# U.P. ELECTRIC SUPPLY CO. LTD v. R. K. SHUKLA AND ANR. ETC

- **Citation:** [1970] 1 S.C.R. 507
- **Court:** Supreme Court of India
- **Decided:** 1969-04-30
- **Bench:** J. C. Shah, G. K. Mitter
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/u-p-electric-supply-co-ltd-v-r-k-shukla-and-anr-etc-4826
- **Pages:** 16

## Headnote

Industrial Dispute-Electricity undertaking taken once by U .. P. State
Electricity Board under s. 6 of Indian Electricity Act, 1910-Retrenchment
compensation claimed by workmen-Dispute whether to be decided under
Industrial Di•pute• Act, 1947 (Central) or under U.P. Industrial Disputes
Act, 1947-,\'ec. 6-H(2) of U.P. Act-Jurisdiction of Labour Court underWhether can decide ·question as to retrenchment con1pensation being payable-Effect of s, 6-0-Board whether liable to pay the campensationEf]ect of ss. 6 and 7 of Indian Electricity Act and Cl. V of Sixth Schedule.
In exercise of the power under s. 6 of the Indian Electricity Act, 1910
the undertakings of the appellant company at Allahabad and Lucknow
were takeh over by the State Electricity Board, U.P. with effect from
September 17, 1964. The wor)anen of the company were taken into the
employment of the Board without any break in continuity of employment.
Certain workmen of the Allahabad undertaking filed before the Labour
Conrt applications under s. 6-H(2) of the U.P. Industrial Disputes Act
1947, for payment of ntrenchment compensation and salary in lieu of
notice.
A group of workmen ·from the Lucknow undertaking also submitted applications underi. s. 6-H(2) with the same prayers; in addition they
claimed compensation fur accumulated earned leave not enjoyed by them
till September 16,. 1964,
The Labour Court allowed the. applications.
The Company appealed to this Court by special leave. According to the
company there was no retrenchment of the workmep because, they had
voluntarily left the servic'e of the company to join the: service of the Board
with· no break in their ~rvice. The questions that fell for consideration
were : (i) Whether the .matter was to be decided under the provisions of
the Industrial Disputes Act, 1947 or those of the U.P. Industrial Disputes
Act, 1947: (ii) Whether the Labour Court had jurisdiction under s. 6-H(2)
of the U.P. Act to decide the applications or because of there being dispute as to the liability to pay retrenchment compensation the matter was
in view of item 10 of the second schedule to the U.P. Act within the exclusive jurisdiction of the Industrial Tribunal; (iii) Whether s. 6-0 of the
U.P. Act also necessita~d that the question of liability to pay retrenchment
compensation be first determined; (iv) Whether in view of ss. 6 & 7 of
the Indian Electricity Act, 1910 and ss. 57 & 57A of the Indian Electricity
(Supply) Act, 1948 read with Cl. V of the sixth schedule thereto. the
liability to pay retrenchment compensation was that of the Board and not
that of the company; (v) Whether the claim. of the Lucknow workmen
for compensation for earned I~ave not enjoyed by them was allowable·.
Held : (i) Unde'r the Seventh Schedule to the constitution legisla·
tion in respect _of 'Trade Union Industrial and Labour Disputes' fallSt within
Entry 22 of the Conclll'ftlnl List and both the State and the Union are
competent to legislate in respect of that field of legislation. Aci; I of 1957
added to the U.P. Industrial Disputes Act. 1947, s. 6-R(2) which enacts
that the rights and li-'b~lities of employers and workmen relating to lay-off
and retrenchment shalt be dete'rmined in accordance with the provisions of
~08
SUPREME COURT lll!PORTS
[1970] 1 S.C.R.
ss. 6-J to 6-0. Act 1 of 1957 received the assent of the President and
by virtue of Art, 254(2) of the Constitution a, 6-R(2) of the U.P. Act
prevails notwithstanding any prior law made by the Parliament,
The
rishta and obligations of the parties had therefore to be decided under the
U.P. Act includina s. 6-R(2), [511 H-512 DJ
Rohtak & Hisrar Districts Electric S11pply Company v. Stal< of U.P.,
(1966] II L.L.J. 330, distinguished.
(ii) Section 6-H(l) and (2) of the U.P. Act were substantially the
same as sub-'5, (I) and (2) of s. 33-C of the Central Act and cuet
decided by this Court under the latter provisions were applicable in the
ir.terpretation of the former. According to the rule laid down ins. 6-H

## Text

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U.P. ELECTRIC SUPPLY CO. LTD.
v.
R. K. SHUKLA AND ANR. ETC.
April 30, 1969
(J. C. SHAH AND G. K. MITTER, JJ.]
Industrial Dispute-Electricity undertaking taken once by U .. P. State
Electricity Board under s. 6 of Indian Electricity Act, 1910-Retrenchment
compensation claimed by workmen-Dispute whether to be decided under
Industrial Di•pute• Act, 1947 (Central) or under U.P. Industrial Disputes
Act, 1947-,\'ec. 6-H(2) of U.P. Act-Jurisdiction of Labour Court underWhether can decide ·question as to retrenchment con1pensation being payable-Effect of s, 6-0-Board whether liable to pay the campensationEf]ect of ss. 6 and 7 of Indian Electricity Act and Cl. V of Sixth Schedule.
