Rai Sahib Ramdayal Ghasiramoil Mills vs The Labour Appellate Tribunal

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 593/1960

Decision Date: 10 December, 1962

Coram: J.R. Mudholkar, Syed Jaffer Imam, J.L. Kapur, J.L. Subbarao

In the matter dated 10 December 1962, the Supreme Court of India delivered its judgment in the case of Rai Sahib Ramdayal Ghasiramoil Mills versus the Labour Appellate Tribunal. The bench consisted of Justice J. R. Mudholkar, Justice Syed Jaffer Imam and Justice J. L. Kapur. The petitioner was the mill known as Rai Sahib Ramdayal Ghasiramoil Mills and the respondent was the Labour Appellate Tribunal. The citation for this decision is reported in 1964 AIR 567 and 1963 SCR Supl. (2) 845.

The mill had been closed on the ground that it suffered heavy losses. Following the closure, the workmen raised an industrial dispute and were awarded retrenchment benefits. Approximately two years later the mill reopened, but only a portion of the former employees were reinstated and a number of new workers were hired. The wages paid after reopening were lower than those previously received. The workers submitted several demands, including the reinstatement of those who were not re‑employed at the reopening and compensation for unemployment from the date of reopening.

Because an industrial dispute had arisen, the Government constituted a single‑member Tribunal and made a formal reference of the dispute to that Tribunal. After the member retired, the Government, invoking section 7(1) of the Industrial Disputes Act 1947 and superseding the earlier notification, constituted another single‑member Tribunal. No fresh reference was made to this new Tribunal, yet it proceeded to adjudicate the dispute. In addition to the earlier demands, the workers contended before the Tribunal that they were entitled to the benefits under section 25(H) of the Industrial Disputes Act, as amended by the Industrial Disputes (Amendment) Act 1953. The appellant opposed the Tribunal’s jurisdiction to hear the dispute and argued that section 25(H) was not applicable to the workmen who had already been retrenched.

The Court rejected the appellant’s first contention that the Tribunal lacked jurisdiction. Although it accepted the second contention that section 25(H) could not be invoked for the retrenched workmen, the Tribunal nonetheless granted relief to the workers on the basis that, despite their inability to claim the statutory benefits, the principle of social justice underlying section 25(H) justified the payment of salaries and allowances from the date the mill reopened. The appellant appealed this order to the Industrial Appellate Tribunal; that appeal was dismissed, and the appellant subsequently filed a writ petition before the High Court of Bombay. The High Court summarily dismissed the writ petition.

The appellant was granted a certificate to bring the matter before this Court. In the proceedings before the Court the appellant repeated the two contentions that had been raised earlier. The Court held that subsection (1) of section 7 of the Industrial Disputes Act gives the Government the power to constitute an Industrial Tribunal. However, the mere constitution of a Tribunal is not sufficient for the Tribunal to acquire jurisdiction over a dispute. The Tribunal must also act under section 10 of the Act and must be made the specific reference for each individual dispute that is to be adjudicated. In the absence of such a reference the Tribunal does not obtain the authority to decide any dispute. The Court further observed that the provisions of section 25(H) cannot be applied to workmen who were retrenched before that provision came into force. Since the provision is not retrospective, no Tribunal may rely on its own notion of social justice or on the underlying principle of section 25(H) to extend the benefit to a dispute that arose prior to the enactment of that provision.

