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: Not extracted

Decision Date: 15 March 1960

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

In this case the Court recorded that the appeal was filed by special leave and it presented a concise question concerning how to interpret notification number 1131‑46 which had been issued by the Government of Bombay on 4 October 1952 under section 2(4) of the Bombay Industrial Relations Act, 1946 (the Act). The respondent was a stenographer who had been employed by the appellant, Godavari Sugar Mills Ltd., at the company’s head office in Bombay. He had been working in that capacity for several years and drew a salary of Rs 135 together with a dearness allowance of Rs 27. On 22 April 1955 the appellant terminated his employment. The appellant claimed that the respondent had been charged with acts of disobedience and insubordination, that a proper inquiry had been held in which the respondent was given an opportunity to defend himself, and that the inquiry had found him guilty of the alleged misconduct, leading to his dismissal.

The respondent contested the legality and propriety of his dismissal by filing an application before the Labour Court at Bombay, asserting that the application was made under section 42(4) read with section 78(1)(a)(i) and (iii) of the Act. The appellant, in response, questioned the competence of the Labour Court to entertain the application on the ground that the Act was not applicable to the respondent’s situation and therefore the Court lacked jurisdiction. Both parties agreed that the jurisdictional issue raised by the appellant should be decided as a preliminary question. Consequently the Labour Court examined the objection and upheld it, holding that the notification relied upon by the respondent did not extend to the head office of the appellant situated in Bombay, and consequently dismissed 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 not applicable to the head office. The respondent then approached the Labour Appellate Tribunal, where the Tribunal reversed the earlier conclusions, holding that the notification did apply to the head office and that the respondent was entitled to the benefits conferred by the Act. Accordingly the Tribunal set aside the orders of the lower courts and remanded the matter to the Labour Court for disposal on the merits in accordance with law. The present appeal arises from that Tribunal order, and the sole issue for determination is whether the notification in question is applicable to the appellant’s head office in Bombay.

In the present matter the Court explained that the Bombay Industrial Disputes Act was enacted by the Bombay Legislature with the purpose of regulating the relationship between employers and employees, of providing a mechanism for the settlement of industrial disputes, and of achieving certain other legislative objectives. The Act therefore contains detailed provisions designed to fulfil these objectives, and it also confers a number of advantages on employees that go beyond the rights already granted under the Central Industrial Disputes Act, 1947. For example, section 42(4) of the Bombay Act authorises an employee who wishes to obtain a modification of any order that the employer has issued under standing orders to file an application before the Labour Court for that purpose, subject to the proviso contained in that provision, the text of which the Court deemed unnecessary to repeat. Section 78(1)(a)(iii) further obliges the Labour Court to decide whether any change proposed by an employer or desired by an employee should be implemented. Consequently, an employee who is dismissed by his employer may challenge the dismissal directly by filing an application before the Labour Court under the Bombay Act. By contrast, under the Central Industrial Disputes Act a complaint that an employee alleges to be an unlawful or wrongful dismissal does not become an industrial dispute unless the grievance is either taken up by a trade union or is pursued collectively by a group of employees and then referred to an industrial tribunal for adjudication under section 10 of that Act. The respondent in the case asserted that he was entitled to a special benefit that is provided by the Bombay Act, and on that basis he argued that his dispute fell within the scope of the notification that was the subject of the appeal. It was accepted by both parties that, if the notification were to apply to the respondent’s situation, the application that he had filed with the Labour Court would be legally competent and would have to be dealt with on its merits; on the other hand, if the notification were found not to apply, the application would be incompetent and would have to be dismissed at the threshold on that ground.

The Court then turned to a careful reading of the notification itself. The notification had been issued by the Government of Bombay pursuant to the authority conferred upon it by section 2, sub‑section (4), of the Bombay Industrial Disputes Act, and it was intended to supersede an earlier notification on the same subject. The substance of the notification was that the Government of Bombay directed that every provision of the Act should be deemed to apply to a specified industry, namely the manufacture of sugar and its by‑products. The notification expressly listed two categories of activity that were to be covered. The first category, labeled clause (1), comprised the cultivation of sugarcane on farms that either belong to or are attached to enterprises that are engaged in the manufacture of sugar and its by‑products. The second category, labeled clause (2), encompassed all agricultural and industrial operations that are connected with either the cultivation of sugarcane or with the manufacture of sugar and its by‑products, provided that such operations are carried out by the same enterprises. For the purpose of giving effect to the notification, a note was appended stating that any service or employment that is connected with the conduct of the industry described above shall be considered to be part of that industry whenever such service or employment is performed by, or for, an employer who is engaged in the industry. By setting out these definitions and inclusions, the notification sought to bring within the ambit of the Bombay Act a broad range of activities that are directly related to sugar production.

