# THE CACHAR CHAH SRAMIK UNION SILCHAR, ASSAM v. THE MANAGEMENT OF THE TEA ESTATE OF CACHAR, ASSAM

- **Citation:** [1966] 2 S.C.R. 344
- **Court:** Supreme Court of India
- **Decided:** 1965-10-26
- **Case number:** Civil Appeal No. 969 of 1963
- **Bench:** P. B. Gajendragadkar, K. N. Wanchoo, M. Hidayatullah, V. Ramaswami
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/the-cachar-chah-sramik-union-silchar-assam-v-the-management-of-the-tea-estate-3545
- **Pages:** 9

## Headnote

Industrial Disputes-Standing
Orders-cl. 8(a) (i) and (iii),
and
Cl. 9-Slzanp in 111arket-Lay off; Retrenchnzent-lvhether justifiedA1nount of co1npensation; when can be gone into.
C
In pursuance, of the recommendation of a Committee, appointed on a
representation by tbc Tea Producers in the Cachar District to investigate
into tbe difficulties of .the Industry as a result of steep fall in prices, a
notification was issued providing that there shall be no issue of foodstuffs at concessional rates .and no cash compensation as such in
lieu
thereof, but the existing dearness allowance was raised temporarily for all
estates in the district. The«upon the condition of the industry which was
I)
on tbe verge of collapse improved; many gardens which had closed down
started refunctioning and many of the workmen who were retrenched were
taken back in employment.
Upon rival contentions, the Industrial Tribunal
held that, (i) the financial crisis was genuine and was not a result of
any manipulation and that the management was entitled under cl. S(a) (i)
and (iii) of the Standing orders to lay off the workmen for an indefinite
period, (2) the management was also entitled to retrench workmen under
E.
cl. 9 of the Standing orders, and ( 3) even if the lay off and retrenchment
were bona fide and justified, the workn1en were entitled to a reasonable
compensation, and the Tribunal fixed the quantum of compensation. In
appeal to this Court :
HELD : (i) The lay off in the present case. was justified by cl.
S(a) (i) and (iii) of the Standing orders. The last part of cl. S(a) (i)
lvhich refers to "other cases beyond his control" \VOtild cover a case of
F'
sudclen slump in the world market and consequent financial difficulties
of the. tea industries [350 BJ
Work111en of Dewan
Tea
Estate v.
Their
A1anage111ent.
[1964]
5 S.C.R. 548, distinguished.
(ii) The n1anagement had also the. additional po\.ver to retrench \\.'Orkmen under cl. 9 of the standing orders. [350 CJ
G
(iii) In the present case, the Tribunal had not committed any error
of la\V or legal principle in deciding the an1ount of con1pe.nsation. [351 G]
Th,~ quantum of compensation is a matter primarily for the Tribunal
to estimate and it ~s not ope.n to this Court to go into this question unless
it is shown that the Tribunal has committed any error of law or legal
principle indeciding it. [352 B-C[
H

## Text

THE CACHAR CHAH SRAMIK UNION SILCHAR, ASSAM
A.
v.
THE MANAGEMENT OF THE TEA ESTATE OF CACHAR,
ASSAM
October 26, 1965
[P. B. GAJENDRAGADKAR, C.J., K. N. WANCHOO, M. HIDAYATULLAH AND V. RAMASWAMI, JJ.J
Industrial Disputes-Standing
Orders-cl. 8(a) (i) and (iii),
and
Cl. 9-Slzanp in 111arket-Lay off; Retrenchnzent-lvhether justifiedA1nount of co1npensation; when can be gone into.
C
In pursuance, of the recommendation of a Committee, appointed on a
representation by tbc Tea Producers in the Cachar District to investigate
into tbe difficulties of .the Industry as a result of steep fall in prices, a
notification was issued providing that there shall be no issue of foodstuffs at concessional rates .and no cash compensation as such in
lieu
thereof, but the existing dearness allowance was raised temporarily for all
estates in the district. The«upon the condition of the industry which was
I)
on tbe verge of collapse improved; many gardens which had closed down
started refunctioning and many of the workmen who were retrenched were
taken back in employment.
