# CORPORATION LTD v. THEIR WORKMEN

- **Citation:** [1975] Supp. 1 S.C.R. 443
- **Court:** Supreme Court of India
- **Decided:** 1975-05-02
- **Case number:** Civil Appeals Nos. 179-180 of 1973
- **Bench:** P. N. Bhagwati, P. K. Goswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/corporation-ltd-v-their-workmen-6534
- **Pages:** 10

## Headnote

Pay111e11t of Bonus Act, 1965--Sect'ion 16-newly set up establishnientlnduJJrial Disputes Act-Section 25FF and 25FFF.
B
The River Steam Nagivation Co. Ltd. carried passengers and cargo in
lnland Waters. It also owned a dock called Rajabagan Dockyard, where
C
it carried out fepairs to its own vessels.
Majority of the shares of the Com·
parry were purchased by the Government of lnclia and considerable financial
~istance was also given by the Government.
~n the year 1966,. th~ financial position of the company became so precanous. that a_n apl?hcation
~or
winding up of the company was made by one of its creditors 1n the Ji1gh
,Court of Calcutta.
The Government of India put forward a scheme of
arrangement and· compromise, and made an application to the High Court
in the \\-inding up petition for sanction of the scheme. The appellant Cor~ D
:poration was incorporated and all the properties and assets of the Company
-st.ooa' transferred to and vested in the Corporation.
As far as the liabilities
.are concerned, only some of them were transferred to the Corpor.ation and
the· rest had to be discharged by the company.
It was also provided in the
scheme that the Corporation should take as many of the existing employees
.as possible.
The scheme also provided that those employees who could not
be taken over by the Corporation v.'ould be pai<i' all legitimate and legal
·compensation by the Company.
The Company was to stand closed. 8000
E
.employees were working in the Company, out
of when 5173 employees
were given fresh appointments by the Corporation on new terms and conditions.
The workmen working in Rajabagan Dockyard demanded payment of bonus
for the years 1967-68 and 1968-69 under the Payment of Bonus Act, 1965.
'rhe' appellant raised a preliminary objection
that the establishment of the
Curporation in
which the V·iorkmen
\Vere en1ployed
\\'aS a
newly set up
F
establishment since 5-6-1967 anCL' the workmen were by reason of section 16
'Of the Payment of Bonus Act, not entitled to payment of bonus for the year
1967-68 and
1968-~9, since the Corporation incurred losses during both these
years.
The Industrial Tribunal held that the workmen were entitled to bonus
on the ground that the appellant \\'as the successor in interest of the com-
]lany in respect of the business carried on in the establishment of Rajabagan
Dockyard.
{;
On appeal by special leave by the appe!lant, it was held :-
The question which arises for determination is whether the Rajabagan
Dockyard in the hanOS of the Corporation could be said to be an establishment newly set up since 5-6-1967.
The Industrial Tribunal erred in addressing itself to a wholly different question namely whether the Corporation
was the successor in interest of the
company.
That
was not a relevant
question.
(448 F-G]
HELD FURT1-IER-The establishment of Rajabagan Dockyard V.'as not a
new establishment in the hands of the Corooration. lt was the same estabJishment, the san1e manufacturing apparatus; \Vhich was operated by the company prior to its taking over by the Corporation. The name of the establish~
ment also continued to be the same.
Its address remains the same anu' the
registration number of the establishment under the Factories Act also rcmaintained the same.
[451-HJ
H
444
A
B
SUPREME C:OURT REPORTS
[1975] SUPP• S.C.R.
HELD-The \VOrkmen were entitled to be paid bonus for the two years,
as the Rajabagan Dockyard was not a new establishmei;it. Observe~ further
-The workmen who were taken over by the Corporation were given frcs~
avpointments after 5-6-1967 with differe!lt sc~les of. pay and
O:ifI~rent conditions of service and there was a break 1n their continuity of service.
