the labourers in the limestone quarry
certain demands were made on the management of the company
but as they were rejected they went on strike; and on
account of the non-supply of limestone due to the strike,
the management had to close down certain sections of the
factory and to lay-off the workers not required during the
period of closure of the sections concerned. Subsequently,
after the dispute between the management and the workers of
the limestone quarry was settled and the strike came to an
end, a demand was made on behalf of the workers of the
factory who had been laid-off during the strike, for payment
of lay-off compensation under s. 25C of the Industrial
Disputes Act, 1947, but the management refused the demand
relying on cl. (iii) to s. 25E of the Act, which provided
that " no compensation shall be paid to a workman who had
been laid-off............... if such laying-off is due to
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strike............ on the part of workmen in another part of
the establishment ". The Industrial Tribunal took the view
that the limestone quarry was not part of the establishment
of the cement factory and that the workmen in the latter
were not disentitled to lay-off compensation by reason of
Cl. (iii) of S. 25E of the Act. The appellant company
appealed by special leave to the Supreme Court and contended
that the decision of the Tribunal was erroneous because the
facts of the case showed (a) that in respect of both the
factory and the limestone quarry there was unity of
ownership, unity of management, supervision and control,
unity of finance and employment, unity
704
of labour and conditions of service of workmen, functional
integrality, general unity of purpose and geographical
proximity, and (b) that the strike was decided on by the
same Workers’ Union which consisted of the workmen at the
factory and the quarry. It was contended for the
respondents inter alia (1) that the conclusion of the
Industrial Tribunal that the factory and the limestone
quarry are not parts of one establishment is a finding of
fact which should not be disturbed in an appeal by special
leave, (2) that the effect of the Explanation to s. 25A of
the Act is to negative the idea of a factory and a mine
forming parts of one establishment, and (3) that since in
the matter of reference of industrial disputes, the Act
gives jurisdiction to two distinct authorities, the Central
Government in respect of the limestone quarry and the State
Government in respect of the factory, the two units, the
factory and mine, cannot -be treated as one establishment.
Held: (1) that the question whether the factory and the
limestone quarry form one establishment depends upon the
true scope and effect of the expression "in another part of
the establishment" in cl.(iii)of s. 25E of the Industrial
Disputes Act, 1947, and involves a consideration of the
tests which should be applied in determining whether a
particular unit is part of a bigger establishment, and
though for that purpose certain preliminary facts must be
found, the final conclusion to be drawn therefrom is not a
mere question of fact ;
(2) that the true scope and effect of the Explanation to s.
25A of the Act is that it explains what categories, factory,
mine or plantation, come within the meaning of the
expression " industrial establishment "; it does not deal
with the question as to what constitutes one establishment
and lays down no tests for determining that question;
(3) that existence of two jurisdictions does not
necessarily imply that for all purposes of the Act, and
particularly for payment of unemployment compensation, the
factory and quarry must be treated as separate
establishments ; and,
(4) that on the facts of the present case the limestone
quarry and the factory constituted one establishment within
the meaning of cl. (iii) of s. 25E of the Act and that the
workmen at the factory were not entitled to claim lay-off
compensation.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 87 of 1958.
Appeal by special leave from the Award dated October 10,
1956, of the Industrial Tribunal, Bihar, Patna, in Reference
No. 6 of 1956.
R. J. Kolah, S. N. Andley and Rameshwar Nath, for the
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appellants.
B. C. Ghose and P. K. Chatterjee, for the respondents.
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1959. September 11. The Judgment of the Court was
delivered by
S. K. DAS J.-This appeal by special leave from an award
dated October 10, 1956, made by the Industrial Tribunal,
Bihar, raises an important question of interpretation in the
matter of a disqualification for lay-off compensation under
s. 25E read with s. 25C of the Industrial Disputes Act, 1947
(hereinafter called the Act), and so far as we know, this is
the first case of its kind in which the expression " in
another part of the establishment " occurring in cl. (iii)
of s. 25E has come up for an authoritative interpretation.
The facts are simple and are shortly set out below. The
Associated Cement Companies Ltd., hereinafter called the
Company, have a number of cement factories in different
States of the Indian Union as also in Pakistan. There are
two such factories in the State of -Bihar, one at Khelari
and the other at a place called Jhinkpani in the district of
Chaibasa in Bihar. The latter factory is commonly known as
the Chaibasa Cement Works. There is a limestone quarry
owned by the same Company situate about a mile and a half
from-the Chaibasa Cement Works, the quarry being known as
the Rajanka limestone quarry. Limestone is the principal
raw material for the manufacture of cement and the Chaibasa
Cement Works, depended exclusively for the supply of
limestone on the said quarry. At the time relevant to this
appeal there were two classes of labourers at the quarry,
those employed by the Company through the management of the
Chaibasa Cement Works and others who were engaged by a
contractor. There was one union known as the Chaibasa
Cement Workers’ Union, hereinafter called the Union, of
which the Company’s labourers both at the Cement Works and
the quarry were members. There was another union consisting
of the contractor’s labourers which was known as the A. C.
