LAW Courses

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More

Rashmi Dutta (Social Compliance Auditor)     24 June 2008

Multiple factories in the same premises owned by a single employer

Hi,

 

Case - Three different factories engaged in the same business owned by a single occupier/ employer are being operated in three different floors in the same premises / building under respective factory licenses. Attendance for the entire workforce is centralized.

 

Question - Whether the laws considering the number of workers will be applicable in consideration to the total work force in the premises or individually?

 

Thanks & Regards,

Rashmi Dutta

 



 11 Replies

H. S. Thukral (Lawyer)     24 June 2008

The test to determine whether one establishment is a part of another was laid down by Supreme Court in


Associated Cement Companies v Their workmen 1960(1) LLj 8 . There are various factors which reveal the result. Kindly go through the judgment and applying the principles stated therein, make your own conclusion. If you have difficulty in getting the citation I can post it on the site. 

Rashmi Dutta (Social Compliance Auditor)     25 June 2008

Dear Sir,

kindly post the citation. Thanks .

Thanks & Regards,
Rashmi Dutta

DEFENSE ADVOCATE.-firmaction@g (POWER OF DEFENSE IS IMMENSE )     25 June 2008

Irrespective of the citation which is applicable in deffrent set of circumsances., in your case your entire fectory will be treated as one unit and taking into consideration the total number of workers the relevant laws will be applicable.


 

Saravana Rajan   26 June 2008

Hi Mr. Shashi,


I do agree that all the three factories will be considered as single factory.


This case is specific to one of the social compliance audits where the factory is defending by having different licenses for different factories in the same premises.


I had gone through the judgement quoted. But would be interested if there are any law references.


Also pls note there are provisions under factories act that the concerned authority can declare this (multiple factories as a single factory) if the occupier makes an application in writing.


Also would be interested in knowing the benefits the management enjoys by having such divisions of factories in the same premises.


Request you to provide law references if any available.


Thanks & Regards


Saravana Rajan.

H. S. Thukral (Lawyer)     27 June 2008

 


[SUPREME COURT OF INDIA] 

 

Associated Cement Companies Limited, Chaibassa Cementwo

v

Their Workmen

 

 

S. K. Das

 

11 Sep 1959

 

BENCH

S. K. Das, S. R. Das & M. Hidayatullah

 

COMPARATIVE CITATIONS

1960 (1) LLJ 1, 1960 AIR(SC) 56, 1959 (17) FJR 166, 1960 SCJ 1164, 1960 (1) SCR 703, 1959 INDLAW SC 115

 

CASES REFERRED TO

Donald L Nordling v Ford Motor Co [1950 (28) ALR 2]

Coles v Dickinson [1864 (16) CBNS 604 : ]

Hoyle v Cram [1862 (142) CB NS125; ER 1090]

 

THIS JUDGMENT WAS FOLLOWED IN 54 CASE(S)

 

ACTS REFERRED

Bombay Industrial Disputes Act, 1938

Factories Act[s. 2, s. 2.]

Indian Penal Code, 1860

Industrial Disputes (Amendment) Act

Mines Act[s. 2, s. 17]

Constitution Of India, 1950

Factories Act, 1948

Industrial Disputes (Amendment) Act, 1953

Industrial Disputes Act, 1947[s. 25E read with s. 25C]

Mines Act, 1952

Plantations Labour Act, 1951[s. 2]

 

 

CASE NO

CIVIL APPELLATE JURISDICTION: Civil Appeal No. 87 of 1958. Appeal by special leave from the Award dated October 10, 1956, of the Industrial Tribunal, Bihar, Patna, in Reference No. 6 of 1956.

 

 

KEYWORDS

Labour & Industrial Law, Dearness Allowance, Conditions Of Service, Lay-Off

 

 

 

LAWYERS

R. J. Kolah, S. N. Andley, Rameshwar Nath

 

 

.JUDGMENT TEXT

 

1959. September 11. The Judgment was delivered by

 

