# M/s. MODI FOOD PRODUCTS CO. LIMITED v. SHRI FAQIR CHAND SHARMA & OTHERS

- **Citation:** [1956] 1 S.C.R. 560
- **Court:** Supreme Court of India
- **Decided:** 1955-08-22
- **Case number:** Civil Appeal No. 353of1955
- **Bench:** Jagannadhadas, Venkatarama Ayyar, B. P. Sinha
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/m-s-modi-food-products-co-limited-v-shri-faqir-chand-sharma-others-1245
- **Pages:** 9

## Headnote

Indu.trial Di•putea (Appellate Tribunal} Act, 1950,
No.
XL VIII of 1950-Ss. 28 a.nd 22(a)-Lay off during pendency of
prior diwute-Application 11nder s. 28 alleging breach of s. 22(a)-
Tribimal finding lay off justified-Application should be di•mi8SedQuantum of compensation pa11ablc-Whcn proviso (b) to s. 25·0, In·
dustrial Dispute• Act applicable.
During the pendency of an appeal before the Labour Appellate
Tribunal in respect of a prior. industrial dispute between the same
parties the management laid off certain workmen and offered to pay
compensation equal to half the basic wages and dea.rness allowance
for the first 45 days in accordance with the provisions of proviso (a)
to s. 25-0, Industrial Disputes Act. The workmen made an application to the Tribunal under s.23 of the Industrial Disputes (Appellate
Tribunal) Act, 1950 alleging that there was a breach of e. 22(a) of
the same Act, and that the lay off was not bona fid• and claimed full
wages for the entire period of the lay off as compensation. The
Tribunal held that the lay off was justified but that the workmen
were entitled to half the basic wages and dearness allowance not
merely for the first 45 days but for the entire period under proviso
(b) to s. 25·0.
Held, that on the finding of the Tribunal that the lay off was
justified the application under e. 23 was liable to be dismissed.
Proviso (b) ·to s. 25-C, Industrial Disputes 4ct, is only appli·
cable in case of a second and distinct Jay off and does not apply tc
a period subsequent to the first 46 days of one continuous lay off.

## Text

1956
May8
560
SUPREME COURT REPORTS
[1956]
M/s. MODI FOOD PRODUCTS CO. LIMITED
v.
SHRI FAQIR CHAND SHARMA & OTHERS.
[JAGANNADHADAS, VENKATARAMA AYYAR and
B. P. SINHA JJ.]
Indu.trial Di•putea (Appellate Tribunal} Act, 1950,
No.
XL VIII of 1950-Ss. 28 a.nd 22(a)-Lay off during pendency of
prior diwute-Application 11nder s. 28 alleging breach of s. 22(a)-
Tribimal finding lay off justified-Application should be di•mi8SedQuantum of compensation pa11ablc-Whcn proviso (b) to s. 25·0, In·
dustrial Dispute• Act applicable.
During the pendency of an appeal before the Labour Appellate
Tribunal in respect of a prior. industrial dispute between the same
parties the management laid off certain workmen and offered to pay
compensation equal to half the basic wages and dea.rness allowance
for the first 45 days in accordance with the provisions of proviso (a)
to s. 25-0, Industrial Disputes Act. The workmen made an application to the Tribunal under s.23 of the Industrial Disputes (Appellate
Tribunal) Act, 1950 alleging that there was a breach of e. 22(a) of
the same Act, and that the lay off was not bona fid• and claimed full
wages for the entire period of the lay off as compensation. The
Tribunal held that the lay off was justified but that the workmen
were entitled to half the basic wages and dearness allowance not
merely for the first 45 days but for the entire period under proviso
(b) to s. 25·0.
Held, that on the finding of the Tribunal that the lay off was
justified the application under e. 23 was liable to be dismissed.
Proviso (b) ·to s. 25-C, Industrial Disputes 4ct, is only appli·
cable in case of a second and distinct Jay off and does not apply tc
a period subsequent to the first 46 days of one continuous lay off.
CIVIL APPELLATE JURISDICTION: Civil Appeal No.
353of1955.
On appeal by special leave from the judgment
and order dated the 22nd August 1955 of the Labour
Appellate Tribunal of India at Lucknow in Misc.
Case No. lll-C-650of1954.
Veda Vyas, (8. K. Kapur and N. H. Hingorani,
with him) for the appellant.
-
J. N. Bannerji, (P. C. Agarwalla, with him) for
the respondent.
•
;
...
S.U.R.
SUPREME COURT REPORTS
561
1956
1956.
May 8.
The Judgment of the Court was
delivered by .
M /s. Modi Food
VENKATARAMA AYYAR J.-The appellant is a comProducts Co.
