# TATANAGAR FOUNDRY COMPANY v. THEIR WORKMEN P. B. GAJENDRAGADKAR, A. K. SARKAR and

- **Citation:** [1962] Supp. 3 S.C.R. 795
- **Court:** Supreme Court of India
- **Decided:** 1959-12-15
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tatanagar-foundry-company-v-their-workmen-p-b-gajendragadkar-a-k-sarkar-and-2494
- **Pages:** 9

## Headnote

a s.c.R.
SUPREME COURT REPORTS
795
TATANAGAR FOUNDRY COMPANY
v.
THEIR WORKMEN
P. B. GAJENDRAGADKAR, A. K. SARKAR and
K. N. WANOHOO, JJ.)
Industrial Dispute-Compensation-Statutory
compen·
sation-Lay off when ,iustijied and when malafide-Scope of
enquiry by Tribunal-Industrial Disputes Act, 1947(14 of
1947), 88, 2(kkk), 250.
The appellant has its factory atJamshcdpur. It manufactures cast iron sleepers, pipes, etc., in the said factory.
The raw materials mainly. required for the manufacture of
sleepCrs are pig iron, coke, limestone and moulding- sand.
The Railway Board is the only buyer of sleepers, and the
sleepers are manufactured only on !'eceipt of orders from the
said Board and not otherwise.
Inspite of its best efforts to
secure the raw materials in 1959, the appellant failed to
secure the same.
As the appellant found that the manufacture of sleepers could not be carried on, it issued a notice
and laid-off the workers of the sleeper factory.
The lay-off
continued from December 15, 1959 to September II, 1960.
On September 12, 1960, the appellant closed the Sleeper
Foundry Department and issued :μotice of retrenchment.
Retrenchment compensation was also paid to the workmen
retrenched.
The appellant
paid
the respondents the
statutory compensation for the Jay-off period as prescribed
bys. 250 of the Industria1 Disputes Act 1947.
However,
the respondents contended that the lay-off ;.as not justified.
The dispute between the parties was referred for adjudication
by the Government of Bihar to the Industrial Tribunal. The
Tribunal found that the appellant was in financial difficulties at the relevant time, the appellant was not actuated
by any
malafide intentions and the lay-off was not the
result of any ulterior motive. However, it held that if the
affairs of the appellant had been better managed and more
foresight had been shown by the appellant prior to the time
when the crisis was reached, pig iron could have been secured
and lay-off could have been avoided. Under the circumstances, the Ttibunal held that the lay-off could not be held
to be altogether justified, and awarded compensation to the
respondents in excess of the amount fixed by the statute.
1962
March 9.
1962
TataJiogar Foundry
ComparrJ'
v.
Tluir W orkmtn
Gajtndra.~odlcar J,
796 SUPREME COURT REl'ORT:S [l!lti2] SCP F.
Held, that the lay-off was justified as raw materials
were not available to 1he appcllan1 at the relevant time. The
only relief to which the \vorkmcn \Vere entitled was the staluttory relief prescribed by s. 25C.
If the lay off is malafide in the sense that the employer
has deliberately and malaciously
brought ahout a situation
\vherc lay off becomes necessary, it is not a lay-off \\'hich
in justified 11nder s. 2(kkk) and the relief provided under
s. 25C is not the only relief to which the workmen are entitled.
The malafides of the employer in declaring Jay-off
really means that no lay-off has in law taken place and a
finding a!i to the malafide of the employer in declaring a layoff takes the lay-off 011t of the definition of s. 2(kkk). If
Jay-off is d<'clarc<l in order to victin1ise \\rorkmen or for son1e
ulterior purpose, the position in the same.
C1vrr, APPELLATE Ju1nso1CTJ0l\: Civil Appr11l
Ko. 315 of l!l61.
Appeal by special leave
from t.lie award
dated December 29, l!JflO, of tho Industrial Trina!, Bihar at Patn:i in Reference No. 4 of Hl60.
C. K. Daplitary, Solid lur-Gt11oa/ n_{ lr1dia. and
Sardar Bal!lldur, for tho appellants.
B. P. Malwshumri, for the.respondents.
1962. Mardi 9. The Judgment of the Court was
deli\'Ned by
GA.IF.XDRAGAllKAH, J.-This appeal by special leave
is directed against the order pnssed by the Industrial
Tribunal, Patna, directing the appellant, the Tata·
nagar Foundry Co., to pay to the respondent~, its
workmen, 75% of the consolidated wages as com·
pensation for having laid them off for a period of
4i"i days commencing from December lfi, l95!l.
