1969 (4) TMI 118 - SC - Companies Law

Summary

Issues Involved:
1. Competence of the Labour Court to entertain and decide applications for retrenchment compensation.
2. Determination of whether the workmen were retrenched.
3. Applicability of the Industrial Disputes Act, 1947, versus the U.P. Industrial Disputes Act, 1947.
4. Liability of the Company to pay retrenchment compensation.
5. Payment of compensation for earned leave not enjoyed by the workmen.

Detailed Analysis:

1. Competence of the Labour Court to entertain and decide applications for retrenchment compensation:

The Company contested the Labour Court's jurisdiction to entertain and decide applications for retrenchment compensation. According to the judgment, disputes relating to retrenchment fall within the exclusive competence of the Industrial Tribunal, not the Labour Court, as per item 10 of the Second Schedule to the U.P. Industrial Disputes Act. The Labour Court's authority is limited to computing the amount of compensation payable, assuming retrenchment is conceded. Since the question of whether the workmen were retrenched was in dispute, the Labour Court was not competent to decide this issue.

2. Determination of whether the workmen were retrenched:

The Company argued that the workmen had voluntarily abandoned their employment to join the Board, and thus were not retrenched. The workmen contended that they were retrenched and sought compensation. The judgment emphasized that without a determination of whether retrenchment occurred, the Labour Court could not compute the compensation. The Labour Court's role is to compute compensation based on an existing right, not to determine the existence of that right.

3. Applicability of the Industrial Disputes Act, 1947, versus the U.P. Industrial Disputes Act, 1947:

The judgment noted that the provisions of the Industrial Disputes Act, 1947, and the U.P. Industrial Disputes Act, 1947, are substantially the same regarding retrenchment. The U.P. Act, including Section 6-R(2), applies in determining the rights and obligations concerning retrenchment compensation. The Supreme Court referenced prior judgments, indicating that disputes relating to retrenchment should be adjudicated under the relevant state legislation, which in this case is the U.P. Industrial Disputes Act.

4. Liability of the Company to pay retrenchment compensation:

The judgment discussed Section 6-0 of the U.P. Industrial Disputes Act, which outlines conditions under which workmen are not entitled to retrenchment compensation. The Company argued that these conditions were met, as the workmen's service was uninterrupted, and the terms of employment with the Board were not less favorable. The Labour Court needed to determine whether these conditions were satisfied before awarding compensation. The Supreme Court concluded that the Labour Court had not made such a determination and thus could not award retrenchment compensation.

5. Payment of compensation for earned leave not enjoyed by the workmen:

The judgment addressed the claim for compensation for earned leave not enjoyed by the workmen. It concluded that there is no statutory provision for such compensation after the closure of the Company. The Company was obliged to provide leave while in operation, but after closure, it could not offer leave or compensate for it. Therefore, no compensation for earned leave was payable.

Conclusion:
The Supreme Court allowed the appeals, concluding that the Labour Court was incompetent to determine the liability for retrenchment compensation. The petitions under Section 6-H(2) filed by the respondents were dismissed, and no compensation for earned leave was awarded. The judgment emphasized the need for proper jurisdictional authority and the requirement of an existing right for the Labour Court to compute compensation.