{"id":6895,"date":"1955-12-23T00:00:00","date_gmt":"1955-12-22T18:30:00","guid":{"rendered":"https:\/\/www.legalindia.com\/judgments\/j-k-iron-and-steel-co-ltd-vs-the-iron-and-steel-mazdoor-union-on-23-december-1955"},"modified":"2016-11-30T14:22:40","modified_gmt":"2016-11-30T08:52:40","slug":"j-k-iron-and-steel-co-ltd-vs-the-iron-and-steel-mazdoor-union-on-23-december-1955","status":"publish","type":"post","link":"https:\/\/www.legalindia.com\/judgments\/j-k-iron-and-steel-co-ltd-vs-the-iron-and-steel-mazdoor-union-on-23-december-1955","title":{"rendered":"J.K. Iron And Steel Co. Ltd., … vs The Iron And Steel Mazdoor Union, … on 23 December, 1955"},"content":{"rendered":"
Supreme Court of India<\/div>\n
J.K. Iron And Steel Co. Ltd., … vs The Iron And Steel Mazdoor Union, … on 23 December, 1955<\/div>\n
Equivalent citations: 1956 AIR 231, \t\t 1955 SCR (2)1315<\/div>\n
Author: V Bose<\/div>\n
Bench: Bose, Vivian<\/div>\n
           PETITIONER:\nJ.K. IRON AND STEEL CO.\t LTD., KANPUR\n\n\tVs.\n\nRESPONDENT:\nTHE IRON AND STEEL MAZDOOR UNION, KANPUR(with connected appe\n\nDATE OF JUDGMENT:\n23\/12\/1955\n\nBENCH:\nBOSE, VIVIAN\nBENCH:\nBOSE, VIVIAN\nAIYYAR, T.L. VENKATARAMA\nAIYAR, N. CHANDRASEKHARA\n\nCITATION:\n 1956 AIR  231\t\t  1955 SCR  (2)1315\n\n\nACT:\n  Industrial  Disputes Act, 1947, (Act XIV of 1947),  ss.  7\nand  11--  Adjudicator--Scope and  authority  of--Democratic\nConstitution--Essentials  thereof--Rule\t of   Law-Benevolent\ndespotism--Foreign thereto.\n\n\n\nHEADNOTE:\n   Held,  that\tadjudication  by an  adjudicator  under\t the\nIndustrial Disputes Act does not mean adjudication according\nto  the\t strict\t law  of master\t and  servant  and  that  an\nadjudicator's\taward\tmay  contain  provisions   for\t the\nsettlement of a dispute which no court could order if it was\nbound  by ordinary law.\t Thus the scope of  an\tadjudication\nunder the Industrial Disputes Act is much wider than that of\nan arbitrator making an award.\tIndustrial Tribunals are not\nfettered   by  such  limitations  and  an  adjudicator\t has\njurisdiction  to  investigate disputes about  discharge\t and\ndismissal and where necessary, to direct reinstatement.\nNevertheless, wide as their powers are, these Tribunals\t are\nnot absolute and there are limitations to the ambit of their\nauthority.   Though they are not courts in the strict  sense\nof the term, they have to discharge quasi judicial functions\nand  as such are subject to the overriding  jurisdiction  of\nthe Supreme Court under Art. 136 of the Constitution.  Their\npowers\tare derived from the statute that creates  them\t and\nthey have to function within the limits imposed there and to\nact  according to its provisions.  Those  provisions  invest\nthem with many of the trappings\" of a court and deprive them\nof arbitrary or absolute discretion and power.\nBenevolent   despotism\t is   foreign\tto   a\t  democratic\nConstitution.  When the Constitution of India converted this\ncountry\t into a sovereign, democratic, republic, it did\t not\ninvest it with the mere trappings of democracy but  invested\nit,  with  the real thing, the true kernel of which  is\t the\nultimate authority of the courts to restrain all exercise of\nabsolute  and arbitrary power not only by the executive\t and\nby   officials\tand  lesser  tribunals\tbut  also   by\t the\nlegislatures   and   even   by\t Parliament   itself.\t The\nConstitution  established a \"Rule of Law\" in this  land\t and\nthat  carries with it restraints and restrictions  that\t are\nforeign to despotic power.\nThe courts, however, must always exercise caution and should\nnot substitute their own judgment and discretion for that of\nsuch tribunals.\n166\n1316\n   In  view of ss. 7 and 11 of the Industrial Disputes\tAct,\n1947 and U.P. State Industrial Tribunal Standing Orders 1951\nthese Tribunals, though not bound by all the  technicalities\nof Civil Courts must nevertheless follow the general pattern\nof the Civil Courts in the matter of taking the pleadings of\nthe parties in writing and the drawing up of issues.  It  is\nnot open to the Tribunals to disregard the pleadings and  to\nreach any conclusion that they think are just and proper.\n   The\tSupreme\t Court\tremitted  the  case  to\t the  Labour\nAppellate  Tribunal  for a rehearing of the appeals  as\t the\nAdjudicator  and the Labour Appellate Tribunal\thad  adopted\nthe  attitude  of  benevolent despots and  had\tbased  their\nconclusion on irrelevant considerations and ignored the real\nquestions that arose for decision and the issues that  arose\nout of the pleadings of the parties.\n   Western   India  Automobile\tAssociation  v.\t  Industrial\nTribunal,  Bombay ([1949] F.C.R. 321, 345), State of  Madras\nv. C. P. Sarathy,<\/a> ([1953] S.C.R. 334, 348), Bharat Bank Ltd.\nv. Employees of Bharat Bank Ltd.,<\/a> ([1950] S.C.R. 459,  497),\nMuir Mills Co. v.  Suti Mills Mazdoor Union, Kanpur<\/a>  ([1955]\n1 S.C.R. 991, 1001), referred to.\n\n\n\nJUDGMENT:\n<\/pre>\n
  CIVIL\t APPELLATE JURISDICTION: Civil Appeals Nos.  22\t and
\n22-A and 301 of 1955.\n<\/p>\n
 Appeals by special leave from the judgment and order  dated
\nthe 4th July 1952 of the Labour Appellate Tribunal of India,
\nLucknow\t in Appeals Nos. 391 and 392 of 1951 arising out  of
\nthe Award dated the 1st November 1951 of the Adjudicator and
\nAdditional Regional Conciliation Officer, Kanpur in Case No.
