MADAN LAL BUDHIA Vs. STATE OF BIHAR
LAWS(PAT)-1960-1-3
HIGH COURT OF PATNA
Decided on January 06,1960

MADAN LAL BUDHIA Appellant
VERSUS
STATE OF BIHAR Respondents




JUDGEMENT

- (1.)IN this case the petitioners carried on the business of generation and supply of electricity in the district of Hazarihagh on the basis of a temporary sanction given by the State Government under Section 28 of the INdian Electricity Act (Act No. IX of 1910) by Notification No. 1604-Misc/ IE-159/40, dated the 25th February, 1941. IN 1952 the petitioners applied to the State Government for grant of a licence under Section 3 of the INdian Electricity Act, 1910 with regard to the business of supply of electricity. The State Government refused to grant a licence by a letter dated the 12th April, 1952, on the ground that the Government themselves proposed to distribute power at Ramgarh as soon as power from the Damodar Valley Corporation was available. Thereafter in May, 1955, a notice was served on the petitioners terminating the agreement for the supply of electricity with effect from the 1st September, 1955. The notice was served by the Defence Department Authorities and it was stated in the notice that the Defence Department would take the supply of electricity from the State Government and not from the petitioner. A copy of the notice is annexure C to the application. Thereafter the petitioners served a notice upon the employees terminating their services with effect from the 1st September, 1955, The notice dated the 1st June, 1955, is annexure D to the application. It appears that from the 1st September, 1955, the State Government obtained bulk supply of electricity from the Damodar Valley Corporation, but the State Government requested the petitioners to make arrangements for distribution of electricity for a short period till the Government could make its own arrangements. The petitioners accordingly carried on the work of distribution of electricity supplied from the State Government's grid in Ramgarh with the help of a skeleton staff for the period from the 1st September, 1955, to the 31st March, 1956, on which date the State assumed full control of the distribution system also and relieved the petitioners from the task of distributing the electricity. The workmen, however, made a demand upon the petitioners for retrenchment compensation under Section 25F of the INdustrial Disputes Act as it stood on the relevant date. The petitioners denied that they were liable to pay any such compensation, but the State Government held that the petitioners were liable to pay a sum of Rs. 35,007/4/- as retrenchment compensation to the workmen and filed a certificate with the Certificate Officer of Hazaribagh for that amount being realised from the petitioners. A copy of the certificate is annexure E to the application. The petitioners fifed an objection before the Certificate Officer, but the objection was dismissed by the Certificate Officer on the 7th June, 1956. An appeal was preferred before the Collector, but the appeal was also dismissed on the 14th September, 1956. The petitioners then took the matter in revision before the Commissioner of Chota Nagpur, who held by his order dated the 13th December, 1957, that the certificate should be kept pending without execution for a period of 6 months & the amount of liability should be determined either by agreement between the parties or by means of a civil suit to be filed by the workmen. The order of the Commissioner is based upon a decision of a Bench of this High Court in Sreo Behariji Mills Ltd. v. State of Bihar AIR 1957 Pat 488 where it was held that the State Government has no power to make an enquiry into the liability to pay compensation under Section 25F of the Act, as it stood before the amendment, if there was a dispute between the employer and the workmen whether there was retrenchment or not. There is no machinery provided in the Act for snaking such an enquiry and so any certificate of public demand for the recovery of compensation, in the circumstances, would be without jurisdiction. It appears that subsequently, on the 7th June, 1958, the State Government issued a notification, purporting to act under Section 33C, Sub-section (2), of the INdustrial Disputes Act, requiring the Labour Court at Ranchi to determine the amount of the money value of the compensation liable to be paid by the petitioners to the workmen concerned. The notification is annexure J to the application and reads as follows:
"Government of Bihar, Labour Department. NOTIFICATION Dated Patna, the 17th Jestha, 1880 (S) 7th June, 1958. No. III/D 1-302/58L-9804. Whereas 84 workmen, named in the schedule annexed hereto are entitled to receive from their employer, namely, the Ramgarh Electric Supply Company, Ramgarh, Main Road, Ranchi, of which Sri Ganga Prasad Budhia and others are the proprietors, the benefits of retrenchment compensation as provided under Section 25F of the INdustrial Disputes Act, 1947 (XIV of 1947), which are capable of being committed in terms of money; And whereas it is necessary to determine the amount at which such benefits should be computed and recovered from the said employer; Now, therefore, in exercise of the powers conferred by Sub-section (2) of Section 33C of the said Act, the Governor of Bihar is pleased to specify the Labour Court at Ranchi constituted by the State Government under Section 7 of the said Act as the Labour Court for determining the amount in money value to which each such workman is entitled. ANNEXURE x x x x x By order of the Governor of Bihar, Sd/-B. P. Singh. Secretary to Government."
The submission of the petitioners is that the notification of the State Government dated the 7th June, 1958, purporting to be made under Section 33C, Sub-section (2), of the INdustrial Disputes Act, is ultra vires and without jurisdiction and must be quashed by a writ in the nature of certiorari under Article 228 of the Constitution.
