# WORKMEN OF MIS FIRESTONE TYRE & RUBBER CO. OF 11\IDIA (P) LIMITED v. FIRESTONE TYRE & RUBBER COMPANY

- **Citation:** [1976] 3 S.C.R. 369
- **Court:** Supreme Court of India
- **Decided:** 1976-02-13
- **Case number:** Civil Appeal No. 2307 of 1969
- **Bench:** V. R. Krishna Iyer, N. L. Untwalia
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/workmen-of-mis-firestone-tyre-rubber-co-of-11-idia-p-limited-v-firestone-tyre-6741
- **Pages:** 10

## Headnote

'
Lay-off-Meaning of-Section 2(kkk) of the Industrial Disputes Act (Act
\
XIV of 1947), 1947.
Lay-off-Right of the management of an Industrial Establishment under the
Industrial Disputes Act (Act XIV of 1947), 1947, to lay-off workmen-Section
2(kkk), 25A, 25B(2) (i) and 25C of the Act-Scope of-Effect of s. 251.
Conzpensation-"Lay-off compensation"-Whether laid-off workmen who do
1101 come under Chapter VA of the Industrial Disputes Act, 1947 by virtue of
s. 2SA are entitled to any co1npensation.
Industrial Disputes Act (Act XIV of 1947), 1947-Section 10(1), 33(c)(2),
powers of the tribunal /court to award lay-off conipensation.
The respondent-company manufacturing tyres in Bombay, due to the general
strike in its factory between the oeriod 3rd March 1967 and 16th May 1967
and again from 4th October 1967 and due to the consequent short supply of
tyres had to lav-off 17 out of its 30 workmen in the Delhi distribution office
and also some out of its 33 workmen in its Madras distribution office.
The
workmen in the Delhi and Madras offices were called back to duty on 22nd
April 1968 and 29th April 1968 respectively.
The workmen were not given
their wages or compensation for the period of lay-off.
An industrial dispute
was raised and referred to the tribunal by the Delhi Administration even
when the lay-off was in operation. The Presiding Officer of the Additional
Industrial Tribunal, Delhi held that the work.men were not entitled to any layoff compensation.
The workmen in Madras filed petitions under s. 33C(2)
of the Industrial Disputes Act for computation of their wages for the period
of their lay-off.
The Presiding officer of the Additional Labour Court. Madras,
holding that the lay-off was justified, dismissed their applications.
On appeal to this Court by special leave,
HELD : ( 1) The sim!)le dictiona·ry meaning according to the concise Oxford
Dictionary of the term "lay-off' is "period during which a workman is temporarily discharged".
Lay-off means the failure, refusal or inability of employer
on account of contingencies mentioned in cl. (kkk) of s. 2 of the Industrial
Disputes Act, 1947, to give employment to a workman whose name is borne
on the Muster Rolls of his Industrial Establishment. It has' been called
a
temporary discharge of the workmen or a temporary suspension of his contract of service.
Strictly speaking, it is not so.
It is merely a fact of temporary unemployment of the workman in the work of the Industrial Establishment.
Mere refusal or inability to give employment to the workman when he
reports for duty on one or more grounds mentioned in cl. (kkk) of s. 2 is
not a temporary discharge of the workman.
[372A, 374A, B, G]
Goya Cotton & Jute Mith Ltd. v. Gaya Cotton & Jute Mills Labour L'nion
J l 9521 IT Labour Law Journal 37, referred to.
(2) (i) That the power to lay-off a workman is inherent in the definition in
.:l. (kkk) of s. 2 is not correct, since no words in the definition clause to indicate the conferment of any power on the employer to lay-off a \Vorkman can
be found.
His failure or inability to give employment, by itself militates
against the theory of conferment of power.
No section in Chapter VA in
express language or by necessary implication confers any power, even on the
management of the Industrial Establishment to which the relevant provisions
are applicable, to lay-off a workman.