\n53 of 1951.\n<\/p>\n
  G.S. Pathak, (Rameshwar Nath and Rajinder Narain), for the
\nappellants in all the appeals.\n<\/p>\n
  G. C. Mathur, for the respondent in C. A. Nos. 22 and 22-A
\nand respondent No. 4 in C. A. No. 301 of 1955.
\n   K.\t  B. Asthana and C. P. Lal, for the respondent No. 3
\nin C. A. No. 301 of 1955.\n<\/p>\n
  1955.\t  December  23.\t  The  Judgment\t of  the  Court\t was
\ndelivered by
\n  BOSE\tJ.-We are concerned here with three  appeals.\tThey
\narise  out  of\ta dispute between the J.K.  Iron  and  Steel
\nCompany\t Limited and the Iron and Steel Mazdoor\t Union.\t  We
\nwill call them the
\n1317<\/span>
\nCompany\t and the Mazdoor Union respectively.  The facts\t are
\nas follows.\n<\/p>\n
 The  Company had its factory and other works at  Kanpur  in
\nUttar Pradesh.\tOn 10-4-1948 the Ministry of Commerce in the
\nGovernment  of India ordered the Company to shift  its\tJute
\nBaling Hoops factory from Kanpur to Calcutta.
\n  As  no land was available in Calcutta no effect  could  be
\ngiven to this order till the year 1950-51.  On 19-3-1951 the
\nIron  and Steel Controller ordered the Company to  stop\t the
\nrolling\t of  jute baling hoops at  once.   Accordingly,\t the
\nproduction of these hoops was stopped from that date.
\n  At the same time there was scarcity of scrap iron and\t the
\nCompany’s  case is that forced it to reduce the\t working  of
\nits furnace from three shifts a day to one.\n<\/p>\n
  The Company states that because of these two causes it was
\nobliged\t to  retrench its staff.  Therefore, it\t issued\t the
\nfollowing- notice dated 15-5-1951 to 128 of its workers:
\n  “Consequent  to transfer of the Rolling Mill\tto  Calcutta
\nand  want  of  scrap  to Furnace  Department  in  full,\t the
\nservices  of the persons as per list attached are  dispensed
\nwith from today.\n<\/p>\n
  Their wages and other dues in full settlement will be paid
\nafter 2 P.m.”\n<\/p>\n
  Twenty five of the 128 accepted their wages and other dues
\nin  full  settlement but the remaining 103  refused.   Their
\ncause  was accordingly espoused by the Mazdoor\tUnion  which
\nmade an application to the Regional Conciliation Officer  at
\nKanpur\ton 16-5-1951 complaining that the  retrenchment\t was
\nillegal and asking that the workmen be reinstated with\tfull
\npayment of their wages for the period they were out of work.
\n   This was forwarded to the Government of Uttar Pradesh and
\non  28-6-1951  the  Governor  of  that\tState  referred\t the
\nfollowing  issue  to the Regional  Conciliation\t Officer  at
\nKanpur\tunder  sections 3, 4 and 8 of  the  U.P.  Industrial
\nDisputes Act, 1947 for adjudication:\n<\/p>\n
“Whether the retrenchment of the workmen
\n1318<\/span>
\ngiven  in  the Annexure by Messrs J. K. Iron and  Steel\t Co.
\nLtd’ Kanpur, is unjustified?  If so, to what relief are\t the
\nworkmen entitled?”\n<\/p>\n
  The  parties filed their written statements  on  14-7-1951
\nand  the  Company  filed  a  rejoinder\ton  20-7-1951.\t The
\nAdjudicator  thereupon took evidence, oral and\tdocumentary,
\nand gave his award on 1-11- 1951.  But before that was\tdone
\nthe  case  of  one  of the workmen  (Kapil  Deo\t Singh)\t was
\nwithdrawn and that left 102 for him to deal with.