In exercise of the power under s. 6 of the Indian Electricity Act, 1910
the undertakings of the appellant company at Allahabad and Lucknow
were takeh over by the State Electricity Board, U.P. with effect from
September 17, 1964. The wor)anen of the company were taken into the
employment of the Board without any break in continuity of employment.
Certain workmen of the Allahabad undertaking filed before the Labour
Conrt applications under s. 6-H(2) of the U.P. Industrial Disputes Act
1947, for payment of ntrenchment compensation and salary in lieu of
notice.
A group of workmen ·from the Lucknow undertaking also submitted applications underi. s. 6-H(2) with the same prayers; in addition they
claimed compensation fur accumulated earned leave not enjoyed by them
till September 16,. 1964,
The Labour Court allowed the. applications.
The Company appealed to this Court by special leave. According to the
company there was no retrenchment of the workmep because, they had
voluntarily left the servic'e of the company to join the: service of the Board
with· no break in their ~rvice. The questions that fell for consideration
were : (i) Whether the .matter was to be decided under the provisions of
the Industrial Disputes Act, 1947 or those of the U.P. Industrial Disputes
Act, 1947: (ii) Whether the Labour Court had jurisdiction under s. 6-H(2)
of the U.P. Act to decide the applications or because of there being dispute as to the liability to pay retrenchment compensation the matter was
in view of item 10 of the second schedule to the U.P. Act within the exclusive jurisdiction of the Industrial Tribunal; (iii) Whether s. 6-0 of the
U.P. Act also necessita~d that the question of liability to pay retrenchment
compensation be first determined; (iv) Whether in view of ss. 6 & 7 of
the Indian Electricity Act, 1910 and ss. 57 & 57A of the Indian Electricity
(Supply) Act, 1948 read with Cl. V of the sixth schedule thereto. the
liability to pay retrenchment compensation was that of the Board and not
that of the company; (v) Whether the claim. of the Lucknow workmen
for compensation for earned I~ave not enjoyed by them was allowable·.
Held : (i) Unde'r the Seventh Schedule to the constitution legisla·
tion in respect _of 'Trade Union Industrial and Labour Disputes' fallSt within
Entry 22 of the Conclll'ftlnl List and both the State and the Union are
competent to legislate in respect of that field of legislation. Aci; I of 1957
added to the U.P. Industrial Disputes Act. 1947, s. 6-R(2) which enacts
that the rights and li-'b~lities of employers and workmen relating to lay-off
and retrenchment shalt be dete'rmined in accordance with the provisions of
~08
SUPREME COURT lll!PORTS
[1970] 1 S.C.R.
ss. 6-J to 6-0. Act 1 of 1957 received the assent of the President and
by virtue of Art, 254(2) of the Constitution a, 6-R(2) of the U.P. Act
prevails notwithstanding any prior law made by the Parliament,
The
rishta and obligations of the parties had therefore to be decided under the
U.P. Act includina s. 6-R(2), [511 H-512 DJ
Rohtak & Hisrar Districts Electric S11pply Company v. Stal< of U.P.,
(1966] II L.L.J. 330, distinguished.
(ii) Section 6-H(l) and (2) of the U.P. Act were substantially the
same as sub-'5, (I) and (2) of s. 33-C of the Central Act and cuet
decided by this Court under the latter provisions were applicable in the
ir.terpretation of the former. According to the rule laid down ins. 6-H(2)
th.! Labour Coun was competent to determine what each workman was
entitled to receive from the employer by way of retrenchment compensation payable in terms of money and the denial of liability of the company
did not affect the jurisdiction of the Labour Court.
Where, however,
as in 1hc present case, t'ie dispute was
1.\'hether the workmen had been
retrenched and computation of the amount of compensation \\'as subsidiary
or incidental, the Labour Court had na authority to trespass upon the
pcwers of the JDdustrial Tribunal which had exclusive jurisdiction under
item 10 of the second schedule of the U.P. Act to decide disputes relating
to retrenchment. [514 B-D-517 FJ
The Cenral Bank of India, Ltd. v. P. S. Rajagopalan etc. [1964] 3 S.C.R.
140 and
Bombay Gas Co. Ltd, v. Gopal Bhlva and Others,
[1964] 3
S.C.R. 709, applied.
The Board of Directors of the South Arcot Electricity Distribution Co.
Ltd. v. N. K. Mohammad Khcn etc .. [1969] 2 S.C.R. 902, explained.
Chief Mining Engineer, East India Coal Co. Ltd. v.
Rameswar a11d
Other.r, [1968] I S.C.R. 140, State Bank of Bikaner and Jaipur v. R. L.
Khandelwal, [1968] I L.L.J. 589 and Punjab Narional Bank Ltd. v. K. L.
Kharbanda, [1962] Supp. 2 S.C.R. 977, referred to,
(iii) Assuming that the Labour Court had jurisdiction to determine
the liability of the company to pay retrenchment compensation no order
awarding retrenchment compensation could still be made without recording
a finding that workmen y.•ere retrenched and compensation was payable
!cir the retrenchment.
For s. 6-0 of the U.P. Act deprives the workmen
of the right to retrenchment compensation in the conditions mentioned
therein.