The Court observed that the language of the notification was noteworthy because it applied not to the “sugar industry” in a generic sense but specifically to “the manufacture of sugar and its by‑products.” The Court explained that, had the notification used the broader term “sugar industry,” it might have been interpreted in a wider manner, taking into account the extensive definition of the word “industry” that is provided in section 2(19) of the Act. By deliberately choosing the narrower phrase “manufacture of sugar and its by‑products,” the notification confined its coverage to that particular segment of activity. The Court therefore concluded that the precise wording of the notification was an intentional limitation, and that this limitation must be respected when determining whether the respondent’s employment falls within its scope.

In its analysis the Court observed that the notification deliberately used the expression “the manufacture of sugar and its by‑products” rather than the broader term “sugar industry.” By choosing this specific phraseology, the notification confined its reach to manufacturing activities rather than to the entire sugar industry. The Court noted that the Labour Appellate Tribunal had interpreted the notification as if it applied to the sugar industry as a whole, an approach the Court described as a serious flaw in that decision. The Court further emphasized that the two items listed in clauses (1) and (2) of the notification were significant. Section 2(19)(b)(i) of the Act defines “industry” to include agriculture and agricultural operations. If “the manufacture of sugar and its by‑products” were synonymous with “sugar industry,” the items in clauses (1) and (2) would already be covered by the definition of “industry,” making their separate inclusion redundant. The Court explained that the explicit inclusion of these two items therefore indicates that the first part of the notification did not originally apply to them. The purpose of adding the inclusive wording before the two clauses was to expand the scope of the notification deliberately. Consequently, the Court concluded that the expression “the manufacture of sugar and its by‑products” must be interpreted narrowly, limited to the activities expressly described and not extending automatically to all activities that might fall under a broader definition of the sugar industry.

The Court then turned to the note that accompanied the notification, which attempted to bring certain services and employments within the notification’s ambit by a deeming provision. The Court found the final clause of that note to be poorly drafted, creating uncertainty about its exact meaning. While the first part of the note deemed some services or employments to be part of the industry because they were connected with its conduct, the latter part imposed a further condition that those services or employments must actually be engaged in the industry. The Court illustrated this by noting that a worker involved in manuring or a clerk handling manure for a farm growing sugarcane could arguably fall within the notification’s scope under the deeming clause. However, the Court observed that it was difficult to extend the same benefit to the respondent, who was employed in the head office located in Bombay. The deeming clause, the Court explained, required that the connection with the industry be established first, and only then could the service or employment be considered as engaged in the industry. The respondent’s counsel had argued that the head office housed the accounts department, establishment section, stores purchase section, and legal department, and that machinery purchased for the industry arrived at the head office before being dispatched to the factories. The Court rejected that argument, stating that the mere receipt and forwarding of machinery at the head office did not bring the head office or its employees within the ambit of the note, which was intended to cover services directly connected with manufacturing sugar and its by‑products, including the specifically mentioned items. Accordingly, the Court concluded that the scope of the notification could not be extended to encompass the head office of the appellant.

In this case, the Court observed that the machinery used in the sugar industry was landed at Bombay, received by the head office, and then dispatched to the factories. The factories and the offices attached to them were located at Lakshmiwadi and Sakharwadi respectively, and these places were separated from the head office in Bombay by hundreds of miles. The Court held that the mere fact that the machinery required at the factories was first received at the head office and subsequently forwarded to the factories could not support the respondent’s claim that the head office and all its employees fell within the note to the notification. The Court explained that the purpose of the notification was to limit its benefits to services or employments that were connected with the manufacture of sugar and its by‑products, including the two items specified in clause (1) and clause (2). Although subsidiary services mentioned in the note were included, the Court found it difficult to extend the scope of the notification to the head office of the appellant. Accordingly, the Court concluded that the Labour Appellate Tribunal had erred in law by holding that the respondent’s case was governed by the notification. The Court further noted that the registrar appointed under section 11 of the Act had consistently refused to recognise the staff of the head office as falling under the notification, and that it was a matter of common ground that the established practice was contrary to the respondent’s pleading. While acknowledging that prevailing practice may have no bearing on the construction of the notification, the Court stated that if the construction showed the head office to be outside the notification, reference to the consistent practice was not irrelevant because it aligned with that construction. The Court observed that lower courts had referred to a similar notification issued for the textile industry under section 2, sub‑section (3) of the Act, and had cited decisions construing that notification, but the Court expressed the view that considering that textile notification and the cited decisions would not serve any useful purpose. Finally, the Court allowed the appeal, set aside the order of the Labour Appellate Tribunal, dismissed the respondent’s application, and declined to grant any order as to costs, thereby confirming that the appeal was allowed.