\n  The  Adjudicator reached the following  conclusions.\t The
\nMazdoor Union had contended that the retrenchment was not in
\ngood faith.  The Adjudicator held that it was and that there
\nwas  neither harassment nor victimisation.  So also  on\t the
\nquestion about the shortage of scrap he held that there\t was
\na  shortage but that it was only temporary and that  it\t was
\nnot  likely  to last for more than 8 or 9 months.   He\tthen
\nreferred  to the Standing Orders and said that\tthe  Company
\nwas not entitled to resort to retrenchment except as a\tlast
\nresort\tand  that in the circumstances of the  present\tcase
\nthese  workmen\tshould (1) have been offered the  option  of
\nemployment in the new set up at Calcutta; and (2) those that
\ndid  not  want\tit should have been  laid  off\tin  rotation
\ninstead\t of being retrenched.  He accordingly  ordered\tthat
\nshould\t be  done  and\tdrew  up  a  graduated\t scale\t ,of
\ncompensation.\n<\/p>\n
  We observe in passing that the expression used  throughout
\nhas  been “played off”.\t The reason for that is that is\t the
\nphrase\tused in the Standing Orders and in the copy  of\t the
\nAct  and Model Standing Orders reproduced by the U.  P.\t De-
\npartment of Labour in its Annual Review of Activities.\t But
\nit seems to us that was due to printer’s error at some stage
\nwhich  has  been repeated in various  places.\tThe  correct
\nexpression  is “lay off”.  That is the expression  used\t and
\ndefined\t in the Act.  The Standing Orders should  have\tused
\nthe same phrase.  Apart from the definition in the Act, “lay
\noff ” is a well-known industrial term meaning, according  to
\nthe Oxford Dictionary, “a period during which
\n1319<\/span>
\na  workman  is\ttemporarily discharged”.  We  will  use\t the
\ncorrect expression in this judgment.\n<\/p>\n
  Both sides appealed to the Labour Appellate Tribunal.\t The
\ndecision,  there  was as follows.  The Tribunal\t upheld\t the
\nfinding that there was in fact a shortage of scrap iron\t and
\nalso agreed with the Adjudicator that was only likely to  be
\ntemporary.   Then  it held, apparently as a matter  of\tlaw,
\nthat  under  the Standing Orders it is\tnot  permissible  to
\nretrench workmen and deprive them of their maintenance\twhen
\nthere is only a temporary shortage of material, whatever the
\nduration of the shortage; all that the employer can do in  a
\ncase like that is to lay them off.\n<\/p>\n
  The  Tribunal also upheld the finding that the  Hoop\tMill
\nwas in the course of transfer to Calcutta consequent on\t the
\norders\tof Government, but they held that there was  nothing
\non the record to show which of the 105 persons (it should be\n<\/p>\n
102)  whose cases they were considering\t were  “specifically
\nengaged\t in the Hoop Mills and had become surplus by  reason
\nof the transfer to Calcutta”.\n<\/p>\n
  This\tis  one of the findings attacked before\t us  by\t the
\nCompany\t on  the  ground that the  Tribunal  has  failed  to
\nrealize that the Company’s operations must be considered  as
\na  whole  and  that because of the  interdependence  of\t its
\nvarious departments a closure of one section, coupled with a
\nshortage of materials in another, is bound to affect its all
\nround  working\tand therefore the question  of\tretrenchment
\ncannot\tbe looked at from the narrow point of view  of\tonly
\none department but must be viewed in its all round  setting.
\nWe will deal with this later.\n<\/p>\n
Another of the Tribunal’s findings on the “transfer”  aspect
\nof  the\t case was that a cut in profits is not in  itself  a
\ngood ground for retrenchment.  It held that retrenchment can
\nonly  be made when there is a total closure of the mill\t “or
\nwhen for any such other reason the workmen become surplus”.
\n  The  final  conclusion  of  the  Tribunal  was  that\t the
\nretrenchment was “wholly unjustified”.\tAccordingly, it\t set
\naside the retrenchments and held that the
\n1320<\/span>
\naffected  workmen will be deemed to be “still  in  service”.
\nand  directed  that they be reinstated.\t The appeal  of\t the
\nMazdoor\t Union\twas partly allowed and that of\tthe  Company
\ndismissed.\n<\/p>\n
  This impelled the Company. to do the following things:
\n(1)to file a writ petition in the Allahabad High Court on 4-
\n8-1952.\t  This was dismissed by that Court on  9-4-1953\t and
\nCivil  Appeal  No. 301 of 1955 is the appeal to\t us  against
\nthat order;\n<\/p>\n
(2)to  file two appeals to this Court against the  order  of
\nthe  Labour  Appellate Tribunal.  These\t appeals  are  Civil
\nAppeal No. 22 of 1955 and Civil Appeal No. 22-A of 1955.