The company
asserted
that
the conditions
precedent to the
exercise of the jurisdicticn did not exist while the workmen asserted the
existence of the conditions.
Without deciding the issue the Labour Court
could not compute the amount of compensation payable to the workmen
on the assumption that the workmeri had been retrenched and their claim
fell within s. 6-0. [SI 8 B: 519 B.q
(iv) Sections 6 and 7 of the lni:lian Electricity Act did not support
the case of the Compar.y that the liability was enforceahle against the
Board after it took over the u~dertaking.
Under these sections when the
undertaking vests in the purchaser, any debt, mortgage or similar obligation
attaches to the purcha~ noney in substitution of the undertaking.
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liability to pav retrenchment
compensation
is a debt : if it arises
on
trans'fer it will attach to 1he purchase money payable to ·the Company in
substitution of the undertaking. [521 A-Bl
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U. P, ELECT. CO. V. R. K. SHUKLA (Shah, J,)
509
(v) The provisions of ss. 57 and 57A of the Indian Electricity (Supply)
Act, 1948, also did not assist the case of the Company. These sections
deal with the licencee's charges to consumers and the Rating Co1nmittees.
In the Sixth Schedule to the Act (incorporated into every license by s. 57
aforesaid) it is provided by cl. IV that certain amount shall be appropriated
towards Contingencies Reserve from the revenues of each year of account.
Clause V then provides f"r the appropriation of the Contingencies Reserve :
it requires the undertaking to hand over the Contingencies Reserve to
the purchaser. If the retrenchment compensation becomes properly due
to the employees of the Company, it would, by virtue' of cl. V sub-cl. (2)
proviso, be charged upon the Contingencies Reserve and the balanco alone
would be handed over to the purchaser. In th• present case however there
was no finding by the Labour Court that the Contingencies Reserve had
been paid over to the pw·chaser. [521 C-522 CJ
(vi) The claim of the Lucknow workmen to compensation in lieu of
earned leave not enjoyed by them could not be allowed. After the Company closed its bUSJoess it could obviously not give any earned leave to
these workmen and the latter could not claim it.
In the absence of a
statutory provision to that effect no
such compensation was payable.
[522 E]
CML APPELLATE JURISDICTION :
Civil Appeals Nos. 1567
of 1968, 585 to 1026 and 1027 to 1082 of 1969.
Appeals by special leave from the orders dated March 28, 19~8
and July 20, 1968 of the Labour Court (II), U.P., Lucknow m
Misc. Cases Nos. 102 of 1965 etc.
M. C. Chagla, Harish Chandra, H. K. Puri and Bishambar
Lal for the appellant _(in all the appeals).
J. P. Goyal and V. C. Prashar, for respondent No. 1 (in all
the appeals) .
S. P. Nayar, for the Attorney-General (in C,As. Nos. 585 to
1026 and 1027 to 1082 of 1969).
The Judgment of the Court was delivered by
Shah, J.
These tiu'ee groups of appeals arise out of orders
made by the Presiding Officer, Labour Court (II), u.n., Lucknow
awarding retrenchment compensation to certain employees of the
U.P. Electric Supply Company Ltd. (in liquidation). In the last
group of appeals orders of the Labour Court awarding in addition
thereto compensation for earned leave not enjoyed by the
employees are also challenged.
The U.P. Electric Supply Company Ltd.-hereinafter called
'the Company'-held two licences issued in 1914 by the Government of U.P. for generating and distributing electricity within the
towns of Allahabad and Lucknow.
The periods of the licenses
expired in 1964. Pursuant to the provisions of paragraph 12(i)
in each of the said licenses and in exercise of the power under
s. 6 of the Indian Electricity Act, 1910, the State Electricity
Board, U.P.-heieinafter referred to as "the Board"-t;JOk over
the ~def!aking of.the Company at Allahabad and Lucknow from
the mtd-ntght of September 16, 1964.
The Company accordingly
510
SUPREME COURT REPORTS
[1970] l S.C.R.
ceased to carry on the business of generation and distribution of
electricity in the areas covered by the original licences.
All the
workmen of the undertakings at Allahabad and Lucknow were
taken over in the employment of the Board with effect from
September 17, 1964, without any break in
the continuity of
employment.
On December 22, 1964, 443 workmen
employed in the
Allahabad undertaking filed before the Labour Court, applications
under s. 6-H(21 of the U.P. Industrial Disputes Act, 1947, for
payment of retrenchment compensation and salary in lieu of
notice.
The workmen submitted that fresh letters of appointment
were issued by the Board on September 16, 1964, taking them in
tho employment oi the Board with effect from September 17, 1964
"in the posts and positions which they previously held", but without giving credit for' their past services with the Company. The
workmen contended that they were entitled to retrenchment compensation and salary in lieu of notice, and prayed for computation
of thoce benefits in terms of money and for directions to the Company to pay them the amount so computed.
A group of 56 workmen employed at the Company's undertaking at Lucknow also submitted applications under s. 6H(2)
of the U.P. Industrial Disputes Act, for payment of retrenchment
compensation and salary in lieu of notice and also for compensation for accumulated earned leave not
enjoyed
by
them
till
SeptEmber 16, 1964.
