Industrial Court Orders Compensation for Regular Employees in Closure Case

The Industrial Court directed Prakash Cotton Mills Pvt. Ltd. to pay closure compensation to regular employees for a specific period of closure, equating it to a layoff. Despite Standing Orders allowing closure without compensation in certain circumstances, the court held the company liable to pay compensation under relevant legal provisions. However, Badli workmen, being casual employees without guaranteed employment rights, were deemed not entitled to closure compensation. The court partially allowed the appeal, upholding compensation for regular employees but setting aside compensation for Badli workmen, with no costs awarded.

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Issues Involved:
1. Liability of the appellant to pay closure compensation to employees.
2. Applicability of Standing Orders 16 & 17.
3. Entitlement of Badli workmen to closure compensation.

Detailed Analysis:

1. Liability of the appellant to pay closure compensation to employees:
The appellant, Prakash Cotton Mills Pvt. Ltd., faced an order from the Industrial Court, Maharashtra, directing the payment of compensation to its employees and some Badli workmen for the period from March 24, 1964, to June 10, 1964, during which the mill was closed due to circumstances beyond the appellant's control. The respondent-Sangh demanded wages for the affected employees during this period, which led to an application before the First Labour Court, Bombay, under sections 79 and 78 of the Bombay Industrial Relations Act, 1946. The Labour Court initially held the appellant liable to pay 50% of the total basic wages and dearness allowance as closure compensation, equating the closure to a layoff under section 2(kkk) of the Industrial Disputes Act, 1947. The Industrial Court, upon appeal, remanded the matter for a fresh inquiry, which again resulted in a similar decision by the Labour Court. The Industrial Court, upon a subsequent appeal, directed compensation at the rate of 50% of basic wages and dearness allowance, with exceptions for certain categories of employees.

2. Applicability of Standing Orders 16 & 17:
The appellant argued that under Standing Orders 16 & 17, which allow for closure without notice and without compensation due to events beyond the company's control, it was not liable to pay any compensation. Standing Order 16 specifies that in the event of a fire, catastrophe, machinery breakdown, or other uncontrollable events, the company may stop operations without notice and compensation. However, the court rejected this contention, stating that Standing Orders 16 & 17 do not preclude the payment of compensation for closure. The court emphasized that the provisions of sub-section (4) of section 42 and section 78(1)(a)(iii) of the Act allow employees to challenge the refusal of compensation for closure before the Labour Court. Hence, the application by the respondent-Sangh was maintainable, and the appellant was liable to pay compensation despite the closure being under the provisions of the Standing Orders.

3. Entitlement of Badli workmen to closure compensation:
The Industrial Court had directed compensation to Badli workmen, who are casual employees without a guaranteed right to employment. The court noted that Badli workmen only get work in the absence of regular employees and do not have their names on the muster rolls. The appellant contended that Badli workmen, having no right to employment, were not entitled to compensation. The court agreed with this view, stating that compensating Badli workmen would be penalizing the appellant unjustly. The court referenced section 25C of the Industrial Disputes Act, 1947, which excludes Badli workmen from layoff compensation. The court also distinguished this case from the Apollo Mills case, where compensation to Badli workmen was awarded without the issue being separately raised or challenged. Thus, the court concluded that Badli workmen are not entitled to closure compensation under Standing Orders 16 & 17.

Conclusion:
The appeal was allowed in part. The court upheld the order of the Industrial Court directing payment of compensation to the regular employees at the specified rate but set aside the order directing compensation to Badli workmen. There was no order for costs.

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