C. Limestone Contractor’s Mazdoor Union. On January 3,
1955, the Union made certain demands on the management on
behalf of the labourers in the limestone quarry, but these
were rejected by the management. Then, by a subsequent
letter dated February 18,
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1955, the General Secretary of the Union gave a notice to
the Manager of the Chaibasa Cement Works to the effect that
the Union proposed to organise a general stay-in-strike in
the limestone quarry from March 1, 1955, if certain demands,
details whereof are unnecessary for our purpose, were not
granted on or before February 28,1955. A similar notice was
also given on behalf of the A.C.C. Limestone Contractor’s
Mazdoor Union. These notices led to certain efforts at
conciliation which however, failed. On February 24, 1955,
the management gave a notice to all employees of the
Chaibasa Cement Works, in which it was stated that in the
event of the strike materialising in the limestone quarry,
it would be necessary for the management to close down
certain sections of the factory at Jhinkpani on account of
the non-supply of limestone; the notice further stated that
in the event of such closure, it would be necessary to lay
off the workers not required during the period of closure
for the sections concerned. The strike commenced on March
1, 1955, and lasted till July 4, 1955. On March 25, 1955,
the management wrote to the General Secretary of the Union
intimating to him that the workers in certain departments
referred to in an earlier letter dated March 19, 1955, would
be laid-off with effect from April 1, 1955. On March 28,
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1955, the management gave the lists of employees who were to
be laid-off with effect from April 1, 1955, and they were,
actually laid-off from that date. During the period of the
strike fresh efforts at conciliation were made and
ultimately the strike came to an end on July 5, 1955, when
the Central Government referred the dispute between the
management and the workers of the limestone quarry to the
Central Industrial Tribunal at Dhanbad. This reference was,
however, withdrawn by mutual consent in terms of a
settlement arrived at on December 7, 1955. The details of
this settlement are not relevant to this appeal.
Thereafter, a demand was made by the Union for payment of
lay-off compensation to those workers of Chaibasa Cement
Works who had been laid-off for the period April 1, 1955, to
July 4, 1955. This demand
707
was refused by the management. This gave rise to an
industrial dispute which was referred by the Government of
Bihar under s. 10 of the Act to the Industrial Tribunal,
Bihar. The terms of reference set out the dispute in the
following words:-
" Whether the workmen of the Chaibasa Cement Works are
entitled to compensation for lay-off for the period from
April 1, 1955, to July 4, 1955."
The parties filed written statements before the Industrial
Tribunal and the only witness examined in the case was Mr.
Dongray, Manager of the Chaibasa Cement Works, Jhinkpani.
At this point it is necessary to read the two sections of
the Act which relate to the right of workmen to lay-off
compensation and the circumstances in which they are
disqualified for the same. The right is given by s. 25C and
the disqualification is stated in three clauses of s. 25E,
of which the third clause only is important for our purpose.
We now proceed to read ss. 25C and 25E so far as they are
material for our purpose.
" S. 25C. (1) Whenever a workman (other than a badli
workman or a casual workman) whose name is borne on the
muster rolls of an industrial establishment and who has
completed not less than one year of continuous service under
an employer is laid-off, he shall be paid by the employer
for all,days during which he is so laid-off, except for such
weekly holidays as may intervene, compensation which shall
be equal to fifty per cent. of the total of the basic wages
and dearness allowance that would have been payable to him
had he not been so laid-off."
" S. 25E. No compensation shall be paid to a workman who
has been laid-off-
(i) ........................
(ii)........................
(iii) if such laying-off is due to a strike or slowing-
down of production on the part of workmen in another part of
the establishment."
708
Now, the central point round which the controversy between
the parties has raged is this. Was the lay-off of the
workers in certain sections of the Chaibasa Cement Works due
to a strike on the part of workmen in another part of the
establishment within the meaning of cl. (iii) of s. 25E ? In
other words, was the limestone quarry at Rajanka part of the
establishment known as the Chaibasa Cement Works? The
contention of the management was and is that the Cement
Works and the limestone quarry form one establishment within
the meaning of cl. (iii) aforesaid. The contention on
behalf of the workmen is that they are not parts of one
establishment but are separate establishments. The learned
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Chairman of the Industrial Tribunal held, for reasons which
we shall presently discuss, that the limestone quarry was
not part of the establishment known as the Chaibasa Cement
Works and the workmen in the latter were not disentitled to
lay-off compensation by reason of cl. (iii) of s. 25E. The
correctness of this view is the principal point for decision
in this appeal.
On behalf of the respondent workmen it has been contended
that the conclusion of the Industrial Tribunal that the
factory at Jhinkpani and the limestone quarry at Rajanka are
not parts of one establishment is a finding of fact and this
appeal should be disposed of on that footing. We do not
think that this contention is correct and we shall presently
deal with it. We propose, however, to examine first the
relation between the limestone quarry at Rajanka and the
cement factory at Jhinkpani in the light of the evidence
given before the Tribunal and the findings arrived at by it;
because they will show the process of reasoning by which the
Tribunal came to its final conclusion.
