# Hari;rasad Shiv· shankar Shukla v. A. D. Divikar S.K.Das ]

- **Citation:** [1957] 1 S.C.R. 143
- **Court:** Supreme Court of India
- **Decided:** 1957
- **Bench:** S. R. DAs C. J
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/hari-rasad-shiv-shankar-shukla-v-a-d-divikar-s-k-das-1328
- **Pages:** 9

## Headnote

BHAGWATI,
Vi;:NKATARAMA
AYYAR
B. P. SINHA and S. K. DAs JJ)
Industrial Dispute-Appeal
pending before Labour Appellate
Tribunal-Closure of factory-Termination of se1·vices of workmen
without permission of the Tribunal-Legality-"Discharge", meaning
of-Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVlll of
]950), SS. 22, 23.
Clause (b) of s. 22 of the Industrial Disputes (Appellate Tribunal)
Act, 1950, provides that during the pendency of any appeal under
the Act no employer shall discharge any workmen concernetl in
such appeal, save with the express permission in writing of the
Appellate Tribunal, and s. 23 enables any employee to make a
complaint in writing to such
Appellate Tribunal if the employer
contravenes the provisions of s. 22 during the pendency of proceedings before the said Tribunal.
1956
Hari;rasad Shiv·
shankar Shukla
v.
A. D. Divikar
S.K.Das ].
1956
BanMar Ju FtMtny
Limiltd
v.
111 Wor.tmm
144
SUPREME COURT REPORTS
[1957]
During the pendency of an appeal filed l:icfore the Labour
Appellate Tribunal the appellant company finding it difficult to run
μie factory decided to close it do\vn and gave notice to all the work~
m_cn that their services would be terminated upon the expiry of
thirty days from July 16, 1952.
On August 31, 1952, a compTaint
was made on behalf of the workmen to the Tribunal under s. 23 of
the Act that the appellant had discharged the!Il without the permission in writing of the Tribunal and had thereby contravened the
provisions of s. 22 of the Act. It was found that the closure of the
· appellant's bu~iness was bona fide.
Held, that s. 22 of the Act is applicable only to an existing or
running industry and that the termination of the services of all
workmen, on a real and bona fide closure of business, is not 'discharge' within the meaning of s. 22(b) of the Act.
/. K. Hosiery Factory v. lAbour Appellate Tribunal of India
(A.LR. 1956 All. 498), approved on the point of construction of s. 22
of the Act.
Pipraich Sugar Mills Ltd. v. The Pipraich Sugar Mills Ma2door
Union (1956) S.C.R. 872 followed.
CIVIL APPELLATE JuRismcnoN : Civil Appeal No. 135
of 1955.
Appeal by special leave from the judgment and order
dated
October
30, 1952,
of
the
Labour Appellate
Tribunal of
India, Allahabad, in Misc. Case No. C-146
of 1952.
R. R. Biswas, for the appellant.
Sukumar Chose ( amicus curiae), for the respondents.
1956. November 28. The
Judgment of the Court
was delivered by
S. K. DAs J.-This is an appeal
by special leave
from the judgment and order of the Labour Appellate
Tribunal of India at Allahabad dated October 30, 1952.
The relevant facts are these. The
Banaras Ice
Factory Limited, the appellant before us, was incorporated
on September 13,
1949, as a private limited company
and was carrying on the busines< of manufacturing ice
in the city of Banaras, though its registered office was
in Calcutta. The factory worked as a seasonal factory
and had in its employment about 25 workmen at all
material times. These workmen were employed from
the month of March to the month of September every
S.C.R.
SUPREME COURT REPORTS
145
vear.
The appellant company got into financial diffi-
~ulties on account of trade depression, rise in the price
of materials and increase in the wages and emoluments
of workmen. It tried to secure a loan of
Rs. 10,000/-
from a Bank but met with no success. Thereupon, it
decidet\ to close down the factory and on
January 15,
1952, a notice was given to its workmen saying that the
factory would be closed down with effect from January
17, 1952, and the services of the workmen would not be
necessary for two months from that date. The workmen received their wages up to January 16, 1952. On
March 18, 1952, they were again taken into service but
this
temporary closing of the factory gave rise to an
industrial dispute and the
workmen
complained that
they were wrongfully laid off with effect from January
17, 1952.
The dispute
wa~ referred to the
Regional
Conciliation · Officer, Allahabad, for adju

## Text

S.C.R.