If certainty of service was to be decided to these \Vorkers, they should have b~en
paid. closure compensation under section 25FFF or at any rate compensation
under section 25FF of the Industrial Dispute. [452-D-451-Etl

## Text

1'
t
CENTRAL INLAND WATER TRANSPORT
443
A
.
CORPORATION LTD.
v.
THEIR WORKMEN
May 2, 1975
[P. N. BHAGWATI AND P. K. GOSWAMI, JJ.J
Pay111e11t of Bonus Act, 1965--Sect'ion 16-newly set up establishnientlnduJJrial Disputes Act-Section 25FF and 25FFF.
B
The River Steam Nagivation Co. Ltd. carried passengers and cargo in
lnland Waters. It also owned a dock called Rajabagan Dockyard, where
C
it carried out fepairs to its own vessels.
Majority of the shares of the Com·
parry were purchased by the Government of lnclia and considerable financial
~istance was also given by the Government.
~n the year 1966,. th~ financial position of the company became so precanous. that a_n apl?hcation
~or
winding up of the company was made by one of its creditors 1n the Ji1gh
,Court of Calcutta.
The Government of India put forward a scheme of
arrangement and· compromise, and made an application to the High Court
in the \\-inding up petition for sanction of the scheme. The appellant Cor~ D
:poration was incorporated and all the properties and assets of the Company
-st.ooa' transferred to and vested in the Corporation.
As far as the liabilities
.are concerned, only some of them were transferred to the Corpor.ation and
the· rest had to be discharged by the company.
It was also provided in the
scheme that the Corporation should take as many of the existing employees
.as possible.
The scheme also provided that those employees who could not
be taken over by the Corporation v.'ould be pai<i' all legitimate and legal
·compensation by the Company.
The Company was to stand closed. 8000
E
.employees were working in the Company, out
of when 5173 employees
were given fresh appointments by the Corporation on new terms and conditions.
The workmen working in Rajabagan Dockyard demanded payment of bonus
for the years 1967-68 and 1968-69 under the Payment of Bonus Act, 1965.
'rhe' appellant raised a preliminary objection
that the establishment of the
Curporation in
which the V·iorkmen
\Vere en1ployed
\\'aS a
newly set up
F
establishment since 5-6-1967 anCL' the workmen were by reason of section 16
'Of the Payment of Bonus Act, not entitled to payment of bonus for the year
1967-68 and
1968-~9, since the Corporation incurred losses during both these
years.
The Industrial Tribunal held that the workmen were entitled to bonus
on the ground that the appellant \\'as the successor in interest of the com-
]lany in respect of the business carried on in the establishment of Rajabagan
Dockyard.
{;
On appeal by special leave by the appe!lant, it was held :-
The question which arises for determination is whether the Rajabagan
Dockyard in the hanOS of the Corporation could be said to be an establishment newly set up since 5-6-1967.
The Industrial Tribunal erred in addressing itself to a wholly different question namely whether the Corporation
was the successor in interest of the
company.
That
was not a relevant
question.
(448 F-G]
HELD FURT1-IER-The establishment of Rajabagan Dockyard V.'as not a
new establishment in the hands of the Corooration. lt was the same estabJishment, the san1e manufacturing apparatus; \Vhich was operated by the company prior to its taking over by the Corporation. The name of the establish~
ment also continued to be the same.
Its address remains the same anu' the
registration number of the establishment under the Factories Act also rcmaintained the same.
[451-HJ
H
444
A
B
SUPREME C:OURT REPORTS
[1975] SUPP• S.C.R.
HELD-The \VOrkmen were entitled to be paid bonus for the two years,
as the Rajabagan Dockyard was not a new establishmei;it. Observe~ further
-The workmen who were taken over by the Corporation were given frcs~
avpointments after 5-6-1967 with differe!lt sc~les of. pay and
O:ifI~rent conditions of service and there was a break 1n their continuity of service.
If certainty of service was to be decided to these \Vorkers, they should have b~en
paid. closure compensation under section 25FFF or at any rate compensation
under section 25FF of the Industrial Dispute. [452-D-451-Etl
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 179-180
of 1973.
