The Godavari Sugar Mills Ltd vs Shri D. K. Worlikar

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: Supreme Court of India

Case Number: Civil Appeal No. 425 of 1958

Decision Date: 14 March, 1960

Coram: P.B. Gajendragadkar, K.N. Wanchoo

The case entitled The Godavari Sugar Mills Ltd. versus Shri D. K. Worlikar was decided on 14 March 1960 by the Supreme Court of India. The judgment was authored by P. B. Gajendragadkar and the bench comprised Justice P. B. Gajendragadkar and Justice K. N. Wanchoo. The petitioner in the proceeding was The Godavari Sugar Mills Ltd., and the respondent was Shri D. K. Worlikar. The citation of the decision is reported as 1960 AIR 842 and 1960 SCR (3) 305, and it has been cited subsequently in E 1966 SC 925, 9 RF 1972 SC 1589, among others.

The dispute arose out of the dismissal of the respondent, who was employed as a stenographer in the head office of the appellant located in Bombay. The respondent contested the dismissal by invoking the provisions of the Bombay Industrial Relations Act, 1946, specifically seeking relief under section 42(4) read with section 78(1)(a)(i) and (iii). He argued that Notification No. 1131‑46 issued by the Government of Bombay in 1952, made under section 2(4) of the same Act, brought the head office of the appellant within the protective scope of the legislation because the appellant was engaged in the sugar industry. The appellant, on the other hand, contended that the notification did not extend to its head office and that consequently the Labour Court lacked jurisdiction to entertain the respondent’s application.

The headnote of the decision records that the respondent, a stenographer employed by the appellant at its Bombay head office, challenged the legality of the dismissal order by filing an application under the Bombay Industrial Relations Act, 1946. He maintained that Notification No. 1131‑46 of 1952, made under section 2(4), covered the head office of the appellant as part of the sugar industry. The appellant disputed the competence of the application, asserting that the Act was inapplicable to the respondent’s case and that the Labour Court was therefore without jurisdiction because the notification did not pertain to the appellant’s head office.

The Court held that a proper construction of Notification No. 1131‑46 shows that the Government of Bombay did not intend to extend its operation to the head office of a sugar industry concern. The notification was confined to the manufacture of sugar and its by‑products, and its purpose was to limit benefits to services or employment directly connected with the manufacturing process, including the growing of sugarcane and all agricultural and industrial operations associated with that activity. Consequently, the notification did not bring the sugar industry as a whole, nor the head office of a sugar‑manufacturing company, within its purview.

The matter was placed before the Supreme Court on civil appeal No. 425 of 1958, taken by special leave from the decision dated 9 October 1956 of the Labour Appellate Tribunal of India, Bombay, in Appeal (Bom.) No. 111 of 1956. The appellant was represented by counsel comprising the Attorney‑General of India and senior advocates, while the respondent was represented by counsel for the appellant. The judgment was delivered by Justice Gajendragadkar.

This appeal raised a concise question regarding the interpretation of Notification No. 1131‑46, issued on 4 October 1952 under section 2(4) of the Bombay Industrial Relations Act, 1946 (Bombay Act 11 of 1947). The respondent, a stenographer employed at the head office of the Godavari Sugar Mills Ltd., had been dismissed on 22 April 1955 after an inquiry that found him guilty of disobedience and insubordination. He sought relief from the Labour Court, invoking the statutory provisions mentioned above. The appellant challenged the jurisdiction of the Labour Court on the basis that the Act did not apply to the respondent’s employment because the notification in question did not extend to the appellant’s head office. Both parties agreed that this jurisdictional issue should be decided as a preliminary question, and the Labour Court upheld the appellant’s objection, concluding that the notification did not apply to the head office of the appellant in Bombay.

