Northern Dooars Tea Co. Ltd. vs Workmen Of Demdima Tea Estate

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

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 753 and 754 of 1962

Decision Date: 13 August 1963

Coram: P.B. Gajendragadkar, K.N. Wanchoo, K.C. Das Gupta

In this case the Supreme Court considered two appeals, numbered 753 and 754 of 1962, which both arose from industrial disputes between the appellant, Northern Dooars Tea Co. Ltd., and its workmen. The first industrial reference concerned two separate questions: the first question related to a lock‑out that the company had imposed on 12 September 1957, and the second question related to the dismissal of six workmen whose names were listed in the annexure to the reference. The second industrial reference dealt with the retrenchment of two hundred and thirty workmen that the company had effected, while the third reference concerned the lay‑off of workmen by the company from 7 October 1957 onward and the claim made by those workmen for compensation for the period of the lay‑off. All three references had been referred by the Government of West Bengal to the Fourth Industrial Tribunal in Calcutta for adjudication, and the Tribunal had delivered a comprehensive award on 15 April 1961. The appellant obtained special leave to challenge the award related to the first reference by filing Civil Appeal No. 753 of 1962, and the appellant also filed Civil Appeal No. 754 of 1962 to contest the award relating to the third reference. No appeal was filed against the award that addressed the second reference.

The appellant, Northern Dooars Tea Co. Ltd., was a public limited company incorporated under the English Companies Act with its registered office in London. At the time of the disputes the company owned the Demdima Tea Estate, which comprised gardens and factories situated in the Jalpaiguri district. Around 22 April 1957, conciliation proceedings were underway between the company and its workmen, and those proceedings concluded with a settlement. Under the terms of that settlement the workmen agreed that, if required, they would work eight hours a day both during the off‑season and the manufacturing season, and that such work would comply with the provisions of the Factories Act. Despite the existence of this settlement, on 23 July 1957 nine factory workers refused to work the agreed eight‑hour day and left the factory before completing the required quota. Those nine workers continued to work only for the shorter hours for several days thereafter. The company reiterated its request that the workers observe the settlement and work the full eight hours, but the nine dissenting workers did not comply. Consequently, the company issued written orders to those nine individuals directing them to work eight hours a day and warning them that failure to obey would result in action against them in accordance with the Standing Orders. Because the nine workers did not obey the written orders, the company served charge‑sheets on them on 26 July 1957.

In July 1957 the appellant deducted wages on a proportional basis for the period between the 22nd and the 25th of that month because nine workmen had supplied only part of the required work. The Minister of Labour for West Bengal intervened, and at his request the appellant withdrew the legal proceedings it had commenced against those nine workmen, and the union also withdrew the strike decision it had announced in the meantime. Subsequently, on the 8th of August 1957 six workmen abruptly abandoned their duties and left the factory premises without completing their daily quota, an act that was quickly followed by their co‑workers joining them. This collective abandonment gave rise to a strike that continued until the 19th of August 1957. During the strike the appellant served charge‑sheets on the six workmen who had initiated the walk‑out, and after hearing their explanations an enquiry was held into their conduct. The enquiry resulted in an order dated 27 August 1957 directing the dismissal of those six workmen. Because conciliation proceedings were still pending between the parties, the dismissal order was not implemented; instead the workmen were placed under suspension while an application was filed with the Regional Labour Officer seeking permission to dismiss them. After the conciliation process concluded, the Regional Labour Officer granted the required permission, and on 18 September 1957 the six workmen were formally dismissed.

Before the final dismissal order could be served, the labour situation at the appellant’s tea estate deteriorated further. On 12 September 1957 the workers again went on strike, a development that the appellant attributed to ongoing propaganda by the union against it. In response, the appellant issued a notice at 9 a.m. on the same day, urging the workmen to resume duty immediately and warning that failure to comply would compel the appellant to lock them out. When the workmen did not answer the notice, the appellant proceeded to declare a lock‑out. Conciliation proceedings followed, and around 5 October 1957 the parties reached an agreement that led to the lifting of the lock‑out and the reopening of the garden on 7 October 1957. After this settlement, disputes arose concerning the legitimacy of the lock‑out that had begun on 13 September 1957, as well as other matters that formed the basis of three reference orders previously mentioned. Both sides presented evidence before the Tribunal. The Tribunal held that the strike initiated by the respondents on 8 August 1957 was “rather hasty and unjustified even though the workers had a grievance,” and it further concluded that the lock‑out declared by the appellant was also unjustified, even assuming that the workers’ strike on 12 September 1957 lacked justification.