Appeal by special leave from the Award dated the 28th July,
1972 of the Fourth Industrial Tribunal, West Bengal in case No.
C VIII-51 of 1972 ordered to be published in the Gazette by Notice
dated the 10th August, 1972.
Jagdish Swamp, A.G. Meneses and K.J. John, for the appellant.
P.S. Khera, for respondent no. 1S. C. Agarwala, V. J. Francis and R. K. Garg, fpr respondent
D no. 2.
The Judgment of the Court was delivered by
BHAGWATI, J., These two appeals, by special leave, arise out
of an industrial dispnte between the Central Inland Water Transport
Corporation Ltd. (hereinafter referred to as the Corporation) and
E its workmen in regard to the payment of bonus for the years 1967-6~
and 1968-69 under the Payment of Bonus Act, 1965.
The industrial dispute was referred to the Industrial Tribunal for adjudication
under s. 10 of the Industrial Disputes Act, 194 7.
The Corporation
raised three preliminary objections, one of which was-and that is
the only preliminary objection with which we are concerned in the
F present appeals--that the establishment of the Corporation in which
the workman were employed was newly set np since 5th June, 1967
and the workman were, therefore, by reason of s. 16 of the Payment
of Bonus Act, 1964, not entitled to payment of bonus for the years
1967-68 and 1968-69.
The Industrial Tribunal by an award dated
2nd March, 1971 rejected these preliminary
objections and held
inter alia that the Corporation was not entitled to claim immunity from
G payment of bonus under s. 16 and directed that the hearing of. the
reference should proceed on merits.
The reference was then heard
on the question of quantification of the amount of bonus and by an
award dated 28th July, 1972, the Industrial Tribunal held that each
workman was entitled to bonus at the rate of 4 per cent of the wage
earned by him during each year or Rs. 40/- whichever is higher.
This second and final award is challenged in appeal No. 179 of 1973.
while the first preliminary award is challenged in appeal No. 180 of
H 1973. It is not disputed on behalf of the Corporation that if its
liability to pay bonus is established and its claim to immunity is negatived, the quantum of bonus payable to the workman would be what
has been awarded by the Industrial Tribunal.
The only question
which, therefore, arises for consideration in these two appeals is as
to the liability of the Corporation to pay bonus under the Payment
•
'
CENTRAL INLAND WATER v. WORKMEN (Bhagwati, J.)
445
of Bonus Act, 1964. The Corporation claims to be free from liabiA
lity to pay bonus by virtue of the provisions of s. 16.
Is this claim
well founded ? To answer this question it is necessary to set out a
few facts.
The River Steam Navigation Co. Ltd. (hereinafter referred to
as the Company) was a limited liability
company incorporated m
England in 1914. It owned a fleet of vessels which it plied in inland
waters for carrying passengers and cargo from Calcutta to dif!erent
places in Assam and vice versa along rivers flowing through what was
then East Pakistan. It afao owried a dock caJled Rajabagan Dockyard at 42, Garden Reach, Calcutta where it carried out repairs to
its own vessels.
A majority of shares of the Company were purchased
by the Government of India and considerable financial assistance was
given by the Government of India from time to time in view of the
great strategic importance of keeping the river routes to Assam open,
but even so, the Company incurred losses in ,carrying on its operations.
The climax came with the armed conflict between India and
Pakistan towards the end of 1965 wh.en river transport service had to be
closed because the river routes passed through what was then East
Pakistan and in fact, forty vessels belonging to the Company were
seized by the Pakistan Government.
This brought about total cessation of the principal business activity of the Company and in consequence, its financial position becan1e so precarious that on
21st June, 1966 an application for winding up of the Company was
made by one of its creditors in the High Court of Calcutta. It was
realised by the Government of India that it was impossible to save
the Company as its total liabilities amounted to over Rs. 8 crores,
the main creditors being the Government of India in the sum of about
Rs. 6.19 crores, the State Bank of India in the sum of Rs. 1.50 crores
and the Cbartered Bank in the sum of Rs. 1.60 crores.