The evidence was really one sided and the only witness
examined was Mr. Dongray, Manager of the Chaibasa Cement
Works. Now, the relation between the limestone quarry and
the factory can be considered from several points of view,
such as (1) ownership, (2) control and supervision, (3)
finance, (4) management and employment, (5) geographical
proximity and (6) general unity of purpose and functional
integrality,
709
with particular reference to the industrial process of
making cement. On all that above points Mr. Dongray gave
evidence. It was not disputed that the Company owned the
limestone quarry as also the factory and there was unity of
ownership. Mr. Dongray’s evidence further showed that there
was unity of control, management and employment. He said
that the limestone quarry was treated as a part and parcel
of the Chaibasa Cement Works, that is, as a department
thereof and he as the Manager was in overall charge of both,
though there was a Quarry Manager in charge as a
departmental head under him. On this point Mr. Dongray
said:-
" There is a Manager appointed for the quarries.
The Manager is working under me. The Cement Works itself
has about eight or nine departments under it. There are
heads of each department. The Manager of the quarry has the
same status as the heads of other departments at the Cement
Works."
This was supported by a circular letter dated March 11,
1952, which said that the entire factory and the associated
quarries were under the sole control of the Manager, who was
responsible for maintaining full output at economic cost up
to the expected standard. The circular letter further
stated that all orders and contracts were to be issued by
the Manager for the working of the factory and quarries and
the relevant bills were to be passed by him. As to finance
and conditions of employment, Mr. Dongray said:-
" All requirements of the quarry are sent by the Manager
there to the office of the Cement. Works and if they are
available in the Cement Works Stores, they are issued from
there; otherwise I indent them from the Bombay office or
purchase them locally. There is no account office in the
quarries and their account is maintained in the Cement
Works’ Office. I as Manager of the Chaibasa Cement Works
make payment for the indents or requirements of the quarries
stated above. The quarry has no separate banking account.
The Quarry Manager is not entitled to operate banking
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account apart from myself At the quarries there are daily-
rated workers and monthly-paid staff.
90
710
To the daily-paid workers in the quarries, the cashier of
the Cement Works or his Assistant makes payment, when
required. The monthly-paid staff of the quarries come to
the Cement Office for receiving payment. In the Cement
Works we have got a system of allocation of work for
different jobs every day. It is done by the Departmental
Heads. Same system prevails in the quarries also. The
Quarry Manager does the distribution as head of that
department. Attendance Register is maintained at the quarry
in the same way as it is done in the different departments
of the Cement Works. There is only one common pay sheet for
all the monthly-paid staff, whether he is at the factory or
in the quarries. For the daily-rated workers we have got
different sheets department-wise and there is one such sheet
for the daily workers of the quarry as well. There is one
summary sheet of the payment showing the payment of all the
departments including the payment in the quarries as well.
I have to send statutory intimation to the authorities under
the Mines Act regarding the quarries for working faces and
other accidents etc. The staff and workers working in the
quarries are transferable to the Cement Works according to
the exigencies of the work and also vice versa. There have
been a few instances of such transfers. The terms and
conditions of service, for instance, T. A., leave, provident
fund, gratuity, etc., are same for workers in the Cement
Works as also the workers in the quarries. We got the
application of the statutory provident fund rules extended
to our department in the quarries also. The report of the
working of the quarry comes to me from the Manager there
from time to time. I as Manager of the Cement Marks make
payments of royalties in in respect of limestones raised
from the quarries. Payments for compensation, maternity
benefits, accidents, etc., in the quarry are made under my
authority by the factory office and not by the Quarry
Manager."
Exhibits 1 to 26 filed on behalf of the management, which
showed the working of the quarry and the
711
factory, supported the aforesaid evidence of Mr. Dongray;
they showed, as has been observed by the Tribunal itself,
that the management was maintaining one common account and
the final authority on the spot in respect of the quarry as
also in respect of other departments of the factory was Mr.
Dongray, the Manager. There were also other documents to
show that the transfer of members of the staff from the
quarry to the factory and vice versa was made by Mr. Dongray
according to the exigencies of service. It is worthy of
note here that the Union itself gave notice to the Manager
of the factory with regard to the intended strike in the
limestone quarry. The geographical proximity of the
limestone quarry was never in dispute. It was adjacent to
the factory, being situate within a radius of about a mile.
As to general unity of purpose -and functional integrality,
this was also not seriouly in dispute. Mr. Dongray said
that limestone was the principal raw material for the
manufacture of cement and the cement factory at Jhinkpani
depended exclusively on the supply of limestone from the
quarry at Rajanka. His evidence no doubt disclosed that
some excess limestone was sent to the factory at Khelari as
well. On this point Mr. Dongray said:-
" Limestone from this quarry is at times sent to the Khelari
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Cement Works, but that is very rare and in small quantity.
It is done only in cases of emergency."