\nThis judgment covers all three appeals.\n<\/p>\n
Mr. G. C. Mathur, who appeared for the Mazdoor Union, raised
\na preliminary objection against the Company’s appeals  based
\non  the following facts.  The Company had appealed  to\tthis
\nCourt  against the Labour Appellate Tribunal’s\tdecision  on
\n26-8-1952.   The petition was summarily dismissed  on  10-9-
\n1952.\tCounsel contended that barred the  present  appeals:
\nCivil  Appeal 22-A of 1955 because it is an  appeal  against
\nthe  very order that is now under appeal, and  Civil  Appeal
\n301  of 1955 on the basis of res judicata because it  raises
\nthe  same points as were raised in the petition for  special
\nleave which was dismissed.\n<\/p>\n
  We  rejected this objection because the previous  petition
\nfor  appeal  does not appear to have been dismissed  on\t the
\nmerits\tbut on two technical grounds.  It is true the  order
\nof dismissal is general but the office note states (1)\tthat
\nno certified copy of the decision appealed against was filed
\nthough Order 13, rule 4, of the Rules of the Supreme  Court,
\nrequires  that\tand  (2)  that the  reliefs  sought  in\t the
\npetition  for special leave and in the writ petition  before
\nthe High Court are the same.  It is evident that formed\t the
\nbasis  of  the order of dismissal especially as\t it  is\t the
\nusual  practice\t not  to entertain an  appeal  here  when  a
\nsimilar matter is pending in the High Court,
\n1321<\/span>
\nBefore we come to the merits it will be necessary to set out
\nthe grounds on which the High Court proceeded.\tThe  learned
\nJudges\twere  concerned with a writ for\t certiorari  and  so
\nnaturally   focussed   their  attention\t on   questions\t  of
\njurisdiction  rather  than on the merits.   They  considered
\nthat  the Adjudicator’ was free to take\t into  consideration
\nall  matters bearing on the question of retrenchment and  to
\nconsider  whether it was “absolutely necessary” to  retrench
\nthe  workmen.\tThey  looked at\t Standing  Order  16(a)\t and
\ndecided\t that the Adjudicator had jurisdiction to  determine
\nthe  scope  and meaning of this Order and that\the  and\t the
\nLabour Appellate Tribunal were competent to hold that  these
\norders meant that the Company was not entitled to take\twhat
\nthe learned Judges called the “extreme step of retrenchment”
\nso long as it was possible for it to “lay off ” the workmen.
\n That at once raises questions about the scope and authority
\nof  an adjudicator under the Industrial Disputes  Act.\t But
\nthat,  we  feel is now settled by  authority.\tThe  Federal
\nCourt  held  in\t Western  India\t Automobile  Association  v.
\nIndustrial  Tribunal, Bombay(1) that adjudication  does\t not
\nmean adjudication according to the strict law of master\t and
\nservant\t and  held that an adjudicator’s award\tmay  contain
\nprovisions for settlement of a dispute which no Court  could
\norder  if  it  was bound by ordinary law.   They  held\tthat
\nIndustrial  Tribunals are not fettered by these\t limitations
\nand  held  further that an adjudicator has  jurisdiction  to
\ninvestigate  disputes  about discharge\tand  dismissal\tand,
\nwhere necessary, to direct reinstatement.
\nThat  decision was followed with approval by this  Court  in
\nState of Madras v. C. P. Sarathy<\/a>(2) and it was again pointed
\nout  that the scope of an adjudication under the  Industrial
\nDisputes Act is much wider than that of an arbitrator making
\nan  award.  It would be pointless to cover the same  ground;
\nso we must take that now as settled law.\n<\/p>\n
All the same, wide as their powers are, these Tri-
\n(1) [1949] F.C.R 321, 345.  (2) [1953] S.C.R. 334, 348,
\n1322<\/span>
\nbunals\tare  not absolute and there are limitations  to\t the
\nambit of their authority.  In Bharat Bank Ltd. v.  Employees
\nof  Bharat Bank Ltd.<\/a>(1) this Court held by a  majority\tthat
\nthough these Tribunals are not Courts in the strict sense of
\nthe term they have to discharge quasi judicial functions and
\nas  such are subject to the overriding Jurisdiction of\tthis
\nCourt  under article 136 of the Constitution.  Their  powers
\nare derived from the statute that creates them and they have
\nto  function  within  the limits imposed there\tand  to\t act
\naccording  to its provisions.  Those provisions invest\tthem
\nwith many of the “trappings” of a court and deprive them  of
\narbitrary  or absolute discretion and power.  There  is,  in
\nour opinion, an even deeper reason which is hinted at in the