S. K. DAS J.-This appeal by special leave from an award dated October 10, 1956, made by the Industrial Tribunal, Bihar, raises an important question of interpretation in the matter of a disqualification for lay-off compensation under s. 25E read with s. 25C of the Industrial Disputes Act, 1947 (hereinafter called the Act), and so far as we know, this is the first case of its kind in which the expression "in another part of the establishment" occurring in cl. (iii) of s. 25E has come up for an authoritative interpretation. The facts are simple and are shortly set out below. The Associated Cement Companies Ltd., hereinafter called the Company, have a number of cement factories in different States of the Indian Union as also in Pakistan. There are two such factories in the State of -Bihar, one at Khelari and the other at a place called Jhinkpani in the district of Chaibasa in Bihar. The latter factory is commonly known as the Chaibasa Cement Works. There is a limestone quarry owned by the same Company situate about a mile and a half from-the Chaibasa Cement Works, the quarry being known as the Rajanka limestone quarry. Limestone is the principal raw material for the manufacture of cement and the Chaibasa Cement Works, depended exclusively for the supply of limestone on the said quarry. At the time relevant to this appeal there were two classes of labourers at the quarry, those employed by the Company through the management of the Chaibasa Cement Works and others who were engaged by a contractor. There was one union known as the Chaibasa Cement Workers' Union, hereinafter called the Union, of which the Company's labourers both at the Cement Works and the quarry were members. There was another union consisting of the contractor's labourers which was known as the A. C. C. Limestone Contractor's Mazdoor Union. On January 3, 1955, the Union made certain demands on the management on behalf of the labourers in the limestone quarry, but these were rejected by the management. Then, by a subsequent letter dated February 18, 1955, the General Secretary of the Union gave a notice to the Manager of the Chaibasa Cement Works to the effect that the Union proposed to organise a general stay-in-strike in the limestone quarry from March 1, 1955, if certain demands, details whereof are unnecessary for our purpose, were not granted on or before February 28, 1955. A similar notice was also given on behalf of the A.C.C. Limestone Contractor's Mazdoor Union. These notices led to certain efforts at conciliation which however, failed. On February 24, 1955, the management gave a notice to all employees of the Chaibasa Cement Works, in which it was stated that in the event of the strike materialising in the limestone quarry, it would be necessary for the management to close down certain sections of the factory at Jhinkpani on account of the non-supply of limestone; the notice further stated that in the event of such closure, it would be necessary to lay off the workers not required during the period of closure for the sections concerned. The strike commenced on March 1, 1955, and lasted till July 4, 1955. On March 25, 1955, the management wrote to the General Secretary of the Union intimating to him that the workers in certain departments referred to in an earlier letter dated March 19, 1955, would be laid-off with effect from April 1, 1955. On March 28, 1955, the management gave the lists of employees who were to be laid-off with effect from April 1, 1955, and they were, actually laid-off from that date. During the period of the strike fresh efforts at conciliation were made and ultimately the strike came to an end on July 5, 1955, when the Central Government referred the dispute between the management and the workers of the limestone quarry to the Central Industrial Tribunal at Dhanbad. This reference was, however, withdrawn by mutual consent in terms of a settlement arrived at on December 7, 1955. The details of this settlement are not relevant to this appeal.Thereafter, a demand was made by the Union for payment of lay-off compensation to those workers of Chaibasa Cement Works who had been laid-off for the period April 1, 1955, to July 4, 1955. This demand was refused by the management. This gave rise to an industrial dispute which was referred by the Government of Bihar under s. 10 of the Act to the Industrial Tribunal, Bihar. The terms of reference set out the dispute in the following words:-

 


The parties filed written statements before the Industrial Tribunal and the only witness examined in the case was Mr. Dongray, Manager of the Chaibasa Cement Works, Jhinkpani.

 

At this point it is necessary to read the two sections of the Act which relate to the right of workmen to lay-off compensation and the circumstances in which they are disqualified for the same. The right is given by s. 25C and the disqualification is stated in three clauses of s. 25E, of which the third clause only is important for our purpose.

 

We now proceed to read ss. 25C and 25E so far as they are material for our purpose.

 


708 Now, the central point round which the controversy between the parties has raged is this. Was the lay-off of the workers in certain sections of the Chaibasa Cement Works due to a strike on the part of workmen in another part of the establishment within the meaning of cl. (iii) of s. 25E ? In other words, was the limestone quarry at Rajanka part of the establishment known as the Chaibasa Cement Works? The contention of the management was and is that the Cement Works and the limestone quarry form one establishment within the meaning of cl. (iii) aforesaid. The contention on behalf of the workmen is that they are not parts of one establishment but are separate establishments. The learned Chairman of the Industrial Tribunal held, for reasons which we shall presently discuss, that the limestone quarry was not part of the establishment known as the Chaibasa Cement Works and the workmen in the latter were not disentitled to lay-off compensation by reason of cl. (iii) of s. 25E. The correctness of this view is the principal point for decision in this appeal.On behalf of the respondent workmen it has been contended that the conclusion of the Industrial Tribunal that the factory at Jhinkpani and the limestone quarry at Rajanka are not parts of one establishment is a finding of fact and this appeal should be disposed of on that footing. We do not think that this contention is correct and we shall presently deal with it. We propose, however, to examine first the relation between the limestone quarry at Rajanka and the cement factory at Jhinkpani in the light of the evidence given before the Tribunal and the findings arrived at by it; because they will show the process of reasoning by which the Tribunal came to its final conclusion.