Mr. Dongray explained that the normal number of departmental
workers in the quarry before the strike was in the
neighbourhood of 250; but there were about 1,000 workers
employed by contractors. The number of daily-rated workers
was in the neighbourhood of 950 and the total monthly-paid
staff varied from 100 to 105. The wages paid to the workers
in the quarry were debited to limestone account of the
Cement Works, and in the matter of costing, the amount spent
on limestone was also debited. The bank accounts, however,
were in the name of the Company and the persons who were
entitled to operate on those accounts were Mr. Dongray, the
Manager, the Chief Engineer, and the Chief Chemist of the
Cement Works.
712
All the aforesaid evidence, oral and documentary, was
apparently accepted by the Tribunal as correct; for the
learned Chairman summarised the evidence of Mr. Dongray
without any serious adverse comment. He then referred to
certain contentions urged on behalf of the Union, which he
said were not without force. We may now state those
contentions. The first contention was that under the
provisions of the Act, the appropriate authority in respect
of the factory at Jhinkpani was the State Government of
Bihar, whereas the appropriate authority in respect of the
limestone quarry, which was a mine as defined in the Mines
Act, 1952, was the Central Government. The second con-
tention was that there were two sets of Standing Orders, one
for the workmen of the factory and the other for the workmen
in the limestone quarry. The third contention was that the
limestone quarry had an office of its own and a separate
attendance register, and the fourth contention was that
under the provisions of the Mines Act, 1952, Mr. Dongray was
an Agent in respect of the limestone quarry and there was a
separate Manager who was responsible for the control,
management and direction of the mine under the provisions of
s. 17 thereof. The learned Chairman referred to certain
criticisms made in respect of the evidence of Mr. Dongray.
One criticism was that though the Company was the owner of
both the factory and the limestone quarry, it had also
factories and limestone quarries at other places in India
and Pakistan and if the test of one ownership were the
determining test, then all the factories and limestone
quarries of the Company wherever situtate would be one
establishment. This criticism was not, however, pertinent
because the Company never claimed that all its factories in
different parts of India and Pakistan formed one
establishment by reason of unity of ownership only. The
other criticism was that Mr. Dongray admitted that, if
necessary in the interest of service, the workmen at the
Chaibasa Cement Works could be transferred to some other
factory of the Company and therefore transferability was not
a sure test. This criticism was also not germane, because
the Company
713
never claimed that transferability was the only sure test.
A third criticism also advanced on behalf of the workmen was
that Mr. Dongray admitted that all the accounts of the
different factories and limestone quarries of the Company
were ultimately consolidated into one Profit and Loss
Account, a criticism which in our view was equally not
pertinent to the question at issue. The learned Chairman
then expressed his final finding in the following words:-
" From these and other admissions made by Mr. Dongray it
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would appear that it is only for economy and convenience
that he was given charge of the control of both the concerns
but his capacity was dual. While he was controlling the
Cement Works as it Works Manager he had the control of the
quarries as its Agent under the Mines Act. It has also to
be noted that if both these establishments which are
inherently different by their very nature are treated as one
and the same, anomalous position may arise in dealing with
the employees in the quarries in matters of misconduct and
such other things if there is a pendency of a dispute in the
Cement Works and vice versa. Obviously, the employees of
the Cement Works have to be dealt with by the State Tribunal
while the employees of the quarries by the Central Tribunal.
This also nullifies the force of the management’s contention
that both are parts of the same establishment. Considering
these it has to be held that the contention of the
management fails and that of the Union must prevail."
We now revert to the contention urged on behalf of the
respondent that this appeal should be disposed of on the
footing that the final conclusion of the Industrial Tribunal
is a finding of fact. The judgment of the Tribunal itself
shows that the final conclusion was arrived at by a process
of reasoning which involved a consideration of several
provisions of the Act and some provisions of the Mines Act,
1952. The Tribunal accepted a major portion, if not all, of
the evidence of Mr. Dongray; but it felt compelled to hold
against the appellant despite that evidence by reason of an
714
anomalous position which, it thought, would arise if the
factory and the quarry were held to be one establishment.
The question before the Tribunal, and this is also the
question before us, was the true scope and effect of cl.
(iii) of s. 25E of the Act, with particular reference to the
expression " in another part of the establishment "
occurring therein. That question was not a pure question of
fact, as it involved a consideration of the tests which
should be applied in determining whether a particular unit
is part of a bigger establishment. Indeed, it is true that
for the application of the tests certain preliminary facts
must be found; but the final conclusion to be drawn
therefrom is not a mere question of fact. Learned counsel
for the respondent is not, therefore, justified in asking us
to adopt the short cut of disposing of the appeal on the
footing that a finding of fact should not be-disturbed in an
appeal by special leave. In this case we cannot relieve
ourselves of the task of determining the true scope and
effect of cl. (iii) of s. 25E by adopting the short cut
suggested by learned counsel.
We proceed now to consider what should be the proper tests
in determining what is meant by " one establishment ".
Learned counsel for the respondent has suggested that the
test has been laid down by the Legislature itself in the
Explanation to s. 25A of the Act. That Explanation states:-
" In this section and in sections 25C, 25D and 25E,
"industrial establishment " means-
(i) a factory as defined in clause (m) of section 2 of the
Factories Act, 1948; or
(ii) a mine as defined in clause (j) of section 2 of the
Mines Act, 1952; or
(iii) a plantation as defined in clause (f ) of section
2 of the Plantations Labour Act, 1951."
