1. Rashtriya Maharashtra Elektrosmelt Kamgar Sangh, which is registered as a representative union under the provisions of the Bombay Industrial Relations Act, 1946, sought to challenge the order dated 30th August, 1982 passed by respondent No. 1 Assistant Commissioner of Labour, Nagpur, granting permission to respondent No. 2 Maharashtra Elektrosmelt Ltd., Chandrapur (hereinafter referred to as the company) to lay off 200 employees. By an amendment, the Union has also sought an order quashing the notice dated 21st May, 1983 issued by respondent No. 2 company consequent to the permission granted by respondent No. 1 giving lay off to the employees mentioned in the list Annexure 'A' appended to the said notice.
2. On 29th June, 1982, the company wrote to the Deputy Commissioner of Labour that in view of discontinuance of production of steel it was necessary to lay off about 500 employees for a period of 3 to 6 months. This was followed by an application in Form XXIII-C under rule 79B(1) of the Industrial Disputes (Bombay) Rules 1957, seeking permission under S. 25-M of the Industrial Disputes Act to lay off 447 workmen out of the total of 895 workmen with effect from 15th July, 1982 for the reasons mentioned in column 20 of the Annexure to the said application.
3. The reasons for the proposed lay off for which permission was sought were as follows :-
i) Heavy accumulation of stocks of finished goods having poor market.
ii) Modification of smelting furnace and steel melt shop equipment.
iii) Cost of production has gone up due to high cost of power and inputs costs compared with the sales realisation of the finished products.
iv) Market prices have gone down due to the liberal policy of Government in respect of import of steel products.
v) Very low export price for Ferro-Manganese and reduced domestic demand.
The application was submitted on 2nd July, 1982 and as mentioned above, permission to lay off the workers was sought with effect from 15th July, 1982.
4. The Assistant Commissioner of Labour, Nagpur, on the basis of the date placed before him accepted Grounds Nos. 1 and 3 and granted permission to lay off only 200 employees. He rejected Grounds Nos. 2, 4 and 5. The order was passed on 30th August, 1982. Being aggrieved by this order, the petitioner has filed this writ petition, on 22nd November 1982, for quashing the said order. Nothing was done by the company in pursuance of the permission till 21st May, 1983, on which date the above referred notice (Annexure 12) was put up for giving lay off to 200 employees mentioned in the Annexure to the said notice.
5. The impugned order is challenged on the ground that the learned Assistant Commissioner of Labour based the order on an incomplete and misleading data in respect of the quantity of pig iron used for manufacturing steel. It was contended that the figures given by the company in respect of accumulation of stock of pig iron were misleading, in as much as the quantity of pig iron used for manufacturing steel was included in the figures shown in the accumulated stock of pig iron. The finding on ground No. 3 was assailed on the ground that there was no appreciable increase in power rate. It was also contended that the increase in the cost of power could not be a reason for lay off, it being non-germane to the definition of 'Lay Off' given in S. 2(kkk) of the Industrial Disputes Act, as it stood before its amendment by Act No. 46 of 1982. It was contended that the increase in the cost of production is not one of the grounds of lay off mentioned in the definition, nor could it be said that it fell within the ambit of 'any other reason' contemplated by the definition of 'lay off' as it stood before the amendment by Act No. 46 of 1982, which came into force on 31st August, 1982, a day after the impugned order was passed.
6. The impugned notice of lay off is challenged on the ground that it was issued in pursuance of the permission which became infructuous on account of delay. As we found for the following reasons that the impugned notice was invalid because the permission itself had become infructuous, we do not think it necessary to consider the challenges made to the impugned order, leaving the company liberty to apply for fresh permission.
7. The definition of 'lay off' as contained in S. 2(kkk) of the Industrial Disputes Act, 1947, as it stood before the amendment by Act No. 46 of 1982, was as follows :
''Lay Off' with its grammatical variations and cognate expressions means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or for any other reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.'
8. Section 25-C of the Industrial Disputes Act recognized the right of workmen laid off to get compensation and lays down that 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, whether continuously or intermittently, 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 clearness allowance that would have been payable to him had he not been so laid off. The first proviso, has it only for 45 days during any period of 12 months, provided there is an agreement to that effect between the workman and the employer, while the second proviso, as it then stood, empowers the employer to retrench the laid off workman after the expiry of the first 45 days of the lay off.