 

The evidence was really one sided and the only witness examined was Mr. Dongray, Manager of the Chaibasa Cement Works. Now, the relation between the limestone quarry and the factory can be considered from several points of view, such as (1) ownership, (2) control and supervision, (3) finance, (4) management and employment, (5) geographical proximity and (6) general unity of purpose and functional integrality, with particular reference to the industrial process of making cement. On all that above points Mr. Dongray gave evidence. It was not disputed that the Company owned the limestone quarry as also the factory and there was unity of ownership. Mr. Dongray's evidence further showed that there was unity of control, management and employment. He said that the limestone quarry was treated as a part and parcel of the Chaibasa Cement Works, that is, as a department thereof and he as the Manager was in overall charge of both, though there was a Quarry Manager in charge as a departmental head under him. On this point Mr. Dongray said:-

 


This was supported by a circular letter dated March 11, 1952, which said that the entire factory and the associated quarries were under the sole control of the Manager, who was responsible for maintaining full output at economic cost up to the expected standard. The circular letter further stated that all orders and contracts were to be issued by the Manager for the working of the factory and quarries and the relevant bills were to be passed by him. As to finance and conditions of employment, Mr. Dongray said:-

 

 

 


 

 

Exhibits 1 to 26 filed on behalf of the management, which showed the working of the quarry and the factory, supported the aforesaid evidence of Mr. Dongray; they showed, as has been observed by the Tribunal itself, that the management was maintaining one common account and the final authority on the spot in respect of the quarry as also in respect of other departments of the factory was Mr. Dongray, the Manager. There were also other documents to show that the transfer of members of the staff from the quarry to the factory and vice versa was made by Mr. Dongray according to the exigencies of service. It is worthy of note here that the Union itself gave notice to the Manager of the factory with regard to the intended strike in the limestone quarry. The geographical proximity of the limestone quarry was never in dispute. It was adjacent to the factory, being situate within a radius of about a mile. As to general unity of purpose -and functional integrality, this was also not seriouly in dispute. Mr. Dongray said that limestone was the principal raw material for the manufacture of cement and the cement factory at Jhinkpani depended exclusively on the supply of limestone from the quarry at Rajanka. His evidence no doubt disclosed that some excess limestone was sent to the factory at Khelari as well. On this point Mr. Dongray said:-

 


 

 

Mr. Dongray explained that the normal number of departmental workers in the quarry before the strike was in the neighbourhood of 250; but there were about 1, 000 workers employed by contractors. The number of daily-rated workers was in the neighbourhood of 950 and the total monthly-paid staff varied from 100 to 105. The wages paid to the workers in the quarry were debited to limestone account of the Cement Works, and in the matter of costing, the amount spent on limestone was also debited. The bank accounts, however, were in the name of the Company and the persons who were entitled to operate on those accounts were Mr. Dongray, the Manager, the Chief Engineer, and the Chief Chemist of the Cement Works. All the aforesaid evidence, oral and documentary, was apparently accepted by the Tribunal as correct; for the learned Chairman summarised the evidence of Mr. Dongray without any serious adverse comment. He then referred to certain contentions urged on behalf of the Union, which he said were not without force. We may now state those contentions. The first contention was that under the provisions of the Act, the appropriate authority in respect of the factory at Jhinkpani was the State Government of Bihar, whereas the appropriate authority in respect of the limestone quarry, which was a mine as defined in the Mines Act, 1952

 


 

 