A
Limited
pany registered under the Indian Companies
ct,
v.
and owns a factory called Modi Oil Mills in the disShri Faqir Chan,l
trict of Meeru t. The responeen ts are workmen em- Sharma and others
ployed in the Mills. The business of the Mills consi'sts in the manufacture of o,ils and paints. On
12-7-1954 the management put up the following notice:
"Notice is hereby given that due to non-availability of groundnut seed and neem seed at the parity
with the ruling prices of the groundnut oil and neem
oil, the Management is reluctantly compelled to close
the Groundnut Crushing Section and Neem Section
till the next groundnut season and thus the workers
in the attached list are surplus and their services are
laid off with effect from 14th July, 1954.
Workers, thus affected, shall be paid compensation
according to Industrial Dispute~ (Amendment) Act,
1953, subject to conditions laid therein. It is further
notified that the time of the attendance as provided
in Section 25(D) and (E) shall be 10 a.m. for all the
laid off workers".
Pursuant to this notice, 142 workmen mentioned
therein, being the respondents in this appeal, were
laid off from the 14th July 1954. On 26-7-1954 the
workmen acting through their Union sent a notice
to the management demanding full wages for the
period of lay off on the ground that it was unjustified and illegal. The management denied these allegations, and refused the demand. This being an industrial dispute as defined in section 2(k) of the Industrial Disputes Act XIV.of 1947, in the ordinary
course, proceedings would have been taken with reference thereto under the provisions of that Act. But
there was at that time another industrial dispute
between the parties pending final adjudication. That
dispute had been referred under section 10 of the
Industrial Disputes Act for adjudication to the
Regional Conciliation Officer, Meerut. He had pronounced his award, and against that, both the parties
562
SUPREME COURT REPORTS
[1956]
1955
had preferred appeals to the Labour Appellate TriM/s. Modi Food
bunal, and they were pending at the date of the
Products co.
notice. The Industrial Disputes (Appellate Tribunal)
Limited
Act XL VIII of 1950, hereinafter referred to as the
v.
Act, contains special provisions with reference to
Sliri Faqir Chand certain disputes which might arise between parties,
Sharma and others when there is already pending adjudication between
Venkataraina
them another industrial dispute. They are sections
Ayyar J.
22 and 23, which are as follows:
"22. During the period of thirty days allowed
for the filing of an appeal under section 10 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
Appellate Tribunal.
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".
·on 24-8-1954 the respondents filed an application
before the ·Labour Appellate Tribunal under section
23 of the Act. Therem, they alleged that the Jay off
was not bona fide, because the ground given therefor,
namely, non-availability of groundnut and neem
seeds at parity with ruling prices was not true; that
further in view of the pendency before the Labour
Appellate Tribunal of an industrial dispute between
the parties, the lay-off was in contravention of section 22(a) of the Act, and they accordingly prayed
->-
S.C.R.
SUPREME COURT REPORTS
563
that they might be awarded by way of compensation
1956
full wages for the entire period of the lay off.
The
M/s. Modi Food
appellant contested the claim. It contended that the
Products Co.
non-availability of groundnut and neem seeds as
Limited
mentioned in the notice was true, and that the lay
v.
off was bona fide. It also claimed that section 22( a) Shri Faqir Chand''·
of the Act had no application to the dispute, as the Sharma and others
notice distinctly stated that the workmen would be
Ven;;:;;rama
paid compensation as provided in section 25-C of the
AyyarJ.
Industrial Disputes Act as amended by Act XLIII
of 1953. It also contended that under that section
compensation was payable only for the first 45 days
at the rate mentioned in the body of the section and
not for any period subsequent thereto. The Tribunal held that the lay off was justified. It further held
on a construction of section 25-C that the workmen
were entitled to half the basic wages and dearness
allowance not merely for the first 45 days but for the
entire period, and that as the appellant did "not
observe the provisions of that section", there was an
alteration of the conditions of service within section
22(a) of the Act. It accordingly awarded compensation for the whole of the period at 50 per cent. of the
basic wages and d~arness allowance. Against this
decision, the management has preferred this appeal
by special leave.
On behalf of the appellant, Sri Veda Vyas contended firstly, that on its finding that the lay off was
justified, the only order which the Tribunal could
have passed was one of dismissal of the petition filed
by the respondents, and that"the award of compensation was, in consequence, without jurisdiction; and
secondly, that on a true construction of section 25-C
of the Industrial Disputes Act, the workmen were
entitled to compensation only for a period of 45 days
as provided in proviso (a) to section 25-C. We are of
opinion that both these contentions axe well-founded.