9. Section 25-M, which is contained in Chapter V-B, which was inserted vide Industrial Disputes (Amendment) Act, 1976, prohibits an employer to give lay off without the previous permission of such authority as may be specified by the appropriate Government by a notification in the official gazette, unless such lay off is due to shortage or power or natural calamity. Sub-section (3) of S. 25-M empowers the authority to whom the application is made to grant or refuse the permission applied for, after making such enquiry as it deems fit and for reasons to be recorded in writing. Sub-section (4) enjoins a duty on authority to complete the enquiry and to communicate the permission or the refusal within a period of two months from the date on which the application is made and provides further than in case such a permission or refusal is not communicated within the said period of two months, permission applied for shall be deemed to have been granted on the expiration of the said period of two months. Sub-section (5), inter alia lays down that where no application for permission is made or if permission is refused, the lay off shall be deemed to be illegal from the date on which the workmen have been laid off and the workmen shall be entitled to all the benefits under any law for the time being in force as if they had not been laid off. It is thus clear from the scheme of the section itself that an application for permission to lay off must be filed at least two months before the date from which the workmen are proposed to be laid off. Sub-section (1) of S. 25-M contemplates previous permission of the authority. Two months' period is allowed to the authority to complete the enquiry and it is only at the expiry of the said period that permission would be deemed to have been granted if order granting or refusing permission is not passed or communicated on or before the expiry of the said period. It is, therefore, clear that no lay off can be proposed to be commenced before the expiry of at least two months from the date of the application for permission.
10. Rule 79-B of the Industrial Disputes (Bombay) Rules, 1957, as amended by Industrial Disputes (Bombay) (1st Amendment) Rules, 1976, inter alia, lays down that application for permission to lay off any workman under sub-s. (1) of S. 25-M shall be made in Form XXIII-C. It will be seen from Form XXIII-C, which was inserted vide Industrial Disputes (Bombay) (1st Amendment) Rules, 1976, which came into force on 28th April, 1976, that in the application for permission the date from which the lay off is proposed to be given must be mentioned. Naturally, therefore, when the concerned authority grants the permission sought, the permission becomes effective from the date which is mentioned in the application as the date from which the lay off is proposed to be given. The management, therefore, would be entitled to commence the lay off from the date mentioned in the application.
11. In a given case, as in the present one, the management may mention a date within a period of two months from the date of the application as the one from which they lay off would be given. It may be possible that the management may even commence giving lay off from a date before the date of expiry of the said period. The first case does not present any difficulty if the management does not proceed to give lay off before the permission is granted. In the second case, there would not be any difficulty if permission is granted ultimately. But, if permission is refused, the effect stated in sub-s. (5) of S. 25-M would take place and the lay off would be deemed to be illegal from the date on which the workmen were laid off.
11-A. The material question, however, that falls for consideration is whether the management can take its own time for commencing the lay off even though the date of commencement of lay off is mentioned in the application or the management must start giving the lay off from the date mentioned in the application or if no date is mentioned or the date mentioned has already expired before permission is granted or is deemed to have been granted, then the lay off must be given from the date of the order granting the permission. As observed above, the form of application contemplates that the date of commencement of lay off must be mentioned. It is pertinent to note that granting or refusing permission is not an empty formality. The concerned authority is bound to enquire and satisfy itself on the basis of the material placed before it that the grounds given for lay off are established. The lay off does not result in termination of employer-employee relationship. The relationships stands suspended only for a temporary period for grounds which have temporary significance. The failure, refusal or inability of the employer contemplated by the definition is not of permanent nature and is such as is caused by temporary difficulties enumerated in the definition given in S. 2(kkk). The relevant considerations on which the permission can be given, therefore, must be based on date which has some relevance to the purpose of lay off. The grounds on which lay off is sought must exist at the time when lay off is proposed to be given and the authority enjoined with the duty of granting or refusing the permission must satisfy itself about the existence of such grounds during the material time. It is in this context that cls. 5, 8, 10, 14, 15, 18 and 19 of the Annexure to the application assume significance. The Annexure to form XXIII-C enumerates the item on which the employer is expected to furnish information to the concerned authority. Item No. 5 relates to annual production item wise for the preceding three years and production figures monthwise for the preceding 12 months. Item No. 8 is about the position of the order book item wise and valuewise for a period of six months and one year next following and for the period after expiry of the said one year. Item No. 10 relates to balance-sheets, profit and loss accounts and audit reports for the last three years. Item No. 14 is about the administrative, general and selling cost in absolute terms per year in the last three years and percentage thereof to the total cost. Item No. 18 is about the position of stocks on last day of the month in the preceding 12 months and Item No. 19 is in respect of annual sales figures for the last three years and monthwise sales figures for the preceding 12 months both item wise and value wise. It is on the basis of this information that the concerned authority is expected to ascertain whether any of the grounds justifying lay off exist.