TQere is no provision in the Act specifically providing that an employer would be entitled to lay-off his workmen
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for the reasons prescribed by s. 2 (kkk). Such a power, therefore, must be
found out from the terms of contract of service or the Standing Orders governing the Establishment.
[374 B-G]
(ii) In the instant case, the number of workmen being only ~3, there being
no Standing Orders certified under the Industrial Employment (Standing Orders)
Act (Act 20 of 1946), 1946, and there being no contract of service conferring
any such right of lay-off, the in

## Text

369
WORKMEN OF MIS FIRESTONE TYRE & RUBBER CO.
OF 11\IDIA (P) LIMITED
v.
FIRESTONE TYRE & RUBBER COMPANY
February 13, 1976
(V. R. KRISHNA IYER AND N. L. UNTWALIA, JJ.J
'
Lay-off-Meaning of-Section 2(kkk) of the Industrial Disputes Act (Act
\
XIV of 1947), 1947.
Lay-off-Right of the management of an Industrial Establishment under the
Industrial Disputes Act (Act XIV of 1947), 1947, to lay-off workmen-Section
2(kkk), 25A, 25B(2) (i) and 25C of the Act-Scope of-Effect of s. 251.
Conzpensation-"Lay-off compensation"-Whether laid-off workmen who do
1101 come under Chapter VA of the Industrial Disputes Act, 1947 by virtue of
s. 2SA are entitled to any co1npensation.
Industrial Disputes Act (Act XIV of 1947), 1947-Section 10(1), 33(c)(2),
powers of the tribunal /court to award lay-off conipensation.
The respondent-company manufacturing tyres in Bombay, due to the general
strike in its factory between the oeriod 3rd March 1967 and 16th May 1967
and again from 4th October 1967 and due to the consequent short supply of
tyres had to lav-off 17 out of its 30 workmen in the Delhi distribution office
and also some out of its 33 workmen in its Madras distribution office.
The
workmen in the Delhi and Madras offices were called back to duty on 22nd
April 1968 and 29th April 1968 respectively.
The workmen were not given
their wages or compensation for the period of lay-off.
An industrial dispute
was raised and referred to the tribunal by the Delhi Administration even
when the lay-off was in operation. The Presiding Officer of the Additional
Industrial Tribunal, Delhi held that the work.men were not entitled to any layoff compensation.
The workmen in Madras filed petitions under s. 33C(2)
of the Industrial Disputes Act for computation of their wages for the period
of their lay-off.
The Presiding officer of the Additional Labour Court. Madras,
holding that the lay-off was justified, dismissed their applications.
On appeal to this Court by special leave,
HELD : ( 1) The sim!)le dictiona·ry meaning according to the concise Oxford
Dictionary of the term "lay-off' is "period during which a workman is temporarily discharged".
Lay-off means the failure, refusal or inability of employer
on account of contingencies mentioned in cl. (kkk) of s. 2 of the Industrial
Disputes Act, 1947, to give employment to a workman whose name is borne
on the Muster Rolls of his Industrial Establishment. It has' been called
a
temporary discharge of the workmen or a temporary suspension of his contract of service.
Strictly speaking, it is not so.
It is merely a fact of temporary unemployment of the workman in the work of the Industrial Establishment.
Mere refusal or inability to give employment to the workman when he
reports for duty on one or more grounds mentioned in cl. (kkk) of s. 2 is
not a temporary discharge of the workman.
[372A, 374A, B, G]
Goya Cotton & Jute Mith Ltd. v. Gaya Cotton & Jute Mills Labour L'nion
J l 9521 IT Labour Law Journal 37, referred to.
(2) (i) That the power to lay-off a workman is inherent in the definition in
.:l. (kkk) of s. 2 is not correct, since no words in the definition clause to indicate the conferment of any power on the employer to lay-off a \Vorkman can
be found.
His failure or inability to give employment, by itself militates
against the theory of conferment of power.
