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TMI Blog1956 (10) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 2,67,042-7-4. After several unsuccessful attempts at getting a larger supply, the management wrote to the Government on May 11, 1950, either to increase their quota or to permit them to sell the Mills. In October 1950, the Government granted permission for the sale of the plant and machinery, and pursuant thereto, the management sold them to a Madras party. As the crushing season was then on, the appellant obtained from the purchaser a lease of the Mills for the current season agreeing to deliver possession thereof on the termination of the lease. It should be mentioned that the appellant was also carrying on negotiations with the purchaser, for itself dismantling the machinery and erecting it at Madras for a lump consideration, expecting to perform the contract through its own workmen. 2. When the workmen became aware of the agreement of sale, their reaction to its was thoroughly hostile, and acting through their Union, the respondent herein, they decided to prevent the transaction going through, as otherwise they would be thrown out of employment. With that object, they moved the Government to cancel the permission granted to the appellant for the sale of the Mills, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oming off from the 12th". After this, the appellant did not hear from the respondent, the strike also did not take place, and the crushing went on till the end of January, 1951, when the season came to an end. One of the points that arises for our determination in this appeal is whether on this correspondence there was a concluded and binding agreement that the appellant should pay 25 per cent of the profits on the sale transaction to the workmen. 4. To continue the narration, the lease having expired with the crushing season, the purchaser came over to Pipraich to take delivery of the Mills and to arrange for the machinery being dismantled and removed to Madras for being erected there. The appellant who, as already stated, was negotiating to get the dismantling done for a lump consideration found that its workmen were as hostile to it as ever, and refused to help in the work. To adopt the language of the respondent in its written statement, "they declined out of sentiment to dig their own graves". After fruitless attempts at getting them to co-operate in dismantling the machinery, the management put up the following notice on February 28, 1951 : "The workers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government declined by its letter dated March 21, 1951, to interfere with the sale of the machinery, and in accordance with the understanding reached above, the workers should have co-operated with the appellant in dismantling the machinery from March 21. But they declined to do so, and thereupon, acting in accordance with its notices dated February 28, 1951, and March 14, 1951, the management duly discharged them. In view of the inability of the appellant to take up the contract, the purchaser entered into direct negotiations with the workmen, and on 1-4-1951 concluded an agreement with them for dismantling the machinery. The net result was that the appellant lost a contract on which, as admitted by the respondent, it would have earned a profit of at least ₹ 2 lakhs. The workers, having taken the benefit of a direct contract with the purchaser for dismantling the machinery, next turned their attention to the appellant, and on the basis of the letters dated January 3, 1951, and January 10, 1951, sent a notice to it on April 19, 1951, asking for distribution among the workers of the "25 per cent labour-share of the profits on sale of machinery". By its letter dated J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36. As the appeal raised questions of importance, and as the respondent was unrepresented we requested Mr. Umrigar to assist us, and we are indebted to him for his learned and comprehensive argument. 9. Two contentions have been urged in support of the appeal : (1) The notification dated November 16, 1951, referring the dispute to the adjudication of the Industrial Tribunal is ultra vires, and the reference and the award therein are in consequence void; and (2) there was no concluded or binding agreement by the appellant to pay the workmen any share of profits in the sale transaction and the award is therefore bad on the merits. 10. Taking the first contention, the provision of law under which the impugned notification dated November 16, 1951, was issued by the State is section 3 of the Act, which runs as follows : "If in the opinion of the State of Government, it is necessary or expedient so to do for securing the public safety or convenience, or the maintenance of public order or supplies and services essential to the life to the community, or for maintaining employment, it may, by general or special order, make provision - . . . (d) for referring any industrial disp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r legislation was firstly to ensure fair terms to the workmen, and secondly to prevent disputes between the employers and employees, so that production might not be adversely affected and the larger interests of the public might not suffer. Both these objects again can have their fulfilment only in an existing and not a dead industry. The view therefore expressed in Indian Metal and Metallurgical Corporation v. Industrial Tribunal, Madras (supra) and K. N. Padmanabha Ayyar v. The State of Madras (supra) that the industrial dispute to which the provisions of the Act apply is only one which arises out of an existing industry is clearly correct. Therefore, where the business has been closed and it is either admitted or found that the closure is real and bona fide, any dispute arising with reference thereto would, as held in K. N. Padmanabha Ayyar v. The State of Madras (supra), fall outside the purview of the Industrial Disputes Act. And that will a fortiori be so, if a dispute arises - if one such can be conceived - after the closure of the business between the quondam employer and employees. 