\njudgment of Mahajan J. (as he then was) at page 500 where he
\nsays  that “benevolent despotism is foreign to a  democratic
\nConstitution”.\t That, in our opinion, is the heart  of\t the
\nmatter.\t  When\tthe  Constitution of  India  converted\tthis
\ncountry into a great sovereign, democratic, republic, it did
\nnot invest it with the mere trappings of democracy and leave
\nit  with merely its outward forms of behaviour but  invested
\nit  with  the real thing, the true kernel of  which  is\t the
\nultimate authority of the Courts to restrain all exercise of
\nabsolute and arbitrary power, not only by the executive\t and
\nby   officials\tand  lesser  tribunals\tbut  also   by\t the
\nlegislatures   and   even   by\t Parliament   itself.\t The
\nConstitution  established a “Rule of Law” in this  land\t and
\nthat carries with it restraints and restrictions
\nthat are foreign to despotic power.\n<\/p>\n
  Despite  this,  however, the Courts must  always  exercise
\ncaution\t and  see  that they do\t not  substitute  their\t own
\njudgment and discretion for that of these Tribunals, for, as
\nMahajan, J. said in Bharat Bank Ltd. v. Employees of  Bharat
\nBank  Ltd.<\/a>(1)  the  overriding powers of  this\tCourt  under
\narticle\t 136  are exceptional; and he went on to  point\t out
\nthat-\n<\/p>\n
  “extraordinary  Powers  of  this  character  can  only  be
\njustifiably used here there has been a grave miscarriage  of
\njustice or where the procedure adopted by
\n (1) [1950] S.C.R. 459, 497.\n<\/p>\n
1323<\/span><\/p>\n
the Tribunal is such that it offends against all notions  of
\nlegal procedure”.\n<\/p>\n
Now the position in the present case is this.  The Tribunals
\nare directed by section 7 of the Industrial Disputes Act  to
\nadjudicate  industrial\tdisputes  “in  accordance  with\t the
\nprovisions of the Act” and section 11 directs them to follow
\n“such  procedure as may be prescribed”.\t The  procedure\t for
\nthe  Uttar Pradesh Tribunals is laid down by the U.P.  State
\nIndustrial Tribunal Standing Orders, 1951.  Very broadly  it
\nfollows the pattern of the civil Courts.  Once the reference
\nis  made  by  Government,  the\tTribunal  has  to  take\t the
\npleadings  of the parties in writing and to draw up  issues.
\nThen   it  takes  evidence,  hears  arguments  and   finally
\npronounces  its “judgment” “in open Court”.  It\t is  evident
\nfrom  this that though these tribunals are not bound by\t all
\nthe  technicalities of civil Courts, they must\tnevertheless
\nfollow\tthe  same general pattern.  Now the  only  point  of
\nrequiring pleadings and issues is to ascertain the real dis-
\npute between the parties, to narrow the area of conflict and
\nto  see just where the two sides differ.  It is not open  to
\nthe Tribunals to fly off at a tangent and, disregarding\t the
\npleadings, to reach any conclusions that they think are just
\nand proper.\n<\/p>\n
  What\texactly\t was the dispute in the present\t case?\t The
\nbroad conflict was of course about the retrenchment and\t the
\nTribunal  was  asked to decide whether the  retrenchment  of
\nthese  103 persons was unjustified; but that by itself\tleft
\nthe   issue  much  too\tbroad,\tso  it\twas   necessary\t  to
\n“particularise” and that was done in the pleadings.
\n The  Company  justified  its action  on  two  grounds:\t (1)
\nbecause\t of  the shortage of scrap and (2)  because  of\t the
\nstoppage  of work in the Hoop Department consequent  on\t the
\norders\tof Government.\tBut none of the\t persons  retrenched
\ncame from the Hoop Department and the Company explained that
\nwas   because\tof  the\t interdependence  of   its   various
\ndepartments   and,  taking  the\t retrenchments\tin   groups,
\ndepartment  by department, it explained just  why  reduction
\nwas effected in those particular places.  In
\n167<\/span>
\n 1324<\/span>
\nthis way, it dealt serially with the retrenchments in(1)  the
\nScrap Department, (2) the Cast Iron Foundry,(3) the Punching
\nand  Pressing Department, (4) the Watch and Ward  Department
\nand (5) the Clerical Department.\n<\/p>\n
  The  Company also made the following assertions, (1)\tthat
\nretrenchment  is  a necessary incidence of an  industry\t and
\nthat  the  discretion  of  the\tmanagement  should  not\t  be
\ninterfered  with; (2) that it is the exclusive\tfunction  of
\nthe  management to determine the size of its  working  force
\nand  (3) that the employer must be the sole judge as to\t how
\neconomically or efficiently its business is to be run.