On the first question, the jurisdiction of the Tribunal to grant relief under secti~n 23 of the Act arises
only if it is made out that there was contravention
of section 22 by the management. The respondents
understood this position quite correctly, and with
78
564
SUPREME COURT REPORTS
[1956]
1956
a view to bring themselves within section 23, they
--
alleged that the lay off was not bona fide, inasmuch as,
Ml s. Modi Food
Products Co.
in fact, groundnut and neem seeds were available. This
Limited
contention rests on the supposition that the condiv.
tions under which wotkmen could be laid off are conShri Faqir Chand ditions as to their service, and• that when the emSharma and others ployer lays off workmen without· proper grounds
y,,,;;;;;, mt>
therefor, it is a violation of the conditions of service
Ayy:r J.
within section 22( a) of the Act.
There was some argument before us whether lay
off, whether justifiable or otherwise, could be brought
within section 22(a) of the Act as amounting to
breach of the conditions of service. On the one hand,
the argument was that the expression "conditions of
service" would include only such conditions as
would operate when the workmen were actually in
service, such as the quantum of wages, hours of work,
provision for leave and so forth, and that when there
was a lay off, these conditions could by their very
nature have no application, and that if the lay off
was unjustified, that would give the workmen a right
to take proceedings under the provisions. of the Industrial Disputes Act, but that they could make no
claim under section 23 as for a breach of the provisions of section 22(a). The contention, on the other
side, was that the workmen and the management
should be deemed to have agreed that there would be
lay off only for good and proper reasons and under
.conditions permitted by law, and that if those conditions were not satisfied, the lay off would be an
alteration of the conditions of service within section
22(a). The question is one of some importance, but
it is unnecessary to express any opinion on it, as
counsel for the appellant conceded after some argument that conditions under which the workmen could
be laid off would be conditions of service. On this
footing, he contended that as the lay off was, in fact,
justified, there was no breach of those conditions, and
that, in consequence, section 22(a) of the Act had no
application. On behalf of the respondents, it is
argued that the lay off must, by its very nature, be
temporary and of short duration, and that if it is for
S.C.R. .
SUPREME COURT REPORTS
565
a long or indefinite period as in the present case, it
could not be said to be a proper lay off such as could
1956
Mfs. Modi Food ·
be deemed to have been agreed to by the workmen,
Products co.
and that section 22(a) of the Act would, there.fore, be
Limited
applicable.
v.
It is common ground that there are no statutory Shri Faqir Cliand
rules prescribing the conditions under which t~ere Sharma and others
could be a lay off. If there had been, they w.ould opeVenkatarama
rate as conditions of service between the parties, and
Ayyar J.
then the question would simply have been whether
there had been a compliance with them. Under the
provisions of the Industrial Employment (Standing
Orders) Act XX of 1946, certain Standing Orders had
been framed with reference to this matter. Counsel
on both sides state that after the enactment of the
Industrial Disputes (Amendment) Act XLIIIofl953,
they are no longer in force, and that there are no
statutory provisions applicable to the present d.ispute. We must, therefore, decide the question on the
footing that the only condition which the parties
might be taken to have agreed to is that the lay off
should be for adequate grounds and for a reasonable
period. On this question, there is a clear finding in
favour of the appellant. The Tribunal has found that
groundnut and neem seeds were not available at
parity prices,.and that for that reason, the work had
to be stopped. It is not likely thap businessmen would
cut their profits to spite the workmen. The period
of the lay off was expressed to be until the next
groundnut season, and we have been told that the
season for groundnut begins sometime in NovemberDecember. In fact, all the respondents have been reemployed in relays from September onwards, and by
the first week of December all of them had been absorbed. On the finding of the Tribunal that the. lay
off was justified, it follows that the application of the
respondents under section 23 of the Act was liable to
be dismissed on the ground that there had been no
contravention of section 22(a).
But, notwithstanding this finding, the Tribunal
·went on to hold that the application under section 23
of the Act was maintainable.
To appreciate the
566
SUPREME COURT REPORTS
[1956)
1956
reasoning behind this decision, it is necessary to
refer to section 25-C of the Industrial Disputes Act,
~Ifs. Modi Food
Products co.
which runs as follows:
Limited
"Right of workmen laid-off for compensation:
v.
Whenever a workman (other than a badli workman
Shri Faqir CJoand or a casual workman) whose name is borne on the
Sliarmaandothers muster rolls of an industrial establishment and who
Venkatarama
has completed not less than one year of continuous
A:;yar J.
service under an employer is laid-off, he shall be paid
by the employer for all days during which he is so
laid off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per
cent. of the total of the basic wages and dearness
allowance that would have been payable to him had
he not been so laid off:
Provided that-
( a) the compensation payable to a workman
during any period of twelve months shall not be for
more than forty-five days except in the case specified
in clause (b);
(b) if during any period of twelve months, a
workman has been paid compensation for forty-five
days and during the same period of twelve months
he is again laid off for further continuous periods of
more than one week at a time, he shall, unless there
is any agreement to the contrary between him and
the employer, be paid for all the days during such
subsequent periods of lay-off compensation at the
rate specified in this section".