Jn the applications filed by the workmen of the Allahabad
undertaking, the Labour Court awarded to each workman
retrenchment compensation at the rates specified in the order and
elso one month's salary and costs.
To each workman
of the
Lucknow undertaking the Labour Court awarded retrenchment
compensation at the rate specified, salary in lieu of one month's
notice, and also wages for 30 days for earned leave not enjoyed
by the workman before the closure of the undertakin~. and cost~.
The Company has appealed to this Court against the orders with
special leave.
The orders for payment of retrenchment
compensation
are
resi,ted by the Company on two grounds-
( i) that the Labour Court was incompetent to entertain and decide the applications for awarding
retrenchment compensation; and
(ii) that the workmen were not in fact retrenched,
and in any event since the workmen were admitted to the service of the Board witMut break in
continuity, and on terms not less favourable
than the terms enjoyed by them with the ComB
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U. P. ELBCT. CO. V. R. K. SHUKLA (Shah, J,)
511
pany, the Company was under no liability to
pay retrenchment compensation.
Some argunient was advanced before us that in determining
matters relating to the award of retrenchment compensation, the
provisions of the Industrial Disputes Act, 1947, and not the U.P.
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Industrial Disputes Act, 194 7, apply.
The question is academic,
because on the yoints in controversy between the parties,
the
statutory proviSlOllll of the Industrial Disputes Act, 194 7, and
the U.P. Industrial Disputes Act, 1947, are substantially the same.
We may, however, briefly refer to this argument since, relying
upon a, judgment of this Court to be presently noticed, counsel for
the workmen insisted that s. 33-C(2) of the Industrial Disputes
C
Act alone may apply.
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After the enactment of the Industrial Disputes Act, 194 7, by
the Dominion Parliament, the U.P. Industrial Disputes Act, 1947,
was enacted by the Provincial Legislature.
The scheme of the
two Acts is substantially the same.
Chapter V-A relating to layoff and retrenchment was added in the Industrial Disputes Act by
Act 43 of 1953 with effect from October 24, 1953.
From time
to time amendments were made in the provisions of the Act. By
s. 25-J (2) it was proVided:
"For the rC!lloval cif doubts, it is hereby declared
· that notlring COl).tained in this Chapter shall be deemed
to affect the pf!i>visions of any other law for the time
being in force ill: any State in so far as that law provides
for the settlemtnt of industrial disputes, but the rights
and liabilities of employers and workmen in so far as
they relate to ~y-off and retrenchment shall be determined in accardance with the provisions of this
Chapter."
After this sub-sectio!l was incorporated in the Industrial Disputes
Act, 194 7, a group of St:ctions including s. 6-R were incorporated
in the U.P. Industril!l Disputes Act by U.P. Act 1 of 1957.
Section 6-R(2) pro'l'ided:
"For the !llinoval of doubts, it is hereby declared
that nothing contained in Sections 6-H to 6-R shall be
deemed to affect the provision of any other law for the
time being in force so far as that law provides for the
settlement of industrial disputes,. but the rights and liabilities of employers 11nd workmen in so far as they relate
to lay-off and retrenchment shall be determined in
accordance wit!l the provisions of Sections 6-H ,o 6-Q."
By virtue of s. 6-R(2) the provisions of the U.P. Industrial Disputes Act, _.,rima facie, apply in the matters of lay-off and r~trench
ment, because under the Seventh Schedule to the Constitution
512
SUPREME COURT REPORTS
[1970) 1 s.c.R.
legislation in respect of "Trade Unions, Industrial and Labour
Disputes" falls within Entry 22 of the Concurrent List and both
the State and the Union are compe•ent to legislate in respect of
that field of legislation.
Whereas by adding s. 25-J (2) it was
enacted that under the industrial Disputes Act, 1947, the rights
and liabilities of employers and workmen in so far as they relate
to lay-off and retrenchment shall be determined in accordacce
with the provisions of Ch. V-A of that Act. by the U.P. Act as
amended by Act 1 of 1957, s. 6-R(2) enacts that •.he rights and
· liabilities of employers and workmen relating to lay-off and retrenchment shall be determined in accordance with .the provisions
of ss. 6-J to 6-Q.
Competence of the State Legislature to enacts. 6-R(2) is not
denied.
Act 1 of 1957 received the assent of the President and by
virtue of Art. 254(2) of the Constitutions. 6-R(2) of the U.P.
Act prevails, notwithstanding any prior law made by the Parliament.
The provisions of the U.P. Act including s. 6-R(2) therefore apply in detem1ining the rights and obligations of the parties
in respect of retrenchment compensation.
The observation to the
contrary made by this Court in Rohtak & Hissar Districts Electric
Supply Company v. State of U.P.(1) which primarily raised a dispute relating to the validity of certain model standing orders proceeded upon a concession made ~t the Bar, and cannot be regarded as decisive.
Since the relevant provisions of the two Acts on
the matter in controversy
in these groups of appeals are not
materially different, we do not think it necessary in this case to
refer the question to a larger Bench.
We, accordingly, propose to refer only to the provi>;ons of the
U.P. Industrial Disputes Act, 1947.
Section 4-A of the U.P. Act
authorises the State Government to constitute one or more Labour
Courts for the adjudication of industrial disputes relating !o any
matter specified in the First Schedule and for performing such
other functions as may be assigned to them under the Act.