\n  The Mazdoor Union retorted that the retrenchments were not
\ndone  in good faith.  It denied that there was any  shortage
\nof  scrap  but admitted the interdependence of\tthe  various
\ndepartments  and used that fact as an argument\tto  indicate
\nthe Company’s bad faith.  The Union said the very fact\tthat
\nthere  had been no retrenchment in the department  that\t was
\ndirectly  affected, namely the Hooping Department, and\tthat
\nthere was no retrenchment in certain allied departments that
\nwould have been the first to be bit, had there been any real
\nshortage  of  scrap, showed that the reasons  given  by\t the
\nCompany\t for the retrenchment were untrue.   In\t particular,
\nthe Union pointed out that there had been no retrenchment in
\nthe following departments which, according to it, would have
\nbeen  the  hardest  hit\t had there been\t any  truth  in\t the
\nCompany’s  case\t namely,  (1) the  Furnace  Department,\t (2)
\nRolling\t Mill  Department, (3) Workshop,  (4)  Painting\t and
\nBundling,  (5) Works and Maintenance.  Then, as regards\t the
\nFoundry Department and the Scrap Department where there\t bad
\nbeen  retrenchments, the Union said that  these\t departments
\nbad sub-sections and yet there were no retrenchments in\t the
\nsub-sections  that  would  have been hit  if  the  Company’s
\nallegations were true.\n<\/p>\n
  The Union gave no reply to the Company’s assertions  about
\nits  right  to retrench in the absence of  bad\tfaith-,\t its
\nright to determine the size of its work-\n<\/p>\n
1325<\/span><\/p>\n
ing  force  and\t its  right to\tjudge  of  the\teconomy\t and
\nefficiency of its business.\n<\/p>\n
  The  Company\tfiled a written rejoinder and  explained  in
\ndetail\twhy  there had been no retrenchments in\t the  places
\nwhere, according to the Union, there should have been on the
\nfacts  alleged by the Company and it again explained why  it
\nhad  retrenched workers in the departments which,  according
\nto  the\t Union, ought to have been the\thardest\t hit.\tThis
\nexplanation  again  brought out the interdependence  of\t the
\nvarious departments.\n<\/p>\n
  Instead  of drawing up issues, as it is required to do  by
\nStanding  Order 22 of 1951, and determining just  where\t the
\nparties\t disagreed,  the Adjudicator at\t once  proceeded  to
\nrecord\tevidence and entered upon a rambling  enquiry  which
\nembraced questions which had not been raised at all.  On the
\nonly point on which the parties were really at issue, namely
\nthe  good  faith  of the management, the  findings  were  in
\nfavour of the Company.\tSo also the Adjudicator accepted the
\nCompany’s assertion about its right to determine the size of
\nits labour force and to effect retrenchment where  necessary
\nsubject\t only  to the proviso which the\t Adjudicator  added,
\nnamely that this must be done in good faith; and indeed\t the
\nMazdoor\t Union\thad not challenged these assertions  in\t its
\nwritten statement.\n<\/p>\n
The Adjudicator said-\n<\/p>\n
  “It is however an accepted principle that such changes  as
\nare  being  done  by  the management  now  form\t a  part  of
\nmanagerial  discretion and cannot be interfered with  unless
\nit  is coloured with the element of victimisation or  unfair
\nlabour practice”.\n<\/p>\n
   But\tdespite\t this, and despite his findings\t about\tgood
\nfaith,\tthe Adjudicator considered that, in spite of it\t all
\n“the  right of the workmen has to be safeguarded to  certain
\nextent”.\n<\/p>\n
  What\tis left of the right if the “accepted principle”  be
\nwhat  he says it is-and if there is no victimisation or\t bad
\nfaith,\the did not proceed to explain.\tIf the principle  he
\nenunciated and accepted is sound, then the only rights\tthey
\nhave are to complain of
\n1326<\/span>
\nbad  faith,  victimisation and so forth.   However,  feeling
\nunder a compulsion to safeguard these unexplained rights  he
\nhad  recourse to Standing Order 16(a) and  ignored  Standing
\nOrders 19 and 20.\n<\/p>\n
  The  “accepted principle” to which the Adjudicator  refers
\nin  the passage quoted above is implicit in Standing  Orders
\n19(a) and 20(a).  They deal with the termination of  service
\nby  an\tindustrial  establishment and  prescribe  a  certain
\nquantum of notice in writing, and then comes this  important
\nproviso in Standing Order 19 (a) –\n<\/p>\n
“Provided that if a permanent workman feels that he has been
\ndischarged for reasons not connected with his employment  or
\nthat  the  reason of discharge communicated to\thim  is\t not
\ngenuine,  he may make an appeal to the Labour  Commissioner.
\nThe  decision  of  the\tLabour\tCommissioner…………….
