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Motibhai Narshibhai and ors. Vs. Jivti Bhagwanji and ors. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtGujarat High Court
Decided On
Judge
Reported in(1971)12GLR35
AppellantMotibhai Narshibhai and ors.
RespondentJivti Bhagwanji and ors.
Cases ReferredU.P. Electric Supply Co. Ltd. v. R.K. Shukla and Anr.
Excerpt:
.....held that the language of section 25ff in its principal clause made it perfectly clear that if the right to retrenchment compensation accrued under it, it must be a right to receive that compensation from the previous employer who was the owner upto the date of transfer and who alone could give notice in accordance with the provisions of section 25f, it was implicit in the language of the clause that the liability would be of the previous employer and, therefore, retrenchment could be deemed to have been made only by the previous employer. that is why their lordships observed that this clearly raised a dispute relating to retrenchment. these observations of their lordships clearly show that the ruling in south arcot electricity distribution co. 's case (supra), which clearly settles the..........held that the language of section 25ff in its principal clause made it perfectly clear that if the right to retrenchment compensation accrued under it, it must be a right to receive that compensation from the previous employer who was the owner upto the date of transfer and who alone could give notice in accordance with the provisions of section 25f, it was implicit in the language of the clause that the liability would be of the previous employer and, therefore, retrenchment could be deemed to have been made only by the previous employer. the principal clause enacted a legal fiction of retrenchment and, therefore, the application under section 33c(2) was held to be competent.4. mr. parikh further argued that the latter decision of the supreme court must be treated to have taken a.....
Judgment:

J.B. Mehta, J.

1. The petitioners who were the old partners of Ambica Pottery Works at Morvi challenge in this petition the order of the Labour Court dated April 7, for computing the benefit of notice pay and retrenchment compensation due to respondent No. 1 and which is ordered to be paid by the petitioners. The petitioners carried on the business of this concern namely Ambica Pottery Works in partnership. The said concern was taken over on November 1, 1965 in an auction sale in a running condition by respondents Nos. 3 to 10 who constituted the new firm. Respondent No. 3 was common to both the old and the new firm. After the concern was thus taken over the respondent No. 1 workman applied to the Labour Court under Section 33C(2) of the Industrial Disputes Act, to have her dues under Section 25FF computed on the ground that this transfer of the undertaking to the new partnership amounted to retrenchment and she was not paid any retrenchment compensation The petitioners-old partners-as well as the respondents-new partners disputed any such liability. The Labour Court held that as there was transfer of undertaking there was retrenchment. The condition of the proviso to Section 25FF, particularly condition (c) was not satisfied as there was nothing on the record to suggest that the services of the workmen were treated as continuous or that the new partners undertook to pay the retrenchment compensation on that basis of continuous service without any interruption. In view of the aforesaid finding the Labour Court has ordered computation of the said benefit of the notice pay and retrenchment compensation due to respondent No. 1 and has ordered that this amount should be recovered from the petitioners-old partners-jointly and severally. It is this order which is challenged in this petition by the petitioners.

2. Mr. Parikh at the time of hearing raised two points:

(1) That the Labour Court had no jurisdiction as the matter of retrenchment was within the exclusive competence of the Industrial Tribunal as the matter was covered by item 10 of the third Schedule to the Industrial Disputes Act (here in after referred to as the Act); and

(2) That the finding of the Labour Court that there was no continuity of the service and that the conditions of the proviso to Section 25-FF were not fulfilled was perverse.

3. As regards the first question the legal position is now well-settled. In the Board of Directors of the South A root Electricity Distribution Co. Ltd. v. N.K. Mohmmed Khan etc. : (1970)IILLJ44SC , their Lord ships in terms reiterated the ratio of the earlier decisions as under:

These decisions make it clear that a workman cannot put forward a claim in an application under Section 33C(2) in respect of a matter which is not based on an existing right and which can be appropriately the subject-matter of an industrial dispute only requiring reference under Section 10 of the Act.