We now revert to the contention urged on behalf of the respondent that this appeal should be disposed of on the footing that the final conclusion of the Industrial Tribunal is a finding of fact. The judgment of the Tribunal itself shows that the final conclusion was arrived at by a process of reasoning which involved a consideration of several provisions of the Act and some provisions of the Mines Act, 1952. The Tribunal accepted a major portion, if not all, of the evidence of Mr. Dongray; but it felt compelled to hold against the appellant despite that evidence by reason of an anomalous position which, it thought, would arise if the factory and the quarry were held to be one establishment. The question before the Tribunal, and this is also the question before us, was the true scope and effect of cl. (iii) of s. 25E of the Act, with particular reference to the expression "in another part of the establishment" occurring therein. That question was not a pure question of fact, as it involved a consideration of the tests which should be applied in determining whether a particular unit is part of a bigger establishment. Indeed, it is true that for the application of the tests certain preliminary facts must be found; but the final conclusion to be drawn therefrom is not a mere question of fact. Learned counsel for the respondent is not, therefore, justified in asking us to adopt the short cut of disposing of the appeal on the footing that a finding of fact should not be-disturbed in an appeal by special leave. In this case we cannot relieve ourselves of the task of determining the true scope and effect of cl. (iii) of s. 25E by adopting the short cut suggested by learned counsel.We proceed now to consider what should be the proper tests in determining what is meant by "one establishment". Learned counsel for the respondent has suggested that the test has been laid down by the Legislature itself in the Explanation to s. 25A of the Act. That Explanation states:- "In this section and in sections 25C, 25D and 25E," industrial establishment

 


 

 

The argument is that the Explanation states in clear terms what an industrial establishment means in certain sections of the Act including s. 25E, and on a proper construction it negatives the idea of a factory and a mineforming parts of one establishment. Curiously enough, s. 25E does not contain the expression "industrial establishment". It uses the word "establishment" only. We agree, however, that if s. 25E is read with s. 25C and the definition of "layoff" in s. 2 (kkk) of the Act, as it must be read, the word "establishment" in s. 25E has reference to an industrial establishment. On the footing that the word "establishment" in s. 25E means an industrial establishment, what then is the effect of the Explanation ? The contention of the respondent is that an industrial establishment may be either a factory as defined in clause (m) of s. 2. of the Factories Act, 1948

 

The Act not having prescribed any specific tests for determining what is 'one establishment', we must fall back on such considerations as in the ordinary industrial or business sense determine the unity of an industrial establishment, having regard no doubt to the scheme and object of the Act and other relevant provisions of the Mines Act, 1952, or the Factories Act, 1948. What then is ' one establishment' in the ordinary industrial or business sense ? The question of unity or oneness presents difficulties when the industrial establishment consists of parts, units, departments, branches etc. If it is strictly unitary in the sense of having one location and one unit only, there is little difficulty in saying that it is one establishment.

 

Where, however, the industrial undertaking has parts, branches, departments, units etc. with different locations, near or distant, the question arises what tests should be applied for determining what constitutes 'one establishment'. Several tests were referred to in the course of arguments before us, such as, geographical proximity, unity of ownership, management and control, unity of employment and conditions of service, functional integrality, general unity of purpose etc. To most of these we have referred while summarising the evidence of Mr. Dongray , and the findings of the Tribunal thereon. It is, perhaps, impossible to lay down any one test as an absolute and invariable test for all cases. The real purpose of these tests is to find out the true relation between the parts, branches, units etc. If in their true relation they constitute one integrated whole, we say that the establishment is one; if on the contrary they do not constitute one integrated whole, each unit is then a separate unit. How the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which gives the right of unemployment compensation and also prescribes disqualification therefor. Thus, in one case the unity of ownership, management and control may be the important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed, in a large number of cases several tests may fall for con- sideration at the same time. The difficulty of applying these tests arises because of the complexities of modern industrial organisation; many enterprises may have functional integrality between factories which are separately owned; some may be integrated in part with units or factories having the same ownership and -in part with factories or plants which are independently owned. In the midst of all these complexities it may be difficult to discover the real thread of unity. In an American decision (Donald L. Nordling v. Ford Motor Company ((1950) 28 A.L.R., 2d. 272) there is an example of an industrial product consisting of, 3, 800 or 4, 000 parts, about 900 of which came out of one plant; some came from other plants owned by the same Company and still others came from plants independently owned, and a shutdown caused by a strike-or other labour dispute at any one of the plants might conceivably cause a closure of the main plant or factory.Fortunately for us, such complexities do not present themselves in the case under our consideration. We do not say that it is usual in industrial practice, to have one establishment consisting of a factory and a mine; but we have to remember the special facts of this case where the adjacent limestone quarry supplies the raw material, almost exclusively, to the factory ; the quarry is indeed a feeder of the factory and without limestone from the quarry, the factory cannot function. Ours is a case where all the tests are fulfilled, as shown from the evidence given on behalf of the appellant to which we have earlier referred. There are unity of ownership, unity of management, supervision and control, unity of finance and employment, unity of labour and conditions of service of workmen, functional integrality, general unity of purpose and geographical proximity. We shall presently deal with the legal difficulties at which the Tribunal has hinted and which have been elaborated by learned counsel for the respondent. But apart from them, the only fair conclusion from the facts proved in the case is that the Chaibasa Cement Works consisting of the factory and the limestone quarry form one establishment. The existence of two sets of Standing Orders and a separate attendance register for the limestone quarry have already been adverted to. They have been sufficiently explained by Mr. Dongray, particularly the existence of two sets of Standing Orders by reason of the statutory requirement of approval by different authorities-one set by the Labour Commissioner, Bihar, and other by the relevant Central authority.