Upon rival contentions, the Industrial Tribunal
held that, (i) the financial crisis was genuine and was not a result of
any manipulation and that the management was entitled under cl. S(a) (i)
and (iii) of the Standing orders to lay off the workmen for an indefinite
period, (2) the management was also entitled to retrench workmen under
E.
cl. 9 of the Standing orders, and ( 3) even if the lay off and retrenchment
were bona fide and justified, the workn1en were entitled to a reasonable
compensation, and the Tribunal fixed the quantum of compensation. In
appeal to this Court :
HELD : (i) The lay off in the present case. was justified by cl.
S(a) (i) and (iii) of the Standing orders. The last part of cl. S(a) (i)
lvhich refers to "other cases beyond his control" \VOtild cover a case of
F'
sudclen slump in the world market and consequent financial difficulties
of the. tea industries [350 BJ
Work111en of Dewan
Tea
Estate v.
Their
A1anage111ent.
[1964]
5 S.C.R. 548, distinguished.
(ii) The n1anagement had also the. additional po\.ver to retrench \\.'Orkmen under cl. 9 of the standing orders. [350 CJ
G
(iii) In the present case, the Tribunal had not committed any error
of la\V or legal principle in deciding the an1ount of con1pe.nsation. [351 G]
Th,~ quantum of compensation is a matter primarily for the Tribunal
to estimate and it ~s not ope.n to this Court to go into this question unless
it is shown that the Tribunal has committed any error of law or legal
principle indeciding it. [352 B-C[
H
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 969 of
1963.
•
•
)
•
•
•
•
-
,,:c'
c. c. s. UNION v. MANAGEMENT (Ramaswami, J.)
345
A
Appeal by special leave from the award dated November 13,
1959 of the Industrial Tribunal, Assam in Sub-References Nos.
25 to 39, 41, 43 to 45, 47 to 51, 54 to 57, 59 to 61, 63 to 67,
69 to 73, 76 and 91 of 1957 and 15 of 1958.
C. B. Agarwa/a, D. L. Sen Gupta and K. P. Gupta, for the
B
appellant.
c
M. C. Setalvad, Purnendu Choudhri, R. C. Dutta and D. N.
Mukherjee, for the re.spondents Nos. 1-5, 7, 9, 11, 14, 15, 20, 22,
25-28, 31(1), 31(4), 31(6), 31(8), 31(10). to 31(14), 32,
33(2), 34, 35, 37-40, 42(2)-42(10), 43 and 44.
R. C. Dutta and D. N. Mukherjee, for respondents Nos. 8, 12,
23and42(1).
D. N. Mukherjee and D. N. Gupta, for respondents Nos. 6 and
31 (5).
D
Dipak Chaudhry, for respondent No. 33 (1).
E
S. N. Mukherjee, for respondent No. ,6 (I).
Sukumar Chose, for respondents Nos. 10, 13(2), 13(3), 19,
30,
31(2)(1), 31(5)(1), 31(6)(1), 31(14)(1), 35(1),
35(2)(1), 35(3)(1), 38(1)(1), 38(2)(1) and 43(11).
B. P. Maheshwari and S. Murthy, for respondents Nos. 8(1),.
31 (9j(1) and 35(6)(1).
The Judgment of the Court was delivered by
Ramaswami, J.
This appeal is brought, by special leave,
f
against the award of the Industrial Tribunal, Assam, published
in Assam Gazette dated January 13, 1960, vide Assam Government Notification No. 361/55 / 690 dated December 29, 1959,
in References Nos. 25 to 39, 41, 43 to 45, 47 to 51, 54 to 57,
59 to 61. 63 to 67, 69 to 73, 76 and 91 of 1957 and 15 of
G
II
1958.
