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The Management of Sri Krishna Talkies Vs. the President Officer, Labour Court and anr. - Court Judgment

LegalCrystal Citation
SubjectLabour and Industrial
CourtChennai High Court
Decided On
Reported in(1972)2MLJ329
AppellantThe Management of Sri Krishna Talkies
RespondentThe President Officer, Labour Court and anr.
Cases ReferredHariprasad v. A.D. Divelkar
Excerpt:
- .....it does not follow that the second respondent was retrenched from service so as to entitle him to claim retrenchment compensation and payment of one month's salary in lieu of notice; and(iii) the second respondent is not entitled to any other claim for he had failed to prove that he was entitled to the same.4. on behalf of the second respondent it was contended that the labour court had sufficient materials to come to the conclusion that the second respondent was forced to execute the letter of resignation, that in this proceeding under article 226 of the constitution it is not open to this court to review the evidence to find out whether the finding of the labour court is correct or not and that, therefore, the findings should be accepted. it is further contended that what in effect.....
Judgment:
ORDER

K.S. Palaniswamy, J.

1. Subba Rao, the second respondent herein, who was employed under Sri Krishna Talkies, Madras, the petitioner herein, as a cashier, applied under Section 33-C(2) of the Industrial Disputes Act, 1947 (hereinafter referred to as the Act) to the Labour Court, Madras, the first respondent, claiming a sum of Rs. 4,450-23, as due to him under certain heads. He alleged that he was forcibly retired from service on 15th May, 1968 and was paid only a sum of Rs. 1,001, that on that date he was entitled to a sum of Rs. 5,451-23, and that deducting the said payment of Rs. 1,001, the balance, namely, Rs. 4,450-23 was due to him. The amount of Rs. 5,451-23 was shown as made up of;

Rs. P.

1. Gratuity .. 1,530 00

2. Retrenchment compensation .. 2,682 00

3. Bonus at 20 per cent .. 715 20

4. 16 days leave wages .. 153 76

5. 7 days festival holiday wages .. 67 27

6. Wrong deduction from the salary

for the month of September, 1967 .. 5 00

7. Payment of one month's

salary in lieu of notice .. 298 00

__________

Total .. 5,451 23

___________

The petitioner-management resisted the claim contending inter alia that the second respondent voluntarily resigned with effect from 16th May, 1968 on receipt of Rs. 1,001 in full quit of the amount due to him and issued necessary vouchers and that, therefore, he was not entitled to any amount.

2. The second respondent gave evidence in support of his claim. On behalf of the management, one Abraham, the then Manager, gave evidence. On a consideration of the evidence, the Labour Court found that the management, with a view to get rid of the second respondent, obtained his signature in a document called 'Letter of Resignation', and that the case of the second respondent that he had not retired or resigned but had been only retrenched was made out. The Labour Court further found that a sum of Rs. 5 which was claimed as deduction from salary, was not due to the second respondent as there was a mistake and that the second respondent was entitled to the rest of the claim. Deducting the sum of Rs. 1,001, the Labour Court passed an order directing payment of the balance, namely, Rs. 4,445-23. This petition is directed against that, award which is sought to be quashed.

3. M. Narayanaswami, appearing for the petitioner, put forward the following contentions:

(i) On the evidence it does not follow that the management made the second respondent sign the letter of resignation. The finding of the Labour Court is unsupportable;

(ii) Even if the finding of the Labour Court is accepted as correct for the sake of argument, it does not follow that the second respondent was retrenched from service so as to entitle him to claim retrenchment compensation and payment of one month's salary in lieu of notice; and

(iii) The second respondent is not entitled to any other claim for he had failed to prove that he was entitled to the same.

4. On behalf of the second respondent it was contended that the Labour Court had sufficient materials to come to the conclusion that the second respondent was forced to execute the letter of resignation, that in this proceeding under Article 226 of the Constitution it is not open to this Court to review the evidence to find out whether the finding of the Labour Court is correct or not and that, therefore, the findings should be accepted. It is further contended that what in effect was achieved by the management was retrenchment of the second respondent and that, therefore, the award of the Labour Court holding that the second respondent was entitled to a retrenchment compensation and one month's salary in lieu of notice is correct. On other claims it was contended that the materials on record are sufficient to support the conclusion of the Labour Court.

5. Mr. Narayanaswami, Counsel for the petitioner, took me through the oral and documentary evidence to show that the finding of the Labour Court that the second respondent was forced to execute the letter of resignation is wholly unwarranted. He drew my attention to the fact that subsequent to the letter of resignation the second respondent had occasion to write to the management asking for payment of some more amount which he claimed as monetary benefits having regard to his 18 years service and that in these letters he did not whisper that he was forced to execute the letter of resignation. It is true, that in the first letter dated 30th May, 1968 written after the letter of resignation of 15th May, 1968 the second respondent did not make any allegation to lead to the inference that any pressure was brought to bear upon him to make him execute the letter of resignation. But in the next letter dated 16th May, 1968 he referred to the fact that he was forced to retire due to reasons better known to the management. In his subsequent letter dated 22nd June, 1968 he stated that he resigned and retired from the job on account of the management. Having regard to these circumstances and the evidence of the second respondent, the Labour Court came to the conclusion that the second respondent had been forced to execute the letter of resignation. It cannot be said that there was total lack of evidence to warrant this finding. I shall accept, for the purposes of this case that the said finding is correct and consider what legal consequences would follow in view of that finding.