The Tribunal observed that the workmen had provided the appellant with notice of their intention to carry out a token strike from 12 September to 14 September 1957, and that the way in which the appellant instituted the lock‑out and the duration for which the lock‑out was maintained demonstrated that the appellant had not acted fairly or in good faith. Accordingly, the Tribunal directed the appellant to pay each workman who was in service immediately before the lock‑out began on 13 September 1957 an amount equal to eight‑fourths of his full wages for the period from 13 September to 6 October 1957. The appellant’s counsel, identified as Mr Sastri, argued that the Tribunal’s conclusion was erroneous. Mr Sastri strongly relied on the prior conduct of the respondents, which he described as being wholly inconsistent with the settlement reached between the parties on 22 April 1957. He maintained that the respondents, acting under the influence of their union, were not cooperative and consistently employed obstructive tactics. Nevertheless, the appellant entered into a settlement with the respondents, and both sides agreed to cooperate thereafter. Under that agreement, the union representatives undertook to advise the workers employed in the factory to work, if required, for eight hours a day during both the off‑season and the manufacturing season, in conformity with the provisions of the Factories Act. In return, the appellant promised that the tea estate would not be closed so long as the terms of the agreement were not breached. Mr Sastri complained that, despite this agreement, the workers refused to work eight hours a day and actually commenced a strike on 8 August 1957. The Tribunal had found that strike to be unjustified, and that finding provided the background against which the appellant’s decision to declare a lock‑out on 12 September 1957 must be examined. The Tribunal acknowledged that there was some merit in this contention and indicated that, when assessing whether the Tribunal was correct in holding the lock‑out to be unjustified, this fact would be taken into account. The subsequent issue to be considered was whether the strike scheduled for 12 September was justified. On that point, the Tribunal did not make a definitive finding; it merely concluded that the lock‑out would be unjustified even if the strike of 12 September were assumed to be unjustified. In evaluating the justification of the 12 September strike, it was necessary to consider the reasons that prompted the respondents to announce a three‑day token strike. It appeared that the appellant’s proposed action against six workmen and the speed with which an inquiry into those workmen was conducted created dissatisfaction among the respondents, leading, at a meeting held on 30 August 1957, the General Body of the union to resolve to proceed with the token strike.

The Demdima Primary Unit of the West Bengal Cha Shramik Union adopted a resolution stating that its members would commence a token strike on the twelfth day of September 1957 and would continue the strike until the fourteenth day of the same month unless the appellant refrained from dismissing six specified workmen. The resolution therefore made clear two points: first, that the contemplated industrial action was to be limited to a token strike, and second, that the duration of the strike was to be confined to three days. It was acknowledged that a token strike normally would not extend for a period as long as three days, and the criticism expressed by counsel named Sastri regarding this aspect of the resolution was considered well founded. Moreover, the tribunal recognised that, even if the respondents felt aggrieved by the appellant’s proposed dismissal of the six workmen, a token strike was not the only remedy available to them. The respondents could have pursued the ordinary route of lodging a protest and referring the dispute to a conciliation officer. Consequently, the tribunal regarded the token strike chosen by the respondents as inappropriate. Nevertheless, the tribunal also observed that the grievance which prompted the respondents to strike could not be dismissed as wholly unsubstantial or unjustified.

Another material fact concerning the strike was the manner in which the resolution was communicated to the appellant. The tribunal found that the respondents’ union served a copy of the resolution upon the appellant by means of a memorandum dated the fourth day of September 1957, yet the appellant took no action on the matter and merely awaited the commencement of the strike on the twelfth day of September. A question arose before the court as to whether the tribunal’s finding on this point was correct. Because the finding pertained to a matter of fact, it could not be effectively challenged by the appellant in an appeal under article 136 of the Constitution. The court was satisfied that the tribunal’s finding was proper. The respondents, in their written statement to the tribunal, specifically asserted that they had served notice of the resolution upon the appellant, and the appellant had not expressly denied this allegation in its own written statement, although it had expressly denied a separate allegation that another notice had been served concerning a different dispute. Furthermore, the testimony of Devan Sarkar, who swore that he had dispatched the letter containing the resolution by ordinary post on the fourth of September to the manager in accordance with usual practice, was accepted as satisfactory by the tribunal and was not open to serious criticism. By contrast, the denial offered by Mr. Austin regarding this particular matter was found to be unsatisfactory. In evaluating Mr. Austin’s statement, reference was made to a letter authored by Mr. Moore addressed to Mr. Austin on the sixteenth of September 1957, which suggested that Mr. Austin was aware, at least by the eleventh of September, of the threatened strike slated to begin on the twelfth of September.