The judgment concerned a civil appeal under the appellate jurisdiction of this Court, identified as Civil Appeal No. 593 of 1960, filed against the order dated 15 October 1956 of the Bombay High Court in Special Civil Application No. 2832 of 1956. Counsel for the appellant appeared, while the respondent did not make an appearance. The judgment was delivered on 10 December 1962 by Justice Mudholkar. This appeal arose from a certificate obtained after the Bombay High Court summarily dismissed a writ petition that had been filed under Articles 226 and 227 of the Constitution. The factual background was as follows: Rai Sahib Ramdayal Ghasiram Oil Mills (referred to as “the Mills”) were closed on 1 September 1952 on the ground that they had incurred heavy losses. The closure was found to be bona‑fide, and the workmen received retrenchment benefits. The Mills subsequently reopened on 14 November 1954, but their operations were conducted on a reduced scale in order to avoid further losses. Some of the retrenched workmen were re‑employed, although they were paid wages that were lower than those they had received before the closure. The Mills asserted that it could not absorb all the former workmen, yet it appears that the Mills also employed new workers. Because the respondents’ union claimed that eleven workmen had not been absorbed, an industrial dispute was raised. In response, the State Government constituted an Industrial Tribunal consisting of Mr Kurian, pursuant to section 7 of the Industrial Disputes Act as it stood on that date, on 13 May 1955, and referred the following question to the Tribunal: “Whether the retrenched workmen referred to in Annexures A, B and C of the Award of the Industrial Tribunal, in the industrial dispute between the workmen and employers of Rai Sahib Ramdayal Ghasiram Rice, Ginning and Oil Mills, Peddapally dated 1 January 1953, are entitled to reinstatement and compensation for unemployment after the reopening of the said Mills.” Shortly after the Tribunal was constituted and the reference made, Mr Kurian retired. Consequently, the Government of Hyderabad issued a notification on 2 June 1955 exercising the powers conferred by subsection (1) of section 7 of the Industrial Disputes Act, thereby superseding the earlier notification of the Labour Department and appointing a new sole member to the Tribunal.

The Rajapramukh exercised the authority granted by subsection (1) of section 7 of the Industrial Disputes Act, 1947 (XIV of 1947) and, superseding Labour Department Notification No. B. 189/54/134 dated 15‑10‑1954, issued a notification stating that an Industrial Tribunal was hereby constituted. The notification appointed Shri Bhikaji Patil as the sole member of that Tribunal, with the purpose of adjudicating industrial disputes in accordance with the provisions of the Act, and it was to take effect immediately. Before this Tribunal, the respondents contended that, following the reopening of the Mills, every former employee should receive preference over any other workers and should be re‑employed on the same wage scale that was applicable at the time the Mills were closed. Their claim relied upon an award rendered by the Industrial Tribunal on 1 January 1953, which had arisen from a dispute between the Mills and the respondents after the Mills were closed in September 1952. Paragraph 24, clause 6 of that award provided that, if the factory were reopened within one year from the date the award became enforceable, the employers were obliged to give first preference to the workmen listed in Annexures A, B and C. The award further stipulated that no other persons could be employed in the factory unless the listed workmen had first been offered employment on the same basic wages and allowances that were in force on 29 July 1952. The respondents complained that, after the reopening, only a small number of the former workers were taken back, and those who were re‑employed received lower wages. In addition, new workers had been recruited, apparently ignoring the entitlement of certain former employees. The respondents also sought to invoke the benefit of section 25 (H) of the Industrial Disputes Act, a provision that had been added by the Industrial Disputes (Amendment) Act, 1953.

The appellant raised several contentions before the Tribunal, but only two of those are presently before this Court. The first contention was that the Tribunal constituted on 2 June 1955 lacked jurisdiction to hear the dispute. The second contention was that the provisions of section 25 (H) of the Industrial Disputes Act, as amended by Act 43 of 1953, were not applicable to the former workmen who had been retrenched. The Tribunal rejected the first contention, as well as other arguments not presently before this Court, but it upheld the second contention, concluding that the provisions of section 25 (H) did not apply to the retrenched workmen. Nevertheless, the Tribunal issued an order in favour of those workmen, stating that although they could not claim the statutory benefits under section 25 (H), they could not be denied the social‑justice principle underlying that section and the rights they had obtained under the 1952 award. Accordingly, the Tribunal ordered that the workers named in Annexures A, B and C who were not taken back into service by the employers should receive their salaries and allowances from the date of the Mills’ reopening, i.e., 14‑11‑1954, calculated at the rates that were in force at the time of the Mills’ closure.