The appellant does not dispute the right of the respondents to compensation, and, in fact, they were
informed by the very notice dated 12-7-1954 under
which they were laid off, that compensation would be
paid to them in accordance with section 25-C. It is as
regards the quantum of compensation payable nnder
that section that the parties are disagreed. It will
be remembered that the lay off commenced on
14-7-1954 and was to continue until the next
groundnut season, and that the workers were actually
absorbed in batches from September,.and that by the
first week of December, they had all of them been·
employed. There was thus one continuous lay off
-~
S.C.R.
SUPREME COURT REPORTS
567
for periods varying from 57 to 121 days. The conteng_s
tion of the appellant is that, on these facts, the workM/s. Modi Food
men were entitled to compensation only in accordance
Products co.
with proviso (a) to section 25-C, and that they would
Limited
therefore be entitled to 50 per cent. of the basic
v.
wages and dearness allowance for the first 45 days Shri Faqir Chand
and for the rest of the period, no compensation was Sharma and_ others
payable. The re&pondents agree that proviso (a) to .venk;;;;.ama
section 25-C applies to the first period of 45 days; but
Ayyar 1.
they contend that for the remaining period of the
lay off, the governing provision is proviso (b) to section 25-C, and that under that proviso, they would
be entitled to compensation as provided in the body
of the section, i.e. 50 per cent. of the basic wages
and dearness allowance, for the remaining period
also. This contention was accepted by the Tribunal,
and holding that the compensation awarded by the
appellant was not in accordance with section 25-C, it
decided, as already mentioned, that there was an
alteration of the conditions of service, and accordingly awarded compensation under section 23 of the Act.
It is contended for the appellant that the construction which the Tribunal has put on section 25-C is
erroneous, and that the amount of compensation
offered by the appellant was the correct amount payable under that section. As already stated, there is
no dispute that the compensation payable for the first
45 days has to be determined in accordance with
proviso (a) to section 25-C. The dispute is only as to
whether for the rest of the period of lay off the workmen are entitled to compensation- under proviso (b)
to section 25-C. That proviso would apply only if the
workmen had been paid compensation for 45 days,
and were again laid off for further periods of more
than one week at a time. On the wording of the section, it is clear that the lay off whjch falls within
proviso (b) to section 25-C must be distinct from that
for which compensation had been paid in accordance
with proviso (a) to section 25-C and subsequent thereto in point of time. And as, in the present case, there
was one continuous lay off for the entire period, proviso (b) could have no application.
568
SUPREME COURT REPORTS
[1956]
1956
Counsel for the respondents contends that though
M/s. Modi Food
there was only one lay off, it should notionally be split
Products co,
up into two, the first period being the 45 days covered
umited
by proviso (a) to the section and the rest of the period,
v.
by proviso (_b). It is arguable that there could be a
Shri Faqir Chand second and distinct lay off following the first withSharma and others out a break, as for example, when the management
V.nkatar«ma
first notifies lay off for a period of 4;5 days and pays
Ayyar J.
compensation therefor, and again issues a fresh notification at the end of the period declaring a further
lay off for a period exceeding 7 days in continuation
of the notified.Jay off, and that that would fall within
proviso (b). But, in the present case, there was only
one notification, and the period specified therein was
up to the next season. By no straining of the language
of proviso (b) to section 25-C can such a lay off be
brought within its purview. The respondents rely in
support of their contention on the decision in
Automobile Products of India Ltd. v. Their Workmen(').
But that decision gives no effect whatever to the
words "again laid off'', and moreover, if the construction adopted therein is correct, there would be no
need for the provisos (a) and (b), as what would be
payable under them, according to the respondents,
would become payable under the body of the section
itself. If, as observed in the above decision, this conclusion leads to an anomalous position, it is for the
legislature, if it thinks fit, to amend the section and
not for the Tribunal to construe it otherwise than
what it plainly means. We are accordingly of opinion
that the respondents are entitled to compensation
only for the 45 days as provided in proviso (a), and
that as the appellant had offered to pay the same by
its notice dated 12-7-1954, there was ilo alteration of
the conditions of service within section 22 of the Act,
and that, in consequence, the petition of the respondents was liable to be rejected.
We accordingly allow the appeal, set aside the order
of the Tribunal, and dismiss the petition of the respondents. The parties will bear their own costs.
{1) [1955} l Labour Law Journal 67.