The Government of India, therefore, put forward a scheme of Arrangement and
Compromise under ss. 391 and 394 of the Companies Act, 1956
and made an application to the High Court in the winding up petition
for sanction of
snch
scheme.
In anticipation
of sanction, the
Government of India incorporated, on 22nd
February, 1967, the
Corporation-a company whoJly owned by it-for effectuating the
Scheme of Arrangement and
Compromise
(hereinafter referred to
as the Scheme) .
B
c
D
E
F
G
The Scheme was sanctioned with some modifications by a Single
Judge .of the High Court by an order dated 3rd May, 1967. It may
be pomted out that when the Scheme was before the learned Single
Judge, the Inland Steam Navigation Workers Union appeared and
made its submissions with a view to safeguarding the interests of the
workers and it was after hearing the Union, that the learned Single
H
Judge made the order sanctioning the scheme with certain modifications.
The Union was aggrieved by the order sanctionina the Scheme
and it j'f~~erred an appeal before a Division Bench of th~ High Court
The D1v1swn Bench, however, by an order dated 14th July, 1967,
confirmed the order of the learned
Single Judge
sanctioning the
Scheme.
446
SUPREME COURT REPORTS
[1975] SUPP· S.C.R.
A
It is not necessary for the purpose of the present appeals to
reproduce the provisions of the Scheme in extenso. Suffice it to state
that the Scheme provided inter alia that all the properties and assets of
the Company shall stand transferred to and vest in the Corporation,
but so far as the liabilities were concerned, only some of them shall_
be transferred to and become the liabilities of the Corporation and
B the rest sliall be discharged. by the Company in the manner set out
in the Scheme out of funds provided by the Government of India.
It was also provided in the Scheme that the Corporation shall take
as many of the existing employees as possible and as can be reasonably taken, over, but as to exactly how many can be employed was
left entirely to the discretion of the Corporation.
The Scheme also
C contained a provision that those employees who cannot be taken over
by the· Corporation shall be paid "all legitimate and legal compensations" by the Company and monies for the same shall be provided
by the Government of India.
Lastly, it was stipulated that upon
the approval of the Scheme, the Company shall be closed and on payment of all creditors, it shall stand dissolved without winding up.
D
The Scheme, as already pointed out, was sanctioned by the order
dated 3rd May, 1967 and pursuant to the Scheme, the Company
issued a notice on the same day stating that the entire undertaking
of the Company will be closed with immediate effect.
There were
at that time about 8000 employees in the various establishments of
the Company and out of them, about 5173 were given fresh apoint·
E ments by the Corporation on new terms and conditions from and after
5th June, 1967.
The Corporation did not carry on any business
activity though it took over the assets of the Company from 3rd May,
1967 and it was only on 5th June, 1967 that it opened the Rajbagan Dockyard and started operating it with workers who were forF
merly employees of the Company but given fresh employment by the
Corporation as aforestated.
When the Rajabagan Dockyard was owned by the Company, the
main purpose for which it was used was maintenance and repairs of
the large fleet of vessels
belonging to the Company. It did very
little work for outside parties.
The result was that when hostilities
G broke out between India and Pakistan and it became impossible to
run rivers transport service and in fact a part of the fleet was seized
by Pakistan Government, the Rajabagan
Dockyard was
paralysed
and it became an establishment without any work and in consequence
a large number of workers working in the Rajabagan Dockyard had
to be laid off. The operational result of the working of the Rajabagan
Dockyard from and after the commencement of the hostilities showed
H considerable loss, as the work was completely at stand-still.
On
taking over the Rajabagan Dockyard, the Corporation, as pointed out
above, started operating it again from 5th June, 1967, but the nature
and volume of the activities were changed.
The Corporation embarked on ship building and ship repairs, general engineering works
and deep sea ship repairs and more than 80 per cent of these activities were carried out by the Corporation for outside parties.