It
i~ common ground that the appellant laid off tho
respondents for the said p

## Text

a s.c.R.
SUPREME COURT REPORTS
795
TATANAGAR FOUNDRY COMPANY
v.
THEIR WORKMEN
P. B. GAJENDRAGADKAR, A. K. SARKAR and
K. N. WANOHOO, JJ.)
Industrial Dispute-Compensation-Statutory
compen·
sation-Lay off when ,iustijied and when malafide-Scope of
enquiry by Tribunal-Industrial Disputes Act, 1947(14 of
1947), 88, 2(kkk), 250.
The appellant has its factory atJamshcdpur. It manufactures cast iron sleepers, pipes, etc., in the said factory.
The raw materials mainly. required for the manufacture of
sleepCrs are pig iron, coke, limestone and moulding- sand.
The Railway Board is the only buyer of sleepers, and the
sleepers are manufactured only on !'eceipt of orders from the
said Board and not otherwise.
Inspite of its best efforts to
secure the raw materials in 1959, the appellant failed to
secure the same.
As the appellant found that the manufacture of sleepers could not be carried on, it issued a notice
and laid-off the workers of the sleeper factory.
The lay-off
continued from December 15, 1959 to September II, 1960.
On September 12, 1960, the appellant closed the Sleeper
Foundry Department and issued :μotice of retrenchment.
Retrenchment compensation was also paid to the workmen
retrenched.
The appellant
paid
the respondents the
statutory compensation for the Jay-off period as prescribed
bys. 250 of the Industria1 Disputes Act 1947.
However,
the respondents contended that the lay-off ;.as not justified.
The dispute between the parties was referred for adjudication
by the Government of Bihar to the Industrial Tribunal. The
Tribunal found that the appellant was in financial difficulties at the relevant time, the appellant was not actuated
by any
malafide intentions and the lay-off was not the
result of any ulterior motive. However, it held that if the
affairs of the appellant had been better managed and more
foresight had been shown by the appellant prior to the time
when the crisis was reached, pig iron could have been secured
and lay-off could have been avoided. Under the circumstances, the Ttibunal held that the lay-off could not be held
to be altogether justified, and awarded compensation to the
respondents in excess of the amount fixed by the statute.
1962
March 9.
1962
TataJiogar Foundry
ComparrJ'
v.
Tluir W orkmtn
Gajtndra.~odlcar J,
796 SUPREME COURT REl'ORT:S [l!lti2] SCP F.
Held, that the lay-off was justified as raw materials
were not available to 1he appcllan1 at the relevant time. The
only relief to which the \vorkmcn \Vere entitled was the staluttory relief prescribed by s. 25C.
If the lay off is malafide in the sense that the employer
has deliberately and malaciously
brought ahout a situation
\vherc lay off becomes necessary, it is not a lay-off \\'hich
in justified 11nder s. 2(kkk) and the relief provided under
s. 25C is not the only relief to which the workmen are entitled.
The malafides of the employer in declaring Jay-off
really means that no lay-off has in law taken place and a
finding a!i to the malafide of the employer in declaring a layoff takes the lay-off 011t of the definition of s. 2(kkk). If
Jay-off is d<'clarc<l in order to victin1ise \\rorkmen or for son1e
ulterior purpose, the position in the same.
C1vrr, APPELLATE Ju1nso1CTJ0l\: Civil Appr11l
Ko. 315 of l!l61.
Appeal by special leave
from t.lie award
dated December 29, l!JflO, of tho Industrial Trina!, Bihar at Patn:i in Reference No. 4 of Hl60.
C. K. Daplitary, Solid lur-Gt11oa/ n_{ lr1dia. and
Sardar Bal!lldur, for tho appellants.
B. P. Malwshumri, for the.respondents.
1962. Mardi 9. The Judgment of the Court was
deli\'Ned by
GA.IF.XDRAGAllKAH, J.-This appeal by special leave
is directed against the order pnssed by the Industrial
Tribunal, Patna, directing the appellant, the Tata·
nagar Foundry Co., to pay to the respondent~, its
workmen, 75% of the consolidated wages as com·
pensation for having laid them off for a period of
4i"i days commencing from December lfi, l95!l.