In examining the evidentiary material, the Court noted a letter sent by Mr. Moore to Mr. Austin dated 16 September 1957, identified as Item No. 48. That correspondence indicated that Mr. Austin was aware, at least by 11 September, of a threatened strike that was expected to begin on 12 September. Consequently, when assessing the validity of the lock‑out declared by the appellant, the Court was required to assume that the appellant had received a minimum of one week’s notice that the respondents intended to undertake a token strike lasting three days, commencing on 8 September. Viewed in this light, the Court found the appellant’s conduct to be subject to serious criticism. If the appellant’s objective had been to avert a lock‑out, it ought to have promptly informed the respondents—either by dispatching a written notice to their union or by otherwise communicating that a strike would force the appellant to impose a lock‑out. The appellant could also have sought the assistance of the conciliator and, in any event, should have issued a clear warning to the respondents regarding its intention to lock them out. Instead, the appellant chose to affix a notice to the notice‑board at nine o’clock in the morning on 12 September, at a time when the strike had already commenced. Considering the location of the notice‑board, it was unreasonable to contend that the strikers would read the notice and respond to it. The Court therefore regarded the act of posting the notice at that hour as a mere formality devoid of substance, leading to the inference that the appellant deliberately allowed the strike to begin so that it could justify a retaliatory lock‑out.

Furthermore, in announcing the lock‑out, the appellant expressly warned the workmen that failure to return to work on the same day would result in the continuation of the lock‑out until the appellant was satisfied and received assurances that the workmen would comport themselves in a disciplined manner upon resumption. This warning implicitly set the stage for negotiations that ultimately produced a settlement. Under that settlement, the respondents’ union pledged to preserve industrial peace within the garden, expressed no objection to any managerial requirement, and secured verbal assurances from each worker that they would adhere to the Standing Order, obey lawful and just managerial directives, work diligently, and refer any future disputes to the proper constitutional channels as prescribed by law. In return, the appellant committed to reopening the garden effective 7 October 1957, to provide immediate employment to as many workers as possible, to lay off any remaining workers in accordance with legal provisions, and to withdraw the charge‑sheets that had been issued against nine factory workers on 26 July 1957. The Tribunal had previously held that by extending the lock‑out in order to obtain oral assurances from each workman, the appellant could not be said to have acted fairly, and therefore concluded that both the declaration of the lock‑out and its continuation until 6 October were vindictive. The Court affirmed that this finding of the Tribunal was well founded.

The Tribunal found that because the appellant sought oral assurances of good behaviour from each workman, it could not be said to have acted fairly, and therefore the Tribunal held that both the declaration of the lock‑out and its continuation until 6 October were undertaken vindictively by the appellant. The Court agreed that this conclusion of the Tribunal was well founded. In this connection, the Court noted that although the workmen had offered to resume work on 16 September, the appellant did not open the gates and refused to give permission to the workmen to return to employment. The effect of the evidence given by Lakhan Das, who was recorded as plaintiff‑witness 1, was that his oral statement was corroborated by the communication made by the Union to the respective authorities on 19 September 1957 (Exhibit IS). Consequently, the grievance advanced by Mr Sastri, who contended that the Tribunal should not have directed the appellant to pay the respondents their wages for the period of the lock‑out, could not be sustained. However, when determining the quantum of wages to be paid to the respondents, the Court could not ignore their conduct at the relevant time. Accordingly, the Court modified the order passed by the Tribunal, directing that the respondents should receive one‑half of their full wages for the period, and that the period should be measured from 16 September to 6 October rather than from 13 September to 6 October. This modification was made because the token strike lasted three days, and the Court concluded that the respondents were not entitled to wages for those days; it was further noted that 15 September was a holiday. The next issue requiring the Court’s decision concerned the dismissal of six workmen, which constituted the second item of dispute referred for adjudication under the first reference. Proceedings against those six workmen were instituted under Clause 18(o)(iii) of the Standing Orders, the charge being that they had left the factory premises and had caused wilful damage and loss to the company’s goods. It appeared that the appellant conducted an enquiry into those charges and, as a result of that enquiry, dismissed the six workmen. The enquiry officer did not make a proper finding recording his conclusions at the end of the enquiry; although he drew some notes for that purpose, those notes could not be treated as a formal finding. Therefore, the Tribunal was required to consider the merits of the dispute independently. The Tribunal held that, based on the evidence adduced at the domestic enquiry, there was no proof that any wilful damage had been caused by the six workmen to the appellant’s property. The Tribunal examined in detail the work assigned to each of the six workmen and provided satisfactory reasons for concluding that the charge of wilful damage to the appellant’s property could not be sustained against any of them. Besides, the Tribunal took notice of the fact that