(2.)THE main argument put forward on behalf of the petitioners is that the closure of the business was real and bona fide on the 1st September, 1955, because licence was not granted to the petitioners by the State Government under Section 3 of the Indian Electricity Act and the business carried on by the petitioners of generation and supply of electricity at Ramgarh had been completely taken over by the State Government with effect from the 1st September, 1955. It was also pointed out on behalf of the petitioners that the judgment of the Supreme Court in Hariprasad Shivshanker Shukla v. A.D. Divelkar (S) AIR 1957 SC 121 was pronounced on the 27th November, 1956. It was held by the Supreme Court in that case that retrenchment as defined in Section 2(oo) of the Industrial Disputes Act and as used in Section 25F of the same Act meant the discharge of surplus labour or staff by the employer for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, and it had no application where the services of all workmen had been terminated by the employer on a real and bona fide closure of business or where the services of all workmen had been terminated by the employer on the business or undertaking being taken over by another employer. In order to counteract the decision of the Supreme Court there has been an amendment made in the Act by the Industrial Disputes (Amendment) Act, 1957 (Act No. 18 of 1957). Section 3 of this Act introduced a new Section 25FFF, which reads as follows:
"25FFF. Compensation to workmen in case of closing down of undertakings. (1) Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provisions of Sub-section (2), be entitled to notice and compensation in accordance with the provisions of Section 25F, as if the workman had been retrenched; Provided that where the undertaking is closed down on account of unavoidable circumstances be- yond the control of the employer, the compensation to be paid to the workman under clause (b) of Section 25F shall not exceed his average pay for three months. Explanation: An undertaking which is closed down by reason merely of financial difficulties (including financial losses) or accumulation of undisposed of stocks shall not be deemed to have been closed down on account of unavoidable circumstances beyond the control of the employer within the meaning of the proviso to this sub-section. x x x x x" THE Amendment Act was passed on the 6th June, 1957, but Section 3 was expressly given a retrospective effect from the 28th November, 1956, by Section 1(2) of the Act, which ready as follows: "1. (2) Section 2 shall be deemed to have come into force on the 10th day of March, 1957, and Section 3 on the 28th day of November, 1956."
As the law stood before the amendment, the workmen would not be entitled to claim compensation from the petitioners under the provisions of Chapter VA of the Industrial Disputes Act in the circumstances of the present case, in view of the decision of the Supreme Court that the workmen would not be entitled to retrenchment compensation under Section 25F if there was bona fide and real closure of business. It follows, therefore, that the State Government has no jurisdiction to make a reference to the Labour Court for determining the amount of any such, compensation under the provisions of Section 33C of the Industrial Disputes Act, which reads as follows:
"33C, Recovery of money due from an employer. (1) Where any money is due to a work-man from an employer under a settlement or an award or under the provisions of Chapter VA, the workman may, without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery of the money due to him, and if the appropriate Government if satisfied any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover in the same manner as an arrear 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 benefit should be computed may, subject to any rules that may be made under this Act, be determined by such Labour court as may be specified in this behalf by the appropriate Government, and the amount so determined may be recovered as provided for in Sub-section (1). x x x x x"
THE reason is that the jurisdiction of the State Government to make a reference would only arise If any money was due to the workmen from the employer under a settlement or an award or under the provisions of Chapter VA of the Industrial Disputes Act. In view of the decision of the Supreme Court in (S) AIR 1957 SC 121 it is obvious that In the circumstances of the present case the workmen are not entitled to get any compensation from their employer under the provisions of Chapter VA of the Industrial Disputes Act. It is contended on behalf of the respondents that the provisions of the new amendment, namely, Section 25FFF, would apply to the present case. THEre is no substance in the argument, because the amendment was made expressly retrospective only with effect from the 28th November, 1956, and it is impossible to contend that the amendment should be given retrospective effect with effect from an earlier date. It is obvious that in the present case the closure took place on the 1st September, 1955, long before the 28th November, 1956, from which date the amendment is deemed to have come into force. It follows, therefore, that the present case is not governed by the amended law incorporated by Section 25FFF of the Industrial Disputes Act, but the present case is governed by the decision of the Supreme Court in (S) AIR 1957 SC 121. Consequently the notification of the State Government dated the 7th June, 1958, made under Section 33C of the Industrial Disputes Act, is ultra vires and without jurisdiction and must be quashed by a writ in the nature of certiorari. We also grant a writ in the nature of mandamus commanding the respondents not to take any steps in pursuance of the notification of the State Government dated the 7th June, 1958, which is annexure J to the application. We accordingly allow this application. THEre will be no order as to costs.


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