No section in Chapter VA in
express language or by necessary implication confers any power, even on the
management of the Industrial Establishment to which the relevant provisions
are applicable, to lay-off a workman.
TQere is no provision in the Act specifically providing that an employer would be entitled to lay-off his workmen
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for the reasons prescribed by s. 2 (kkk). Such a power, therefore, must be
found out from the terms of contract of service or the Standing Orders governing the Establishment.
[374 B-G]
(ii) In the instant case, the number of workmen being only ~3, there being
no Standing Orders certified under the Industrial Employment (Standing Orders)
Act (Act 20 of 1946), 1946, and there being no contract of service conferring
any such right of lay-off, the inescapable conclusion ~ that the workmen were
laid-off without any authority of law or the power m the management under
ll
the contract of service.
[374 G-H]
The Management of Hotel [mperial, New Delhi & others V. Hotel Workers'
Union [1960] 1 S.C.R. 476 and V. P. Gindroniya v. State of Madhya Pradesh
& Ors. [1970] 3 S.C.R. 448, referred to.
Veiyra (M.A.) Fernandez
(C.P.)
and another,
[19561
1 Labour La\V
Journal, 54 7. reversed.
Workmen oj Dewan Tea Estate and Ors. v. The Management [19641 5
C
S.C.R. 548, applied.
0
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Sanghi Jeevarai Ghewar Chand & Ors. v. Secretary, Madras Chillies. Grains
Kirana Merchants Workers' Union and Anr. [1969] 1 S.C.C. 366, distinguished.
(3) If the terms of a cop.tract of service or the statutory terms engrafted in
the Standing Orders do not give the power to lay-off to the employer, the
employer would be bound to pay compensation for the period of lay-off which
ordinarily and generally would be equal to the fu11 wages of the concerned
workman.
If, however, the terms of employment confer a right of lay-off on
the management. then in the case of an Industrial Establishment which
is
governed by Chapter VA, compensation will be payable in accordance wit& the
provisions contained therein.
But compensation or no compensation will be
payable in the case of an Industrial Establishment to which the provisions of
Chapter VA do not apply and it will be so as per the terms of empJ9yment.
[377-B-Dl
Kanhaiya Lal Gupta v. Ajeet Kumar Dey and others, [1967] II Labour
Law Journal. 761 and Steel and General Mills Co. Ltd. v. Additional District
Judge, Rohtak and others, [1972] 1 Labour Law Journal, 284, approved.
K. T. Rolling Mills Private Ltd. and another v. M. R. Meher and others,
A.l.R. 1963 Bombay 146. reversed.
(4) In a reference under s. 10(1) of the Act. it is ooen to the tribunal or
court to award coIIl{Jensation which may not be equal to the full amount of
basic wages and dearness allowance.
But no such oower exists in the Labour
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Court under s. 33C(2) of the Act.
Only the money due has to be quantified.
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If the lay-off could be held to be in accordance with the terms of contract
of service. no com!Jensation at all could be allowed under s. 33C(2) of
the
Act, while in the reference some compensation could be allowed. [378-B-C]
[In the instant case as regards the workmen in the Delhi case. the court
held 75% of the basic wages and dearness a11owance would be the adequate
compensation for the lay-off period.]
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2307 of 1969
(Appeal by Special leave from the Award dated the ls! April 1969
of the Addi. Industrial Tribunal, Delhi in I. D. No. 83 of 1968) and
Civil Appeals
Nos. 1857-1859/70.
(Appeals by Special Leave
from the Judgment and Order dated the 17th November 1969 of the
Addi. Labour Court. Madras in claim Petition Nos. 627 and 629 of
1968).
M. K. Ramamurthi and Jitendra Sharma and Janardan Sharma, for
the appellants in both the appeals.