In this case, the appellant failed to provide any reasonable or rational explanation for selecting those six workmen from among a large number of striking employees and proceeding against them. The Court observed that if the accusation had been framed against the six men under Clause 14(c)(12) of the Standing Orders, the situation might have been different. The Tribunal, however, concluded that the appellant’s decision to dismiss the six workmen was made in bad faith because it rested on irrational and unreasonable discrimination. The Court agreed that this finding of the Tribunal could not be successfully challenged by the appellant in the present appeal. The Court noted that the domestic enquiry was infirm because it did not record a proper finding; the enquiry officer had only taken some notes, which did not amount to a formal conclusion. Moreover, the Tribunal had determined that no evidence was presented during the enquiry to demonstrate that any wilful damage or loss had been caused by the six workmen. On the basis of these observations, the Court saw no ground on which to dispute the Tribunal’s conclusion that the order of dismissal was invalid. Consequently, the Court held that the Tribunal was justified in directing the reinstatement of the six workmen. The Court also added that the ownership of the Demdima Tea Estate had transferred in 1960, and therefore the order of reinstatement would be enforced against the new owner, who had become the successor in possession of the property during the pendency of the present dispute.

The discussion then moved to the dispute identified as Appeal No. 754 of 62, which concerned the lay‑off of workmen by the appellant beginning on 7 October 1957. The appellant had filed an exhibit, marked Ex 1, which set out the particulars of the lay‑off, the manner in which it was withdrawn, the number of workers affected, and the period during which the lay‑off operated. The Court observed that the factual matrix relating to the lay‑off was not contested. The Tribunal, having examined the material, had ordered that the appellant should pay lay‑off compensation to the affected workmen in accordance with Section 25C of the Industrial Disputes Act. Counsel for the appellant, identified as Mr Sastri, raised two contentions against this award. The first contention asserted that the appellant should not be liable to pay any lay‑off compensation because the lay‑off arose from a settlement reached between the parties on 4 October 1957. The Court recalled that the settlement had ended the closure or lock‑out of the garden, and one of its terms required the management to reopen the garden effective 7 October 1957, to provide immediate employment to as many workers as possible, and to lay‑off the remainder of the labour force in accordance with law. The appellant argued that, since the lay‑off had been agreed to by the parties, the respondents could not claim compensation. The Court expressed the view that there is

The Court observed that the first argument advanced by the petitioner possessed no substantive foundation. While it was true that the parties had contemplated and agreed that a certain number of workmen might have to be laid off, the settlement expressly provided that no dispute would be raised by the workmen in respect of such a lay‑off. Nevertheless, the same agreement unequivocally stipulated that any lay‑off would be carried out in accordance with the law, and that compliance necessarily required the payment of compensation prescribed by Section 25C of the Industrial Disputes Act. The second contention raised by the petitioner sought to rely on Section 25E(iii), contending that compensation could not be claimed because the lay‑off was alleged to have resulted from a strike or a slowdown of production by workmen in another part of the establishment. The Court noted that Section 25E(iii) excludes compensation only when the lay‑off is directly attributable to such a strike or slowdown elsewhere in the undertaking. The material placed before the Tribunal did not demonstrate any such causal connection, and the appellant had not put forward any case that a strike in one section of the garden had caused the lay‑off of the workers in question. Accordingly, the Court held that Section 25E(iii) was wholly inapplicable. Consequently, after a minor alteration concerning the payment of wages for the period of lock‑out, the Court confirmed the awards rendered by the Tribunal, dismissed both appeals, and ordered the appellant to bear the costs of the respondents together with one hearing fee.