 

We proceed now to consider the legal difficulties which according to learned counsel for the respondent stand in the way of treating the limestone quarry and the factory as one establishment. The Tribunal has merely hinted at these difficulties by saying that an anomalous position will arise if the quarry and the factory are treated as one establishment. It is necessary to refer briefly to the scheme and object of lay-off compensation and the disqualifications therefor as envisaged by the relevant provisions in Chapter VA of the Act. That chapter was inserted by the Industrial Disputes (Amendment) Act, 1953 (43 of 1953), which came into effect from October 24, 1953. The right of workmen to lay-off compensation is obviously designed to relieve the hardship caused by unemployment due to no fault of the employee; involuntary unemployment also causes dislocation of trade and may result in general economic insecurity. Therefore, the right is based on grounds of humane public policy and the statute which gives such right should be liberally construed, and when there are disqualifying provisions, the latter should be construed strictly with reference to the words used therein. Now, s. 25 gives the right, and there are three disqualifying clauses in s. 25E. They show that the basis of the right to unemployment compensation is that the unemployment is involuntary; in other words, due to no fault of the employees themselves; that is why no unemployment compensation is payable when suitable alternative employment is offered and the workman refuses to accept it as in cl. (1) of s. 25E ; or the work- man does not present himself for work at the establishment as in cl. (ii); or when the laying-off is due to the strike or slowing down of production on the part of workmen in another part of the establishment as in cl. (iii). Obviously, the last clause treats the work men in one establishment as one class and a strike of slow-down by some resulting in the laying-off of other workmen disqualifies the workmen laid-off from claiming unemployment compensation, the reason being that the unemployment is not really involuntary.It is against this background of the scheme and object of the relevant provisions of the Act that were must now consider the -legal difficulties alleged by the respondent.

 

The first difficulty is said to arise out of s. 17 of the Mines Act, 1952. That section says in effect that every mine shall be under a Manager having prescribed qualifications who shall be responsible for the control, management and direction of the mine; it is then pointed out that the word 'agent' in relation to a mine means a person who acts as the representative of the owner in respect of the management of the mine and who is superior to a Manager.

 

The argument is that the limestone quarry at Rajanka had a ' Manager' under the Mines Act, 1952

 

The second difficulty is said to arise out of certain provisions of the Act which relate to the constitution of Boards of Conciliation, Courts of Inquiry, Labour Courts and Tribunals and the reference of industrial disputes to these bodies for settlement, inquiry or adjudication. The scheme of the Act is that except in the case of National Tribunals which are appointed by the Central Government, the appropriate Government makes the appointment of Boards of Conciliation, Courts of Inquiry, Labour Courts and Tribunals and it is the appropriate Government which makes the refer- ence under s. 10 of the Act. Now, the expression appropriate Government is defined in s. 2(a) of the Act. So far as it is relevant for our purpose, it means the Central Government in relation to the limestone quarry at Rajanka and the State Government of Bihar in relation to the factory at Jhinkpani. We had stated earlier in this judgment that in this very case the original dispute between the management and the workmen in the limestone quarry was referred to the Central Tribunal at Dhanbad, while the latter dispute about lay-off compensation to workmen of the factory was referred by the Government of Bihar to the Industrial Tribunal at Patna. The argument before us is that when the statute itself brings the two units, factory and mine, under different authorities, they cannot be treated as one establishment for the purposes of the same statute. Our attention has also been drawn to s. 18(3) of the Act under which in certain circumstances, a settlement arrived at in the course of conciliation proceedings under the Act or an award of a Labour Court or Tribunal is made binding

 


It is contended that it will be difficult to apply s. 18(3) if the factory and the limestone quarry are treated as one establishment. Lastly, learned counsel for the respondent has referred us to s. 33 of the Act. Sub-section (1) of that section, in substance, lays down that during the pendency of any conciliation proceedings or of any proceeding before a Labour Court or Tribunal in respect of any industrial dispute, no employer shall alter the conditions of service to the prejudice of workmen or punish any workmen, save with the permission in writing of the authority before which the proceeding is pending. Sub- sections (2) and (3) we need not reproduce, because for the purposes of this appeal, the argument is the same, which is that if a proceeding is pending before a Central Tribunal, say in respect of the limestone quarry, there will be difficulty in applying the provisions of s. 33 in respect of workmen in the factory over which the Central Tribunal will have no jurisdiction. The Industrial Tribunal did not specifically refer to these provisions, but perhaps, had them in mind when it said that an anomalous position would arise if the factory and the quarry were treated as one establishment.