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WORKMEN v. FIRESTONE TYRE & RUBBER co. (Untwalia, I.) 3 71
S. N. Andley, (Rameshwar Nath and B. R. Mehta in CAs 185759/70) for respondents in both the appeals.
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The Judgment of the Court was delivered by
UNTWALIA, J.-As the main question for determination in these
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appeals by special leave is common, they have been heard together and
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Civil Appeal No. 2307 of 1969
The respondent company in this appeal has its Head Office at
Bombay. It manufactures tyres at its Bombay factory and sells the
tyres and other accessories in the markets
throughout the country.
The company has a Distribution office at Nicholson Road, Delhi.
There was a strike in the Bombay factory from 3rd March, 1967 to
!6th May, 1967 and again from 4th October, 1967. As a result of the
strike there was a short supply of tyres etc. to the Distribution office.
In the Delhi Office, there were 30 employees at the relevant time. 17
workmen out of 30 were laid-off by the management as per their
notice dated the 3rd February,
1968, which was to the following
effect:
"Management is unable to give employment to the following workmen due to much reduced production in the company's factory resulting from strike in one of the factory
departments.
These workmen are, therefore, laid-off in accordance with
law with effect from 5th February, 1968."
The lay-off of the 17 workmen whose names were mentioned in
the notice was recalled by the management on the 22nd April, 1968.
The workmen were not given their wages or compensation for the
period of lay-off.
An industrial dispute was raised and referred by
the Delhi Administration on the 17th April, 1968 even when the layoff was in operation.
The reference was in the following terms :
"Whether the action of the
management to 'lay-off' 17
workmen with effect from 5th Feb. 1968 is illegal and/or
unjustified,
and if so, to what relief are these
workmen
entitled?"
The Presiding Officer of the Additional Industrial Tribunal, Delhi
has held that the workmen are not entitled to any lay-off compensation.
Hence this is an appeal by their Union.
We were informed at the Bar that some of the workmen out
of the batch, of 17 have settled their disputes with the management
and their cases were not represented by the Union in this appeal.
Heuce this judgment will not affect the compromise or the settlement
arrived at between the management and some of the workmen.
The question which for our determination is whether the management had a right to lay-off their workmen and whether the workmen
are entitled to claim wages or compensation.
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The simple dictionary meaning according to the Concise Oxford
Dictionary of the term 'lay-off' is "period during which a workman
is
temporarily discharged."
The term 'lay-off' has been wellknown in the industrial arena.
Disputes were often raised in
relation to the 'lay-off' of the workmen in various industries. Sometime
compensation was awarded for the period of lay-oft but many a time
when the lay-off was found to be justified workmen were not found
entitled to any wages or compensation. In Gaya Cotton & lute Mills
Ltd. v. Gaya Cotton & Jute Mills Labour Union( 1) the standing order
of the company provided that the company could
under
certain
circumstances
"stop any machine or machines
or department or
departments, wholly or partially for any period or periods without
notice or without compensation in lieu of notice." In such a situation
for the closure of the factory for a certain period, no claim for
compensation was allowed by the Labour Appellate Tribunal of
India. We are aware of the distinction
betwen a lay-off
and a
closure. But just to point out the history of the law we have referred
to this case.
Then came an amendment in the Industrial Disputes Act,
194 7
-hereinafter referred to as the Act-by Act 43 ot 1953.
[n section
2 clause (kkk) was added to say:
"lay-off" (with its
grammatical
variations
and cognate
expressions) means the
failure, refusal or inability of an
employer on
account of shortage of coal, power or raw
materials or the accumulation of stocks or the break-down
of machinery or for any other reason to give employment to
a workman whose name is borne on the muster rolls of his
industrial establishment and who has not been retrenched.
Explanation-Every workman whose name is borne on the
muster
rolls
of the
industrial
establishment
and who
presents himself for work at the establishment at the time
appointed for the purpose during normal working hours on
any day and is not
given employment
by the employer
within two hours of his
so presenting himself shall
be
deemed
to have been
laid-off for that
day within the
meaning of this clause :
Provided that if the workman, instead of being given
employment at the commencement of any shift for any day
is asked to present himself for the purpose during the second
half of the shift for the day and is given employment then,
he shall be deemed to have been laid-off only for one-half of
that day :
Provided further that if he is not given any such employment even after so presenting himself,
he shall not
be
deemed to have
been laid-off for the second half of the
shift for the day and shall be entitled to full basic wages
and dearness allowance for that part of the day."