Their Lordships immediately pointed out that in the case before their Lordships the claim for retrenchment compensation on the transfer of the electrical undertaking was based under Section 25FF of the Act as the said right accrued to the workmen under Section 25FF of the Act and was an existing right at the time when the applications were made. The Labour Court clearly had jurisdiction to decide whether such a right did or did not exist, when dealing with the applications under that provision. The mere denial of that right by the company could not take away the jurisdiction of the Labour Court and, therefore, the order made by the Labour Court was held to be competent. Even as regards the contention of the Company that the question whether the company was liable or the Government which had taken over the Electricity Company was liable, it was held that the Labour Court had the jurisdiction to go into that question in such an application for computation of the benefit under Section 25FF of the Act as it was an existing right, which initially accrued under the provisions of law. In computing the benefit under that right and laying it down that the liability was enforceable against the company the Labour Court was concerned with the right claimed under the Act. Whether by virtue of the provisions of the terms of the transfer of the undertaking of the company to the Government or by virtue of the Madras Act in that connection, the company was entitled to claim that this liability should be ultimately met by the State Government was a point which did not affect the right of the workmen to claim their compensation from the company. In fact at page 198 it was in terms held that the language of Section 25FF in its principal clause made it perfectly clear that if the right to retrenchment compensation accrued under it, it must be a right to receive that compensation from the previous employer who was the owner upto the date of transfer and who alone could give notice in accordance with the provisions of Section 25F, it was implicit in the language of the clause that the liability would be of the previous employer and, therefore, retrenchment could be deemed to have been made only by the previous employer. The principal clause enacted a legal fiction of retrenchment and, therefore, the application under Section 33C(2) was held to be competent.

4. Mr. Parikh further argued that the latter decision of the Supreme Court must be treated to have taken a different view. Mr. Parikh vehemently relied on the case of U.P. Electric Supply Co. Ltd. v. R.K. Shukla and Anr. etc. : (1969)IILLJ728SC . That decision is also by the Division Bench of two Judges and there is nothing in that decision to suggest that the earlier decision in the Board of Directors of the South Arcot Electricity Distribution Co. Ltd. (supra) has been in any manner overruled. The later decision proceeds on its special facts. At pages 404 and 405 their Lordships in terms pointed out the relevant pleas. The workmen contended that they were retrenched while the company contended that the workers voluntarily abandoned the employment under the company because they found it more profitable to take up employment under the Board without any break in the same post and on the same terms and conditions on which they were employed in the Company. That is why their Lordships observed that this clearly raised a dispute relating to retrenchment. Their Lordships also observed that disputes relating to retrenchment of workmen and closure of establishment fell within the exclusive competence of the Labour Court. That is why at page 407 their Lordships again pointed out that in order that a claim may be adjudicated upon under Section 33C(2) there must be an existing right and the right must arise under an award, settlement or under the provisions of Chapter V-A, or it must be a benefit provided by a statute or a scheme made thereunder and there must be nothing contrary under such statute or Section 33C(2). But the possibility of a mere claim arising under Section 33C(2) was not envisaged by the Court as conferring jurisdiction upon the Labour Court to decide matters which were essentially within the jurisdiction of the Industrial Tribunal Further proceeding at page 408 their Lordships pointed out that where however the right to retrenchment compensation which is the foundation of the claim is itself a matter which is exclusively within the competence of the Industrial Tribunal to be adjudicated upon a reference, it would be straining the language of Section 33C(2) to hold that the question whether there has been retrenchment may be decided by the Labour Court. The power of the Labour Court is to compute the compensation claimed to be payable to the workmen on the footing that there has been retrenchment of the workmen. Where retrenchment is conceded, and the only matter in dispute is that by virtue of Section 25FF no liability to pay compensation has arisen, the Labour Court would be competent to decide the question. In such a case the question is one of computation and not of determination of the conditions precedent to the accrual of liability. Where, however, the dispute is whether workmen have been retrenched and computation of the amount is subsidiary or incidental, the Labour Court would have no authority to trespass upon the powers of the Tribunal with which it is statutorily invested. In this context it was mentioned that in the South Arcot case apparently the only argument advanced before this Court was whether Section 25FF applied to that case having regard to the fact that the terms of employment under the new employer were not favorable than those immediately applicable to them before the transfer, and the Court proceeded to hold that the Labour Court was competent to determine the compensation. These observations of their Lordships clearly show that the ruling in South Arcot Electricity Distribution Co. Ltd. (supra) has not been overruled in any manner The test applied by their Lordships was as to whether retrenchment itself is disputed or whether retrenchment is conceded or could not be disputed, and the only matter in dispute is as to whether there is liability to pay compensation under Section 25FF of the Act. In the case before their Lordships, the retrenchment itself was disputed because the employer took up the plea that the workmen had voluntarily abandoned the employment. That is why their Lordships held in that case that the Labour Court was incompetent to decide this question whether there was retrenchment or voluntarily abandonment of the employment, as this issue was exclusively within the competence of the Industrial Tribunal.