SUPREME COURT REPORTS
143
earlier that it is reasonable to assume that standardisation of retrenchment
compensation
an<l
doing away
with
a perplexing
variety of factors
for granting
retrenchment compensation may well
have been the
purposes of s. 25F, though the basic consideration
must
have
been the
granting
of
unemployment
relief.
However, on our view of the construction of s. 25F, no
compensation need be paid
by the
appellants in the
two appeals.
It is unnecessary
therefore
to
decide
whether, in other cases of a different character, s. 25F
imposes a reasonable restriction or not.
In the result, we must allow the two appeals and set
aside the decisions of the
High Court of Bombay in the
two cases.
We hold that the appellants in the two
appeals are not liable to , pay any compensation
under
s. 25F of the Act to their erstwhile workmen who were
not retrenched within the meaning of that expression
in that section.
In the
circumstances of these two
cases, the parties must bear
their own costs throughout.
Appeals allowed.
BANARAS ICE FACTORY LIMITED
v.
ITS WORKMEN
(S. R. DAs C. J.,
BHAGWATI,
Vi;:NKATARAMA
AYYAR
B. P. SINHA and S. K. DAs JJ)
Industrial Dispute-Appeal
pending before Labour Appellate
Tribunal-Closure of factory-Termination of se1·vices of workmen
without permission of the Tribunal-Legality-"Discharge", meaning
of-Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVlll of
]950), SS. 22, 23.
Clause (b) of s. 22 of the Industrial Disputes (Appellate Tribunal)
Act, 1950, provides that during the pendency of any appeal under
the Act no employer shall discharge any workmen concernetl in
such appeal, save with the express permission in writing of the
Appellate Tribunal, and s. 23 enables any employee to make a
complaint in writing to such
Appellate Tribunal if the employer
contravenes the provisions of s. 22 during the pendency of proceedings before the said Tribunal.
1956
Hari;rasad Shiv·
shankar Shukla
v.
A. D. Divikar
S.K.Das ].
1956
BanMar Ju FtMtny
Limiltd
v.
111 Wor.tmm
144
SUPREME COURT REPORTS
[1957]
During the pendency of an appeal filed l:icfore the Labour
Appellate Tribunal the appellant company finding it difficult to run
μie factory decided to close it do\vn and gave notice to all the work~
m_cn that their services would be terminated upon the expiry of
thirty days from July 16, 1952.
On August 31, 1952, a compTaint
was made on behalf of the workmen to the Tribunal under s. 23 of
the Act that the appellant had discharged the!Il without the permission in writing of the Tribunal and had thereby contravened the
provisions of s. 22 of the Act. It was found that the closure of the
· appellant's bu~iness was bona fide.
Held, that s. 22 of the Act is applicable only to an existing or
running industry and that the termination of the services of all
workmen, on a real and bona fide closure of business, is not 'discharge' within the meaning of s. 22(b) of the Act.
/. K. Hosiery Factory v. lAbour Appellate Tribunal of India
(A.LR. 1956 All. 498), approved on the point of construction of s. 22
of the Act.
Pipraich Sugar Mills Ltd. v. The Pipraich Sugar Mills Ma2door
Union (1956) S.C.R. 872 followed.
CIVIL APPELLATE JuRismcnoN : Civil Appeal No. 135
of 1955.
Appeal by special leave from the judgment and order
dated
October
30, 1952,
of
the
Labour Appellate
Tribunal of
India, Allahabad, in Misc. Case No. C-146
of 1952.
R. R. Biswas, for the appellant.
Sukumar Chose ( amicus curiae), for the respondents.
1956. November 28. The
Judgment of the Court
was delivered by
S. K. DAs J.-This is an appeal
by special leave
from the judgment and order of the Labour Appellate
Tribunal of India at Allahabad dated October 30, 1952.
The relevant facts are these. The
Banaras Ice
Factory Limited, the appellant before us, was incorporated
on September 13,
1949, as a private limited company
and was carrying on the busines< of manufacturing ice
in the city of Banaras, though its registered office was
in Calcutta. The factory worked as a seasonal factory
and had in its employment about 25 workmen at all
material times. These workmen were employed from
the month of March to the month of September every
S.C.R.
SUPREME COURT REPORTS
145
vear.
The appellant company got into financial diffi-
~ulties on account of trade depression, rise in the price
of materials and increase in the wages and emoluments
of workmen. It tried to secure a loan of
Rs. 10,000/-
from a Bank but met with no success. Thereupon, it
decidet\ to close down the factory and on
January 15,
1952, a notice was given to its workmen saying that the
factory would be closed down with effect from January
17, 1952, and the services of the workmen would not be
necessary for two months from that date. The workmen received their wages up to January 16, 1952. On
March 18, 1952, they were again taken into service but
this
temporary closing of the factory gave rise to an
industrial dispute and the
workmen
complained that
they were wrongfully laid off with effect from January
17, 1952.