It
i~ common ground that the appellant laid off tho
respondents for the said period. The appellant's
case was that it had paid the respondents tho
statutory compcru;ation for the said lay-off as
prescribed by s.25C of tho Industrial Disputes Act
(No. 14 of 1947) (hereinafter called 1,he Act).
T~o
:i 8.C.R.
SUPREME COURT REPORTS
797
respondents, however, contended that the lay-off
was not justified and so the statutory compensation
paid by the appellant did not satisfy the ends of
justice. It was this dispute between the parties
which was referred for adjudication by the Government of Bihar to the Industrial Tribunal on
February \!, 1960.
On this reference, the Tribunal
has held "that the lay-off could not be held to be
altogether justified." That is why it has awarded
compensation to the respondents in. excess of the
amount statutorily fixed in that behalf.
The
appellant contends that the award thus made by
the Tribunal is contrary to law.
Before dealing with the merits of the contentions raised by the appellant, it would be necessary
to state some rclevent facts which led to the lay-off.
The appellant is a Public Limited Company and
bas its factory in Jamshedpur. It manufactures
east iron sleepers, pipes, general engineering casting
and non.ferrous castings in the said factory. The raw
materials mainly required for the manufacture of
sleepers are pig-iron, coke, limestone and moulding
sand. The Railway . Board is the only buyer of
sleepers and the . sleepers are, therefore, manufactured only on receipt of orders u:pon tenders from
the said B Jard, and not otherwise.· The normal
procedure for procuring raw material was that after
an order was received from the Railway Board, the
appellant submitted its requirement of pig iron to
the Iron & Steel Controller of the Government of
·India who allocates the quantity for· the said
commodity to the vario~s manufactures, such as
Tata Iron & Steel Co. Ltd. and Indian Iron & Steel
Co. Ltd. Formerly, supply of pig iron used to
come from the said two concerns to the appellant
and the appellant used to pay cash to Tata Iron &
Steel Co. Ltd. for the pig iron supplied by it and by
a Letter of credit to the Indian Iron & Steel Co. Ltd.
on which the said Company used to supply the raw
material made by it. In 1959, both the companies
1962
Tatanag11r roundry
Company
v.
Their Workmen
Gajendragadkllr J.
1962
Tatanr:gar f"'&11ndr7
CampanJ
v.
Tlttir Workmtn
Oajnzdratalikar J.
798 SUPREME COURT REPORTS [1962) SUPP.
stopped supply of pig iron in spite of the order
iBSucd in that behalf by the Controller, and they
wrote to the appellant suggesting that the appellant
should request the Controller to cancel his order
and place the same with some other suppliers.
Correspondence followed between the said companies and the appellant and finally in November,
l 959, the appellant was informed by the said companies that they could not supply its requirements
of raw material. ·
In June, 1959, the Bhila.i Steel Works made
their first shipment of pig iron addressed to the
appellant. In August, 1959, the said Works
despatched some wagons of pig iron to the appellant, but out of 20 wagons of the consignment, I 4
were lost completely, and the rest misrlclivcred and
were subsequently found somewhere in Gomoh and
some in Tatanagar and they never reached the
appellant in time.
In May, l9ri9, the appellant arranged for
Letter of Credit for a sum of Rs. 1,00,000/- fol' the
Bhilai Steel Works. In August, there was a supply
of 440 tons and in September, followed a supply of
36 wagons containing pig iron to the extent of 20 to
21 tons each roughly. In all, this latter supply
came to about 760 tons. In the two subsequent
months, no supply was rec,eivcd from Bhilai. The
Letter of Credit which the appellant had opened for
Bhilai Steel Works was revolving, with the result
that as soon aa one transaction was completed, the
said letter was ready for the subsequent transaction. The effect of this revolving letter was that
the value of credit of Rs. l,00,000/- continued to be
outstanding all the time. In spite of this revolving
letter, the Bhilai Steel Works failed to supply pig
iron in the two months October and November. The
appellant reminded the Works that no supply of pig
iron was received from them and yet no advice of
·any despatch of pig iron waa received from the
~ s.c.li.
SUPREME COURT REPORTS
799
Works after July 27, 1959. Even the 20 wagons
which had been sent in August and September did
not arrive at the factory. These wagons, it was
later learnt, had been delivered to K. P. Docks and
some other destinations.