The
items specified in the First Schedule are-
" I. The propriety or legality of an order pas>d by
an employer under th~ Standing Orders;
2. The applicat'on and interpretation
of Standing
Orders;
). Di,char~c or dismissal of workman
includin~
r~inslatcmcnt of. or grant of relief to. workmc11
wwngfully dismissed:
-1. Withdrawal of any
customary
concession
<'r
privilege;
11) J1%C•] 11 L.1 . .J. JJO.
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U. P, ELECT. CO. v. R. K. SHUKLA (Shah, J.)
513
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5. lliegality or otherwise of a strike or lock-out; and
6. All matters other than those specified in the
Second Schedule." ·
Section 4-B authoriscis the State. Government to constitute one or
more Industrial Tribunals for the adjudication of industrial disB putes relating to any matter whether specified in the First Schedule
or the Second Schedwe.
Item 10 of the Second Schedule relates
to "Retrenchment of workmen and closure of establishment".
Prima facie, disputes relating to retrenchment of workmen and
closure of establishment fall within the exclusive competence of
the Industrial Tribunal, and not within the competence of the
Labour Court constituted under s.
4-A.
The Company had
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expressly raised a cc;intenJion that they had not retrenched the
workmen and that ~
wor1crnen had voluntarily abandoned the
Company's service by seeking employment with the Board even
before the Company Closed its undertaking.
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The workmen contended by their petitions filed before the
Labour Courts that they were retrenched, the Company contended
that the workmen had voluntarily abandoned the employment
under the Company because they found it more profitable to take
up employment under the Board without any break in the same
post and on the same terms and conditions on which they were
employed by the Cooipany.
This clearly raises the question
whether there wail tttrenchment of workmen, which gave rise to
liability to pay retr¢U,chment compensation.
A dispute relating
to retrenchment is eJ!Q]usively within the competence of the Industrial Tribunal by .virtue of item 10 of the Second Schedule to the
U.P. Industrial Disputes Act, and is not within the competence of
the Labour Court. Section 6-H of the U.P. Act provides :
" ( 1) Where: any money is due to a workman from
an employer unqer the provisions of Sections 6-J to 6-R
or under a settlement or award, or under an award given .
by an adjudicator or the State Industrial Tribunal
appointed or cO!).stituted under this Act, before the commencement of the Uttar Pradesh Industrial Disputes
(Amendment aiill Miscellaneous Provisions) Act, 1956,
the workman ril!Y. without prejudice to any other mode
of recovery, •e an application to the State Government for the re(iovery of the money due to him, and if
the State Govettiment is satisfied that any amount is so
due, it shall iss!lF a certificate for that amount to the
Collector who '$all proceed to recover the same as if
it were an arreal of land revenue.
(2) Where any workman is entitled to receive from
the employer any benefit which is capable of being computed in terms of money, the amount at which such
514
SUPREME COURT REPORTS
(1970] l S.C.R.
benefit should be computed may, subject to any rules
A.
that may be made under this Act, be determined by such
Labour Court as may be specified in this behalf by the
State Government, and the amount so determined may
be recovered as provided for in sub-section (1).
(3)
"
Under s. 6-H(2) the Labour Court was competent to determine
what each workman was entitled to receive from the employer by
way of retrenchmeint compensation payable in terms of money
and the denial of liability by the Company did not affect the jurjsdiction of the Labour Court.
In several decisions of this Court the inter-relation between
sub-ss. ( 1) & (2) o1 s. 33-C (wh;;h are substantially in the same
terms as sub-ss. (I) & (2) of s. 6-H of the U.P. Industrial Disputes Act) was examined.
It was held by this
Court in The
Central Bank of India Ltd. v. P. S. Rajagopalan etc.(') that the
scope of s. 33-C(2) is wider than that of s. 33-C( I).
Claims
made under s. 33-C( 1) can only be tl1ose which arr. referrable to
settlement, aw<>rd or the relevant provisions of Ch. V-A, but those
limitations are not to be found in s. 33-C(2).
The three categories of claims mentioned in s. 33-C( I) fall under s. 33-C(2)
and in that sense s. 33-C(2) can itself be deemed to be a kind of
execution proceeding, but it is possible that claims not based on
settlements, awards or made under the provisions of Ch. V-A
may also be competent under s. 33-C(2). Elaborating this thesis
Gaiendragadkar, J., who delivered the judgment of the Court
observed (pp. 155-156) :
"There is no doubt that the
three categories of
claims mentioned in s. 33C( 1) fall under s.
33C(2)
and in that sense, s. 33C(2) can itself bC deemed to be
a kind of execution proceeding; but it is possible that
claims not based on settlements, awards or made under
the provisions of Chapter V-A, may also be competent
under s. 33C(2) and that may illustrate its wider scope.
We would, however, like to indicate some of the claims
which would not fall under s. 33C(2), because they
formed the subject matter of the appeals which
have
been grouped together for our decision along with the
appeals with which we are dealing at present. If an
employ~~ is dismissed or demoted and it is
his
case
that the dismissal or demotion is wrongful, it would not
be open to him to make a claim for the recovery of his
salary or wages under s. 33C(2).