6. The Labour Court has not borne in mind the correct principles to be applied in deciding a question of this kind. The second respondent claims retrenchment compensation and payment of one month's salary in lieu of notice as if he had been retrenched from service. Though he alleged in his claim statement that he was entitled to retrenchment compensation as he was forced to retire, he did not state that he was retrenched for the reason that he was considered as a surplus hand. Nor did he say in his evidence anything on that aspect. It was elicited in the cross-examination of the manager of the petitioner that in the place of the second respondent the management had appointed one K.V. Chandy to work as cashier. In the face of this evidence, the question is whether the Labour Court was right in awarding retrenchment compensation and one month's salary in lieu of notice to the second respondent. In other words, the question is whether the second respondent can be said to have been retrenched from service within the meaning of Section 2(00) of the Act, which reads:

(00) 'retrenchment' means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include-

(a) voluntary retirement of the workman; or

(b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf, or

(c) termination of the service of a workman on the ground of continued ill-health.

7. The scope of this definition of 'retrenchment' arose for consideration before the Supreme Court in Barsi Railway Co. Ltd. v. Jogiekar and Ors. : [1957]1SCR121 . In that case a railway company served a notice upon its workmen intimating that as a result of the Government of India's decision to terminate the contract of the railway company and to takeover the railway, the services of all the workmen of the railway company would be terminated with effect from a particular date. In pursuance of this notice, their services were terminated. The question considered by the Supreme Court was whether the services of the workmen were retrenched within the meaning of Section 2(00). That decision arose in appeal from a decision, of the Bombay High Court reported in Jogiekar v. Barsi Railway Co. Ltd. 1955 U.K.J.K.J.H. 371. The High Court of Bombay had taken the view that inasmuch as it was a case of closure of the business, the termination of the services of the employees amounted to retrenchment and that the employees were, entitled to retrenchment compensation. Overruling this view, the Supreme Court observed at page 252-

For the reasons given above, we hold, contrary to the view expressed by the Bombay High Court, that retrenchment as defined in Section 2(00) and as used in Section 25F has no wider meaning than the ordinary, accepted connotation of the word : it means the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise, than as a punishment inflicted by way of disciplinary action, and it has no application where the services of all workmen have been terminated by the employer on a real and bona fids closure of business as in the case of Sri Dinesh Mills Ltd., or on the service of all business or undertaking being taken over by another employer in circumstances like those of the railway company...On our interpretation in no case is there any retrenchment, unless there is discharge of surplus labpur or staff in a continuing or running industry.

In coming to the above conclusion, their Lordships analysed the definition of 'retrenchment' in Section 2(00) and observed that four essential requirements were involved, namely, (1) termination of the services of a workman; (2) by the employer, (3) for any reason whatsoever; and (4) otherwise than as a punishment inflicted by way of disciplinary action. Conceding that the definition was indeed Very wide, their Lordships construed the expression 'for any reason whatsoever' as not to be interpreted to include the case of discharge of all workmen on account of the bona fide closure of business. It was observed that in the absence of any compelling words to indicate that the intention was even, to include a bona fide closure of the business it would be divorcing the expression altogether from its context to give it such a wide meaning, and that where, within the framework of the ordinary acceptation of the word, every single requirement of the definition clause is fulfilled, it would be wrong to take the definition as destroying the essential meaning of the word defined. It is for these reasons that their Lordships laid down the principle that in no case could there be any retrenchment unless there is discharge of surplus labour or staff in a continuing or running industry.

8. A Full Bench of the Bombay High, Court in National Garage v. Gonsalves : (1962)ILLJ56Bom considered the question whether the termination of the services simpliciter amounted to retrenchment attracting, Section 25-F and answered it in the negative. Chainani, C.J. speaking for the Court, after extracting the above portion of the judgment of the Supreme Court, observed at page 60:

We are bound by the above decision, of the Supreme Court. We accordingly hold that retrenchment within the meaning of the Industrial Disputes Act means discharge of surplus labour or staff in a continuing or running industry...If the termination of services is found to be due to the reason that the workmen discharged was surplus, i.e., in excess of the requirements of the business or the industry concerned, it will amount to retrenchment within the meaning of the Act. If the termination of services is due to any other reason, it will not constitute retrenchment.