In regard to the supply of pig iron from Rourkela, the appellant arranged for finance on cash
basis. In fact, between August and December a
total advance of Rs. 1,75,000/- was made to the
Rourke la Steel Works. A supply of pig iron worth
about Rs. 1,64,000/- was received by the appellant,
but th~ balance of Rs. 11,000/- was still outstanding.
Jn addition to the cash advances, the appellant also
opened a Letter of Credit for Rs. 1,00,000/- in
November, 1959, for financing the purchase of steel
from the said Works.
As early as 1959, TISCO informed the appellant that it regretted that it would not be possible
for it to supply the requirements of the company
regularly, while in regard to the supply from IISCO,
the position was still worse.
The appellant kept its employees and the
Assistant Labour Commissioner fully informed of
these unfortunate developments from time to time.
Both the Assistant Labour Commissioner and Mr.
John, · President of the respondents' Union, did
what they could by moving the Government to
assist the appellant in securing the raw material.
Even so, when the situation did not show any signs
of improvement and the appellant found that no
raw material was available with whioh its foundry
could 0arry on tho manufacture of sleepers, it issued
a notice on December 15, 1959, and laid off the
workers of the Sleeper Factory. This lay-off continued until September, 11,.1960 and from September 12, 1960, the appellant closed the Sleeper Foundry department and issued notice of retrenchment.
Subsequently, retrenchment compensation was duly
vaid to the workmen who had been retrenched.
1962
Tatanagar Foundry
Compat:Y
v.
Their Workmen
Gajendragadkar J.
800 SUPRE'.IIE COURT REPORTS (1962] SUPP.
/98t
That, in short, is the background of the la.y-off, tho
· validity of which formed tho subject-matter of the
T alim.gttt F0111tdry
f'
CMflP••.1
present re erence.
Tl,.;,~-.,;,,,,.
It appears that boforc the Tribunal it was
Oojer.Uracadlcor J.
urged by the respondents that the appellant had
deliberately brought about a situation which led to
the lay-off in order to divert the relevant orders for
sleepers to its Belur factory.
The argument was
that at Belur, the appellant gets its work done at
cheaper cost with the help of contract labour. Now,
if this contention had been established, then it
would clearly have been a case of malafides on the
part of the appellant and a claim for additional
compensation may have been justified.
But the
Tribunal has rej<>ctcd thie contention and has held
that no ovideacu had been adduced to prove such a
malafide intontion on the part of the appellant.
It was also urged by the respondents that even
in the absence of pig iron, the manufacture of sleepers could have been curried
on by
utilising
a substitute, 'ln<l in support Df this case, four
witnesses were examined by the respondents. The
Tribunal has rejected this ca.so also.
It has found
that the evidence given by tho four witnesses was
unreliable and un-satisfactory and the statement
made by the General Manager in cross-examina.tion
on this point was sufficient to show that in the
absence of pig iron, castings with scrap iron and
tin could not have been made. In fact, the
Genera.I Manager categorically stated that
the
appellant had not casted any sleeper without pig
iron at any time. Thus,
the
alternative plea
raised by the respondents to suggest that if the
appellant bad so desired, it could have avoided to
la.y-otf its workmen, bas also been rejected by
the Tribunal.
The Tribunal, however, was inclined to take
the view that if the management had been more
foresighted, it could have avoided the unfortunate
•
•1
3 s.c.R.
SUPREME COURT REPORTS
sot
position which it had to face at the relevant time
and because the Tribunal thought that the situation
which faced the appellant at the relevant time was
partly due to its negligence, it reached the final
conclusion that the lay-off was not altogether
justified. The Tribunal's view appears to be that
if reasonable care had been exercised by the
appellant, the situation could have been avoided.
It is this part of its finding that is seriously
disputed before us by the appellant.
Under s. 2 (kkk), "lay-off" men,ns, inter nlia,
the failure, or inn,bility of an employer on n,ccount
of shortage of raw materials to give employment to
a workman whose name is borne on the muster
rolls of his industrial establishment and who has
not been retrenched. As we have already seen,
· there
is
no
doubt
that
raw
materials
were not -available to the appellant at the relevant
time
and so.
the
lay· off
which
is
the
subject-matter of the present dispute satisfies the
test prescribed by the definition.
Section 25C
provides for
the right of workmen laid-off for
compensation, and it is common ground that compensation, equal to 50% of the total of the basic
wages and dearness allowance, as th.erein prescribed
has been paid hy the appellant to the respondents.