It
r
' '
--:
CENTRAL INLAND WATER v. WORKMEN (Bhagwati; !.)
447
was found that the machinery taken .over from the Company was largely obsolete and antiquated and much of it was not usable and the
·Corporation could put to use only a part of the machinery worth
about Rs. 13 lacs. The nature of the work having changed and its
volume increased, the Corporation found it difficult to cope with the
work with the existing plant 'and machinery and soon felt the need
of purchasing new plant and machinery both by way of replacement
and addition.
In the meantime, a Development Committee
was
appointed by the Government. of India to examine various questions
relating to development of Rajbagan Dockyard and this Committee
submitted its report in June 1968 making various recommendations
which involved an outlay of about Rs. 3 crores in constructing new
sheds and purchasing and installing new plant and machinery. It
seems that the recommendations of the Development Committee were
accepted by the Government of India and the necessary funds were
made available according to a phased programme.
The Corporation
accordingly started construction of six industrial sheds in the premises of Raiabagan Dockyard and also purchased and installed new
plant and machin~ry worth about Rs. 50 lacs. The Rajabagan Dockyard, however, continued to work at a loss and during the years 196768 and 1968-69, these being the years with which we are concerned
in the present appeals, the losses of the Corporation from the operation of the Rajabagan Dockyard continued to mount.
Vide the First
and Second Annual Reports of the Corporation for the years 1967-68
and 1968-69.
We are concerned in the present appeals with the workers in
the Rajabagan
Dockyard.
They are represented
by two Unioss,
namely, Central Inland Water Transport Corporation Ltd. Mazdoor
Sabha and Egra and Rajabagan Dockyard Workers Union.
These
two unions made a demand for payment of bonus for the years 196768 and 1968-69 under the Payment of Bonus Act, 1965. The Corporation rejected the demand mainly on the ground that the establishment of Rajabagan Dockyard, as operated by it, was newly set
up since 5th June, 1967 and no profit was derived by the Corporation from this establishment during the years 1967-68 and 1968-69
and therefore, the workers were not entitled to payment of bonus by
reason of s. 16 of the Act.
This led to the making of a reference
by the Government of West Bengal under s. 10 of the Indus-trial Dispntes Act, 1947.
The Industrial Tribunal, as already pointed out
above, tried the issue as to the claim of the Corporation to exemption from payment of bonus under s. 16 of the Act, as a preliminary issue.
The Corporation examined three witnesses on its
behalf, namely, Krishnaswami Srinivasan, Jovdev Basak and Girdharilal Makhija, while the workers examined only the Joint Secretary of one of the two unions, namely, Ashgar Hussain.
Some documentary evidence was also produced on behalf of the parties.
The
Industrial Tribunal, on a consideration of the oral as well as documentary evidence, came to the conclusion that the Corporation was
the snccessor-in-interest of the Company in regard to the business of
Rajabagan Dockyard which was taken over by it as a going concern
and the establishment of Rajabagan Dockyard could not, therefore,
A
B
c
D
E
F
G
H
448
SUPREME COURT REPORTS
[1975] SUPP. S.C.R.
A be said to be newly set up so as to attract the applicability of s. 16
of the Act. The Industrial Tribunal, on this view, rejected the contention of the Corporation and by its preliminary award dated 2nd
March, 1971 held that the Corporation was liable to pay bonus to
the workers.
This was followed by the final award dated 28th July,
1972 quantifying the amount of bonus.
The Corporation challenges
B the correctness of tne view taken by the Industrial Tribunal and
contends that, oon the facts and circumstances of the case, as appearing from the evidence, the establishment of Rajabagan Dockyard,
as operated by it, is newly set up and it is accordingly not liable to
pay bonus to the workers.
It would be convenient at this stage to refer to the provisions
C of s. 16 of the Act in order to appreciate the true nature and scope
of the inquiry before us.