The argument is that the Explanation states in clear terms
what an industrial establishment means in certain sections
of the Act including s. 25E, and on a proper construction it
negatives the idea of a factory and a mineforming parts of
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one establishment. Curiously enough, s. 25E does not
contain the
715
expression "industrial establishment". It uses the word "
establishment " only. We agree, however, that if s. 25E is
read with s. 25C and the definition of " layoff " in s. 2
(kkk) of the Act, as it must be read, the word "
establishment " in s. 25E has reference to an industrial
establishment. On the footing that the word " establishment
" in s. 25E means an industrial establishment, what then is
the effect of the Explanation ? The contention of the
respondent is that an industrial establishment may be either
a factory as defined in clause (m) of s. 2. of the Factories
Act, 1948, or a mine as defined in cl. (j) of s. 2 of the
Mines Act, 1952, or a plantation as defined in cl. (f) of s.
2 of the Plantations Labour Act, 1951; but it cannot be a
combination of any two of the aforesaid categories;
therefore, a factory and a mine together, as in the present
case, cannot form one establishment. This argument proceeds
on the assumption that the Explanation while stating what
undertakings or enterprises come within the expression "
industrial establishment " necessarily lays down the test of
’one establishment’ also. We do not think that there is any
warrant for this assumption. The Explanation only gives the
meaning of the expression " industrial establishment " for
certain sections of the Act; it does not purport to lay down
any test as to what constitutes one ’ establishment’. Let
us take, for example, a factory which has different
departments in which manufacturing processes are carried on
with the aid of power. Each department, if it employs ten
or more workmen, is a factory within the meaning of cl. (m)
of s. 2 of the Factories Act, 1948; so is the entire factory
where 1,000 workmen may be employed. The Explanation merely
states that an undertaking of the nature of a factory as
defined in cl. (m) of s. 2 of the Factories Act, 1948, is an
industrial establishment. It has no bearing on the question
if in the example taken, the factory as a whole or each
department thereof should be treated as one establishment.
That question must be determined on other considerations,
because the Explanation does not deal with the question of
one establishment. In our view, the true scope and effect
716
of the Explanation is that it explains what categories,
factory, mine or plantation, come within the meaning of the
expression " industrial establishment " ; it does not deal
with the question as to what constitutes one establishment
and lays down no tests for determining that question. We
cannot, therefore, accept the argument of learned counsel
for the respondent that a factory and a mine, a mine which
supplies the raw material to the factory, can never be one
establishment under the Act; that we do not think is the
effect of the Explanation to s. 25A.
The Act not having prescribed any specific tests for
determining what is ’one establishment’, we must fall back
on such considerations as in the ordinary industrial or
business sense determine the unity of an industrial
establishment, having regard no doubt to the scheme and
object of the Act and other relevant provisions of the Mines
Act, 1952, or the Factories Act, 1948. What then is ’ one
establishment’ in the ordinary industrial or business sense
? The question of unity or oneness presents difficulties
when the industrial establishment consists of parts, units,
departments, branches etc. If it is strictly unitary in the
sense of having one location and one unit only, there is
little difficulty in saying that it is one establishment.
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Where, however, the industrial undertaking has parts,
branches, departments, units etc. with different locations,
near or distant, the question arises what tests should be
applied for determining what constitutes ’one
establishment’. Several tests were referred to in the
course of arguments before us, such as, geographical
proximity, unity of ownership, management and control, unity
of employment and conditions of service, functional
integrality, general unity of purpose etc. To most of these
we have referred while summarising the evidence of Mr.
Dongray ,and the findings of the Tribunal thereon. It is,
perhaps, impossible to lay down any one test as an absolute
and invariable test for all cases. The real purpose of
these tests is to find out the true relation between the
parts, branches, units etc. If in their true relation they
constitute one integrated whole, we say
717
that the establishment is one; if on the contrary they do
not constitute one integrated whole, each unit is then a
separate unit. How the relation between the units will be
judged must depend on the facts proved, having regard to the
scheme and object of the statute which gives the right of
unemployment compensation and also prescribes
disqualification therefor. Thus, in one case the unity of
ownership, management and control may be the important test;
in another case functional integrality or general unity may
be the important test; and in still another case, the
important test may be the unity of employment. Indeed, in a
large number of cases several tests may fall for con-
sideration at the same time. The difficulty of applying
these tests arises because of the complexities of modern
industrial organisation; many enterprises may have
functional integrality between factories which are
separately owned; some may be integrated in part with units
or factories having the same ownership and -in part with
factories or plants which are independently owned. In the
midst of all these complexities it may be difficult to
discover the real thread of unity. In an American decision
(Donald L. Nordling v. Ford Motor Company (1)) there is an
example of an industrial product consisting of, 3,800 or
4,000 parts, about 900 of which came out of one plant; some
came from other plants owned by the same Company and still
others came from plants independently owned, and a shutdown
caused by a strike-or other labour dispute at any one of the
plants might conceivably cause a closure of the main plant
or factory.