5. In the present case the facts are totally different. The retrenchment must be considered to have been conceded, because there is no dispute that this was a case of transfer of undertaking by reason of auction sale, therefore, Section 25FF itself creates a legal fiction of retrenchment as mentioned in the South Arcot Electricity Distribution Co. Lid's case (supra), and the old partners would be liable to pay retrenchment compensation under Section 25FF of the Act, unless the case fell within the terms of the proviso. In such a case the question would be one of computation and not of determination of the condition precedent to the accrual of liability. It is of course true that the Labour Court could not pass an order against old employers without going into the question whether the conditions of the proviso were fulfilled. Therefore, the latter decision could not help Mr. Parikh as it does not lay down any other legal position than what has been laid down in the South Arcot Electricity Distribution Co. Ltd.'s case (supra), which clearly settles the question so far the jurisdiction of the Labour Court to compute the benefit under Section 25FF is concerned such cases where there is no dispute that the undertaking has been transferred and so, the retrenchment is clearly conceded. It should also be kept in mind that in the present case an individual workman has applied for computation of an existing benefit under Section 33C(2). The exclusive jurisdiction of Industrial Tribunal under the various item of the Third Schedule would only arise in respect of matters which are not based on any existing legal right and which could be appropriately the subject matter of an industrial dispute only requiring such a reference under Section 10 of the Act. In the present case, the individual workman is not claiming any industrial right but an existing legal right as on admitted facts the retrenchment gets conceded when there is no dispute as to the transfer of the undertaking and, therefore, there is no necessity of any industrial dispute being first raised and referred to the Industrial Tribunal, which would have exclusive competence to make the necessary adjudication for conferring the disputed industrial right to the concerned workman under its award. Even the Division Bench consisting of Vakil J. and S.H. Sheth J. in Special Civil Applications Nos. 29 of 1965, 672 of 1966 and 340 of 1965 decided on July 18, 1969 had also taken the same view, even after considering this latter decision of the Supreme Court, by holding that the Labour Court has jurisdiction to compute the benefit under Section 25FFF on closure of the undertaking, and that such dispute was not within the exclusive competence of the Industrial Tribunal under item 10 of Schedule III. In view of this settled legal position the first contention of Mr. Parikh must fail that the Labour Court has no jurisdiction to entertain the application of respondent No. 1.

6. As regards the second question the Labour Court has in terms recorded the finding that there is nothing on the record to suggest that the services of the workmen were to be treated as continuous by the new partners. The Labour Court in terms relied upon the terms of the sale-deed which itself provided that all liabilities relating to sales tax, income tax, Government tax and under the agreement till October 29, 1965 were of the old partners and from October 30, 1965 they were of the new partners. Therefore, there is no term whatsoever as to how the services of the old workmen were to be treated. Even when the Union wrote a letter demanding continuity of services the new employers refused to give any such undertaking and they merely stated that old employees had been taken on work and none was to be rendered unemployed, if he performed, satisfactory work. But it could not be predicted how long the concern would work. In fact an amount of Rs. 2000/- was kept with the receiver for the payment of the dues of the workmen. Therefore, there was sufficient material on record to justify the conclusion of the Labour Court that there is nothing in the evidence to suggest that the new employers have given continuity to the workmen and had undertaken to pay retrenchment compensation treating the entire service as continuous. Therefore, the said finding that the condition (c) of proviso to Section 25FF of the Act was in any case not fulfilled cannot be said to be perverse. Therefore, the Labour Court was right in ordering the old partners to pay the amount as ordered to be computed by it. Therefore, no ground has been made out justifying any interference with the order of the Labour Court.

7. In the result this petition fails. Rule discharged. There shall be no order as to costs as respondent No. 1 has not appeared. There shall be no order as to costs of other respondents.

Rule accordingly discharged. No order as to costs.


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