During the period from June, 1951 to March, 1953 the
entire tea industry in the Cachar district of Assam was subject
to an unusual economic crisis. There was a steep rise in the cost
of production due to increase of wages and introduction of subsidised rations.
In October, 1949, a Tripartite Conference was
held at Silchar and it was decided in this Conference that nearly
20 Tea Estates had become uneconomic and should be allowed
to convert food concessions into cash at the rate of 0-4-6 per
346
SUPREME COURT REPORTS
[l966] 2 S.C.R.
head per day.
The need for re-adjustment of labour force was
.also recognised in this Conference.
The financial position of
the Tea Estates however continued to cause anxiety to the Gov-
· ernment.
On February 12, 1949, an Ad hoc Committee was
appointed which submitted its report on September 13, 1950.
In this report the Committee stressed the inability of the tea
industry to bear the burden of subsidised food-stuffs.
The Committee further found that the increase in production cost was
considerable and the tea estates were compelled to borrow more
money and the Scheduled Banks were finding it difficult to meet
the demand.
The Committee found that the yield of tea in
Cachar district was 7 mds. per acre and in its view the absolute
minimum yield which could be economic in Cachar was 8 mds.
per acre.
In view of the critical condition of the tea industry
in Cachar another Committee named as 'The Cachar Plantation
Committee' was constituted on April 4, 1950.
The report of
the Committee was submitted on January 4, 1951.
The Committee recommended abandonment of uneconomic areas under
tea and suggested offer of alternative employment to the surplus
labour or provision of khet land, if available.
The Committee
also recommended a seven annas conversion rate per day in lieu
of food concession for all estates and it was proposed that Government should undertake to supply foodgrains to tea estates at
controlled wholesale, rates.
The Committee also reached the
finding that the average return to the shareholder was 2-2/3%
·and the remuneration to the managerial staff constituted a very
·small fraction of the total cost of production.
Even according
:to the labour representatives on this Committee the labour costs
'I'epresented 4 7 per cent of the total cost of production of tea.
1
In the year 1951 there was a sudden recession in the world
iJrice of tea.
Fluctuations commenced in the middle of June,
1951 and there was a rather rapid decline in prices of tea in
November, 1951.
Cachar prices came down from 1-10-1 per
lb. on October 30, 1951 to 1-2-11 per lb. on March 17, 1952.
•The prices of Cachar tea ranged between 0-14-4 per lb. to
0-12-11 per lb. between June and August 1952.
In May the
price came down to 0-12-3. After June 1952 the price of Cachar
tea ranged between J-1-0 to 0-12-2.
The decline in prices
covered a long period and was unprecedented in its character.
To add to the difficulties of the tea industry there was a notification under the Minimum Wages Act dated March 11, 1952 raising wages of Jabour substantially. A representation was made to
the Government of India by Associations of Tea Producers in
March and April, 1952 regarding the difficulties of the industry
A
B
•
•
c
D
•
E
F
G
'
H
•
•
A
B
c
D
c. c. s. UNION l'. MANAGEMENT (Ramaswami, .f.)
347
as a result of the steep fall in prices.
The Government of India
appointed a two-member Committee (known as the Official Team)
to investigate into the matter.
Before the team concluded its
investigation the situation had taken a critical turn and the tea
industry in Cachar was on the verge of a total collapse. By
January 22, 1953, 82 out of 11 l gardens in Cachar district had
closed down.
The Official team recommended conversion of food
concessions into cash, arrangement for credit facilities through suitable co-operative banks and postponement of the implementation
of the Plantation Labour Act for a period of two years. As regards
the question of the revision of the Minimum Wage the tea industry
was asked to make necessary representation to the State concerned.
In its report dated January 31, 1953 the Minimum Wage Committee observed that the estates in Cachar District stood on an entirely
different footing and expressed a fear that almost all of them were
likely to go out of business if the existing low prices of tea continued for any length of time. Even at the time of the Minimum
Wage Notification a number of estates were known to be uneconomic and the increase in wage rates resulting from the Notification'
was a severe blow to them. The hope that prices of tea would rise
was completely belied and events so conspired that most of the
estates turned out to be uneconomic.