Sub. section (I) of Section 16 which is
the only material sub-section provides :-
D
E
"16. (1) Where an
establishment is
newly set up
whether before or after the commencement of this Act,
the employees of such establishment shaU be entitled to
be paid bonus under this Act only-
( a) from the accounting
year in which
the employer
derives profit from such establishments; or
(b) from the sixth accounting year following the accounting year in which the employer sells the goods produced or manufactured by him or renders services, as
the case may be from such establishments, whichever is earlier."
Now it is obvious that if the establishment of Rajabagan Dockyard
could be said to be newly set up from 5th June, 1967, the workers
F
would not be entitled to payment of bonus for tl;ie years 1967-68
and 1968-69, because the corporation admittedly did not derive any
profit from such establishment till then.
The question which, therefore, arises for determination is
whether the Rajabagan Dockyard
in the hands of the Corporation could be said to be, an establishment
newly set up since 5th June, 1967.
On
looking at the award of
the Industrial Tribunal, however, we find that the Industrial TribuG nal addresses itself to a wholly different question, namely, whether
the Corporation took-over the business of Rajabagan Dockyard as
a going concern from the Company and was a successor-in-interest
of the company in respect of such business.
That was not a relevant question for the purpose of determining the applicability of section 16.
An establishment may not be newly set up, it may be an
existing establishment of which merely the ownership has changed.
H But the new owner may not necessarily be the successor-in-interest
of the old in respect of the business carried on in the establishment.
The two concepts are entirely different.
One may acquire the ownership of an establishment without taking-over the business as a going
concern and becoming a successor-in-interest in respect of it.
The
word 'establishment' is also found used iri section 3 and that section
clearly indicates that an establishment may consist of different depart-
'
' ,
~-
,
CENTRAL INLAND WATER v. WORKMEN (Bhagwati, !.)
449
ments or undertakings and it is,
ther!'fore, not sy!'onymous with
A
'undertaking which has been defined, though in a different context,
by this Court in Gymkhana Club Unpn v. Management(') to mean
"any business or any work or any project which one engages in or
attempts as an enterprise analogous to business or trade".
The dictionary meaning of 'establishment' as given in Webster's International
Dictionary includes inter-alia
"an institution or J?lace of business,
B
with its fixtures and organised staff; as, large establishment, a manufacturing establishment." 'Establishment' therefore means the whole
trading, business or manufacturing apparatus with a separate identifiable existence. This apparatus which is used for the purpose of
carrying on trade, business or undertaking
may change hands and
pass from one owner to another.
The workers operating this appaC
ratus and working in it may change; new workers may take the place
of old or come as additional workers.
When the ownership of the
establishment, which is nothing but another name for this apparatus,
is transferred from one person to another the establishment remains
the same: merely its ownership is changed and it cannot be said to
be a new establishment in the hands of the transferee.
Now, though
the transferee may become the owner of the establishment, he would
D
not necessarily be a successor-in-interest of the transferor in respect
of the business carried on in the establishment.
The question as to
whether he can be held to be a successor-in-interest of the transferor
would depend on
consideration of several relevant
facts. What
should be the relevant facts to be taken into account in determining
this question was explained by Gajcndragadkar, J. in the following
E
words : "Did the purchaser purchase the whole of the business ? Was
the business purchased a going concern at the time of the sale transaction ? Is the b>Jsiness purchased carried on at the same place
as before ? Is the business carried on without a substantial break
in time ?
Is . the business carried on by the purchaser the samc
or similar to the business in the hands of the vendor ? If there has
been a break in the continuity of the business, what is the nature of
F
the break and what were the reasons responsible for it ? What is
the length of the break ? Has goodwill been purchased ?
Is the
purch~se only of some parts ar.d 1he purchaser
having purchased
the said parts purchased some other new parts and starte.d a business
of his own which is not the same 13 the old business but is similar
to it ? These. and all other relevant factors have to be borne in mind
G
in deciding the question as to whether the purchaser can be said to
be. su~ee~sor-in-int.erest of the vendor for the purpose of industrial
ad1uchcatton.