\nshall be binding on both the parties”.\n<\/p>\n
  Reading  the body of Standing Order 19 (a) along with\t the
\nproviso\t in  the light of the “accepted\t principle”,  it  is
\nevident\t that  the  only right the  workman  has,  when\t his
\nservices are lawfully terminated after service of due notice
\nand so forth, is to question the order on only two grounds-
\n(1)that\t he  has been discharged for reasons  not  connected
\nwith his employment, and
\n(2)that\t the reason of discharge communicated to him is\t not
\ngenuine.\n<\/p>\n
   There  is  nothing in these Standing Orders\tto  indicate
\nthat  retrenchment is a measure of last resort and  that  an
\nemployer  must\tcontinue  to lay  off  his  workmen  however
\nuneconomical that may be to the business; still less that he
\nmust lay them off in rotation and thus affect other  workmen
\nwho  would  not\t be  affected  by  a  legitimate  order\t  of
\nretrenchment.\tThat  cuts  at the  root  of  the  “accepted
\nprinciple”.\n<\/p>\n
   In  any  event,  the\t ground\t on  which  the\t adjudicator
\nproceeded  was not a matter in dispute between\tthe  parties
\nbecause\t it was not raised in their pleadings and could\t not
\nhave been put in issue bad the Adjudicator troubled to\tdraw
\nup  issues  as he should have done.  As\t Mahajan,  J.  said,
\nadjudicators and tribu-\n<\/p>\n
1327<\/span><\/p>\n
nals  cannot act as benevolent despots and that\t is  exactly
\nwhat  it  comes to when an adjudicator, after  setting\tout,
\ncorrectly in our opinion the Company’s rights, holds against
\nthe  Union  on the only grounds that it did raise  and\tthen
\nproceeds to give an award, not only on grounds that are\t not
\nraised\tbut  on\t grounds that fly in the face  of  the\tvery
\nprinciples that he enunciated; and that only because he felt
\nthat he was under a compulsion to “safeguard” the workmen to
\n“a certain extent”.\n<\/p>\n
  Both\tsides appealed to the Labour Appellate Tribunal\t and
\nthe second ground of the appeal lodged, by the Mazdoor Union
\nwas  “that  the award of the learned  Adjudicator  is  quite
\narbitrary” which, of course, is exactly what it was
\nAnd so also ground No. 9:\n<\/p>\n
  “That\t  the  learned\tAdjudicator  has  gone\tbeyond\t his
\njurisdiction in awarding relief on a question not,  referred
\nto it by Government”.\n<\/p>\n
  That\tagain we feel is justified.  What was  referred\t was
\nthe  question  of  the\tjustification  for  retrenchment  of
\ncertain specified workmen.  What was awarded was the  laying
\noff of persons whose cases were not even considered, that is
\nto  say,  when\tthe  Adjudicator  directed  laying  off\t  in
\nrotation,  his\torder necessarily affected persons  who\t had
\nneither\t been  laid off nor retrenched and whose  cases\t not
\neven  the Union had in mind.  It is to be observed that\t the
\nMazdoor\t Union\tcomplains about this part of  the  order  in
\nground No. 11 though on a different ground.
\n  The Company also appealed against the Adjudicator’s  order
\nand  grounds Nos. 6, 9 and 24 of their appeal  are  directed
\nagainst\t that part of the order that deals with the lay\t off
\nof  the workmen.  Among other reasons advanced is that\tthis
\nwill  adversely affect others who are not  retrenched.\t The
\nother grounds repeat what was said in the company’s  written
\nstatement though in different language.\n<\/p>\n
   The\tLabour Appellate Tribunal contrasted Standing  Order
\n15(a)  with Standing Order 16(a) but also  ignored  Standing
\nOrders 19(a) and 20 which are the
\n1328<\/span>
\nonly  ones  that really apply to this case.  It\t upheld\t the
\nfinding\t of  the Adjudicator that there was  a\tshortage  of
\nscrap  but held that as the shortage was for only  6  months
\nretrenchment was not justified.\n<\/p>\n
  In  point of fact, the Labour Appellate Tribunal is  wrong
\nabout the six months.  It was under the impression that\t the
\nAdjudicator  had  come\tto that conclusion.   But  what\t the
\nAdjudicator  said  was that the shortage at best was  for  a
\nperiod\tof 8 or 9 months.  The passage which  the  Appellate
\nTribunal  quotes is not the finding of the  Adjudicator\t but
\nthe  argument advanced on behalf of the Company.   The\tfull
\npassage runs thus:\n<\/p>\n
  “Shri\t Mahalingam stated that Standing order\t16(a)  which
\nprovides  for a lay off of a maximum period of 12 days in  a
\nmonth  contemplates  a\ttemporary  shortage  of\t very  short
\nduration.   It could not apply to shortage of raw  materials
\nlasting for more than 6 months and hence the Company’s right
\nto  retrench  is  not affected\tby  the\t aforesaid  Standing
\nOrder”.\n<\/p>\n
  The\tAppellate  Tribunal  quoted  the  portion  we\thave
\nunderlined but ignored the rest of the sentence and the part
\nthat  went before and concluded that the portion  underlined
\nwas a part of the Adjudicator’s findings.\n<\/p>\n
  However,  even if we assume that the Tribunal\t would\thave
\nreached\t the  same conclusion if it had\t realised  that\t the
\nshortage  was for as long as 8 or 9 months, the\t error\tinto
\nwhich  it  has fallen is that the question  of\tretrenchment
\ncannot be made to depend on the duration of the shortage  or
\neven on the fact that those retrenched will be thrown out of
\nemployment  but on the effect that an omission\tto  retrench
\nwill  have on the business.  In some cases, laying off\teven
\nfor  6\tor 8 or 9 months might make  the  Company  bankrupt,
\ntherefore, if the Appellate Tribunal considered that it\t had
\npower  to  stop retrenchment for reasons  other\t than  those
\ngiven in the proviso to Standing Order 19(a) it was bound to
\nlook into the Company’s finances and determine the  question
\nof justification on that basis.\t The only question  referred
\nwas the retrenchment justified? and we find it
\n1329<\/span>
\nimpossible  to\tsee  how  that\tcan  be\t determined  without
\nconsidering  the question of good faith which in turn  would
\nlargely\t depend\t on  the finances of  the  Company,  on\t the
\nadverse effect that retention would have on the business and
\non  whether  retention\twould  mean  the  deadweight  of  an
\nuneconomic surplus and so forth.\n<\/p>\n
Next,  when the Appellate Tribunal turned its  attention  to
\nthe  transfer of the Hoop Mill to Calcutta, it\tagreed\tthat
\nwould have been a good ground for retrenching those who were
\nspecifically  engaged in the Hoop Mill but not\tthe  others.
