M/S. Jeewanlal (1929) Ltd., Calcutta vs Its Workmen

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 264 of 1960

Decision Date: 3 March 1961

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

In the matter titled M S Jeewanlal (1929) Ltd., Calcutta versus Its Workmen, the Supreme Court of India rendered its judgment on 3 March 1961. The opinion was authored by Justice P B Gajendragadkar, who was joined on the bench by Justice K N Wanchoo. The petitioner in the proceedings was the company M S Jeewanlal (1929) Ltd., Calcutta, and the respondent was the body of its workmen. The judgment was recorded under the citation 1961 AIR 1567 and also appears in the 1962 S C R (1) 717 reporter. Subsequent citations of the decision include references such as RF 1981 S C 852 (12) and R 1992 S C 780 (10). The case concerned the interpretation of the expression “continuous service” as it appears in the Industrial Disputes Act, 1947 (Act 14 of 1947), specifically relating to the provisions governing gratuity under the industrial dispute framework.

The factual backdrop involved an employee named Bhanu Bala who entered the service of the petitioner as a workman in 1929 and later tendered his resignation in 1957. During his tenure, Bhanu Bala was absent without permission or leave for a substantial period of roughly eight months, from February 1945 to October 1945. An award concluded between the company and its workmen incorporated a gratuity scheme that provided that an employee who retired voluntarily or resigned after fifteen years of continuous service would be eligible for gratuity at the prescribed rate. Bhanu Bala asserted his right to gratuity under this clause, while the company contended that his service was not continuous because of the prolonged unauthorized absence, thereby rendering his claim incompetent. The central issue before the Court was the proper construction of the term “continuous service” within the 1951 award. The Court held that a word may acquire different meanings in different contexts and that “continuous service” is ultimately a factual determination that must be assessed on the specific circumstances of each case. Where a statutory definition exists, that definition prevails; where an award supplies its own definition, that definition binds the parties. In the absence of a clear definition in the award and where statutory definitions are of no assistance, the Court must examine the principle underlying the term. The Court explained that “continuous service” in the setting of a gratuity scheme signifies an uninterrupted employer‑employee relationship that may terminate only by the act of the parties—such as resignation or dismissal—or by operation of law, but it does not cease merely because of an employee’s unauthorized absence. Nevertheless, the Court acknowledged that a prolonged unauthorized absence could give rise to an inference of abandonment. The Court further noted that participation in an illegal strike, by itself, does not break the continuity of service for gratuity purposes, provided that the relevant standing‑order provisions are obeyed.

Participation in an illegal strike could not be said to cause a breach in the continuity of service, although such participation might constitute a good cause for termination, provided that the relevant provisions in the Standing Orders were complied with. The Court distinguished the decision in Buckingham and Carnatic Co. Ltd. v. Workers of the Buckingham and Carnatic Co. Ltd., [1953] S.C.R. 219, and referred to the earlier authority Budge Budge Municipality v. P. R. Mukherjee, [1953] 1 L.L.J. 195.

The matter before the Court was Civil Appeal No. 264 of 1960, filed by special leave against the award dated 12 October 1959 of the Industrial Tribunal, Bombay, in Reference (IT) No. 81 of 1959. Counsel for the appellant consisted of S. T. Desai, Sukumar Ghose and B. N. Ghose, while counsel for the respondents were C. L. Dhudia and K. L. Hathi. The judgment was delivered on 3 April 1961 by Justice Gajendragadkar.

This appeal challenged an award of the industrial tribunal that had been made under section 36A(2) of the Industrial Disputes Act, 1947, for the purpose of interpreting certain terms of an earlier award dated 28 April 1951, issued in Reference No. 168 of 1950. The dispute originated between the appellant, M/s Jeewanlal (1929) Ltd., and its workmen over demands raised by the respondents in 1950. The tribunal, upon referral, passed an award that, among other matters, incorporated a gratuity scheme. Several provisions of that award were now sought to be interpreted.

On 31 August 1957 the employer accepted the resignation of its employee, Bhanu Bala, who had initially joined the company in 1929. Despite his long tenure, Bhanu Bala’s service was interrupted for approximately eighty‑one months because he remained absent without permission from 14 February 1945 to the end of October 1945. The appellant contended that, because of this interruption, the employee was not entitled to any gratuity under the scheme framed by the award. Nevertheless, on compassionate grounds, the employer offered him a sum of roughly Rs 1,165.

Bhanu Bala refused the offered amount, asserting that he was entitled to a gratuity of Rs 2,282.50. His claim gave rise to an industrial dispute, which he pursued before the First Labour Court at Bombay, invoking section 33C of the Industrial Disputes Act. The Labour Court entertained the petition, decided in favour of the employee, and directed the appellant to pay Rs 1,781.80 as gratuity.

Unsatisfied with that decision, the appellant approached the Bombay High Court, seeking a writ under articles 226 and 227 of the Constitution on the ground that the Labour Court lacked jurisdiction to entertain the employee’s application. The High Court granted the writ, set aside the Labour Court’s order, and consequently quashed the award of gratuity.

Following the High Court’s judgment, the Government of Bombay referred the question of the meaning of “continuous service” contained in the 1951 award to the Industrial Court under section 36A(1) of the Act. The referral placed the interpretation of that term, as used by the tribunal, before the Industrial Court for determination.

