# TRICITY DISTRIBUTION CO. LTD v. N. K. MOHAMMAD KHAN, ETC

- **Citation:** [1969] 2 S.C.R. 902
- **Court:** Supreme Court of India
- **Decided:** 1968-11-25
- **Case number:** Writ Appeal No. 113 of 1959
- **Bench:** J. M. Shelat, V. Bhargava
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/tricity-distribution-co-ltd-v-n-k-mohammad-khan-etc-4604
- **Pages:** 11

## Headnote

The Madras Electricity Supply Undertakings (Acquisition) Act 29
of 1954, and Rules thereunder; s. 15 and r. 17-The Industrial DispUll$
A.ct 14 of 1947 ss. 25F, 25FF, ·33C(2)-Electricity company taken over
by State Government of Madras-Employees continued in
employment
under s. 15 and r. 17 under Madras A.ct-Retrenchment compensation
to employees, whether payable-Applicability of proviso to s. 25FF of
Industrial Disputes Act-Jurisdiction of Labour Court under s, 33C(2).
The appellant Company was taken over by the Government of Madras
in exercise of the powers conferred on it by the Madras Electricity Supply
Undertakings (Acquisition) Act 1954. All the property and assets of
B
c
the company became vested in the Madras Government. Under r. 17
D
of the Madras. Government Undertakings (Acquisition) Rules, 1954 all
the staff of the Company employed immediately before the vesting date
were retained by the Government and were continued provision.ally for a
period of 12 months from the date of vesting on the same terms and
conditions of service as were applicable to them under the Company
immediately before the date of vesting. 1n respect of the future' employment of the workmen by the Madras Government, their conditions of
service were to be regulated by s. 15 of the Madras Act and the variouo
E
condition. laid down in r. 17 of the Rules.
Subsequently the workmen
claimed that they had become entitled to retrenchment
compensation
under s. 25F read with s. 25FF of the Industrial Disputes Act,
1947
and filed application for computation of the compensation payable to
them under s. 33C of the Act, before the Labour Court. Initially the
Company was the only opposite party to the applications but later the
State of Madras and the Electricity Board of Madras to which the Stale
F
had transferred the undertaking, were also made parties. The Company
and the Electricity Board raised certain preliminary
objections to
the
jurisdiction of the Labour Court which did not find favour
with that
Court.
On merits the Labour Court held that the workmen were entitled to retrenchment compensation
under s. 25FF and directed
the
Company to pay the ' amount. The High Court upheld the
Tribunal's
orders on merits as well as on the question of jurisdiction. The Com~
pany appealed to this Court. The submissions on behalf of the appellant
G
were : (i) That the Labour Court as well as the High Court were not
right in· holding that the conditions laid down in !he' proviso to s. 25FF
were not satisfied; (ii) that the applications under s. 33C(2) of the Act
were not maintainable because the question whether the workmen were
entitled to retrenchment compensation was outside the jurisdiction of the
Labour Court which was not competent to decide such a disputed queo-
. tion; (iii) That the High Comt was wrong in holding that the question
H
whether the liability to pay tpe retrenchment compensation fell on the
Company or the State of Madras or the Electricity Board could not be
decided by the Labour Court under s. 33C(2) of the Act and had to be
decided ·in other appropriate proceedings.
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SOUTH ARCOT ELECT. CO. v. N. K. KHAN
903
HELD : (i) The conditions of service of the workmen under s. 15 of
the Madras Act and under r. 17 were less favourable than their conditions of service had been under the company. In the circumstances the requirements of cl. (b)
of the proviso to s.
25FF were obviously
not satisfied
and
that proviso
could not be
invoked by the Company for the purpose of defeating the claim made by the workmen nnder
the principal clause of that section.
Under the principal clause the workmen. became entitled to receive retrenchment compensation in accordance
with s. 25F of the Act on fue basis of the legal fiction envisaged that
those rights would accrue to them as if the workmen had been retrenched.
The Labour Court and the High Court were therefore right in holdin~
thst the workmen were entitled to claim retrenchment compensati

## Text

BOARD OF DIRECTORS OF THE SOUTH ARCOT ELEC·
A
TRICITY DISTRIBUTION CO. LTD.
v.
N. K. MOHAMMAD KHAN, ETC.
November 25, 1968
[J. M. SHELAT AND V. BHARGAVA, JJ.]