 

We have given our most earnest consideration to these arguments, but are unable to hold that they should prevail. It is indeed true that in the matter of constitution of Boards of Conciliation, Courts of Inquiry, Labour Courts and Tribunals and also in the matter of reference of industrial disputes to them, and perhaps for certain other limited purposes, the Act gives jurisdiction to two distinct authorities, the Central Government in respect of the limestone quarry and the State Government in respect of the factory. The short question is-does this duality' of jurisdiction, dichotomy one may call it, necessarily imply that for all purposes of the Act, and particularly for payment of unemployment compensation as per the provisions in Ch. VA, the factory and the quarry must be treated as separate establishments. We are unable to find any such necessary implication. There is no provision in the Act which says that the existence of two jurisdictions has the consequence contended for by learned counsel for the respondent; nor do we find anything in the provisions creating two jurisdictions which by reason of the principle underlying them or by their very nature give rise to an implication in law that the existence of two jurisdictions means the existence of two separate establishments. On the contrary, such an implication or inference will be at variance with the scheme and object of unemployment compensation as provided for by the provisions in Ch. VA of the Act. We have pointed out earlier that the object of unemployment compensation is to relieve hardship caused by involuntary unemployment, that is, unemployment not due to any fault of the employees. If in the ordinary business sense the industrial establishment is one, a lay-off of some of the workmen in that establishment as a result of a strike by some other workmen in the same establishment cannot be characterised as involuntary unemployment. To hold that such an establishment must be divided into two separate parts by reason of the existence of two jurisdictions is to import an artificiality for which we think there is no justification in the provisions of the Act.Nor do we think that ss. 18(3) and 33 present any real difficulty. Section 18(3) clearly contemplates a settlement or an award which is binding on a part of the establishment.

 

It says so in express terms. If, therefore, in the case before us there is a settlement or award in respect of the limestone quarry, it will be binding in the circumstances mentioned in the subsection, on the workmen in that part of the establishment which is the limestone quarry. Similarly, a settlement or award in respect of the factory will be binding on the workmen of the factory. Section 33, as far as it is relevant for the argument now under consideration, is in two parts. Sub-section (1) relates to a matter connected with the dispute in respect of which a proceeding is pending. Sub-section (2) relates to a matter not connected with the dispute in respect of which the proceeding is pending. In one case permission of the authority before which the proceeding is pending has to be obtained for punishing etc. ; in the other case, an application for approval of the action taken by the employer has to be made. We see no difficulty in applying s. 33 in a case like the one before us. For workmen in the mine, the authority will be the one appointed by the Central Government; for the factory, the authority will be that appointed by the State Government. This is the same argument as the argument of two jurisdictions in another form. The assumption is that there cannot be two jurisdic- tions for two parts of one establishment. This argument is valid, if the assumption is correct. If, however, there is no warrant for the assumption, as we have held there is none, then the argument has no legs to stand upon.

 

So far we have dealt with the case irrespective of and apart from reported decisions, because there is no decision which really covers the point in controversy before us. Learned counsel for the appellant has referred to the decisions in Hoyle v. Cram ((1862) 12 C.B. (N.S.) 125; 142 E.R. 1090) and Coles v. Dickinson ((1864) 16 C.B.(N.S.) 604; 143 E.R. 1264). The question in the first case was if the appellants there were liable to be convicted of an offence against the Bleaching Works Act, 23 and 24 Vict. c. 78 in employing the child without A school master's certificate. It was held that a child employed on the premises where the bleaching, dyeing and finishing were performed was employed in an incidental printing process within the second section of 8 and 9 Vict. c. 29; and that the place where he was so employed formed part of "the establishment where the chief process of printing was carried on" within the meaning of that Act.The decision proceeded mainly on the words of the statute; but Earle, C.J., said:

 


 

 

In the second case the question was this : by the 73rd section of 7 and 8 Vict. c. 15, premises which are used solely for the manufacture of paper were excluded from the operation of the Factory Acts; there were two mills, one at Manchester and the other in Hertfordshire. The Manchester mill prepared what was called half-stuff which was sent to the mill in Hertfordshire to be manufactured into paper, and the question was if the Manchester mill was exempted from the operation of the Factory Acts. The answer given was in the affirmative. It was stated that each step in the process was a step in the manufacture of paper, and the distance between the two places where the several parts were carried on was wholly immaterial in view of the words of the statute.