The dispute
wa~ referred to the
Regional
Conciliation · Officer, Allahabad, for adjudication.
In
the meantime, that is, on
June 6, 1952, the workmen
gave a strike notice and as there ·.was no coal in the
factory, the appellant also gave
~· notice of closure
on June 12,
1952. A settlement was; however, arrived
at between the parties on June 15, 1952, ·at .the house
of the Collector of Banaras. The terms of that· settlement, inter alia, were: (1)
the management · would
withdraw its notice of
closure dated
June 12, 1952 ;
(2) the workmen would withdraw
their strike notice
dated June 6, 1952 ; (3) there being no coal, the workers would remain on leave for a period of thirty days
with effect from June 16, 1952, and would report for
duty on July 16,
1952, at 8 A.M. and
(4) after the
workers had resumed their duty on July 16, 1952, the
appellant would not
terminate the services of any
workmen or lay them off in future
without obtaining
the prior permission of the Regional Conciliation
Officer, Allahabad.
On
June "28,
1952, the
Regional
Conciliation
Officer, Allahabad, gave his award in the matter of the
industrial dispute between the appellant and its workmen with regard to the alleged wrongful laying off of
the workmen from January 17, 1952, to
March 18, 1952,
1956
B1J111IT1JS J,. FMIMY
Limited
v.
Its Workmen
S. K.Das J.
Banaras let FaclQry
Limit!d
v.
Its Workmen
S. K. Da, J.
146
SUPREME COURT REPORTS
(19571
referred to above.
Bv his award the Regional Conciliation Officer gave full' wages to the workmen for
the
period in question. On July
16,
1952, none of the
workmen reported for
duty in accordance with
the
terms of the agreement referred to above, and on
th~t
date the appellant gave a notice to its workmen to the
effect that the appellant found it difficult to, run the
factory and had decided to close it down ; the workmen
were informed that their services
would not be required
and would be terminated upon the expiry of thirty
<lays
from July
16, 1952. The workmen, it is stated,
accepted the notice and took their pay for one month
(from July 16 to August 15, 1952) without any protest.
Against the award of the Regional Conciliation Officer
dated June 28,
1952, the appellant filed an appeal
to
the Labour Appellate Tribunal on July 25, 1952.
On August 31, 1952,
a complaint was made on
behalf of the workmen to the Labour Appellate Tribunal
under s.
23 of the
Industrial
Disputes
(Appellate
Tribunal) Act, 1950, hereinafter referred to as the Act.
The gravamen of the complaint was that the appellant
had contravened the provisions of s. 22 of the Act,
because the appellant had discharged all the workmen
with effect from August 15, 1952, without the permission in writing
of the
Labour
Appellate
Tribunal
during the pendency before it of the appeal
filed on
July 25, 1952, against
the
award
of the Regional
Conciliation Officer. The Labour
Appellate
Tribunal
dealt with this complaint by its order dated
October
30, 1952. Before the
Labour
Appellate.
Tribunal it
was urged on behalf of the appellant that there was no
contravention of s. 22, because on July 16, 1952, when
the notice of discharge was given by the appellant, no
appeal was
pending· before it, the appellant's
appeal
having been filed several days later, namely, on
July
25, 1952: This C'mtention was
not accepted
by the
Labour Appelbte
Tribunal on the ground that though
the. notice of discharge was given on July 16, 1952, the
termination of service was to come into operation after
one month, that is, from
August 15, 1952, on which
date the appeal before the Labour Appellate Tribunal
was
certainly
pending.
As learned
counsel for the
S.C.R.
SUPREME COURT REPORTS
147
appellant has not again pressed this point before us, it
is not necessary to _§ay anything more about it.
A second point urged before the Labour Appellate
Tribunal was that the appellant had the right to dose
Jown the factory, when the appellant found that it was
not in a position any longer to run the factory. The agreement of June 15, 1952, did not stand in the appellant's
way, as the workmen themselves did not report for duty
on July 16, 1952. The closure being a bona fide closure,
it was not necessary to obtain the permissioQ of the
Labour Appellate Tribunal and there was therefore no
contravention of s. 22 of the Act. The Labour Appellate
Tribunal apparently
accepted the principle that
the
appellant had the right to close its business
but took
the view that
permission should have been obtained
before the
closure. It referred
to the agreement of
June 15, 1952, and held that though the appellant had
the right to close its business,
permission
was still
necessary and in the absence
of such permission, the
appellant was guilty of contravening cl. (b) of s. 22 of
the
Act, and directed that
the
appellant should pay
its workmen full wages as compensation for the period
of involuntary unemployment up to
the date
of its
award, that is, during the period from August 16, 1952,
to October 30, 1952.