(I) [19521 II Labour Law Journal, 37.
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WORKMEN I'. FIRESTONE TYRE & RUBBER co. (Untwalia, !.) 373
By the same Amending Act, Chapter VA was introduced in the Act
to provide for lay-off and retrenchment compensation. Section 2SA
excluded the Industrial Establishment in which less than SO workmen
on an average per working day had been employed in the preceding
calendar month from the application of Sections 2SC to 2SE. Section
25-C provides for the right of laid-off workmen for
compensation
and broadly speaking compensation allowable is 50% of the total of
the basic wages and dearness allowance that would have been payable
to the workman had he not been laid-off. It would be noticed that the
sections dealing with the matters of lay-off in Chapter VA are not
applicable
to
certain
types
of
Industrial Establishments. The
respondent is one such Establishment because it employed only 30
workmen at its Delhi Office at the relevant time. In such a situation
the question beset with difficulty of solution is whether the laid-off
workmen were entitled to any compensation, if so, what'?
We shall now read section 25-J. It says:
"(!) The provisions of this Chapter shall have effect notwithstanding anything
inconsis~ent therewith contained in
any other law including standing orders made under the
Industrial Employment (Standing Orders) Act, 1946 :
Provided that where under the provisions of any other Act or
Rules, orders or notifications issued thereunder or under any standing
orders or under any award,
contract of service or otherwise, a
workman is entitled to benefits in respect of any matter which are
more favourable to him than those to which he would be entitled
under this Act, the workman shall continue to be entitled to the more
favourable benefits in respect of that matter, notwithstanding that he
receives benefits in respect of other matters under this Act.
For the removal of doubts, it is
hereby declared that nothing
contained in this Chapter shall be deemed to affect the provisions of
any other law for the time being in force in any State in so far as that
law provides for the settlement of industrial disputes, but the rights and
liabilities of employers and workmen in so far as they relate to layoff and retrenchment shall be determined in accordance
with
the
provisions of this Chapter."
The effect of the provisions
aforesaid is that for the period of
lay-off in an Industrial Establishment to which the said provisions
apply, compensation will have to be paid in accordance with section
25C. But if a workman is entitled to benefits which are more favourable to him than those provided in the Act, he shall continue to be
entitled to t]je more favourable benefits. The rights and liabilities of
employers and workmen in so far as it relate to lay-off and retrenchment, except as provided in section 25J, have ~ot to be determined in
accordance with the provisions of Chapter VA.
The ticklish question which does not admit of an easy answer Is as
to the source of the power of management to lay-off a workman. The
employer has
a right to
terminate the
services of a workman.
Therefore, his power to retrench presents no difficulty as retrenchment
means the termination by the employer of the service of a workman for
any reason whatsoever as mentioned in clause ( oo) of section 2 of the
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Act. But lay-off means the failure, refusal or inability of employer on
account of contingencies mentioned in clause (kkk) to give employment to a workman whose name is borne on the Muster Rolls of his
Industrial Establishment. It has been called a temporary discharge of
the workman or a temporary suspension of his contract of service.
Strictly speaking, it is not so. It is merely a fact
of temporary
unemployment
of the
workman
in the work
of the Industrial
Establishment.
Mr. S. N. Andley submitted with reference ,o the
explanation and the provisions appended to clause (kkk) that the
power to lay-off a workman is inherent in the definition. We do not
find any words in the definition clause to indicate the conferment of
any power on the employer to lay-off a workman.
His fail.,re or
inability to give employment by itself militates against the theory of
conferment of power. The power to lay-off for the failure or inability
to give employment has to be searched somewhere else. No section
in the Act confers this power.