 

The last decision to which our attention has been drawn is the American decision in Donald L. Nordling v. Ford Motor Comp- any ( 1950 (28) ALR 2d. 272). This decision is perhaps more in point as it related to unemployment compensation. The stat- ute in that case provided that an individual losing his employment because of a strike or other labour dispute should be disqualified during its process "at the establishment in which he is or was employed". The claimants there had been employed at a Minnesota automobile assembly plant which was partially shut down because of a lack of parts due to a strike at a manufacturing plant owned and operated by the same corporation in Michigan. The Minnesota Supreme Court to which an application was made for a certiorari to review a decision of the director of the division of employment and security reviewed the tests which have generally been applied for determining what is meant by the term ' establishment' within the meaning of the statute concerned; it pointed out that there was no uniformity of decision on the question and it was not possible to lay down an absolute or invariable test. The decision was based on the broader ground that the tests of functional integrality, general unity and physical proximity should all be taken into consideration in determining the ultimate question of whether a factory, plant or unit of a larger industry is a separate establishment within the meaning of the employment and security law. The test which was emphasized in that case was the test of the unity of employment and on that footing it was found that the evidence was ample to support the director's finding that the Minnesota plant was a separate establishment.We do not think that these decisions carry the matter any further than what we have explained in earlier paragraphs of this judgment. We must have regard to the provisions of the statute under which the question falls to be considered; if the statute itself says what is one establishment, then there is no difficulty. If the statute does not, however, say what constitutes one establishment, then the usual tests have to be applied to determine the true relation between the parts, branches etc., namely, whether they constitute one integrated whole or not. No particular test can be adopted as an absolute test in all cases of this type and the word 'establishment' is not to be given the sweeping definition of one organisation of which it is capable, but rather is to be construed in the ordinary business or commercial sense.

 

For the reasons which we have already given, we are of the view that the learned Chairman of the Industrial Tribunal wrongly held that the limestone quarry at Rajanka and the factory at Jhinkpani were separate establishments. In our view, they constituted one establishment within the meaning of cl. (iii) of s.25E of the Act. It was conceded on behalf the respondent workmen that the lay-off in the factory was due to the non- supply of limestone by reason of the strike in the limestone quarry and the strike was decided on by the same Union which consisted of the workmen at the factory and the quarry. That being the position, the disqualification in cl. (iii) aforesaid clearly applied and the workmen at the factory were not entitled to claim lay-off compensation.

 

The result, therefore, is that the appeal succeeds and is allowed and the award of the Industrial Tribunal is set aside. In the circumstances of the case in which a difficult question of interpretation arose for decision for the first time, we pass no order as to costs.

 

 

 

 

H. S. Thukral (Lawyer)     27 June 2008

 


[SUPREME COURT OF INDIA] 

 

Wipro Limited

v

Regional Provident Fund Commissioner

 

 

 

 

17 Sep 1993

 

COMPARATIVE CITATIONS

1994 (1) CLR 5, 1993 INDLAW SC 292

 

CASES REFERRED TO

Additional Secretary To The Government of India and Others v Smt Alka Subhash Gadia and Another 1990 Indlaw SC 636

Sayaji Mills Limited v Regional Provident Fund Commissioner 1984 Indlaw SC 297

Dharamsi Morarji Chemicals Co. Ltd. v N. G. Desai, The Regional Provident Fund Commissioner And Others. 1984 Indlaw MUM 56

Employers In Relation To Punjab National Bank v Ghulam Dastagir 1978 Indlaw SC 45

State of Punjab v Satpal and Another 1969 Indlaw SC 26

New Delhi Secretary Delhi Press Workers Union Delhi 1960 Indlaw SC 55

The Associated Cement Companies Limited, Chaibassa Cementwo v Their Workmen 1959 Indlaw SC 115

Commissioner (1972 Lic 202) and Ganapaty Bhanderkar Regional Provident Fund Commissioner [1989 (2) LLJ p 480]

High Court rulings in Mahipal Singh Shanker Singh Regional Provident Fund Commissioner [1972 LIC 202]

 

ACTS REFERRED

Factories Act, 1948

 

 

CASE NO

W. P. No. 10424 of 1993,

 

 

KEYWORDS

Natural Justice, Labour & Industrial Law, Tribunal, Victimization, Probation

 

 

.JUDGMENT TEXT

 

The Order of the Court is as follows

 

1. The petitioner in this Petition filed under Article 2126 of the constitution, has sought for a Writ of Certiorari to quash the order No. E/4/93 dated nil passed by respondent and communicated tot he petitioner vide letter dated 15.12.1993 in NO, KN/PF/ENFV/TMKDVN/1497/KN/14294/93, Produced at Annexure-A.