Fortunately for us, such complexities do not present
themselves in the case under our consideration. We do not
say that it is usual in industrial practice, to have one
establishment consisting of a factory and a mine; but we
have to remember the special facts of this case where the
adjacent limestone quarry supplies the raw material, almost
exclusively, to the factory ; the quarry is indeed a feeder
of the factory and without limestone from the quarry, the
factory cannot function. Ours is a case where all the tests
are fulfilled,
(1) (1950) 28 A.L.R., 2d. 272.
91
718
as shown from the evidence given on behalf of the appellant
to which we have earlier referred. There are unity of
ownership, unity of management, supervision and control,
unity of finance and employment, unity of labour and
conditions of service of workmen, functional integrality,
general unity of purpose and geographical proximity. We
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shall presently deal with the legal difficulties at which
the Tribunal has hinted and which have been elaborated by
learned counsel for the respondent. But apart from them,
the only fair conclusion from the facts proved in the case
is that the Chaibasa Cement Works consisting of the factory
and the limestone quarry form one establishment. The
existence of two sets of Standing Orders and a separate
attendance register for the limestone quarry have already
been adverted to. They have been sufficiently explained by
Mr. Dongray, particularly the existence of two sets of
Standing Orders by reason of the statutory requirement of
approval by different authorities-one set by the Labour
Commissioner, Bihar, and other by the relevant Central
authority.
We proceed now to consider the legal difficulties which
according to learned counsel for the respondent stand in the
way of treating the limestone quarry and the factory as one
establishment. The Tribunal has merely hinted at these
difficulties by saying that an anomalous position will arise
if the quarry and the factory are treated as one
establishment. It is necessary to refer briefly to the
scheme and object of lay-off compensation and the
disqualifications therefor as envisaged by the relevant
provisions in Chapter VA of the Act. That chapter was
inserted by the Industrial Disputes (Amendment) Act, 1953
(43 of 1953), which came into effect from October 24, 1953.
The right of workmen to lay-off compensation is obviously
designed to relieve the hardship caused by unemployment due
to no fault of the employee; involuntary unemployment also
causes dislocation of trade and may result in general
economic insecurity. Therefore, the right is based on
grounds of humane public policy and the statute which gives
such right should be
719
liberally construed, and when there are disqualifying
provisions, the latter should be construed strictly with
reference to the words used therein. Now, s. 25 gives the
right, and there are three disqualifying clauses in s. 25E.
They show that the basis of the right to unemployment
compensation is that the unemployment is involuntary; in
other words, due to no fault of the employees themselves;
that is why no unemployment compensation is payable when
suitable alternative employment is offered and the workman
refuses to accept it as in cl. (1) of s. 25E ; or the work-
man does not present himself for work at the establishment
as in cl. (ii); or when the laying-off is due to the strike
or slowing down of production on the part of workmen in
another part of the establishment as in cl. (iii).
Obviously, the last clause treats the work men in one
establishment as one class and a strike of slow-down by some
resulting in the laying-off of other workmen disqualifies
the workmen laid-off from claiming unemployment
compensation, the reason being that the unemployment is not
really involuntary.
It is against this background of the scheme and object of
the relevant provisions of the Act that were must now
consider the -legal difficulties alleged by the respondent.
The first difficulty is said to arise out of s. 17 of the
Mines Act, 1952. That section says in effect that every
mine shall be under a Manager having prescribed
qualifications who shall be responsible for the control,
management and direction of the mine; it is then pointed out
that the word ’agent’ in relation to a mine means a person
who acts as the representative of the owner in respect of
the management of the mine and who is superior to a Manager.
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The argument is that the limestone quarry at Rajanka had a ’
Manager’ under the Mines Act, 1952, and Mr. Dongray acted as
the agent, that is, representative of the owner, viz., the
Company; and this arrangement which was in consonance with
the provisions of the Mines Act, 1952, it is argued, made
the factory and the quarry two separate establishments. We
are unable to accept this argument as correct. We do not
think that s. 17 of the Mines Act, 1952, has any relevance
720
to the question whether the limestone quarry was part of a
bigger establishment. It prescribes the appointment of a
Manager for purposes of the Mines Act, 1952, and does not
deal with the question of ’one establishment’ within the
meaning of cl. (iii) of s. 25E of the Act. The fact that
the quarry Manager worked under the overall control and
supervision of Mr. Dongray showed, on the facts proved in
this case, just the contrary of what learned counsel for the
respondent has contended ; it showed that the factory and
the quarry were treated as one establishment.