There are two small matters which present some difliculty in the
solution of the problem.
In explanation ( 1) appended to sub-section
(2) of section 25B the words used are :
"he has been laid-off under an agreement or as permitted by
standing order made under the Industrial Employment
(Standing Orders) Act, 1946, or under this Act or under
any other law applicable to the industrial establishment."
indicating that a workman can be laid-off under the Industrial Disputes
Act also.
But it is strange to find that no section in Chapter VA in
express language or by necessary implication confers any power, even
on the management of the Industrial Establishment to which the
relevant provisions are applicable, to Jay-off a workman.
Clause (ii)
of section 25E says :
"No compensation shall be paid to a workman who has been
laid-off--
If he does not present himself for work at the establishment at the appointed time during normal working hours at
least once a day."
This indicates that there is neither a temporary discharge of the workman nor a temporary suspension of his contract of service. Under the
general law of Master and Servant. an employer may discharge an
employee either temporarily or premanently but that cannot be without
adequate notice.
Mere refusal or inability to give employment to the
workman when he reports for duty on one or more grounds mentioned
in clause (kkk) of section 2 is not a temporary discharge of the workman. Such a power, therefore, must be found out from the terms of
contract of service or the Standing Orders governing the establishment. In the instant case the number of workmen being only 30, there
were no Standing Orders certified under the Industrial Employment
(Standing Orders) Act, 1946. Nor was there any term of contract of
service conferring any such right of lay-off. In such a situation the
conclusion seems to be inescapable that the workmen were laid-off
without any authority of Jaw or the power in the management under
the contract of service. In Industrial Establishments where there is a
power in the management to lay-off a workman and to which the
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WORKMEN v. FIRESTONE TYRE & RUBBER co. (Untwalia, /.) 375
provisions of Chapter VA apply, the qestion of payment of compensaA
tion will be governed and determined by the said provisions. Otherwise
Chapter VA is not a complete Code as was argued on behalf of the
respondent company in the matter of payment of lay-off compensation. This case, therefore, goes out of Chapter VA. Ordinarily and
generally the workmen would be entitled to their full wages but in a
reference made under section 10 ( 1 ) of the Act, it is open to
the
Tribunal or the Court to a ward a lesser sum finding the justifiability
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of the lay-off.
In The Management of Hotel Imperial, New Delhi & others v .
Hotel Workers' Union(') in a case of suspension of a workman it was
said by Wanchoo, J. as he then was, delivering the judgment on behalf
of the Court at page 482:
"Ordinarily, therefore, the absence of such power either as
an express term in the contract or in the rules framed under
some statute would mean that the master would have no
power to suspend a workman and even if he does so in the
sense that he forbids the employee to work. he will have to
pay wages during the so-called period of suspension. Where,
however. there is power to suspend either in the contract of
employment or in the statute or the rules framed thereunder,
the suspension has the effect of temporarily suspending the
relation of master and servant with the consequence that
the servant is not bound to render service and the master is
not bound to pay."
The same principle was reiterated in V. P. Gindroniya v. State of
Madhya Pradesh & Ors. (2)
We have referred to the suspension cases because in our opinion
the principles governing the case of lay-off arc very akin to those
applicable to a suspension case.
In Veiyra (M. A.) v. Fernandez (C. P.) and another(') a Bench
of the Bombay High Court opined that under the general law the
employer was free to dispense with the services of a workman, but
under the Industrial Disputes Act he was under an obligation to lay
him off; that being so, the action of lay-off by the employer could not
be questioned as being ultra vires.
We do not think that the view
expressed by the Bomby High Court is correct.