His demotion or dismissal nrny give rise to an industrial dispute which may
(I) (1964:) S.C
140.
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u. P, ELECT. co. 'v. ll. K. SHUKLA (Shah, J.)
515
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be appropriately tried, but once it is shown that the
employer has dismissed or demoted him, a claim that
the dismissal or demotion is unlawful and, therefore,
the employee continues to be the workman of the
employer and is entitled to the benefits due to him
under a pre-existing cont~act, cannot be made under
B
s. 33C(2)."
D
The same view was reiterated in Bombay Gas Co. Ltd. v. Gopal
Bhiva and Others(').
Mr. Goyal on behalf of the workmen, however,
contended
that in a recent judgment of this Court a different view has been
expressed.
He invited our attention to The Board of Directors
of the South Arcot Electricity Distribution Co. Ltd. v. N. K.
Mohammad Khan, etc. (2). In that case the Electricity undertaking was taken over by the Government of Madras in exercise
of the powers conferred by the Madras Electricity Supply Undertakings (Acquisition) Act, 1954, and the employees of tlie unde&.;
tal!:ing ,were taken over by the new employer.
The employees·
clainied retrenchment compensation from the old employer under
s. 25FF, of the Industrial Disputes Act, 1947. It was
urged
before this Court that the Labour Court was incompetent to decide
the claini for retrenchment compensation.
This Court observed
that s. 25FF (b) applied as the terms of service under the new
E
employer were less favourable than those under the old employer,
and under the terms of ss. 15 ( 1) & (2) of the Acquisition Act
and ss. 9A and 10 of the Industrial Employment
(Standing
Orders) Act, 1946, liability to pay retrenchment compensation
rested upon the previous employer and on that account the
Labour Court was competent to entertain the petitions under s.
33C(2). The language of s. 25FF in the view of the Court made
it perfectly clear that if the right to compensation accrued under
the Act, the worknien became entitled to receive retrenchment
compensation, when under the Madras Act the undertaking stood
transferred to the State Government
from
the
Company.
Referring to the contention that the Labour Court was not compeE
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tent to determine the liability to pay retrenchment compensation,
where the liability itself was denied, the Court referred to the
judgments of this Court in Chief Mining Engineer, East India
Coal Co. [,,Id. v. Rameswar.and Others(•); State Bank of Bikaner
and Jaipur v. R. L. Khandelwal('); Punjab National Bank Ltd.
v. K. L. Kharbanda("); Centra1 Bank. of India v. P. S. Rajagopalan and Others('); and Bombay Gas Company Ltd. v. Gopal
Bhiva and Others(1), and proceeded to observe that the right
(I) [1964J 3 S.C.ll. 709.
(2) [1969] 2 S.C.R. 902.
(3) (1968] 1 S.C.ll. 140.
(4) [1968] 1 L.L.J. 589.
(5) [1962] Supp. 2 S.C.R. 977.
(6) [1964] 3 S.C.R. 140.
516
St:PREME COURT REPORTS
[1970) l S.C.R.
which has been claimed by the various workmen in their applications under s. 33C(2) of the Act was a right which accrued to
them under s. 25FF nf tire Act and was an existing right at the
time when those applications were made, and the Labour Court
had jurisdiction to decide, in dealing with the applications under
that provision, whether such a right did or did not exist.
The
mere denial of that right by the Company, it was said, could not
take away its jurisdiction and that the order of the Labour Court
was competently made.
The decision in the Central Bank of India v. P. S.
Ra/agopa/an and Others('), to which we have already referred, makes it
clear that all disputes relating ~o claims which may be computed
in terms ,1f money are not necessarily within the tem1s
of s.
33C(2).
Again in Chief Mining Engineer, East India Coal Co.
Ltd. v. Rameswar and Others('), Shela!, J., observed:
" ...... that the right to the benefit which is sought
to be computed [under s. 33C(2)] must be an existing
one, that is to say, alre&.dy adjudicated upon or provided for and must arise in the course of and in relation
to
the
relatiomhip
between an industrial
workman and his employer.
Since the scope of sub-s. (2) is
wider than that of sub-s. ( 1) and the sub-section is not
confined to cases arising under an award, settlement or
under the provisions of Ch. V-A, there is no reason
to hold that a benefit provided for under a statute or a
scheme made thereunder, without there being anyJhing
contrary under such statute ors. 33C(2), cannot fall
within sub-s. (2).
Consequently, the benefit provided
in the bonus scheme made under the Coal Mines Provident Fund and Bonus
Schemes
Act,
1948,
which
remains to be computed must fall under sub-s. (2) and
the Labour Court therefore had jurisdiction to entertain
and try such a claim, it being a claim in respect of an
existing right arising from the relationship of an industrial workman and his employer."
That judgment clearly indicates that in order that a claim may be
adjudicated upon under s. 33C(2), there must be an existing right
and the right must arbe under an award, settlement or under the
provisions of Ch. V-A. or it must be a benefit provided by a
statute or a scheme made thereunder and there must be nothing
contrary under such statute or s. 3 3C ( 2).
But the possibility of
a mere claim arisin!( under Ch. V-A is not envisaged by the Court
in that case as confcrrinμ jurisdiction upon the Labour Court to
decide matters which "' e essentially within the jurisdict;on of the
Industrial Tribunal.