9. In Desikachari v. The Mail : AIR1962Mad327 , he scope of Section 2(00) was raised, before a Bench of this Court. But the question was expressly left undecided, though the learned Judges had noticed the argument of the Advocate-General that the decision of the Supreme Court in Hariprasad v. A.D. Divelkar (1957) I L.L.J. 243 : 1957 S.C.J. 83, should be confined to the case of a discharge of workers where the industry itself had ceased to exist by reason of closure. On behalf of the second respondent it was contended that it cannot be said, that their Lordships of the Supreme Court had intended to lay down that the element of surplusage is an essential ingredient in all cases and that therefore, the decision of the Supreme Court should be understood in the peculiar facts of that case which related to closure of the business. I am unable to accept this argument. It is no doubt true that the Supreme Court was concerned with, the employees who were discharged consequent upon the closure of the industry. But a reading of the judgment would show that their Lordships were concerned with the precise scope of the expression 'retirement' as defined in Section 2(00) and ruled that its scope was, how it should be ordinarily understood and how the definition so understood would not cover the case of discharge consequent upon the closure or transfer of an industry. In Murugesa Naicker Co. v. Labour Court (1963) I L.L.J. 495, the scope of the aforesaid decision of the Supreme Court arose for consideration before Veeraswami, J., as, he then was. The learned Judge, after extracting the definition of 'retrenchment' observed:

Prima facie it may appear that the definition as worded would include every kind of termination. In fact, the exclusion of the cases falling within the purview of (b) and (c) in the definition would suggest that surplusage of labour is not the test of retrenchment. If the matter were res Integra I must confess I should have had considerable difficulty in reading the definition of 'retrenchment' in a narrower sense. The precise question was, however, considered by the Supreme Court in Hariprasad v. A.D. Divelkar 1957 S.C.J. 83 : (1957) 1 L.L.J. 243.

And after extracting the relevant portion of the judgment of the Supreme Court, the learned Judge observed-

It seems to me that the ambit of the section was, therefore, clearly delimited by the Supreme Court in that decision.

10. Having regard to the foregoing principles the question arises, whether the finding of the Labour Court that the second respondent was forced to resign is sufficient to hold that the second respondent is entitled to retrenchment compensation and one month's salary in lieu of notice. Clearly it is not. There is no whisper in the claim statement or in the evidence that the services of the second respondent were terminated on the ground he was considered as a surplus hand. On the other hand, there is positive evidence that after the second respondent left the service either by way of retrenchment or resignation, the management appointed one Chandy to work in the place of the second respondent. On the finding of the Labour Court it follows that the second respondent was not retrenched from service within the meaning of Section 2(00) as interpreted by the Supreme Court, and is therefore not entitled to retrenchment compensation and one month's salary in lieu of notice as if his services were terminated by retrenchment. The Labour Court failed to notice this fact in accepting the claim of the second respondent on these two heads. The award of the Labour Court, so far as those two items are concerned, is unsustainable.

11. Out of the seven items of claims made by the second respondent, the Labour Court disallowed only one item, namely, Rs. 5 which the second respondent claimed as an unlawful deduction from his salary in the month of September, 1967 which the Labour Court found was the correct deduction on account of some error. After finding that the case of the second respondent that he was retrenched and that he did not retire or resign had been made out the Labour Court concluded as if that finding was sufficient to uphold the claim of the second respondent on other respects. The claim included gratuity of Rs. 1,530 calculated at 15 days basic wages of every completed year of service for 18 years taking the basic wages as Rs. 170. The management disputed this claim contending inter alia that the second respondent's basic pay was only Rs. 100, that he was eligible to a gratuity of Rs. 990 and was actually paid Rs. 1,001 in full quit and that, therefore, the second respondent was not entitled to any amount by way of gratuity. The Labour Court totally failed to consider this controversy. As a matter of fact, in his evidence, the second respondent admitted that his basic salary, as entered in the books of accounts, was Rs. 110. It was contended on his behalf that though the sum of Rs. no was basic pay as cashier, the second respondent was also attending to the work of banking assistant for which he was separately entitled to Rs. 55 as basic wages and that therefore the correct amount of basic wages for both the posts held by the second respondent would be Rs. 165. This aspect was also not considered by the Labour Court.

12. Another item of claim of the second respondent was Rs. 712-20 said to be bonus at 20 per cent of the wages. The management disputed this claim contending that for the year 1967-68 the second respondent did not work for any day and that unless he proved that he had worked for not less than 30 days he was not entitled to bonus. There is controversy as to whether the second respondent worked for 30 days or less number of days. This aspect also has been lost sight of by the Labour Court which has assumed as if upon the mere proof that the second respondent was retrenched from service he was entitled to bonus. Likewise, the claim of the second respondent for leave wages and festival holiday wages which have been disputed by the management have not been considered. It is regrettable that the Labour Court has disposed of these claims in a perfunctory and summary manner without applying its mind to the principles that govern the various heads of claims. Findings of fact are necessary on some of these matters. In this view, I do not wish to express any opinion on these questions. The matter has to go back to the Labour Court for fresh disposal of these claims.

13. In the result, the award of the Labour Court is quashed. The claims to retrenchment compensation and payment of one month's salary in lieu of notice shall stand disallowed. The matter is remitted to the Labour Court for fresh disposal with regard to the second respondent's claim under other heads (except item 6 which has been already disallowed by the Labour Court). The parties are at liberty to adduce additional evidence on those items. No costs.


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