Thakur M.D. and Another vs Labour Appellate Tribunal of India, Bombay and Another

Bavdekar, J.—This is an application by two of the employees of respondent 2, Ruston & Hornsby (India), Ltd., Bombay, a company which is manufacturing oil engines in Bombay at present. The company had a plan for some time to expand their factory and for that purpose they have now erected a new factory at premises acquired by them at Chinchwad and they propose to take even some of the machine tools of the present factory to Chinchwad closing the Bombay factory altogether. It appears that there is a dispute which is pending for final determination by the Labour Appellate Tribunal with regard to the bonus due to the employees of the company, and consequently if the company wanted to terminate the services of the employees in Bombay upon the ground that they were closing their Bombay factory, it became necessary for the company to approach the Labour Appellate Tribunal for permission to terminate the services of their present employees under the provisions of S. 22 of the Industrial Disputes (Appellate Tribunal) Act. The company made such an application which was opposed and it appears that the employees made a contention before the Tribunal that the workmen were entitled to be taken to Chinchwad for employment upon their present conditions of wages, bonus, etc., and to be provided also with housing accommodation there. The Labour Appellate Tribunal did not go into the rights of the employees if any in this regard. They said that it was not a matter for them to decide what the rights either of the employers or the employees will be after 1 July 1955, when the company was closing its factory. The only question which was before them was whether a prima facie case had been made out for the termination of the services of the employees and they said that inasmuch as the company had established a new and bigger factory at Poona, it was but proper for them to close their Bombay factory and the company could not be expected to continue the work which the employees were doing in this small Bombay factory. They said consequently that the permission which was asked for by the company could not be withheld and granted the permission to retrench the workmen.

There are altogether 142 workmen of the company for retrenching whom the Labour Appellate Tribunal has given permission, and although only two of the employees have made this application to this Court under Arts. 226 and 227 of the Constitution, the decision in this case will govern the cases of the other workmen also. We are told that some of the employees do not wish to go to Poona and they have as a matter of fact even accepted the gratuity, etc., to which they were entitled upon the termination of their services. But that is an aspect of the matter which need not detain us in the consideration of the present application.

The first point which Mr. Palkhivala who appears for respondent 2 has made that this application being under Arts. 226 and 227 and the application under Art. 226 and lying on the original side in this case the presentation of the application on the Appellate Side creates a difficulty is devoid of any substance. A Division Bench of this Court has now decided that the proper procedure in cases of such applications is to register the application on the Appellate Side and inasmuch as it is obvious that an application cannot be registered on both the sides that is the procedure that has been followed in this case.

Coming next to the merits, Mr. Palkhivala has somewhat strenuously urged before us that we have not got before us an appeal from the decision of the Labour Appellate Tribunal and howsoever wide our jurisdiction under Arts. 226 and 227 of the Constitution it does not permit us to sit in judgment over the Labour Appellate Tribunal''s decision in appeal. That is perfectly correct. We have got however in this case raised before us what may be termed a question of excess of jurisdiction. Mr. Palkhivala has taken us almost verbatim through the judgment of the Labour Appellate Tribunal and what they seem to have done is that while guarding themselves against saying anything that would affect prejudicially either party with regard to their rights, they came to the conclusion that the action of the company in closing their Bombay factory was correct and then they said that inasmuch as that action was correct the permission could not be refused. Now, the permission which had been applied for by the company was in respect of terminating the services of 142 employees. The question which arose for determination consequently was not whether the employers were right in closing the Bombay factory. It has got to be remembered that now that there is industrial legislation in this country, the rights of the parties do not stand where they would have been under the common law. The employers were entitled at common law to terminate the service of the employees by giving a proper notice if necessary at any time. After the industrial legislation there has been placed restraint upon this power. It is common ground that if the employers were to terminate the services of the employees because of what they considered were proper reasons, the matter might be taken up to an industrial court and the question which the industrial court would then have to ask in determining as to whether the termination of the services was proper or not would not be as to what rights of the parties at common law were. They would have to ask themselves the question as to whether a case has been made out for the termination of the services. Workmen may, for example, become surplus owing to the introduction perhaps of new machinery. The question which the industrial tribunal in such a case would have to inquire would be as to whether it had become necessary to terminate the services of the workmen. It appears consequently that when the company said that they were closing their Bombay factory and starting a much bigger factory in Poona, the question which arose before the Labour Appellate Tribunal for determination was not whether there was any need for the company to employ the workmen in Bombay but whether a prima facie case had been made out for termination of the services of the workmen, i.e., whether there was any difficulty in regard to the company employing the workmen in similar jobs in the new Poona factory and that is the question which we find that the tribunal have never applied their mind to and they certainly have given no answer to it so far as we can see from their judgment. We have already mentioned that they have recorded a finding that the company was quite right in saying that they would close their Bombay factory for which they have now no use in view of the much larger factory which they have built at Chinchwad. But from this the tribunal straightway go to the question of granting the permission, the only ground which they give being that if the Bombay factory was closed the workmen could not be employed in Bombay and it was unreasonable of the workmen to expect the company to carry on the small Bombay factory in Bombay.

Now, it is quite true that the factory in this case has been removed from Bombay to Poona. The employees insisted that they had got a right to be taken to the Poona factory under the present terms and they ought also to be provided with houses in Chinchwad. Upon the question raised by the employees, we express no particular opinion. If at all a contention is raised before the Labour Appellate Tribunal by the employees that they would go to Poona only on those conditions and not otherwise, the Tribunal may have to consider the insistence of the employees that they should be taken to Chinchwad for service on the present conditions. It may conceivably happen that other difficulties may arise in the may of taking the workmen to Poona, but that does not alter the fact that the question before the Tribunal was whether the services of the employees could not be continued and unless they consider and answer that question it cannot possibly be said that they have determined what they had to determine before granting the permission. The case obviously is one of jurisdiction in which case this Court is entitled to interfere.

The rule will therefore be made absolute. We quash the order of the Labour Appellate Tribunal in regard to the permission which they granted for terminating the services of all the 142 workmen. The opponents will pay the costs of the applicants of this application.