In the present dispute, the Court was asked to interpret the expression “continuous service” that appeared in the award of 1951 made by the Industrial Court pursuant to section 36A(1) of the Industrial Disputes Act. The Industrial Court had assumed jurisdiction over the matter and held that, as used in the award, “continuous service” meant service that was not broken or interrupted by the termination of the employment contract by either the employer or the employee, nor by any operation of law. The appellant challenged the correctness of that interpretation in the appeal before this Court. The award contained a gratuity scheme, the relevant portions of which were set out as follows: (i) on the death of an employee while in service, or on an employee becoming physically or mentally disabled so that he could not continue in service, the employee or his legal representatives were to receive half a month’s wages for each completed year of service, subject to a maximum of ten months’ wages; (ii) on termination of service by the company after five years of continuous service, the employee was to receive gratuity at the same rate as stipulated in clause (i); and (iii) on voluntary retirement or resignation after fifteen years of continuous service, the gratuity was likewise to be paid at the same rate. The employee, Bhanu Bala, tendered his resignation, which the company accepted in August 1957, and he sought the benefit under clause (iii). The appellant contended that Bhanu Bala’s service was not continuous for the required fifteen‑year period because there was a hiatus in his employment from 14 February 1945 to the end of October 1945, and that this interruption rendered his claim under clause (iii) invalid. The Industrial Court rejected the appellant’s contention. Counsel for the appellant, Mr S.T. Desai, argued that in determining the meaning of “continuous service” in clause (iii) the Court should compare the provisions of section 49B(1) together with its explanation in the Indian Factories Act 1934 and section 79(1) with its explanation in the Indian Factories Act 1948 as they stood before the 1954 amendment. He submitted that an unauthorised absence from work ordinarily created a break in service, and therefore an employee who resumed work after such unauthorised absence should not be allowed to claim continuous service because of the break. To support this position, he relied on the Supreme Court’s decision in Buckingham and Carnatic Co. Ltd. v. Workers of the Buckingham and Carnatic Co. Ltd., wherein the Court held that the workers’ service continuity was interrupted by an illegal strike, disqualifying them from claiming holidays with pay under section 49B(1) of the Factories Act. The appellant highlighted that decision as persuasive authority for the view that unauthorised absence should break continuity of service.

The Court observed that the earlier decision was based on the meaning of the term “strike” as defined in section 2(q) of the Industrial Disputes Act, 1947, read together with the relevant provision of section 49‑B of the Indian Factories Act, 1934; it stressed that the same words can acquire different meanings when placed in a different statutory context. Referring to Budge Budge Municipality v. P. It. Mukherjee (2), the Court quoted: “the same words may mean one thing in one context and another in different context. This is the reason why decisions on the meaning of particular words or collection of words found in other statutes are scarcely of (1) [1953] S.C.R. 219. (2) [1953] 1 L. L. J. 195, 198. much value when we have to deal with a specific statute of our own; they may be helpful but cannot be taken as guides or precedents.” Consequently, the Court held that the interpretation given to “continuous service” under the Factories Act does not necessarily control the issue before it in the present appeal. The same observation was applied to the argument that relied on the definition of “continuous service” contained in section 2(eee) of the Industrial Disputes Act, 1947. That section declares that “continuous service” means uninterrupted service and expressly includes periods of interruption caused only by sickness, authorised leave, accident, a strike that is not illegal, a lockout or any cessation of work that is not attributable to any fault of the workmen. While the Court acknowledged that this definition is relevant when the question of continuous service is examined under the Industrial Disputes Act, it cautioned that the definition cannot be automatically imported to interpret “continuous service” in an award arising from an industrial dispute unless the award’s own context justifies such importation. In other words, if the expression “continuous service” is given a statutory definition, that definition will prevail; an award may itself provide a definition of the expression, and that definition will bind the parties in all claims arising under the award. However, where the award is silent on the meaning and where the statutory definitions in other Acts do not offer material assistance, the question must be examined on principle, and the appropriate meaning must be determined for the particular award. The Court noted that this is precisely the task undertaken by the tribunal in the present case. Accordingly, the tribunal interpreted “continuous service” within the gratuity scheme it had framed as embodying the continuing master‑servant relationship between the employer and his employees. The tribunal explained that if a servant resigns, his service ends automatically; similarly, if the employer terminates the employee’s service, the continuity of service likewise ceases. Moreover, the tribunal recognized that the service of an employee may be terminated by operation of any law, which also disrupts continuity.

The Court observed that an interruption caused by the operation of any law, under the relevant statutory framework, represents another instance in which the continuity of service is broken. However, it is difficult to hold that a mere unauthorized absence, without obtaining leave or any other disciplinary sanction, automatically terminates the employee’s continuity of service. Likewise, participation in an illegal strike, even though it may expose the employee to dismissal, does not by itself end the master‑servant relationship in the industrial context and its legal consequences. Such participation may constitute a sufficient ground for termination, provided that the applicable standing‑order provisions governing that matter are duly complied with as required by law and the procedural safeguards. Nevertheless, the Court emphasized that mere involvement in an illegal strike cannot be said to breach continuity of service for the purpose of gratuity entitlement under the applicable scheme. Conversely, if an employee remains absent from duty without leave, in an unauthorized manner, for a prolonged period such that a reasonable inference can be drawn that he has abandoned his position, in fact, then that long unauthorized absence may be regarded as causing a break in continuity under the law. Therefore, determination of whether an employee satisfies the required period of continuous service remains a factual question to be decided based on the specific circumstances of each case and the evidential record. In its view, the Court found that the tribunal’s approach was substantially correct. However, it clarified that, in addition to the situations identified by the tribunal, a class of cases exists where a prolonged unauthorized absence may reasonably lead to an inference of abandonment of service. The Court noted that this approach ensures equitable treatment of employees. Accordingly, the Court confirmed the award, dismissed the appeal, ordered no costs, and entered the appeal as dismissed.