It 1s hardly necessary to emphasise in this connection that though illustrations are relevant, it would be unreasonable
to exaggerate the importance of any one of these facts or to adopt
the. i?flexible rule ·that the presence or absence of any of them is
decmve of the matter one way or the other-The decision of the
H _
question must ultimately depend npon the evaluation of all the relevant factors. a?d it cannot ~e re~ch.ed by treating any one of them
as of ?ver-nd1_ng or conclusive s1gmficance."
Vide Anakapalla CooperaJive Agricultural and Industrial Society Ltd. v. Workmen.(•)
-
(t) [1968] (1) SCR 742.
(2) [1963] Supp. l SCR 730.
450
SUPREME COURT REPORTS (1975] SUPP. S.C.R.
A
Now in the present case the Industrial Tribunal concentrated only
on the question as to whether the Corporation had become the sucessorin-interest of the company in respect of the business carried on in the
establishment of Rajabagan Dockyard and answered this question
in the affirmative.
We do not think that this was a correct line of
enquiry pursued by the Industrial Tribunal.
The only limited question
B
before the Industrial Tribunal was whether the
establishment
of
Rajabagan Dockyard in the hands of the Corporation was a new
establishment or it was the some old establishment which was owned
by the company prior to its taking over by the Corporation.
We
shall presently turn to consider this question, but before we do so,
we may point out that prima facie even in the view taken by it as
regards the question whether the Corporation was the successor-inc interest of the Company, the Industrial Tribunal appears to have
missed some material aspects.
The Industrial Tribunal seems to
have overlooked the following important am! relevant considerations.
The entire undertaking of the compnay including tl1e business carried
on in the Rajabagan Dockyard had to be closed dowri owing to heavy
loss. The Rajabagan Dockyard in fact became idle on the conm1enceD ment of the hostilities between India and Pakistan and the workers
employed in the Rajabagan Dockyard had to be laid off. The notice
of closure was put up by the company on 3rd May, 1967 pursuant to
the order made by the High Court of Calcutta sanctioning the scheme.
There was, therefore, no business which was being carried on in the
Rajabagan Dockyard as a going concern when the Rajabagan Dockyard
E
was taken over by the Corporation in terms of the scheme.
So far
as the workers in the Rajabagan Dockyard were concerned. it was
specifically provided in the Scheme after hearing the Union that the
Corporation shall take as many of the existing employees as possible
and as can be reasonably taken-over but as to exactly how many can
be employed was left entirely to the discretion of the Corporation.
There was thus no obligation on the Corporation to take-over or
F
absorb all the workers who were previously working the Rajabagan.
Dockyard under the Company.
Though the Corporation took-over
the Rajbagan Dockyard on 3rd May, 1967 under the Scheme, the
Corporation did not start operating it until 5th June, 1967.
There
was thus a fairly long break from the commencement of th~ hosti·
lilies between India and Pakistan up to 5th June, 1967 before the
Ra.!abagan Dockyard started functioning again.
Then again the busiG ness which was started by the Corporation in the Rajabagan Dockyard
was to a large extent different in character from that carried on by
the company.
The pnnc1pal activny which the Company cnrrie<l ·on
in the Rajabagan Dockyard was maintenance and repairs of its own
fleet of vessels bnt the Corporation commenced not only ship build.
ing and ship repairing work but also general engineering work such as
structural fabrication work, forging, casting and machining and also
H deep sea ship repairing and general engineering work comprised more
than 80 per cent of the total work as against only. a negligible fraction in the time of the Company and moreover a very substantial part
of the work was done for outside parties. It was also provided in
the Scheme that the workers who were not taken-over by the Corporation would be paid "all legitimate and legal compensation." The
workers who were taken-over by the Corporation were given fresh
,
•
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CENTRAL INLAND WATER v. WORKMEN (Bhagwati, !.)
appointments from and after 5th June, 1967 with different scales
of pay and different conditions of service. and there was a break m
their continuity of service.