The Committee further
observed that it was realised that labour could ill-afford to agree
E
to any suggestion to reduce the existing minimum wage but the,
situation was such that drastic measures had to be considered in
the interest of the labourers themselves. It is to be noted also in
this connection that Cachar labourers who have been settled Off
the estates for generations had alternative sources of income in
common with the village folk in the neighbourhood. In pursuanceF
of the recommendation of the Committee there was a revised notification dated February 9, 1953, under the Minimum Wages Act
with regard to all the tea estates in the district of Cachar and the·
uneconomic tea estates in the Assam Valley. The notification provided that there shall be no issue of food-stuffs at concessional rates
and no cash compensation as such in lieu thereof. But with a view
G
to mitigate the hardship of Jabour due to suspension of food concessions, the existing dearness allowance was raised temporarily
for all Cachar tea estates at the rate of one anna for adults and'
six pies for minors for each working day.
After the issue of the
revised notification the economic condition of the tea estates
improved and many tea estates started refunctioning. Many of the
H
workmen who were retrenched were taken back in employment and
others were provided alternative employment in tea estates outside·
Cachar district in the Assam Valley district or elsewhere:.
348
SUPREME COURT
REPORTS
[1966] 2 s.c.R.
The case of the Cachar Chah Sramik Union (hereinafter called
A
the Union) before the Industrial Tribunal was that there was no
genuine crisis which could justify retrenchment, lay off or even
reduction of working days in a week.
According to the Union
the financial
crisis was
manipulated by the management
because of the notification under the Minimum Wages Act
issued in March, 1952.
The object of the management was
to force the Government to revise that notification and at the same
time to crush the growing trade union movement. It was contended
that the introduction of short working hours and retrenchment were
unfair labour practice. The Union claimed compensation on the
ground that the measures taken by the management were wholiy
unjustified. It was alternatively contended that even if the measures
were justified, the workmen were entitled to compensation on
account of involuntary unemployment which they had suffered for
no fault of theirs.
The opposite view was put forward by the
management and it was contended on its behalf that it was compelled to reduce the number of working days and, in some cases,
B
c
to resort to retrenchment because there was a real and sudden
D
financial crisis in the industry and the industry could not be run
with profit without resort to these measures.
Upon these rival contentions the Industrial Tribunal held, in
the first place, that the financial crisis was genuine and was not a
result of any manipulation and that the management was entitled
E
under cl. 8(a)(i) and (iii) of the Standing Orders to lay off the
workmen for an indefinite period. The Tribunal further held that
the management was also entitled to retrench workmen under
cl. 9 of the Standing Orders. The Tribunal considered that even
if the lay off and retrenchment were bona fide and justified, the
workmen were entitled to a reasonable compensation and fixed the F
quantum of compensation at the rate of one week's pay for every
four months of unemployment.
Finally the Tribunal held that
the provision of khet land and other amenities like housing and
medical facilities available to the workmen should be taken to
adequately represent one week's wages.
After laying down these
principles tlie Industrial Tribunal examined the case of each indiG
victual garden and awarded compensation in some cases while refusing to grant any compensation in others.
On behalf of the appellant-Union Mr. Aggarwala submitted,
in the first place, that cl. 8(a) of the Standing Orders had no application to the present case and the Tribunal was not justified in
H
holding that the financial difficulty facing the tea estates was a
matter beyond the control of the management, and the workmen
•
~
' -!'"
•
•
•
•
•
c. c. s. UNION V. MANAGEMENT (Ramas1vami, J.)
349
A
could not, therefore, be laid off by the management under this
clause. The relevant portion of cl. 8 reads as follows :
B
n
E
"Closing and re-opening of sections of the industrial
establishments, and temporary stoppages of work, and
the rights and liabilities of the employer and workmen
arising therefrom.