14. In the light of the principles stated above, we must examine the nature of the dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... think that on a true construction of s. 3, the power of the State to make a reference under that section must be determined with reference not to the date on which it is made but to date on which the right which is the subject-matter of the dispute arises, and that the machinery provided under the Act would be available for working out the rights which had accrued prior to the dissolution of the business. 15. It was next argued that even on his view, the notification dated November 16, 1951, was incompetent inasmuch as the management had offered by its letter dated January 3, 1951, to pay the workmen 25 per cent of the profits on the sale transaction only on April 30, 1951, and the right to the amount thus accrued to the workmen only after the closure of the business on March 21, 1951. But this argument proceeds on a misapprehension of the correct position on the facts. The true scope of the promise contained in the letter dated January 3, 1951, is that the workmen a acquired thereunder a right in praesenti to 25 per cent of the profits, but that the amount became payable only on April 30, 1951, the reason obviously being that it could be precisely determined only after the transa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal itself took of it when it observed that "no final agreement could be arrived at..... and consequently the management served a notice on 28th February 1951". But then it went on to observe that, in fact, the workmen did not go on strike on January 12, 1951, and continued in service till they were served with notice of discharge of February 28, 1951, that was consideration for the promise made by the agreement, which must therefore be taken to have become a term of service, and that in consequence "the promise of the management as contained in the letters of 3rd and 10th January 1951, is a binding agreement under which the workmen are entitled to compensation for termination of their services on the closure of the Mills". This argument rests on a confusion of thought. The question whether there was consideration for the promise made by the management in its letters dated January 3, and January 10, 1951, arises only if the offer contained in the letters had been accepted by the respondent, so as to ripen into an agreement. And if there was no concluded agreement between the parties, as the Tribunal itself had held, then further question as to whether it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the termination of their services, treating it as retrenchment, and that the award of compensation of ₹ 45,000 which was that the management itself had suggested, might be sustained on that footing. This contention assumes that the termination of the services of workmen, on the closure of a business, is retrenchment. But retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff or the labour force is discharged a surplusage and the termination of services of all the workmen as a result of the closure of the business cannot therefore be properly described as retrenchment. It is however contended by Mr. Umrigar that the definition of retrenchment in section 2(oo) of the Industrial Disputes Act XIV of 1947 is wide enough to include discharge consequent on the closure of business, and that under section 25-F, compensation could be awarded therefore. Our attention has been invited on behalf of the appellant to the decision in J. K. Hosiery Factory v. Labour Appellant Tribunal (1956)IILLJ4All , where it was held that retrenchment as defined in section 2(oo) does not comprehend discharge on the closure of busi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... srs India Reconstruction Corporation Limited, Calcutta (supra), as what happened there was that one of the units of the company, that at Calcutta, was closed and that would be a case of retrenchment, and the observations quoted above were purely obiter. They were, however, quoted and followed without discussion by the Appellate Tribunal is Messrs Benett Coleman & Company Ltd. v. Their Employees (supra), which further remarked at p. 27 : "Thus whether the closure was justified or not, the workmen who have lost their jobs would in any even get compensation. If it was not bona fide or not justified, it may be that the measure of compensation would be larger then if it was otherwise". 22. For the reasons given above, we cannot assent to these observations. It should be mentioned that in Messrs Benett Coleman and Company Ltd. v. Their Employees (supra), there was no closure of business, but winding up of the Calcutta unit by a newspaper publishing company which had its headquarters at Bombay. We must accordingly overrule this contention also. We should add that the Tribunal was of the opinion, that apart from agreement, the workmen should not, in view of their conduct, be a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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