The second difficulty is said to arise out of certain
provisions of the Act which relate to the constitution of
Boards of Conciliation, Courts of Inquiry, Labour Courts and
Tribunals and the reference of industrial disputes to these
bodies for settlement, inquiry or adjudication. The scheme
of the Act is that except in the case of National Tribunals
which are appointed by the Central Government, the
appropriate Government makes the appointment of Boards of
Conciliation, Courts of Inquiry, Labour Courts and Tribunals
and it is the appropriate Government which makes the refer-
ence under s. 10 of the Act. Now, the expression
appropriate Government is defined in s. 2(a) of the Act. So
far as it is relevant for our purpose, it means the Central
Government in relation to the limestone quarry at Rajanka
and the State Government of Bihar in relation to the factory
at Jhinkpani. We had stated earlier in this judgment that
in this very case the original dispute between the
management and the workmen in the limestone quarry was
referred to the Central Tribunal at Dhanbad, while the
latter dispute about lay-off compensation to workmen of the
factory was referred by the Government of Bihar to the
Industrial Tribunal at Patna. The argument before us is
that when the statute itself brings the two units, factory
and mine, under different authorities, they cannot be
treated as one establishment for the purposes of the same
statute. Our attention has also been drawn to s. 18(3) of
the Act under which in certain circumstances, a settlement
arrived at in the course of conciliation proceedings under
the Act or an award of
721
a Labour Court or Tribunal is made binding " on all persons
who were employed in the establishment or part of the
establishment, as the case may be, to which the dispute
relates on the date of the dispute and all persons who
subsequently become employed in that establishment or part."
It is contended that it will be difficult to apply s. 18(3)
if the factory and the limestone quarry are treated as one
establishment. Lastly, learned counsel for the respondent
has referred us to s. 33 of the Act. Sub-section (1) of
that section, in substance, lays down that during the
pendency of any conciliation proceedings or of any
proceeding before a Labour Court or Tribunal in respect of
any industrial dispute, no employer shall alter the
conditions of service to the prejudice of workmen or punish
any workmen, save with the permission in writing of the
authority before which the proceeding is pending. Sub-
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sections (2) and (3) we need not reproduce, because for the
purposes of this _ appeal, the argument is the same, which
is that if a proceeding is pending before a Central
Tribunal, say in respect of the limestone quarry, there will
be difficulty in applying the provisions of s. 33 in respect
of workmen in the factory over which the Central Tribunal
will have no jurisdiction. The Industrial Tribunal did not
specifically refer to these provisions, but perhaps, had
them in mind when it said that an anomalous position would
arise if the factory and the quarry were treated as one
establishment.
We have given our most earnest consideration to these
arguments, but are unable to hold that they should prevail.
It is indeed true that in the matter of constitution of
Boards of Conciliation, Courts of Inquiry, Labour Courts and
Tribunals and also in the matter of reference of industrial
disputes to them, and perhaps for certain other limited
purposes, the Act gives jurisdiction to two distinct
authorities, the Central Government in respect of the
limestone quarry and the State Government in respect of the
factory. The short question is-does this duality’ of
jurisdiction, dichotomy one may call it, necessarily imply
that for all purposes of the Act, and particularly for
722
payment of unemployment compensation as per the provisions
in Ch. VA, the factory and the quarry must be treated as
separate establishments. We are unable to find any such
necessary implication. There is no provision in the Act
which says that the existence of two jurisdictions has the
consequence contended for by learned counsel for the
respondent; nor do we find anything in the provisions
creating two jurisdictions which by reason of the principle
underlying them or by their very nature give rise to an
implication in law that the existence of two jurisdictions
means the existence of two separate establishments. On the
contrary, such an implication or inference will be at
variance with the scheme and object of unemployment
compensation as provided for by the provisions in Ch. VA of
the Act. We have pointed out earlier that the object of
unemployment compensation is to relieve hardship caused by
involuntary unemployment, that is, unemployment not due to
any fault of the employees. If in the ordinary business
sense the industrial establishment is one, a lay-off of some
of the workmen in that establishment as a result of a strike
by some other workmen in the same establishment cannot be
characterised as involuntary unemployment. To hold that
such an establishment must be divided into two separate
parts by reason of the existence of two jurisdictions is to
import an artificiality for which we think there is no
justification in the provisions of the Act.
Nor do we think that ss. 18(3) and 33 present any real
difficulty. Section 18(3) clearly contemplates a settlement
or an award which is binding on a part of the establishment.
It says so in express terms. If, therefore, in the case
before us there is a settlement or award in respect of the
limestone quarry, it will be binding in the circumstances
mentioned in the subsection, on the workmen in that part of
the establishment which is the limestone quarry. Similarly,
a settlement or award in respect of the factory will be
binding on the workmen of the factory. Section 33, as far
as it is relevant for the argument now under consideration,
is in two parts. Sub-section (1) relates
723
to a matter connected with the dispute in respect of which a
proceeding is pending. Sub-section (2) relates to a matter
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not connected with the dispute in respect of which the
proceeding is pending. In one case permission of the
authority before which the proceeding is pending has to be
obtained for punishing etc. ; in the other case, an
application for approval of the action taken by the employer
has to be made. We see no difficulty in applying s. 33 in a
case like the one before us. For workmen in the mine, the
authority will be the one appointed by the Central
Government; for the factory, the authority will be that
appointed by the State Government. This is the same
argument as the argument of two jurisdictions in another
form. The assumption is that there cannot be two jurisdic-
tions for two parts of one establishment. This argument is
valid, if the assumption is correct. If, however, there is
no warrant for the assumption, as we have held there is
none, then the argument has no legs to stand upon.