There is an important decision of
this Court in Workmen of
Dewan Tea Estate and Ors. v. The Management(') on which reliance
was placed heavily by Mr. M. K. Ramamurti appearing for
the
appel)ant and also. by ~r. Andley for the respondent. One of the
quest10n for
consideration was whether section 25C of the Act
recognises the common law right of the management to declare a
lay-off for reasons other than those specified in the relevant clause of
the Standing Order. While considering this question, Gajcndragadkar, J.
as he then was. said at page 554:
"The question which we are concerned with at this stage is
_. jh'hether _it__ ca~_Jie said that s.25C recognises a common law
(I) [1960] 1S.C.R.476.
(2) [1970] 3 S.C.R. 448.
(3) [1956] 1 Labour Law Journal, 547.
(4) [1964] 5 S.C.R. 548.
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right of the industrial employer to lay off his workmen. This
question must, in our opinion, be answered in the negative.
When the laying off of the workmen is referred to in s. 25C,
it is the laying off as defined by s. 2 (kkk) and so, workmen
who can claim the benefit of s. 25C must be workmen who
are laid off and laid off for reasons contemplated by s. 2
(kkk); that is all that s. 25C means.
Then follows a sentence which was pressed into service by the
respondent. It says :
"lf any case is not covered by the Standing Orders, it will
necessarily be governed by the provisions of the Act, and
layoff would be permissible only where one or the other of
the factors mentioned by s. 2 (kkk) is present, and for such
lay off compensation would be awarded under s. 25C."
In our opinion, in the context, the sentence aforesaid means that if the
power of lay-off is there in the Standing Orders but the grounds of
lay-off are not covered by them, rather, are governed by the provisions
of the Act, then lay-off would be permissible only on one or the other
of the factors mentioned in clause (kkk). Subsequent discussions at
pages 558 and 559 lend ample support to the appellant's argument
that there is no provision in the Act specifically providing that
an
employer would be entitled to lay-off his workmen for the reasons
prescribed by section 2 (kkk).
Mr. Andley placed strong reliance upon the decision of this Court
in Sanjhi leevraj Ghewar Chand & Ors. v. Secretary, Madras Chillies,
Grains Kirana Merchants Workers' Union & Anr.( 1) The statute under
COl)sideration in this case was the Payment of Bonus Act, 1965 and
it was held that the Act was intended to be a comprehensive and
exhaustive Jaw dealing with the entire subject of bonus of the persons
to whom it should apply. The Bonus Act was not to apply to certain
Establishments.
Argument before the Court was that bonus was.
payable de hors the Act in such establishment also.
This argument
was repelled and in that connection it was observed at page 381 :
"It will be noticed that though the Industrial Disputes Act
confers substantive rights on workmen with regard to lay off,
retrenchment compensation, etc., it does not create or confer
any such statutory right as to payment to bonus. Bonus was
so far the creature of industrial adjudication and was made
payable by the employers under the machinery provided
under that Act and other corresponding Acts enacted for
investigation and settlement of disputes raised thereunder.
There was, therefore, no question of Parliament having to
delete or modify item 5 in the Third Schedule to Industrial
Disputes Act or any such provision in any corresponding
Act or its having to exclude any right to bonus thereunder
by any categorical exclusion in the present case."
And finally it was held at page 385 :
"Considering the history of the legislation, the background
and the circumstances in which the Act was enacted, the
(I) [1969] 1 s.c.c. 366.
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WORKMEN v. FIRliSTONE TYRE & RUBBER co. (Untwalia, J.) 377
object of the Act and its scheme, it is not possible to accept
the construction suggested on behalf of the respondents that
the Act is not an exhaustive Act dealing comprehensively
with the subject-matter of bonus in all its aspects or that
Parliament still left it open to those to whom the Act does
not apply by reason of its provisions either as to exclusion or
exemption to raise a dispute with regard to bonus through
Industrial adjudication under the Industrial Disputes Act or
other corresponding law."
In a case of compensation for lay-off the position is quite distinct and
different. If the term of contract of service or the statutory term•
engrafted in the Standing Orders do not give the power of lay-off to
the employer, the employer will be bound to pay compensation for the
period of lay-off which ordinarily and generally would be equal to the
full wages of the concerned workmen.