(a) (i) The manager may at any time in the event of
lire, catastrophe, break Gown of machinery, stoppage of
power or supply, epidemic, civil commotion, strike,
extreme climate conditions or other causes beyond his
control, close down either the factory or field work or
both wilhout notice.
(iii) In cases where workmen are laid off for short
periods on account of failure of plant or a temporary
curtailment of production, the period of unemployment
shall be treated as compulsory leave either with or without pay, as the case may be; when, however workmen
have to be laid off for an indefinitely long period their
services may be terminated after giving them due notice
or pay in lieu thereof."
In support of this argument Mr. Aggarwala referred to the decision
of this Court in Workme11 of Dewan Tea Estate v. Their Management('). But the ratio of that decision has no application to the
present case in which the material facts are different.
In Workmen of Dewan Tea Estaie v. Their Management(') there was no
sudden slump in the price of tea but there was difficulty experienced
11
by the management in obtaining financial facilities from banks. It
was an individual case of management experiencing financial difficulty, and it was, therefore, held by this Court that the stoppage
of financial assistance will not fall within the phrase "stoppage of
power or supply" in cl. 8(a)(i) of the Standing Orders. It was also
pointed out in that case that there was no evidence produced on
<G
behalf of the management to substantiate its plea of non-availability
of finance.
There was also no evidence on the record to justify
the assumption of the management that the financial difficulty faced
•
by it was beyond its control.
The material facts in the present
case are different. It has been found by the Industrial Tribnnal
that there was a sudden slump in the price of tea in the world
H
markets, that the recession of prices of tea commenced in the
middle of J 951 and continued during the whole of 1952 for a
(1) [l.964] s s.c.R. 548.
350
SUPREME COURT
REPORTS
[1966] 2 S.C.R.
·period of about 18 months.
The low level of prices reached in
May, 1952, was unprecedented.
The Tribunal has also found
that the economic crisis of the tea industry in Cachar region was
real and was caused by reasons beyond the control of the management of the tea estates. In our opinion, the lai;t part of cl. 8(a)(i)
which refers to "other causes beyond his control" would cover a
case of sudden slump in the world market and the consequent financial difficulties of the tea estates.
We accordingly hold that the
lay off in the present case was justified by cl. 8(a)(i) and (iii) of
the Standing Orders and the argument of Mr. Aggarwala on this
aspect of the case is not warranted.
A
As regards retrenchment, we are satisfied that the managec
ment had also the additional power of retrenching workmen under
cl. 9 of the Standing Orders which reads as follows :
"Termination of employment and notice thereof to
be given by the employer and workmen.
Notice of termination of employment, whether by
D
Manager or by worker, shall be given equal to the wageperiod of the worker concerned.
Provided that-
( a) The Manager may terminate the employment of
a worker forthwith and pay his wages for the wage ..
period (equivalent to his average earnings over the preceding period of three months) in lieu of notice.
(b) Notice of termination of employment shall be
necessary only in case of permanent workers and not in
the case of outside or temporary workers except insofar
as is laid down in ap.y agreement entered into between the
Manager and such outside or temporary workers.
(c) ..................................... .
(d) Where the employment of any worker is terminated the wages earned by him and other dues, ·if any,
shall be paid before the expiry of the second working
day on which his employment is terminated.
,,
...........................................
E
F
G
The Tribunal has found that there was no victimisation or unfair
labour practice or mala fide
on the part
of the management in closing the gardens or in making the
retrencll.-
H
ment. Mr. Aggarwala on behalf of the appellant did not challenge
the finding of the Tribunal on this point, but learned Counsel
r
•
c. c. s. UNION v. MANAGEMENT (Ramaswami, J.)
351
A . argued that even if the management was justified, the workmen
were entitled to payment of compensation according to the scale
laid down in s. 25F of the Industrial Disputes Act.
It was conceded by learned Counsel that Ch. VA which contains s. 25F
came into force on October 24, 1953 by amending Act 43 of
B
c
D
1953 and the retrenchment in the present case was effected long
before that date.