So far we have dealt with the case irrespective of and apart
from reported decisions, because there is no decision which
really covers the point in controversy before us. Learned
counsel for the appellant has referred to the decisions in
Hoyle v. Cram (1) and Coles v. Dickinson (2 ). The question
in the first case was if the appellants there were liable to
be convicted of an offence against the Bleaching Works Act,
23 and 24 Vict. c. 78 in employing the child without a
school master’s certificate. It was held that a child
employed on the premises where the bleaching, dyeing and
finishing were performed was employed in an incidental
printing process within the second section of 8 and 9 Vict.
c. 29; and that the place where he was so employed formed
part of " the establishment where the chief process of
printing was carried on " within the meaning of that Act.
The decision proceeded mainly on the words of the statute;
but Earle, C.J., said:
" It appears that the works at Mayfield having some years
ago become inadequate, by reason of the
(1) (1862) 12 C.B. (N.S.) 125; 142 E.R. 1090.
(2) (1864) 16 C.B.(N.S.) 604; 143 E.R. 1264.
724
increase of the business and by the detorioration and
deficiency of the water of the river Medlock, the appellants
transferred part of their works to Sandy Vale: but that the
principal part of the work continued to be carried on at
Mayfield, which was the principal seat of the firm. In a
commercial sense, therefore, Sandy Vale clearly was part of
one entire establishment. It was contended for the
respondent that the statute did not mean forming part in a
commercial sense, but in a popular and local sense. But I
see no reason for confining the meaning to local proximity.
The whole substantially forms one establishment."
In the second case the question was this : by the 73rd
section of 7 and 8 Vict. c. 15, premises which are used
solely for the manufacture of paper were excluded from the
operation of the Factory Acts; there were two mills, one at
Manchester and the other in Hertfordshire. The Manchester
mill prepared what was called half-stuff which was sent to
the mill in Hertfordshire to be manufactured into paper, and
the question was if the Manchester mill was exempted from
the operation of the Factory Acts. The answer given was in
the affirmative. It was stated that each step in the
process was a step in the manufacture of paper, and the
distance between the two places where the several parts were
carried on was wholly immaterial in view of the words of the
statute.
The last decision to which our attention has been drawn is
the American decision in Donald L. Nordling v. Ford Motor
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Company (1). This decision is perhaps more in point as it
related to unemployment compensatiOn. The statute in that
case provided that an individual losing his employment
because of a strike or other labour dispute should be
disqualified during its process " at the establishment in
which he is or was employed ". The claimants there had been
employed at a Minnesota automobile assembly plant which was
partially shut down because of a lack of parts due to a
strike at a manufacturing plant owned and operated by the
same corporation in Michigan. The Minnesota Supreme Court
to which an application was made for
(1) (1950) 28 A.L.R. 2d. 272.
725
a certiorari to review a decision of the director of the
division of employment and security reviewed the tests which
have generally been applied for determining what is meant by
the term ’ establishment’ within the meaning of the statute
concerned; it pointed out that there was no uniformity of
decision on the question and it was not possible to lay down
an absolute or invariable test. The decision was based on
the broader ground that the tests of functional integrality,
general unity and physical proximity should all be taken
into consideration in determining the ultimate question of
whether a factory, plant or unit of a larger industry is a
separate establishment within the meaning of the employment
and security law. The test which was emphasized in that
case was the test of the unity of employment and on that
footing it was found that the evidence was ample to support
the director’s finding that the Minnesota plant was a
separate establishment.
We do not think that these decisions carry the matter any
further than what we have explained in earlier paragraphs of
this judgment. We must have regard to the provisions of the
statute under which the question falls to be considered; if
the statute itself says what is one establishment, then
there is no difficulty. If the statute does not, however,
say what constitutes one establishment, then the usual tests
have to be applied to determine the true relation between
the parts, branches etc., namely, whether they constitute
one integrated whole or not. No particular test can be
adopted as an absolute test in all cases of this type and
the word ’establishment’ is not to be given the sweeping
definition of one organisation of which it is capable, but
rather is to be construed in the ordinary business or
commercial sense.
For the reasons which we have already given, we are of the
view that the learned Chairman of the Industrial Tribunal
wrongly held that the limestone quarry at Rajanka and the
factory at Jhinkpani were separate establishments. In our
view, they constituted one establishment within the meaning
of cl. (iii) of
92
726
s.25E of the Act. It was conceded on behalf the respondent
workmen that the lay-off in the factory was due to the non-
supply of limestone by reason of the strike in the limestone
quarry and the strike was decided on by the same Union which
consisted of the workmen at the factory and the quarry.
That being the position, the disqualification in cl. (iii)
aforesaid clearly applied and the workmen at the factory
were not entitled to claim lay-off compensation.
The result, therefore, is that the appeal succeeds and is
allowed and the award of the Industrial Tribunal is set
aside. In the circumstances of the case in which a
difficult question of interpretation arose for decision for
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the first time, we pass no order as to costs.
Appeal allowed.