In the case before the Court, the respondent had been employed as a stenographer by the appellant, Godavari Sugar Mills Ltd., at its head office in Bombay, receiving a salary of Rs. 135 together with a dearness allowance of Rs. 27. The appellant asserted that the respondent had committed acts of disobedience and insubordination. After a proper enquiry in which the respondent was given an opportunity to defend himself, the enquiry concluded that the respondent was guilty of the alleged misconduct, and consequently his services were terminated. To contest the legality and propriety of his dismissal, the respondent filed an application before the Labour Court at Bombay, invoking sections 42(4) and 78(1)(a)(i) and (iii) of the Bombay Industrial Relations Act. The appellant responded by challenging the competence of the application, arguing that the Act did not extend to the respondent’s situation and that, therefore, the Labour Court lacked jurisdiction to entertain the matter. Both parties agreed that the jurisdictional issue should be tried as a preliminary question. The Labour Court considered the objection, upheld it, and held that the notification relied upon by the respondent did not apply to the appellant’s head office in Bombay, leading to the dismissal of the respondent’s application. The respondent appealed this decision to the Industrial Court, but the Industrial Court affirmed the Labour Court’s finding that the notification was inapplicable to the head office. The respondent then approached the Labour Appellate Tribunal, which reversed the earlier rulings, holding that the notification did apply to the head office and that the respondent was entitled to the benefits conferred by the Act. On that basis, the Tribunal set aside the orders of the lower courts and remitted the matter to the Labour Court for determination on the merits, thereby giving rise to the present appeal.

The sole issue presented for determination was whether the contested notification extended to the appellant’s head office in Bombay. The Act in question had been enacted by the Bombay Legislature to regulate employer‑employee relations, to provide mechanisms for the settlement of industrial disputes, and to serve other related purposes. It contained detailed provisions intended to achieve its objectives and conferred additional benefits on employees beyond those granted by the Central Industrial Disputes Act, 1947. For example, under section 42(4) of the Act, an employee who desired a change in any order issued by the employer under the standing orders could make an application to the Labour Court, subject to a proviso that need not be reproduced here. Section 78(1)(a)(iii) required the Labour Court to decide whether any change sought by an employee or made by an employer should be effected. An order of dismissal issued by an employer could therefore be challenged directly by the employee through an application to the Labour Court under the provisions of the Act, unlike the procedure under the Central Act, which required a union‑sponsored complaint or a group of employees to raise the dispute before an industrial tribunal. The respondent claimed a special benefit under the Act and contended that his case fell within the scope of the notification. It was undisputed that if the notification applied, the respondent’s application to the Labour Court would be competent and would have to be heard on its merits; conversely, if the notification did not apply, the application would be incompetent and would have to be dismissed at the outset. The Court therefore needed to interpret the notification to determine its applicability to the head office of the appellant.

In this case the Court explained that under the Bombay State Act an employee who had been dismissed could challenge the dismissal directly by filing an application before the Labour Court, whereas under the Central Industrial Disputes Act a complaint of wrongful dismissal became an industrial dispute only when it was taken up by a trade union or by a group of employees and then referred to an industrial tribunal for adjudication under section ten of that Act. The respondent asserted that he was entitled to a special benefit under the State Act and therefore argued that his dispute fell within the scope of a specific notification issued by the Government of Bombay. Both parties agreed that if the notification were applicable to the respondent’s case, his application to the Labour Court would be competent and would have to be heard on its merits; conversely, if the notification did not apply, the application would be incompetent and would have to be dismissed at the preliminary stage. The Court then set out the wording of the notification, which had been issued by the Government of Bombay in exercise of the powers conferred by section two, sub‑section four of the Act, and which superseded an earlier notification. The notice declared that “the Government of Bombay is pleased to direct that all the provisions of the said Act shall apply to the following industry, viz., the manufacture of sugar and its by‑products, including (1) the growing of sugarcane on farms belonging to or attached to concerns engaged in the said manufacture, and (2) all agricultural and industrial operations connected with the growing of sugarcane or the said manufacture, engaged in such concerns.” A note attached to the notification added that for the purposes of the notification every service or employment connected with the conduct of the above industry would be deemed to be part of the industry when engaged in or by an employer engaged in that industry. The Court observed that the notification deliberately limited its application to “the manufacture of sugar and its by‑products” rather than to the “sugar industry” as a whole. Had the broader term “sugar industry” been used, the definition of “industry” contained in section two, sub‑clause nineteen of the Act could have been invoked to give the notification a wider reach. By choosing a more specific phraseology, the legislature intended to confine the notification’s reach to the manufacturing activity and its immediate by‑products. The Court noted that the Labour Appellate Tribunal had incorrectly interpreted the notification as referring to the sugar industry in its entirety, a mistake that constituted a serious infirmity in the Tribunal’s decision. Moreover, the Court pointed out that the explicit inclusion of the two items in clauses (1) and (2) was significant because section two, sub‑clause nineteen, paragraph (b)(i) already defines “industry” to include agriculture and agricultural operations. If “the manufacture of sugar and its by‑products” were synonymous with “sugar industry,” the two items would have been covered automatically by that definition, making their separate mention redundant. Their specific inclusion therefore demonstrated that the first part of the notification was not intended to cover them, and the inclusive wording was used to extend the scope of the clause. This analysis led the Court to conclude that a limited construction must be given to the words “the manufacture of sugar and its by‑products.”