Relying on the decision in /. K. Hosiery Factory v.
Labour Appellate Tribunal of India (1), learned counsel
for the appellant has urged
three points before us.
His fir~t point is that the termination
of the services
of all workmen
on a real
and bona fide closure of
business is not 'discharge' within the
meaning of cl.
(b) of s. 22 of the Act. His second point is that if the
word 'discharge' in cl. (b ). aforesaid includes termination of services of all workmen on bona fide closure of
business, then the clause is an unreasonable restriction
on the 'fundamental right guaranteed in cl. (g) of Art.
19(1) of the Constitution. His third point is that, in
any view, the Labour
Appellate
Tribunal,
was not
entitled to grant compensation to the workmen, because
s .. 23 of the
Act did not in terms entitle the Labour
(1) A.LR. 1956 All. 498.
1956
Bal!IJl'as Ice Factary
Limited
v.
Its Workmen
S. K. Das ].
Banaras 111 FodDrJ
Li.mud
v.
Its Wor.bntia
S. K. D., ].
148
SUPREME COURT REPORTS
[1957]
Appellate Tribunal to pass an order of compensation.
We may state here that if the appellant succeeds on
the first point, it becomes
unnecessary
to decide the
other two points.
For a consideration of the first point, we must first
read ss. 22 and 23 of the Act.
Section 22 : "During
the
period
of thirty days
allowed for the filing of an appeal under section IO or
during the pendency of any appeal under this
Act,
no employer shall-
( a) alter, to
the prejudice of the workmen concerned
in
such appeal,
the conditions of
service
applicable
to
them immediately before the filing of
such appeal, or
(b) discharge or punish, whether by dismissal or
otherwise, any
workmen
concerned in such appeal,
save with
the express
permission in writing of the
Appell.ate Tribunal."
Section
23 : "Where an employer contravenes the
provisions of section 22
during the
pendency of proceedings before the Appellate Tribunal, any employee,
aggrieved by
such contravention,
may make a complaint in writing, in the prescribed
manner,
to such
Appellate • Tribunal and on receipt of such complaint,
the Appellate Tribunal shall decide the
complaint as
if it were an appeal
pending before it, in accordance
with the provisions
of this Act and shall pronounce
its decision thereon
and the
provisions of
this
Act
shall apply accordingly."
The short question before us is whether the word
'discharge' occurring in cl. (b) of s. 22 includes termination of the services of
all workmen on a real and
bona fide closure of his business by the employer. It
is true that the word
'discharge' is not qualified by
any limitation in cl. (b).
We must, however, take the
enactment as a whole and consider s. 22 with reference
to the provisions of the Industrial Disputes Act, 1947,
(XIV of 1947) which is in pari materia with the
Act
under our consideration. We have had occasion to
consider recently in two cases the general scheme and
S.C.R.
SUPREME COURT REPORTS
149
scope of the
Industrial
Disputes Act, 1947. In Burn
& Co.,
Calcutta v.
T lzeir
Employees (1) this
Court
observed that the object of
all labour legislation was
firstly,
to
ensure
fair terms to the
workmen and
secondly, to prevent disputes between employers and
employees so that production might not be adversely
affected and the larger interests of the public might
not suffer.
In Pipraich
Sugar
Mills Ltd. v. Pipraiclz
Suga,. Mills
Mazdoor Union (9) it was observed-"The
objects
mentioned above
can
have their fulfilment
only in an existing and not
a dead
industry." We
acceptcJ
the view
expressed in
lndian
Metal
and
Metallurgical
Corporation
v.
Industrial
Tribunal (3 )
and K.
M.
Padmanabha Ayyar v.
The State of
Madras (4) that the provisions of the
Industrial
Disputes Act, 1947,
applied to an existing
industry and
not a dead industry. The same view was
reiterated
in Hariprasad Shivshankar Shukla v. A. D. Divikar (6)
where we held that 'retrenchment' in cl. ( oo) of s. 2 and
s. 25F did not include termination of the services of
workmen on bona fide closure of business.