The Madras Electricity Supply Undertakings (Acquisition) Act 29
of 1954, and Rules thereunder; s. 15 and r. 17-The Industrial DispUll$
A.ct 14 of 1947 ss. 25F, 25FF, ·33C(2)-Electricity company taken over
by State Government of Madras-Employees continued in
employment
under s. 15 and r. 17 under Madras A.ct-Retrenchment compensation
to employees, whether payable-Applicability of proviso to s. 25FF of
Industrial Disputes Act-Jurisdiction of Labour Court under s, 33C(2).
The appellant Company was taken over by the Government of Madras
in exercise of the powers conferred on it by the Madras Electricity Supply
Undertakings (Acquisition) Act 1954. All the property and assets of
B
c
the company became vested in the Madras Government. Under r. 17
D
of the Madras. Government Undertakings (Acquisition) Rules, 1954 all
the staff of the Company employed immediately before the vesting date
were retained by the Government and were continued provision.ally for a
period of 12 months from the date of vesting on the same terms and
conditions of service as were applicable to them under the Company
immediately before the date of vesting. 1n respect of the future' employment of the workmen by the Madras Government, their conditions of
service were to be regulated by s. 15 of the Madras Act and the variouo
E
condition. laid down in r. 17 of the Rules.
Subsequently the workmen
claimed that they had become entitled to retrenchment
compensation
under s. 25F read with s. 25FF of the Industrial Disputes Act,
1947
and filed application for computation of the compensation payable to
them under s. 33C of the Act, before the Labour Court. Initially the
Company was the only opposite party to the applications but later the
State of Madras and the Electricity Board of Madras to which the Stale
F
had transferred the undertaking, were also made parties. The Company
and the Electricity Board raised certain preliminary
objections to
the
jurisdiction of the Labour Court which did not find favour
with that
Court.
On merits the Labour Court held that the workmen were entitled to retrenchment compensation
under s. 25FF and directed
the
Company to pay the ' amount. The High Court upheld the
Tribunal's
orders on merits as well as on the question of jurisdiction. The Com~
pany appealed to this Court. The submissions on behalf of the appellant
G
were : (i) That the Labour Court as well as the High Court were not
right in· holding that the conditions laid down in !he' proviso to s. 25FF
were not satisfied; (ii) that the applications under s. 33C(2) of the Act
were not maintainable because the question whether the workmen were
entitled to retrenchment compensation was outside the jurisdiction of the
Labour Court which was not competent to decide such a disputed queo-
. tion; (iii) That the High Comt was wrong in holding that the question
H
whether the liability to pay tpe retrenchment compensation fell on the
Company or the State of Madras or the Electricity Board could not be
decided by the Labour Court under s. 33C(2) of the Act and had to be
decided ·in other appropriate proceedings.
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SOUTH ARCOT ELECT. CO. v. N. K. KHAN
903
HELD : (i) The conditions of service of the workmen under s. 15 of
the Madras Act and under r. 17 were less favourable than their conditions of service had been under the company. In the circumstances the requirements of cl. (b)
of the proviso to s.
25FF were obviously
not satisfied
and
that proviso
could not be
invoked by the Company for the purpose of defeating the claim made by the workmen nnder
the principal clause of that section.
Under the principal clause the workmen. became entitled to receive retrenchment compensation in accordance
with s. 25F of the Act on fue basis of the legal fiction envisaged that
those rights would accrue to them as if the workmen had been retrenched.
The Labour Court and the High Court were therefore right in holdin~
thst the workmen were entitled to claim retrenchment compensation in
accordance with the provisions of s. 25F of the Act because of the right
accruing to them under •· 25FF of the Act. [910 A-CJ
Tue employment under the new employer could only commei;ce
from the time when the ownership or the management of the undertaking
vested in the State Government; but .simultaneously with that vesting, the
workmen had to be deemed to be retrenched from service. The retrenchment could, therefOre, be deemed to have bee~ made only by the previous employer. Further, it would be the prev10us . employer w~o. would
be competent to give the notice in accordan~e with. the provmo!"'. of
•. 25F of the Act. In these circumstances the conclus~on was irreststible
that the claim under s. 25FF of the Act to compensation accrues to the
workmen against the previous employer under whom he was ~ployed
until the date of the transfer. In the present case therefore the nght. to
receive compensation clearly accrued under s. 25FF of the Act agamst
the Company and there was, ther~fore, no difficulty in the Labour Court
exercising jurisdiction on that basis. [910 H-911 CJ
(ii) The right which had been claimed by the v~rious '!""rkmen in
their applications under s. 33C(2) of the Act, was a ngh! which accrued
to them under s. 25FF of the Act and was_ an existing right at the . ti'!'•
when these applications were made.,
Tb~ Labour Oourt ~!early had 1un•-
diction to decide whether such a nght did or did not exist when dealing
with the application under that provision. The mere denial of that right
by the company cold not take away its jurisdiction, so !hat the order
made by the Labour Court was competent. [911 H-912 Al
Chief Mining Engineer, Ew;t India Coal Co. Ltd. v. Rameswar & Ors.