It was, however, contended that the principle
embodied in s. 25 F should be applied in the present case. It was
said that by enacting Ch. VA the legislature was merely recognising the practice of payment of compensation by Labour Tribunals
before the date of the amendment and the legislature decided, by
the amendment, to standardise the payn;ient of compensation by
prescribing a statutory rule in that behalf (See The Indian Hume
Pipe Co. Ltd. v. The Workmen and another)(').
There is substance in the argument put forward on behalf of the appellant and
the Tribunal has also applied this principle in granting compensation to the retrenched workmen even though the case was not
attracted by s. 25F of the Industrial Disputes Act.
But the Tribunal has taken the view that one week's wages for every four months
of unemployment was adequate compensation. The contention of
the appellant is that the compensation should have been awarded
on the scale laid down in s. 25F of the Industrial Disputes Act.
We are unable to accept this argument as correct. As pointed out
E by this Court in The Indian Hume Pipe Co. Ltd. v. The Workmen
and another('), Industrial Tribunals had been awarding compensation even before the enactment of s. 25F but there was no uniformity or certainty in the matter and in determining the amount
of compensation the Tribunals considered a variety of relevant
factors. It is manifest that in determining the amount of compenF
G
sation the Tribunals exerdised complete discretion and took into·
account whatever factors they considered relevant. In the present
case, the Tribunal has estimated the amount of compensation as
one week's wages for every four months of unemployment and it
is not shown on behalf of the appellant that in making this estimate
the Tribunal has committed any error of law or applied any wrong
principle.
As regards the compensation to retrenched workmen, the Tribunal has stated in para 135 of the Award that the amenities
granted to them included undisturbed possession of residential
quarters and khet lands.
They were also granted medical relief,
fuel and other forest produce even during the period of suspension
H
of work. The Tribunal did not attempt to evaluate accurately the
pecuniary value of all these concessions but it has expressed the
(I) [1960] 2 S.C.R. 32 at p. 42.
L2Sup CT /66-9
352
SUPREME COURT REPORTS
[1966] 2 S.C.R.
view that the value of these concessions would be roughly equal to A
one week's• wages for every four months of unemployment and
therefore the retrenched workmen were not entitled to any com-
. pensation in cash apart from any right to wages in lieu of a week's
notice under cl. 9 of the Standing Orders. On behalf of the
appellant Mr. Aggarwala said that the retrenched workmen were
entitled to get a larger amount of compensation than that awarded
by the Tribunal.
The quantum of compensation is, however, a
matter primarily for the Tribunal to estimate and it is not open to
this Court to go into this question unless it is shown that the Tribunal has committed any error of law or legal principle in deciding
it. As regards the workmen who were subjected to short hours of
· work, the Tribunal has observed that they have been granted
ex gratia payments which were, in several cases in excess of the
total loss of wages by reason of the revision of the daily wages
under the notification of February 9, 1953 under the Minimum
Wages Act. · On behalf of the appellant reference was made by
B
c
Mr. Aggarwala to the deposition of Mr. R. M. Bipan. at page 97,
Part-I that the ex gratia payment compensated merely for the · D
minimum wages cut and not the loss to labour by the short workweek. But the Tribunal having examined the entire evidence reached
the conclusion that the ex gratia payment was in several cases in
excess of total loss of remuneration on account of the notification
under the Minimum Wages Act. There is also undisputed evidence
in this case to show that even in normal times short hours had to
be imposed by employers upto a period of three days in a week
in Cachar tea gardens. In this state of facts it is not possible for
us to hold that the Tribunal was in error in holding that the
ex gratia payment made by the management was sufficient compensation to the workmen who were not retrenched outright but
who were put on short hours of work.
For the reasons expressed we hold that there is no merit in
this appeal which is accordingly dismissed.
We do not propose
to pass any order as to costs.
Appeal dismissed;
E
F
·e' am;
J
••
'