AI Drafter 
TaxTMI 
TaxTMI 
1955 (12) TMI 48
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....e time there was scarcity of scrap iron and the Company's case is that that forced it to reduce the working of its furnace from three shifts a day to one. 5. The Company states that because of these two causes it was obliged to retrench its staff. Therefore, it issued the following notice, dated 15-5-1951 to 128 of its workers : "Consequent to transfer of the Rolling Mill to Calcutta and want of scrap to Furnace Department in full, the services of the persons as per list attached are dispensed with from today. Their wages and other dues in full settlement will be paid after 2 p.m." 6. Twenty-five of the 128 accepted their wages and other dues in full settlement but the remaining 103 refused. Their cause was accordingly espoused by the Mazdoor Union which made an application to the Regional Conciliation Officer at Kanpur on 16-5-1951 complaining that the retrenchment was illegal and asking that the workmen be reinstated with full payment of their wages for the period they were out of work. 7. This was forwarded to the Government of Uttar Pradesh and on 28-6-1951 the Governor of that State referred the following issue to the Regional Conciliation Office....
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....there was as follows. The Tribunal upheld the finding that there was in fact a shortage of scrap iron and also agreed with the adjudicator that that was only likely to be temporary. Then it held, apparently as a matter of law, that under the Standing Orders it is not permissible to retrench workmen and deprive them of their maintenance when there is only a temporary shortage of material, whatever the duration of the shortage; all that the employer can do in a case like that is to lay them off. 12. The Tribunal also upheld the finding that the Hoop Mill was in the course of transfer to Calcutta consequent on the orders of Government, but they held that there was nothing on the record to show which of the 105 persons (it should be 102) whose cases they were considering were "specifically engaged in the Hoop Mills and had become surplus by reason of the transfer to Calcutta." 13. This is one of the findings attacked before us by the Company on the ground that the Tribunal has failed to realise that the Company's operations must be considered as a whole and that because of the interdependence of its various departments a closure of one section, coupled with a shortage of mate....
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....d (2) that the reliefs sought in the petition for special leave and in the writ petition before the High Court are the same. It is evident that that formed the basis of the order of dismissal especially as it is the usual practice not to entertain an appeal here when a similar matter is pending in the High Court. 20. Before we come to the merits it will be necessary to set out the grounds on which the High Court proceeded. The learned Judges were concerned with a writ for certiorari and so naturally focussed their attention on questions of jurisdiction rather than on the merits. They considered that the Adjudicator was free to take into consideration all matters bearing on the question of retrenchment and to consider whether it was "absolutely necessary" to retrench the workmen. They looked at Standing Order 16(a) and decided that the Adjudicator had jurisdiction to determine the scope and meaning of this Order and that he and the Labour Appellate Tribunal were competent to hold that these orders meant that the company was not entitled to take what the learned Judges called "the extreme step of retrenchment" so long as it was possible for it to "lay off" the workmen. 21. That....
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....ch is the ultimate authority of the Courts to restrain all exercise of absolute and arbitrary power, not only by the executive and by officials and lesser tribunals but also by the legislatures and even by Parliament itself. The Constitution established a "Rule of Law" in this land and that carries with it restraints and restrictions that are foreign to despotic power. 24. Despite this, however, the Courts must always exercise caution and see that they do not substitute their own judgment and discretion for that of these Tribunals, for, as Mahajan, J. said in Bharat Bank, Ltd., v. Employees of Bharat Bank, Ltd. (1950)NULLLLJ921SC , 497) the overriding powers of this Court under Art. 136 are exceptional; and he went on to point out that - "extraordinary powers of this character can only be justifiably used where there has been a grave miscarriage of justice or where the procedure adopted by the Tribunal is such that it offends against all notions of legal procedure." 25. Now the position in the present case is this. The Tribunals are directed by section 7 of the Industrial Disputes Act to adjudicate industrial disputes "in accordance with the provisions of the Act" an....
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....ally or efficiently its business is to be run. 29. The Mazdoor Union retorted that the retrenchments were not done in good faith. It denied that there was any shortage of scrap but admitted the interdependence of the various departments and used that fact as an argument to indicate the Company's bad faith. The Union said the very fact that there had been no retrenchment in the department that was directly affected, namely, the Hooping Department, and that there was no retrenchment in certain allied departments that would have been the first to be hit, had there been any real shortage of scrap, showed that the reasons given by the company for the retrenchment were untrue. In particular, the Union pointed out that there had been no retrenchment in the following departments which, according to it, would have been the hardest hit had there been any truth in the Company's case, namely, (1) the Furnace Department, (2) Rolling Mill Department, (3) Workshop. (4) Painting and Bundling, (5) Works and Maintenance. Then, as regards the Foundry Department and the Scrap Department where there had been retrenchments, the Union said that these departments had sub-sections and yet there ....
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....unexplained rights he had recourse to standing Order 16(a) and ignored Standing Orders 19 and 20. 35. The "accepted principle" to which the Adjudicator refers in the passage quoted above is implicit in Standing Orders 19(a) and 20(a). They deal with the termination of service by an industrial establishment and prescribe a certain quantum of notice in writing, and then comes this important proviso in Standing Order 19(a) - "Provided that if a permanent workman feels that he has been discharged for reasons not connected with his employment or that the reason of discharge communicated to him is not genuine, he may make an appeal to the Labour Commissioner. The decision of the Labour Commissioner.... shall be binding on both the parties." 36. Reading the body of Standing Order 19(a) along with the proviso in the light of the "accepted principle", it is evident that the only right the workman has, when his services are lawfully terminated after service of due notice and so forth, is to question the order on only two grounds - (1) that he has been discharged for reasons not connected with his employment, and (2) that the reason of discharge communicated t....
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.... Among other reasons advanced is that this will adversely affect others who are not retrenched. The other grounds repeat what was said in the company's written statement though in different language. 43. The Labour Appellate Tribunal contrasted standing Order 15 (a) with Standing Order 16(a) but also ignored Standing Orders 19(a) and 20 which are the only ones that really apply to this case. It upheld the finding of the Adjudicator that there was a shortage of scrap but held that as the shortage was for only six months retrenchment was not justified. 44. In point of fact, the Labour Appellate Tribunal is wrong about the six months. It was under the impression that the Adjudicator had come to that conclusion. But what the Adjudicator said was that the shortage at best was for a period of eight or nine months. The passage which the Appellate Tribunal quotes is not the finding of the Adjudicator but the argument advanced on behalf of the Company. The full passage runs thus : "Sri Mahalingam stated that Standing Order 16(a) which provided for a lay-off of a maximum period of twelve days in a month contemplates a temporary shortage of very short duration. It could not....
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....is Court reported Muir Mills Co. v. Suti Mills Mazdoor Union, Kanpur (1955)ILLJ1SC where Bhagwati, J. delivering the judgment of the Court said : "The considerations of social justice imported by the Labour Appellate Tribunal in arriving at the decision in favour of the respondent were not only irrelevant but untenable." 49. In the present case also we are of opinion that the Adjudicator and the Labour Appellate Tribunal had adopted the attitude of benevolent despots and have based their conclusions on irrelevant considerations and have ignored the real questions that arose for decision and the issues that arose out of the pleadings of the parties. 50. It would not be right for us to substitute our judgment and discretion for that of the Adjudicator and the Tribunal; accordingly, as we are of opinion that the real questions that were in dispute between the parties were neither appreciated nor considered. We have no alternative but to remit the matter to the Labour Appellate Tribunal for a proper decision after drawing up issues that arise out of the pleadings, considering them and deciding the dispute accordingly, with liberty of course to remit the case to the Adjud....