[1968J 1 S.C.R. 140, applied.
State of Bikaner and Jaipur v. R. L. Khande/wal, [1968J 1 L.L.J. 589,
Punjab National Bank Ltd. v. K. L. Kharbanda, [1962] Supp. 2 S.C.R.
977, Central Bank of India v. P. S. Ra1a3opala11 & Ors., [1964] 3 S.C.R .
140 and Bombay Gas Company Ltd. v. Gopal Bhiva and Ors. [1964] 3
S.C.R. 709, referred to.
(iii) The Labour Court was concerned with the right claimed under
the Act.
Whether by virtue cf the provisions or the terms of transfer
of the und~~aking from the company to the Government or by virtue
of the prov1S1ons of the Madras Act, the company was entitled to claim
that this liability should be ultimately met by the State Government wu
a point which did not affect the right of the workmen to claim their compensation from the Company and the Labour Court was therefore not
required to go into the question when dealing with application under
s. 33C(2) of the Act.
[912 C-EJ
904
SUPREME COURT REPORTS
(1969) 2 S.C.R.
CIVIL APPELLATE JURISDICTION : Civil Appeals Nos. 2455
A
and 2540 o[ 1966.
Appeals by special leave from the judgment and order dated
June 28, 1962 of the Madras High Court in Writ Appeal No.
113 of 1959 and Writ Petition No. 254 of 1960.
S. V. Gupte, M. Ranganatha Sastri, M. S. K. Sastri and M. S.
Narasimhan, for the appellant (in both the appeals).
M. K. Ramamurthi, Shyamala Pappu and Vineet Kumar, for
respondent No. 1 (in both the appeals).
K. N. Mudaliyar, Advocate-General for the State of Madras
B
and A. V. Rangam, for respondents Nos. 2 and 3 (in both the c
appeals).
The Judgment of the Court was delivered by
Bbargava, J.
The appellant, the South Arcot Electricity
Distribution Company Ltd. (hereinafter referred to aE. "the Company"), was carrying on the business of distribution of electricity as a Licensee under the Government in South Arcot District in the State of Madras.
The Government of Madras, in
exercise of the powers conferred on it by the Madras Electricity
Supply Undertakings (Acquisition) Act. No. 29 of 1954 (hereinafter referred to as "the Madras Act"), took over the appellant's undertaking with effect from 1st of June, 1957.
The
Company chose to be paid compensation on Basis A laid down
in section 5 ( 1) of the Madras Act, with the result that all the property belonging to the Company, including the fixed assets, cash,
security investments, and the like and all rights, liabilities and
obligations as on the date of vesting vested or must be deemed
to have vested in the Madras Government.
Under Rule 17 of
the Madras Electricity Undertakings (Acquisition) Rules, 1954
(hereinafter referred to as "the Rules") framed by the Governor
of Madras under the provisions of the Madras Act, all the staff
of the Company employed immediately before the vesting date
were retained by the Government and were continued provisionally for a period of 12 months from the date of vesting on the
same terms and conditions of service as were applicable to them
under the Company immediately before the date of vesting.
In
respect of future employment of the workmen by the Madras
Government, their conditions of service came to be regulated by
s. 15 of the Madras Act and the various conditions laid down in
r. 17 of the Rules. Subsequently, the employees of the Company
numbering 352 claimed that they had become entitled to retrenchment compensation under section 25F read with s. 25FF of the
Industrial Disputes Act No. 14 of 194 7 (hereinafter referred to as
"the Act") and filed applications for computation of the comD
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SOUTH ARCOT ELECT. co. v. N. K. KHAN (Bhargava, !.)
905
pensation payable to them under section 33C(2) of the Act before
the Labour Court. All these 352 applications were based on an
identical claim and were heard by the Labour Court together.