The Industnal Tribunal observed that
fresh
letters of appointment were accepted by the workers under
compulsion and duress arising on account of economic necessity but
that is not the kind of compulsion or duress which deprives an action
of its voluntary character and introduces an infirmity in it. It is indeed unfortunate that in our country there is so much poverty and
there are so few job opportunities that the spectre of unemployment
and economic :-vant haunts our underprivileged segments of society
and corrodes their freedom and choice of action and reduces them to
a position where they can be easily dominated and exploited.
But
the remedy for this state of affairs is not in the hands of the Court,
unless an industrial dispute is raised and the Court gets an opportunity of bringing about social justice through the machinery of indnstrial adjudication.
Here, as the matter stands, there can be no
doubt that the workers who were taken-over by the Corporation were
given fresh employment on different scales of pay and different terms
and conditions than those enjoyed by them under the Company and
they suffered a break of more than a month in their continuity of
service.
One observation, however, we cannot fail to make and it
· is that, though the entire undertaking of the Company was closed on
3rd May, 1967, it is strange that no provision was made in the
Scheme for payment of closure compensation to those workers who
might subsequently be taken-over by the Corporation. If continuity
of serVice was to be denied to these workers, then surely they should
be entitled to c16sure compensation under section 25FFF or at any
rate compensation under section 25FF of the Industrial Disputes Act,
1947. We hope and trust that, though no such provision is made in
the Scheme, the Government of India will consider this aspect of
payment of compensation under section 25FF or section 25FFF
vis-a-vis those workers who were fortunate enough to be taken over
by the Corporation but whose continuity of service was interrupted.
That apart, these were some of the important and relevant considerations which ought to have been taken into account by tbe Industrial
Tribunal but which the Industrial' Tribunal apparently failed to do.
How far this would. vitiate the finding of the Industrial Tribunal on
thi.s 9uestion !s a matter on which we do not wish to express any final
cpmton a• it ts not necessary to do so for the purpose of the present
appeaJs.
We le_ave. the question open for adjudication as and when
occasion may anse m future.
One th_ing is however clear that the establishment in Rajabagan
Dockyard m the hands of the Corporation was not a new establish451
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G
ment.
It w~ the same establishment-the
same
manufacturin
bpparatus-wh1c~ was op~rated by the company prior to its taking-ave~
H
. Y the Corporat10n. It 1s true that the Corporation purchased and
lns~all~ ne; wa11:t and ~achine!"Y in substitution as also in addition
Rn ba o a de
srx new mdustnal sheds within the premises of the
a1a gan D~ckyard but that does not mean that it became a newly
set u~ estahltshment.
T~e establishment went by the same name
of Raiabagan Dockyard; its address remained the same and some of
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SUPREME COURT REPORTS (1975] SUPP. S.C.R.
the old plant and machinery also continued to be used by the Corporation. The Registration number of the
establishment under
the
Factories Act also remained the same.
It is however not necessary
to discuss this aspect of the case any further, as it was almost con-,
ceded by Mr. Jagdish Swaroop, learned counsel appearing on b~half
of the appellants, that Rajabagan Dockyard could not be said to be
an establishment newly set up by the Corporation within the meaning
of section 16.
His real grievance was against the finding of the
Industrial Tribunal that the Corporation was the successor-in-interest
of the company in respect of the business carried on in the Rajabagan
Dockyard.
That finding however ·cannot stand because as already
pointed out by us, it was wholly unnecessary for the decision of the
present question and moreover it failed to take into account diverse
important and relevant considerations.
So far as concerns the question which is directly before us for consideration, we take the view
that the Rajabagan Dockyard was not an establishment newly set up
by the Corporation from 5th June, 1967 as claimed by but was
the same establishment as was owned by the Company prior to 3rd
May, 1967.
Section 16, sub-s. (1) was, therefore, not attracted and
the Corporation was not entitled to claim immunity from payment
of bonus under that provision.
We, therefore, uphold the claim of the workers for payment of
bonus for the years 1967-68 and 1968-69 as awarded by the Industrial Tribunal and dismiss the appeals with costs.
E P.H.P.
Appeals dismissed.
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