If. however, the terms of
employment confer a right of lay-off on the management, then, in the
case of an industrial establishment which is governed by Chapter VA,
compensation will be payable in accordance with the provisions contained therein.
But compensation or no compensation will be payable
in the case of an industrial establishment to which the provisions
of Chapter VA do not apply, and it will be so as per the terms of the
employment.
In Kanhaiya Lal Gupta v. Ajeet Kuniar Dey and others(1) a learned
single Judge of the Allahabad High Court seem to have rightly held
that in the absence of any term in the contract of service or in the
statute or in the statutory rules or standing orders an employer bas no
right to lay-off a workman without paying him
wages.
A learned
single Judge of the Punjab and Haryana High Court took an identical
view in the case of Steel and General Mills Co. Ltd. v. Additional
District Judge, Rohtak and others.(2 ) The majority view of the Bombay
High Court in K. T. Rolling Mills Private Ltd. and another v. M. R.
Meher and other(') that it is not open to the Industrial Tribunal under
the Act to award lay-off compensation to workmen employed in an
'Industrial Establishment' to which S. 25-C does not apply, is not
correct. The source of the power of the employer to lay-off workmen
does not seem to have been canvassed or discussed by the Bombay
High Court in the said judgment.
In the case of· the Delhi office of the respondent the Tribunal bas
held that the lay-off was justified. It was open to the Tribunal to award
a lesser amount of compensation than the full wages. Instead of
sending back the case to the Tribunal, we direct that 75% of the
basic wages and dearness allowance would be paid to the workmen
concerned for the period of lay-off. As we have said above this will
not cover the case of those workmen who have settled or compromised
their disputes with the management.
Civil Appeals 1857-1859 (NL) of 1970
In these appeals the facts are identical to those in the other appeal.
There were only 33 employees in the Madras Office of the respondent
company. Certain workmen were laid-off for identical reasons from the
(I) [1957] II Labour Law Journal, 761.
(2) [1972] I Labour Law Journal, 284.
(3) A.T.R. 1963 Bombay, 146.
A
B
c
D
E
F
G
H
A
B
c
378
SUPREME COURT REPORTS
(1976] 3 S.C.R.
5th February, 1968. The lay-off was lifted on the 29th April, 1968.
The concerned workmen filed petitions under section 33C (2) of the Act
for computation of their wages for the period of lay-off. Holding that
the lay-off was justified and valid the Presiding Officer of the
Additional Labour Court, Madras has dismissed their applications for
salary and allowances for the period of lay-off.
Hence these appeals.
In a reference under section 10 ( 1) of the Act it is open to the
Tribunal or the Court to award compensation which may not be equal
to the full amount of basic wages and dearness allowance. But no such
power exists in the Labour Court under section 33C (2) of the Act.
Only the money due has got to be quantified. If the lay-off could be
held to be in accordance with the terms of the contract of service, no
compensation at all could be allowed under section 33C (2) of the
Act, while, in the reference some compensation could be allowed.
Similarly on the view expressed above that the respondent company
had no power to lay-off any workmen, there is no escape from the
position that the entire sum payable to the laid-off workmen except
the workmen who have settled or compromised, has got to be computed and quantified under section 33C(2) of the Act for the period
of lay-off.
D
For the reasons stated above all the appeals are allowed. In Civil
Appeal No. 2307 /1969 in place of the order of the Tribunal, an order
is made on the lines indicated above. And in Civil Appeals 1857 to
1859/1970 the orders of the Labour Court are set aside and the cases
of the appellants are remitted back to that Court for computation and
quanfification of the sums payable to the concerned workmen for the
period of lay-off. There will be no order as to costs in any of the
E
appeals.
S.R.
Appeals allowed:-
Orders in CA 2307/69
mocFlicd: CAs 1857-1859/70 remitted hock to the Tribunal.
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