Initially, the Company was the sole opposite par~y in these applications, but, later on, the State of Madras was IIIlpleaded as an·
other opposite party. In addition, the Electricity Board of Madras to which the State of Madras had transferred the undertaking', was also impleaded as an opposite party.
The <;ompany
contested these applications on various grounds, inter alza pleading that there had been no .break in the service of th.e emp.loyees
or any change in the condit10ns of therr service to therr detmnent,
so that the employees were not entitled tc; cl~im any compen~a
tion. Another plea taken was that the applications were not mamtainable under s. 33C(2) of the Act, because the Labour Court
was not competent to decide the question whether the workmen
were entitled to retrenchment compensation when this claim of
theirs was not accepted by the Company.
It was, in addition,
pleaded that, even if the workmen were entitled to any compensation, the liability to pay that compensation was not that of the
Company, but of the State of Madras or the Electricity Board
in view of the provisions of the Madras Act, under which all the
liabilities of the Company had vested first in the State of Madras
and subsequently in the Electricity Board. The Electricity Board
also contended that no liability for payment of retrenchment compensation had arisen and that, in any case, there was no obligation on the part of the Board to pay retrenchment compensation.
The Board supported the Company in the plea that the services
of the employees had not been interrupted and that the terms and
conditions of service were in no way Jess favourable after the
vesting of the undertaking in the State of Madras or the Electricity Board. It was further pleaded that a dispute had arisen between the Company and the Government under s. 13 ( 1) (b) of the
Madras Act as to which of the two was liable to pay retrenchment
compensation if at all, and no relief could be given to the employees by the Labour Court until the said dispute was decided in
accordance with the provisions of the Madras Act by arbitration.
On these pleadings, three preliminary objections were raised, viz.,
~1) that the. no~ice wages and retrenchment compensation claimed
m the apphcations were not benefits due to the employees within
the meaning of s. 33C(2) of the Act; (2) that, as retrenchment
came under Chapter VA of the Act, it could only be decided by
an Indust_rial Tribunal and not by the Labour Court; and (3)
that, havmg regard to the fact that complicated questions of law
and fact as to the liability of the Company or the Government or
the Board had to be decided, it was not competent for the Labour
Court to decide the matter summarily in proceedings under s.
33C(2) of the Act and that the dispute must be decided by a civil
court. The Labour Court, by an order dated 3rd October, 1958,
906
SUPREME COURT REPORTS
[1969] 2 S.C.R
ov.er-i:uled thes~ preliminary objections and directed that the applications be listed for being tried on merits.
The Company,
thereupon, filed writ petitions under Article 226 of the Constitution in the High Court of Madras numbered as 820 and 842 to
847 of 1958 seeking directions of the Court restraining the Labour
Court from enquiring into these applications on merits on the
grofi!ld !hat the Labour Court had no jurisdiction to entertain the
applica~ons from the employees. A learned single Judge of the
Court dISmissed the writ petitions holding that the Labour Court
had jurisdiction to decide the applications and that the controversy between the Company on the one side, and the Government of Madras and the Electricity Board on the other side as
to the party which had to bear the liability will have to be' disposed of in proceedings taken separately from these proceedings
under ~e Act. Aggrieved by this decision, the Company preferred Wnt Appeal No. 113 of 1959 in the Appellate Side of the
High Court.
In the meantime, the Labour Court took up the applications
for decision on merits and, since common questions were involved
in all the applications, one of these applications C.P. No. 81 of
1957 was taken up as a test case for disposal by the Labour Court
by consent of all parties concerned.
The Labour Court, by its
order dated 4th February, 1960, held that the workmen concerned were entitled to retrenchment compensation in accordance with
s. 25FF of the Act, computed the amount due, and passed an
order directing the Company to pay the amount.
The Company, thereupon, filed Writ Petition No. 254 of
1960 in the High Court of Madras for quashing this order of the
Labour Court.
Writ Appeal No. 113 of 1959 and this Writ
Petition No. 254 of 1960 were heard together by a Division Bench
of the High Court which decided them by a common judgment
and dismissed the Writ Appeal as well as the Writ Petition. The
Company then sought leave to appeal to this' Court under Art.
133 of the Constitution.