The Tribunal ordered that the workers listed in Annexures A, B and C who had not been taken back into service by their employers be re‑employed and that they receive their salaries and allowances from the date the mills reopened, which was 14‑11‑1954. The Tribunal further directed that the amount of salary to be paid to each worker should be the same as the salary that was in force at the time the mills were closed.

Following this order, the appellants filed an appeal against the Tribunal’s decision before the Labour Appellate Tribunal in Bombay. The Labour Appellate Tribunal dismissed the appeal. Undeterred, the appellants then instituted a writ petition in the High Court of Bombay, which, as previously noted, rejected the petition at the preliminary stage. The Court considered the appellant’s contention that the Industrial Tribunal, which consisted solely of Mr Patil, lacked jurisdiction to decide the dispute. The Court agreed with this contention and held that it must be upheld.

The Court explained that, at the relevant time, subsection (1) of section 7 of the Industrial Disputes Act authorized the appropriate Government to constitute one or more Industrial Tribunals for the adjudication of industrial disputes, and that the Government could determine the number of members of each Tribunal. Subsection (2) of section 8 provided that if a Tribunal consisted of a single member and that member’s services ceased, the Government could appoint another independent person in his place and the proceedings would continue before the newly appointed member. According to this legal framework, the appropriate step for the Government, after Mr Kurian’s services were no longer available, would have been to act under subsection (2) of section 8 and appoint a replacement, thereby allowing the existing Tribunal to continue its proceedings.

Instead of invoking subsection (2) of section 8, the Government chose to act under subsection (1) of section 7, superseding its earlier notification and creating a fresh Industrial Tribunal composed solely of Mr Patil. The Court noted that it was unnecessary to examine whether the original Tribunal continued to exist with a vacancy, because the Government’s decision to constitute a new Tribunal was flawed. The Government, after forming the new Tribunal, failed to refer the specific dispute to it in accordance with subsection (1)(c) of section 10 of the Act. It appears that the Government and its legal advisers assumed that a simple notification under subsection (1) of section 7 would satisfy the legal requirements, and that an additional notification under section 10(1)(c) was not needed to refer the particular dispute for adjudication.

The Court emphasized that while subsection (1) of section 7 empowers the Government to create a Tribunal for the purpose of adjudicating industrial disputes, this power alone does not confer jurisdiction upon the Tribunal. The Tribunal must also receive a specific reference to each dispute under section 10 before it can exercise jurisdiction over that dispute. Without such a reference, the Tribunal lacks authority to adjudicate the matter. On this basis alone, the Court concluded that the appeal must be allowed. The Court added that it would briefly address the reason why the Tribunal had thought it appropriate to grant the retrenched workers the benefits of section 25(H) on the ground of social justice, but that discussion would follow subsequently.

In the matter before it, the Tribunal had attempted to give the retrenched workers the benefit of the provisions of section 25(H) on the ground of social justice. The Court observed that although an Industrial Tribunal possesses wide powers when adjudicating industrial disputes, it does not have the authority to assume powers that the legislature alone may confer, nor may it do anything that the legislature has not authorized. Section 25(H) of the Industrial Disputes Act provides for the re‑employment of retrenched workmen under certain circumstances, giving them preference over new entrants. However, the Court noted that the provision in question was enacted by Act 43 of 1953, and that the same Act, in subsection (2) of section 1, expressly states that the provision shall be deemed to have come into force on 24 October 1953. Consequently, the Court held that the provisions of section 25(H) cannot be applied to workmen who had been retrenched before that commencement date. The Court further observed that the legislature plainly did not intend for the provisions to have effect prior to 24 October 1953. Because the legislative mandate is clear, the Court concluded that no Tribunal may, on the basis of its own sense of social justice, disregard the commencement date and apply the provision or its underlying principle to a dispute that arose before the provision became operative. Accordingly, the Court allowed the appeal, set aside the award of the Industrial Tribunal, and dismissed any order as to costs since the respondents had not appeared. The appeal was thus allowed.