(tl [1964] 1 S.CR. 140.
(11 (1968] t S.CR 14-0.
A
B
c
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E
F
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U. P. ELECT. CO. V. R, K. SHUKLA (Shah, J.)
517
A
The legislative intention disclosed by ss. 33-C(l) and 33-C(2)
is fairly clear. Under s. 33-C ( 1) where any money is due to a
workman from an employer under a settlement or an award or
under the provisions of Ch. V-A, the workman himself, or any
other person authorised by him in writing in that behalf, may make
an application to the appropriate Government to recover of the
B money due to him.
Where the workman who is entitled to
receive from the emplnyer any money or any benefit which is
capable of being computed in terms of money, applies ir, that
behalf, the Labour Court may under s. 33-C(2) decide the questions arising as to the amount of money due or as to the amount
at which such benefit shall be computed. Section 33-C(2)
is
wider than s. 33C(l). Matters which do not fall within the
terms of s. 33C(l) may, if the workman is shown to be entitled
to receive the benefits, fall within the terms of s. 3 3C ( 2) . If the
liability arises from an award, settlement or under the provisions
of Ch. V-A, or by virtue of a statute or a scheme made thereunder, mere denial by the employer may not be sufficient to negac
D
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F
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tive the claim under s, 33-C(2) before the Labour ~ourt. Where
however the right to retrenchment compensation which is
the
foundation of the claim is itself a matter which is exclusively
within the competence of the Industrial Tribunal to be adjudicated
upon a reference, it would be straining the language of section
33C(2) to hold that the question whether there has been retrenchment may be decided by the Labour Court.
The power of the
Labour Court is .~ c<impute the compensation claimed to be payable to the workmen on the footing that there has been retrenchment of the workm~II· Where retrenchment is conceded, and the
only matter in disp~ is that by virtue of s. 25FF no liability to
pay conpensation has arisen the Labour Court will be competent
to decide the questjOD.
In such a case the question is one of
computation an<ilrnot .of detennination, of the conditions precedent
to the accrual of liability.
Where, however, the dispute is whether
workmen have been retrenched and computation of the amount is
subsidiary or incidental, in our judgment, the Labour Court will
have no authority to' trespass upon the powers of the Tribunal
with which it is statu~orily invested.
In the umeported judgment
of this Court in './:he Qoard of Directors of the South Arcot Electricity Distribution Co.'1Ltd. v. N. K. Mohammed Khan, etc. (1) apparently the only argument advanced before this Court was that
s. 25FF applied to that case having regard to the fact that the
tenns of employmedi under the new employer were
not less
favourable than those immediately applicable to them before the
transfer, and !Ji. Court proceeded to hold that the Labour Court
was competent to d~ennine the compensation.
(!) [1969] 2 S.C.R. 902.
518
SUPREME COURT REPORTS
[1970] 1 S.C.R.
The finding that the Labour Coun was imcompetent to decide
the applications of the workmen would be sufficient to dispose of
the appeals before us.
But other arguments
were
advanced
before us, and which have an important bearing on the claims
made : we propose briefly to deal with these arguments.
Assuming that the Labour Court had jurisdiction to determine
the liability of the Company to pay retrenchment comeensation no
order awarding retrenchment compensation could still be made
without recording a finding that there was retrenchment of the
workmen and compensation
was
payable for retrenchment.
Section 6-0 of the U.P. Industrial Disputes Act (which in its
phraseology is somewhat different from s. 25FF of the Industrial
Disputes Act) provides :
"Notwithstanding anything contained in
Section
6-N no workman shall be entitled to compensation
under that section by reason merely of the fact that there
has been a change of employers in any cas" where the
ownership or management of the undertaking in which.
he is employed is transferred, whether by agreement or
by operation of law, from one employer to another :
Provided that-
( a) the service of the workman has not been interrupted by reason of the transfer;
A
B
c
D
( b) the tenns and conditions of service applicable
E
to the workman after such transfer are not in
any way less favourable than those applicable to
him immediately before the transfer; and
( c) the employer to whom the ownership or management of the undertaking is so transferred is,
under the terms of the transfer or otherwise,
legally liable to pay to the workman, in the event
of his retrenchment, compensation on the basis
that his service has been continuous and has
not been interrupted by the transfer."
In the present groups of appeals it is common ground that
1here was no interruption resulting from the undertaking being
·taken over by the :Soard.
The agreements between the Board
and the workmen to admit the workmen into employment of the
Board were reached before the undertakings of
the Company
were taken over.
The Company contended that the terms and
conditions of service applicable to workmen after the transfer
were not in any way less favourable to the workmen than those
applicable to them immediately before the undertakings were takea
over, and that the employer to whom the ownership or manageF
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A
B
c
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E
F
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U. P. ELECT, CO. v. R. K. SHUKLA (Shah, !.)
5 19
ment of thei undertakings were so transferred was, under the terms
of the transfer or otherwise, legally liable to pay to the workmen,
in tl}C event of their retrenchment, compensation on the basis that
their services had been continuous and had not been interrupted
by the taking over.
The workmen denied that claim.
The
Labour Court could i:ward compensation only if it determined
the matter in controversy in favour of the workmen it could not
assume that the conditions of the proviso to s. 6-0 were fulfilled.