The High Court granted a certificate
in respect of its judgment in Writ Petition No. 254 of 1960, while
rejecting the application for grant of certificate in respect of the
same judgment insofar as it had disposed of Writ Appeal No. 113/
1959. Civil Appeal No. 2540 of 1966 now before us has been
filed by the Company in pursuance of that ~ertificate gr.~nted by
the High Court. The Company further obtamed from this Court
special leave to appeal against the same judgment insofar as it
governed Writ Appeal No. 113 of 1959 and in pursuance of that
special leave granted by this Court, Civil Appeal No. 2455 of
1966 has been filed.
These appeals have been heard by us together and are now to be disposed of by this common judgment.
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SOUTH ARCOT ELECT. co. v. N. K. KHAN (Bhargava, J.)
907
Mr. S. V. Gupte, learned counsel appearing for the Company
raised the following three points in his arguments in these two
appeals:-
(1) That the Lab.our Court as well as the High Court were
not right in holding that the conditions laid down in the proviso
to s. 25FF of the Act were not satisfied and in thus accepting
the claim of the workmen to compensation under the principal
clause of that section.
(2) That the applications under s. 33C(2) of the Act were not
maintainable, because the question whether the workmen were
entitled to retrenchment compensation was outside the jurisdiction of the Labour Court which was not competent to decide such
a disputed question.
(3) That the High Court was wrong in holding that the question whether the liability to pay the retrenchment compensation
fell on the Company or the State of Madras or the Electricity
Board could not be decided by the Labour Court under s. 33C(2)
of the Act and had to be determined in other appropriate proceedings.
Section 25FF of the Act is as follows :-
"Where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that
undertaking to a new employer, every workman who has
been in continuous service for not less than one year in
that undertaking immediately before such transfer shall
be entitled to notice and compensation in accordance
with the provisions of section 25F, as if the workman
had been retrenched :
Provided that nothing in this section shall apply to
a workman in any case where there has been a change
of employers by reason of the transfer, if-
( a) the service of the workman has not been interrupted by such transfer;
(b) the terms and conditions of service applicable
to the workman after such transfer are not in any way
less favourable to the workman than those applicable to
him immediately before the transfer; and
(c) the new llmployer is, under the terms of such
transf~r or otherwise, !e~ally liable to pay to the workman, m th~ event ?f his .retrenchment, compensation
on the basIS that hIS service has been continuous and
has not been interrupted by the transfer."
908
SUPREME COURT REPORTS
[1969] 2 S.C.R.
The principal clause of thls section clearly confers a right on
every workman, who has been .employed c~ntinuously for not less
than one year in any undertaking, to receive retrenchment compensation in accordance with the provisions of s. 25F of the A~t
as if the workman had been retrenched whenever the ownership
or management of the undertaking is transferred, whether by
agreement or by operation of law. Consequently, in the present
case, the employees, who presented the applications under s.
33C(2) of the Act, clearly became entitled to receive retrenchment compensation in· accordance with s. 25F of the Act when,
under the Madras Act, this undertaking stood transferred to the
State Government from the Company. This would be the legal
right vesting in the workmen if the proviso does not apply to
their cases, and it accrues irrespective of the fact that the workmen had not actually been retrenched.
The right under this
principal clause is conferred on the basis of the legal fiction that
the workmen are to be deemed to have been retrenched unless
their services are continued in accordance with the conditions laid
down in the proviso. The only question that falls for determination in respect of the first point raised by Mr. Gupte thus, is
whether the right which accrued to the workmen under the principal clause was defeated because of the compliance of the conditions laid down in the proviso. The proviso lays down three conditions in clauses (a), (b) and (c) each one of which has to be
satisfied before it can be held that the right conferred by the
principal clause does not accrue to the workman. In the present
case, tllere is no doubt that tlle services of tlle workmen had not
been interrupted by the transfer, so that condition (a) was clearly
satisfied. It 'has, however, been found by the High Court that
conditions (b) and (c) of tlle proviso had not been satisfied. In our
opinion, it is unnecessary to go into the question whetller condition (c) has or has not been satisfied, because it is very clear iliat
condition (b) of the proviso is certainly not satisfied.
Under
clause (b), the requirement is that the terms and conditions of
service applicable to tlle workman after the transfer must not in
any way be less favourable than those applicable to him immediately before the transfer. On examination of the Madras Act
and the Rules, it is manifest tllat the terms and conditions of
service of the workmen have not remained as favourable under
the State Goverrunent or the Electricity Board as they were when
the workmen were employed by the Company. Under clause (1)
- of section 15 of the Madras Act, the State Govermnent is given
the power to terminate the services of any workman after giving
him three calendar months' notice in writing or paying him thr.ee
months' pay in lieu of such notice.