12. Significantly enough, so far as production figures, position of stock and sales figures are concerned, the management is expected to furnish monthwise information for 12 months preceding the date of the application for permission. The whole endeavour, therefore, is expected to be to ascertain whether on the date on which the lay off is proposed to be given, the circumstances justifying the lay off exist or not. Hence, it is incumbent on the management to commence the lay off from the date mentioned in the application or if the date has already expired, then from the date of the order. It is conceivable in the light of the position stated above that the permission would ensure to the benefit of the management for all times to be utilised at any time the management chooses to do so. As rightly urged by Shri Dhabe, lay off curtails the right of workmen and the provisions relating to lay off must be liberally interpreted in favour of the workmen whose rights are curtailed by the provisions. At the most, it can be said that if the date for commencing the lay off is already over, then the lay off can be commenced within a reasonable time after the order is communicated. Reasonable time is of course a question of fact depending upon the circumstances of each case. But, as emphasised above, lay off is of temporary nature, permission for which is granted on the basis of existence of circumstances prevailing on the date on which the application is made or on the date on which lay off is proposed to be given. Reasonable time obviously would not mean the time taken by the management to make up its mind. Reasonable time would be the time required for completing the process that might be going on the date on which permission was granted.
13. Judged in the context of the above observations, it is clear that the permission granted vide the impugned order had become infructuous because the date on the basis of which the order was passed became irrelevant for the period for which the lay off is sought to be given. It will be seen from the statements filed by the management before respondent No. 1 that relevant information was supplied for the period ending at the latest at the end of June, 1982. On the basis of this information permission could not have been granted on 21st May, 1983, the date on which the management proposed to implement it. It is also significant to note in this context what the company stated in the letter dated 29th June, 1982 about the period for which the lay off was expected to last. This is what is stated in the penultimate paragraph of the letter addressed to the Deputy Commissioner of Labour :
'While we have discontinued our steel operations from May 1982, we have not immediately laid off our employees connected with the steel plant. As a temporary measure, these employees have been given alternative jobs in the area of overhauling of the steel plant equipment, minor modifications, regular maintenance and material handling etc. although output was of much less and we were required to pay full wages to them. These jobs are now over and it is not possible for us to provide any alternative work to these employees and continue giving full wages and fringe benefits. We are, therefore, constrained to lay off about 500 employees FOR A PERIOD OF 3 TO 6 MONTHS, and in case the situation as stated above does not improve considerably, we shall be forced to take steps for retrenching these employees. Necessary application to this effect would be file within a short period.'
14. It is, therefore, clear that even the management expected the lay off to last for a period of 3 to 6 months from 15th July, 1982. This period was over along before the impugned notice was given. The delay in implementing the permission has rendered it infructuous and the impugned notice based on the said permission is illegal and must be quashed. In view of this finding, it is not necessary to decide the question whether the permission itself was bad in law. It is also not necessary because the management seeks liberty to file a fresh application for permission. Accordingly we quash the impugned notice of lay off with liberty to the management of respondent No. 2 to apply for fresh permission, which obviously must be sought on the basis of the position existing on the date of the application.
15. In the result, the petition is partly allowed and the impugned notice dated 21st May, 1983 is quashed. No order as to costs.
16. Petition partly allowed.