\nBut  this  takes an impossibly narrow view and\tignores\t the
\nover-all working of a business concern and the repercussions
\nthat  a transfer of this kind would have on other  parts  of
\nthe  business.\t It  totally ignores the  pleadings  of\t the
\nparties\t and, like the adjudicator, bases its conclusion  on
\nsome  airy view of what it considers would be a\t good  thing
\nfor  the  workmen.   That  is  not  a  decision\t “given\t  in
\naccordance with the Act” and is as much open to objection on
\nthat score as the award of the Adjudicator.
\nIt is pertinent at this stage to refer to a decision of this
\nCourt  reported\t in  Muir Mills Co. v.\tSuti  Mills  Mazdoor
\nUnion, Kanpur<\/a>(1) where Bhagwati, J. delivering the  judgment
\nof the Court said-\n<\/p>\n
  “The\tconsiderations\tof social justice  imported  by\t the
\nLabour\tAppellate  Tribunal in arriving at the\tdecision  in
\nfavour\tof  the\t respondent were  not  only  irrelevant\t but
\nuntenable”.\n<\/p>\n
  In  the  present  case also we are  of  opinion  that\t the
\nAdjudicator  and the Labour Appellate Tribunal\thad  adopted
\nthe  attitude  of benevolent despots and  have\tbased  their
\nconclusions  on irrelevant considerations and  have  ignored
\nthe  real questions that arose for decision and\t the  issues
\nthat arose out of the pleadings of the parties.
\n  It  would not be right for us to substitute  our  judgment
\nand discretion for that of the Adjudicator and the Tribunal:
\naccordingly,  as we are of opinion that the. real  questions
\nthat were in dispute between the
\n (1) [1955] 1 S.C.R. 991, 1001.\n<\/p>\n
1330<\/span><\/p>\n
parties\t were neither appreciated nor considered we have  no
\nalternative but to remit the matter to the Labour  Appellate
\nTribunal for a proper decision after drawing up issues\tthat
\narise  out of the pleadingS, considering them  and  deciding
\nthe dispute accordingly, with liberty of course to remit the
\ncase  to the Adjudicator for a retrial or for the taking  of
\nfurther\t evidence if it is of the opinion that the  omission
\nto  draw  up issues and focus attention on the\tpoints\tthat
\nseem  to  be in dispute has had the result of  shutting\t out
\nevidence that might otherwise have been led.
\n An agreement said to have been reached between the  parties
\non  7-9-1953  was placed before us towards the\tend  of\t the
\narguments  but we have not looked at it because counsel\t for
\nthe  Mazdoor Union said it did not cover the case  of  these
\nretrenched  workers.  The Company insisted that it did.\t  We
\nwere  not prepared to investigate that dispute at that\tlate
\nstage  but  we\tmake  it plain\tthat  the  Labour  Appellate
\nTribunal  will\tbe at liberty to consider it or\t not  as  it
\ndeems right after hearing what both sides have to say
\nabout it.\n<\/p>\n
  The  award  and  the\tdecision  of  the  Labour  Appellate
\nTribunal  are  set  aside and the case is  remitted  to\t the
\nLabour\tAppellate Tribunal for a re-bearing of\tthe  appeals
\nfiled before it and for a fresh decision in the light of the
\nforegoing observations.\n<\/p>\n
  We  will, however, have to make some\tinterim\t arrangement
\nfor  payment  of what may be termed a  sort  of\t subsistence
\nallowance  to  the affected workmen during the\tpendency  of
\nthose further proceedings.  As there is no agreement between
\nthe  parties  on  the subject, we leave\t it  to\t the  Labour
\nAppellate  Tribunal or the Adjudicator, as the case may\t be,
\nto make suitable orders in this respect.\n<\/p>\n
  There will be no order, about costs as neither party is to
\nblame for what has happened.\n<\/p>\n
1331<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"
Supreme Court of India J.K. Iron And Steel Co. Ltd., … vs The Iron And Steel Mazdoor Union, … on 23 December, 1955 Equivalent citations: 1956 AIR 231, 1955 SCR (2)1315 Author: V Bose Bench: Bose, Vivian PETITIONER: J.K. IRON AND STEEL CO. LTD., KANPUR Vs. RESPONDENT: THE IRON AND STEEL MAZDOOR UNION, KANPUR(with connected […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_lmt_disableupdate":"","_lmt_disable":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[30],"tags":[],"class_list":["post-6895","post","type-post","status-publish","format-standard","hentry","category-supreme-court-of-india"],"yoast_head":"\nJ.K. Iron And Steel Co. 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