It has not been shown to
us on behalf of the Company that there was any such liability to
termination of sevices of these workmen while they were employA
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SOUTH ARCOT ELECT. co. v. N. K. KHAN (Bhargava, J.)
909
ed by the Company. In the absence of any special conditions of
service, the rights of the wor~en were to. be governed by the
provisions of the Act under which the only nght of the Company
to terminate the services of these workmen was by retrenchment
after complying with the requirements of. s. 25F of the Act. On
such termination each workman was entltled not only to one.
month's notice ~r wages for one month in lieu of notice, but
was also entitled to receive, at the time of retrenchment, compensation which was to be equivalent to 15 days' average pay for
every completed year of continuous service or an:y part thereof
in excess of six months. It does not appear that, if the Government were to terminate the service of the same workman under
s. 15(1) of the Madras Act, the workman would be entitled to
the same compensation which he would have received from the
Company if he had been retrenched in accordance with the provisions of s. 25F of the Act. Thus, clause ( 1) of section 15 of the
Madras Act itself introduces a condition of service which was less
favourable to the workmen than the conditions applicable when
they were employed by the Company. Similarly,. clause (2) of
s. 15 of the Madras Act lays down the workmen, whose services
are retained by the Government, shall be governed by such rules
as the Government may, from time to time, make in regard to
them. It is clear that, in exercise of his power, the Government
can make rules altering the terms and conditions of service of
the workmen retained by the Government, and this power can
be exercised from time to time.
There was no such liability of
change of conditions of service of the workmen while they were
employed under the Company. If the Company had desired to
alter their conditions of service, the Company would have been
required to comply with the provisions of either s. 9A of the Act,
ors. 10 of the Industrial Employment (Standing Orders) Act No.
20 of 1946. Obviously, the right of the Government of Madras
as the new employer under s. 15(2) of the Madras Act to change
the conditions of service of the workmen from time to time, in
its very nature, alters the conditions of service of the workmen to
their disadvantage. Rule 17 of the Rules further shows that immediately on the vesting of the undertaking in the State Gdvernment, the services of the workmen retained by the Government
becomes provisional and the subsequent permanent employment
of those workmen in the undertaking is dependent on the conditions !aid down i~ that Rule. This liability imposed on the workmen 1s clearly disadvantageous to those workmen who were in
the permanent employ of the Company. The same Rule also shows
that the employees would not be entitled to bonus or other concessions not allowed to the servants of the Government, even if
the workmen were !)ntitled to bonus and the concessions from the
Company.
The workmen also became liable to transfer to any
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910
SUPREME COURT REPORTS
[1969] 2 S.C.R.
other place or post in the Government Electricity Department depending on exigencies of service. These are instances of a number of conditions of service which became less favourable to the
workmen on their becoming employees of the State Government
when the undertaking vested in that Government by transfer from
the Company. In these circumstances, the requirements of the
proviso to s. 25FF of the Act are obviously not satisfied and that
proviso cannot be invoked by the Company for the purpose of
defeating the clainl made by the workmen under the principal
clause of that section.
Under that principal clause, the workmen became entitled to receive retrenchment compensation in
accordance with the provisions of s. 25F of the Act on the basis
of the legal fiction envisaged that those rights would accrue to
them as if the workmen had been retrenched. The Labour Court
and the High Court were, therefore, right in holding that the
workmen were entitled to claim retrenchment compensation in accordance with the provisions of s. 25F of the Act because of the
right accruing to them under s. 25FF of the Act.
In this connection, an additional point urged by Mr. Gupte
was that the principal clause of s. 25FF of the Act does not Jay
down which of the two employers mentioned therein is liable to
pay the retrenchment compensation and, consequently, where
there is a dispute between the two employers, an application for
computation of the benefit under ~- 25FF of the Act cannot be
competently entertained and decided by a Labour Court. It appears to us that the language of that principal clause makes it
perfectly clear that, if the right to retrenchment compensation
accrues under it, it must be a right to receive that compensation
from the previous employer who was the owner up to the date of
transfer. It is implicit in the language of that clause. The clause
Jays down that every workman mentioned therein shall be entitled to notice and compensation in accordance with the provisions of s. 25F as if the workman had been retrenched. Obviously,
in such a case, the date of the deemed retrenchment would be the
date when the ownership or management of the undertaking stands
transfered to the new employer. In the present case, that date
would be the 1st of June, 1957, when the undertaking of the
Company was taken over by the Government of Madras under
the Madras Act. If the workmen's services are to be deemed
to be retrenched on that very date, it is clear that, for purposes
of determining who has retrenched the workmen and who is liable
to pay the retrenchment compensation, the workmen could not
become the employees of the new employer.