Turning now to s. 22 of the Act, it is clear enough
that d. (a) applies to a running or existing industry
only ; when the industry itself ceases to exist,
it is
otiose
to talk of alteration of the conditions
of service
of the workmen
to their
prejudice, because
their
service itself
has
come
to
an end.
The alteration
referred to in cl. (a) must therefore be an alteration in
the conditions of sen•ice to the prejudice of
the workmen concerned,
in an
existing or running industry.
Similarly, the second part of cl. (b) relating to punishment can have
application to a running or existing
industry only. 'Vhen the
industry
itself
ceases to
exist, there
can be no question of punishment
of a
workman by
dismissal or otherwise. We are then left
with the word 'discharge'. Unqualified
though the
word is, it must, we think, be interpreted in harmony
with the general scheme and scope of the
Industrial
Disputes Act, 1947. Our attention has
been drawn to
(1) [1956] s. c. R. 781.
(4) [1954] I L .. L. J. 469.
(2) [1956J S. C.R. 872.
(5) (1957] S. C.R. 121.
(~) /\.. I. R. 1953 Mad. g8.
1956
Banar111 lt:JJ FtJ&lory
Lilailld
v.
lls Workmen
s. K. DM J.
Banaras Ice Factory
Limilttl
v.
Its Workmen
S. IC Da< ],
150
SUPREME COURT REPORTS
[1957]
the definition of 'workman' in cl.
(s) of s. 2, which
says-" ... for the purposes
of any
proceeding
under
this
Act in
relation to
an industrial dispute, (the
definition) includes any person who has been dismissed,
discharged or retrenched in connection with, or as a
consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to
that dispute."
In
the said definition clause
also,
the
word
'discharge'
means discharge of a person in a running or continuing business-not discharge of all workmen when the
industry itself ceases to exist on a bona fide closure of
business.
The true scope and effect of ss. 22 and 23 of the Act
were explaintd in The Authomobile Products of India
Ltd. v.
Rukmaji Bala(
It was pointed out there
that the object of s. 22 was "to protect the workmen
concerned in disputes which formed
the subject-matter
of pending proceedings against victimisation" and
the
further object was "to ensure that proceedings in connection with industrial disputes
already
pending should
be brought to a termination in a peaceful atmosphere
and that no employer should during the pendency of
these proceedings take any action
of the kind mentioned in the
sections which may give rise to fresh
disputes
likely
to
further
exacerbate
the
already
strained relations between the employer and the workmen." Those objects are
capable of fulfilment in a
running or continuing industry only, and not a dead
industry.
There is
hardly any
occasion for praying
for permission to lift the ban imposed by s. 22, when
the employer has the right to close his business and
bona fide does so, with the result that the industry itself ceases to exist. If there is no real closure but a
mere pretence of a closure or it is mala fide, there is no
closure in the eye of law and the workmen can raise
an industrial dispute and may even complain under
s. 23 of the Act.
For these reasons, we must uphold the first point
taken before us on
behalf of the appellant.
The
Appellate Tribunal was in error in holding that the
_(1) (1955] t S. C.R. i241.
S.C.R.
SUPREME COURT REPORTS
151
appellant had contravened cl. (b) of s. 22 of the
Act.
The Appellate Tribunal did not find that the closure
of the appellant's business was not bona fide; on the
contrary, in
awarding compensation, it proceeded
on
the footing that the appellant was justified in closing
its business on account of the reasons stated by it. As
to
the agreement of
June 15,
1952, the
workmen
themselves did
not abide
by it
and the appellant's
right ca'nnot be defeated on that ground.
In view of our decision on the first point, it becomes
unnecessary to decide the other two points. On the
point of construction of s. 22
of the Act, we approve
of the
dicision of the
Allahabad
High Court
in
/. K. Hosiery Factory v. Labour Appellate Tribunal of
India (supra) but
we
refrain
from
expressing any
opinion on the other points decided therein and we
must not be understood to have expressed our assent,
contrary to the opinion expressed by us in the case of
The Automobile Products of India Ltd. (supra) to the
vie)V that under s. 23 of the
Act, it is not open to an
Industrial
Tribunal to
award
compensation
m an
appropriate case.
In the result, the appeal is allowed and the decisio!l
of
the
Labour
Appellate
Tribunal dated the 30th
October 1952 is set
aside. As the workmen did not
appear before us, there will be no order for costs.
We
are indebted to Mr. Sukumar
Ghosh
for presenting
before us the case of the workmen as amicus curiae.
Appeal allowed.
S-76 S. C. Indiaf59
Bm1aras let Faaoty
Limited
Its Workm1•
S. JC Dns J.