Section 6-0 is in tenns negative. It deprives the workmen of the
right to retrenchment compensation in the conditions mentioned
therein.
The Company asserted that the conditions precedent to
the exercise of jurisdiction did not exist.
The workmen asserted
the existence of the conditions.
Without deciding the issue, the
Labonr Court could not compute the amount of compensation
payable to the workmen.
On the assumption that the workmen
had been retrenched and their claim fell within the proviso to
s. 6-0.
It was urged by Mr. Goyal on behalf of the workmen that this
plea was not raised or argued before the. Labour Court, and it
cannot be permitted to be raised in this Court.
But this contention was raised in the reply filed by the Company; and the judgment of the Labour Court does indicate that its authority to
decide that question was disputed.
We are unable to hold that
the objection though raised was not urged before the Labour
Court, and on that. account to confirm the decision of the Labour
Court which until the matt~r in controversy was decided could not
be rendered.
Even; if, therefore, the Labour Court was competent
to entertain the dispute relating to award of retrenchment compensation, the order made by the Labour Court must be Set
aside.
One more contention raised at !)le Bar by Mr. Chagla for the
Company may be considered.
It<\vas urged that the ·,obligation
to pay retrenchment compensation in the event of liability arising
must in law be deemed to be taken over by the Board. In The
Board of Directors of the South A rcot Electricity Distribution
Company Ltd. v. N. K. Mohammad Khan, etc.( 1 ), to which we
have already made a reference, it was contended on behalf of the
Electr;city Company that the liability to pay retrenchm~nt compensation did not ~f on. the licensee, but on the Madras Government
This Court.held; having regard to the scheme of the Act
that if retrenchment compensation is jJayable, it is the original
undertaking which remains liable, and not the undertaking which
takes over the business.
Counsel however relied upon ss. 6 and
7 of the Indian Electricity Act, 1910, in support of his plea that
the liability to pay retrenchment compensation rests · upon the.
(I) [1969) 2 S.C.R. 902.
!<!Sup. CJ/69-4
•
520
SUPREME COURT REPORTS
[1970] l
undertaking which takes over the undertaking.
Section 6 of the
Indian Electricity Act, 1910, provides :
" ( I ) Where a license has been
granted to
pay
person, not being a local authority, the State Electricity
Board 3hall,-
(a)
(b)
in the case of a license granted before the commencement of the Indian Electricity (Amendment) Act, 1959, on the expiration of each such
period as is specified in the license; and
have the option of purchasing the undertaking and such
option shall be exercised by the State Electricity Board
serving upon the licensee a notice in writing of not less
than one year requiring the licensee to sell the undertaking to it at the expiry of the relevant period referred
to in this sub-section.
,,
In tl1e present case notice was given of termination of the license
after the expiry of the period of the original license and the
Board took over the undertaking of the Company.
Section 7 of
the Indian Electricity Act provides :
"Where an undertaking is sold under section .... 6,
then upon the completion of the sale or on the date on
which the undertaking is delivered to the intending
purchaser under . . . . . . . . sub-section ( 6) of section
6 ..........
A
B
c
D
E
(i) the undertaking shall vest in the purchaser
F
. . . . . . . . . . free from any debt, mortgage or similar
obligation of the licensee or attaching to the undertaking:
Provided that any such debt, mortgage or similar
obligation shall attach to the purchase money in substitution for the undertaking;
(ii) the rights, powers, authorities, duties and obligations of the licensee under his license shall stand transferred to ilie purchaser and such purchaser shall be
deemed to be the licensee :
Provided that where the undertaking is sold or delivered to a State Electricity Board or the State Government, the license shall cease to have furilier operation."
G
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U. P. ELECT. CO. V. ll. K. SHUKLA (Shah, J.)
52 I
A It is clear that when the undertaking vests in the purchaser, a•y
debt mortgage or similar obligation attaches to the purchase
money in substitutidn of the undertaking. The liability to pay
retrenchment compensation is a debt : if it arises on transfer it
will attach to the purchase money payable to the Company in
substitution for the undertaking.
Sections 6 and . 7 of the lndiall
B
Electricity Act do not support the case of the Company that tke
liability is enforceable against the Board after it takes over the
undertakings.
c
D
The provisions bf ss. 57 and 57 A of the Indian Electricity
(Supply) Act, 1948, also do not assist the case of the Company.
Sections 57 & 57 A of the Electricity (Supply) Act, 1948, deal
with the licensee's charges to consumers and the Rating Committees.
By the Sixth Schedule dealing with financial principles
and their application, it is provided by cl. IV that certain amount
shall be appropria~d towards Contingencies Reserve from
tlle
revenues of each year of account.
By cl. V of the Sixth Schedule
it is provided :
"( 1) The Contingencies Reserve shall not be drawn
upon during d:te currency of the licence except to meet
such charges as the State Government may approve as
boing-
,
(a) ex~s or loss of profits arising out of acciE
dents, strikes or circumstances which the management could not have prevented;
F
(b) expen~s on replacement or removal of plant or
works 'other than expenses requisite for normal
main~ance or renewal;
( c) com~nsation payable under any law for the
time bieing in force and for which no other provision.