The c:mployment
under the new employer could only commence from the time when
the ownership or the management of the undertaking vested in
the State Government; but, sinlultaneously with this vesting, the
workmen had to be deemed to be retrenched from service. That
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SOUTH ARCOT ELECT. co. v. N. K KHAN (Bhargava, !.)
91!
retrenchment could, therefore, be deemed to have been made
only by the previous employer.
Further, it would be that previous employer who would be competent to give the notice in
accordance with the provisions of s. 25F of the Act. The notice
of retrenchment, which has to be deemed to have become effective on the date of vesting of the undertaking in the State Government, could not possibly be given by the State Government. In
these circumstances, the conclusion is irresistible that the claim
under s. 25FF of the Act to compensation accrues to the workman against the previous employer under whom he was employed
until the date of transfer.
In the present case, therefore, the
right to receive compensation clearly accrued under s. 25FF of
the Act against the Company and there was, therefore, no difficulty in the Labour Court exercising jurisdiction on that basis.
So far as the second point is concerned, it is fully answered
by our decision in Chief Mining Engineer, East India Coal Co.
Ltd. v. Rameswar and Ors.(') where it was held:-
"It is clear that the right to the benefit which is
sought to be computed must be an existing one, that is
to say, already adjudicated upon or provided for and
must arise in the course of and in relation to the relationship between an industrial workman and his employer."
The view was further clarified and affirmed by this Court in State
of Bikaner and Jaipur v. R. L. Khandelwal(') where the Court
took notice of the decisions of this Court in the case cited above
and in Punjab National Bank Ltd. v. K. L. Kharbanda,( 3 ) Central Bank of India v. P. S. Rajagopalan and Others,(') and
Bombay Gas Company Ltd. v. Gopal Bhiva and Others, (') and
held:-
"These decisions make it clear that a workman cannot put. forward a claim in an application under s.
33.C\2) rn. respect of a matter which is not based on an
~x1stmg nght and ~hich ~an J;>e appropriately the subiect-matter of an rndustnal dispute only requiring reference under s. 10 of the Act."
.
In_ the present .case, we ha".e already indicated, when dealin
wit~ the first pom~, tha~ the n~ht, which has been claimed by th~
yano~s workmen m their applications under s. 33C(2) of the Act
is a nght ~h!ch a?crued to them under s. 25FF of the Act and
was an ex1stmg nght at the time when these applications were
(1) [1968] 1 S.C.R. 140.
(2) [1968] I LL J 589
(3) [1962] Supp. 2 S.C.R. 977.
(4) [1964] 3 s.c.R. 14o.
M6_Sl'p. C.l./69-7
(5) (1964] 3 S.C.R. 709.
912
SUPREME COURT REPORTS
(1969] 2 S.C.R.
made.
The Labour Court clearly had jurisdiction to decide
whether such a right did or did not exist when dealing with the
application under that provision.
The mere denial of that right
by the Company could not take away its jurisdiction, so that the
order made by the Labour Court was competent.
The third and the last point raised by Mr. Gupte fails and
could not be pressed in view of our decision that the right of the
workmen, which has been adjudicated upon by the Labour Court
in the applications under s. 3 3C(2) of the Act, was a right accruing to them against the Company under s. 25FF of the Act. The
right having initially accrued under this provision of the law against
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rhe Company, the Labour Court was clearly justified in computing .
the benefit under that right and laying it down that the liability
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was enforceable against the Company.
The Labour Court was
concerned with the right claimed under the Act.
Whether, by
virtue of the provisions or the terms of transfer of the undertaking from the Company to the Government, or by virtue of the
provisions of the Madras Act, the Company is entitled to claim
that this liability should be ultimately met by the State Government was a point which did not affect the right of the workmen
to claim their compensation from the Company and the Labour
Court was, therefore, not required to go into this question when
dealing with applications under s. 33C(2) of the Act.
The appeals, consequently, fail and are dismissed with costs
payable to workmen only.
One hearing fee.
The amount of
interest which has accrued on the amount deposited in the Bank
will be proportionately payable with the principal to the employees concerned.
G.C.
Appeals dismissed.
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