The issue referred to the Tribunal was whether the
action of the management in laying off the workmen was justified. If not, to what relief were the
respondents entitled ? In other words, the reference
shows that it was only if the Tribunal came to the
conclusion that the lay-off was not justified that the
question of considering what additional compensation should be paid to the respondents could arise.
If the lay-off is justified and it satisfies the requirements of the definition under s. 2(kkk), the only
relief to which the workmen laid off are entitled is
the statutory relief prescribed by s. 250.
Ther<C is
no doubt ur dispute about this position.
1962
Tatan1gaf' Foundry
Company
v.
Their Hrorkmen
Gaje11drt11adkar J.
1162
1·a~a11a1sr F1,u1id1.J
Co1t1pat!}'
..
'fhtir.WOYkmc'I
UajenJ,ttgadl.:ar J.
so2 SUPREME dOUR'i' REi>oRTS [1962] SUPP.
It is also not in disp!Jfo that if the lay.off is
mal1~lido . in
ihe sense that the employer has
dcliboratcly and maliciously brought about a situation where laj off became nocl'ssary, then it would
not bn a lay-off which is justified under s. :?(kkk)
and the relief provided to the laid-off workmou
under s. 25C would not be the only relief to which
they are entitled. Malafidee of the employer in
declaring a lay-off really mean that no lay-off, as
contemplated by th1~ definition, has iu law taken
place and so, a finding as t-0 malafides of the
employer in declaring a lay-off naturally takes the
lay-off out of ihe definition of s. 2(kkk) and as such
s. 25C cannot be held to be applicable to it so as to
confiw., the workmen's right to the compensation
therein prescribt<l. If the lay-off has been declared
in order to victimise . the workmen or for some
other ulterior purposP, the position would be the
same. It would not be a lay-off as contemplated
by 8. 2(kkk).
But when dealing with a lay-off like the one
with which we arc concerned in the present appeal
it would not be open to the Tribuual to enquire
whether the appellant could have avoided the lay·
off if he had been more diligent, more careful
or more
far-sighted.
That is a matter rclat·
iug to the management of the undertaking and
unless malafides are alleged or proved, it would Le
dilllcult to asi;ume that the Industrial Tribunal has
jurisdiction to sit in judgment over the acts of
manag:;rnent of tho employer and inveetigMe
whether a more prudent management could have
avoided the situation which led to lay-off. The danger
involved in permitting such jurisdiction to the
Tribunal is illustrated by the present award itself.
The Tribunal has found that tho appellant :was in
financial difficulties at the relevant time ; it has
fow1d that the appellant was not actuated by any
malafide intention, it has come to the conclusion
that the lay-off was not the result of any ulerioJ~
1
3 S.C.R.
SUPREME COURT REPORTS
so3
· motive, and yet it has finally come to the conclu·
sion that if the affairs of the appellant had been
better managed and more foresight had been shown
by the appellant prior to the time when the crisis
was reached, pig iron could have been secured and
lay-off could have been avoided. Apart from the
fact that this conclusion does not appear to be
borne out hy any evidence on record, it seems to
us that the Tribunal exceeded its jurisdiction in
trying to decide whether better management could
have avoided the crisis. The appellant is, no doubt,
expected to manage its affairs prudently, but it
would, we think, not be reasonable or fair to hold
that if the employer is faced with a situation under
which for lack of raw materials he has to lay-off his
workmen, it is necessary that he must submit to an
enquiry by the Industrial Tribunal about the
prudence of the management and the fore-thought
displayed by it in anticipating and avoiding the diffi·
culties. That is why we think in embarking upon an
enquiry as to whether the . appellant had shown
sufficient foresight in managing its affairs, the
Tribunal bas exceeded its jurisdiction. Besides, as
we have just indicated, its finding on the question
of negligence is not supported by any evidence on
record nor by probabilities in the case. In that
connection, it is significant that subsequently the
section in question has been closed and the retrenched workmen have been paid retrenchment compensation due to them.
The result is, the appeal succeeds and the
order passed by the Tribunal for the payment of
compensation of 75% of the consolidated wages is
set aside.
There would be no order as to costs.
Appeul allowed.
196:i
Tatonogar FotJndry
Comp1ny
••
Their Workmen
Gajtndrcga!fkir J.