The Court observed that if the term “industry” itself had covered the two items listed in clauses (1) and (2), then adding those clauses would have been unnecessary. Their specific inclusion therefore shows that the first part of the notification was not intended to apply to them, and the inclusive wording introducing the two items was used to broaden the scope of that clause. This demonstrates that a narrow construction must be given to the words “the manufacture of sugar and its by‑products”. The Court noted that the explanatory note appended to the notification attempts to bring certain types of service and employment within its ambit by deeming them part of the industry. However, the final sentence of the note is poorly drafted and its intended meaning is unclear. Even assuming that the first part of the note deems some services or employments to be part of the industry because they are connected with its conduct, the latter part imposes the additional requirement that such service or employment must actually be engaged in that industry. For example, a worker involved in manuring or a clerk at a manure depot that supplies manure to sugarcane farms might be covered by the note, but it is difficult to see how an employee stationed at the head office in Bombay could rely on that provision. The deeming clause extends to certain services and employments only insofar as they are performed within the industry, so the connection with the industry must still be established before the note can be applied to the respondent. Counsel for the respondent argued that the head office contains an accounts department, an establishment section, a stores purchase section and a legal department, and pointed out that machinery purchased for the industry arrives in Bombay, is received by the head office and then dispatched to the factories. The Court noted that the factories and their attached offices are located at Lakshmiwadi and Sakharwadi, respectively, and are separated from the head office by several hundred miles. The fact that machinery required at the factories is first received at the head office and subsequently forwarded to the factories does not, in the Court’s view, support the respondent’s claim that the head office and all its employees fall within the scope of the note. The Court concluded that the purpose of the notification is to limit its benefit to services or employment that are directly connected with the manufacture of sugar and its by‑products, including the two items specified in clauses (1) and (2).

In this case the Court observed that the note to the notification expressly covered by‑products, including the two items identified in clause (1) and clause (2). The Court further noted that subsidiary services of the type it had previously indicated were also captured by virtue of the note. Nevertheless, the Court expressed the view that it would be difficult to extend the scope of the notification to include the head office of the appellant. Accordingly, the Court held that the Labour‑Appellate Tribunal had erred in law when it concluded that the respondent’s situation fell within the ambit of the notification. The Court added that the registrar appointed under section 11 of the Act had consistently refused to recognise the staff of the head office as being covered by the notification, and that it was an accepted fact that the prevailing practice to date had been contrary to the respondent’s contention. While acknowledging that, in construing a statutory notification, the existing practice is not determinative, the Court explained that if, after an interpretation of the notification, it is concluded that the head office lies outside its reach, it is nevertheless appropriate to refer to the prevailing practice because that practice aligns with the interpretation adopted by the Court. The Court observed that the lower courts had referred to a comparable notification issued for the textile industry under section 2, sub‑section (3) of the Act, and had cited decisions interpreting that notification. The Court found that considering that textile‑industry notification and the cited decisions would not serve any useful purpose. Consequently, the Court allowed the appeal, set aside the order of the Labour‑Appellate Tribunal, dismissed the respondent’s application, and declined to award any order as to costs.