 

2 The question in controversy in this petition is

 

 

 


 

In order to resolve the aforesaid controversy, it is necessary to state a few facts as stated by the petitioner, which are as follows :

 

That M/s Wipro Ltd., is a Company incorporated and registered under the provisions of the Companies Act, 1956 having its registered office at Bombay, hereinafter called as 'the Company'. It has set up four independent and different units among other divisions, in different States, to manufacture consume products. They are -

 

(i) Wipro Consumer Products, P. B. No. 12, Amelnar, Maharashtra,

 

(ii) Wipro Consumer Products, Wiranal Nagar, Bhagyanagar. Gujarat.

 

(iii) Wipro Consumer Products, Plot No. 4, Antharasanahalli, Tumkur Karnataka,

 

(iv) Wipro Leather Products, 128/1, Vel-lanchari Village, Guduyancherry, Tamil Nadu.

 

The controversy in this petition is in respect unit/establishment in Karnataka, hereinafter called 'the establishment'.

 

That sometime in 1986-87, the Company proposed to set up consumer products unit in Karnataka, for manufacture of vanaspathi in flexi packs, Santoor Soap, fatty acids and Glycerine, Original proposal was to establish the factory at Mysore Road in Bangalore. Subsequently, the location of the factory was changed to Tumkur, which was declared to be an industrially backward areas, as the Government of Karnataka offered package of new incentives and concessions to the industrially backward area That, after completing all formalities, the establishment went in for production with effect from 13.4.1988.That in the year 1985, the Company in order to start a new consume production unit in Karnataka had purchased all the plants and machineries and other assets of M/s Margarine & Refined Oil Co., (p) Ltd., which was under closure, with the intention of setting up a factory in the premises of M/s Margarine & Refined Oil Co., (p) Ltd. Various concessions and incentives offered by the Government of Karnataka, for setting up industrially backward place, like Tumkur, prompted the company to change its mind and set up the establishment at Tumkur. Accordingly the establishment was set up at Tumkur making use of the second-hand machinery, obtained from its Amelnar factory at a depreciated value and those of M/s Margarine & Refined Oil Co. /, (P) Ltd., which had remained closed That the Company after obtaining necessary licences and permits from various authorities and after obtaining loans from various banks to the tune of Rs. 435 lakhs towards modernising and working capital of the establishment in addition to the financial assistance to the extent of Rs. 2.42 crores received from the Company's headquarters at Bombay, has started production with effect from 13. 4. 1988.

 

It appears that on 10. 8. 1988, the establishment addressed a letter to the Assistant Provident Fund Commissioner, Bangalore requesting for a separate Code number of the establishment, under the provisions of the Act. This was followed by another letter dated 8. 10. 1988 from the Company requesting for allotment of a separate Provident Fund Code number for the establishment, contending that the establishment is entirely a different unit having no linkage or connection with the Company's other unit at Maharashtra.

 

That, as there was no favourable response from the respondent, the establishment wrote another letter dated 27. 11. 1990 to the respondent requesting for providing a Provident Fund Code number. It is stated in the said letter that the establishment commissioned the factory at plot No. 4 Antharasanahalli Industrial Area, Tumkur and it has commenced production from 13. 4. 1988. It is further stated therein that, even thought the period of three years would expire on 13.41991, the establishment, since willing to cover the establishment under the provisions of the Act voluntarily requested for a new Provident Fund Code number. In reply to the said request, the respondent vide his communication dated 18. 6. 1991 allotted a provisional code number for administrative convenience of the establishment. The relevant portion of the said communication reads as under :"*

Your request for allotment of separate code number to your establishment/branch i.e. M/s. Wipro Ltd., Tumkur is carefully examined and it is decided to allot a separate code number namely KN/14294 with effect from 30. 4. 1988 provisionally (and the rate of contribution applicable to your establishment is 10%) only for your administrative convenience with a clear understanding that both the units-that is M/s. Wipro Ltd., Bombay MH/948 and M/s. Wipro Ltd., Tumkur are not separate and independent units. Your establishment will be treated as a branch of M/s. Wipro Ltd., Bombay KN/948 and not as a separate and independent unit and employment strength of both of them will be continued to be reckoned together for all purposes under the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 and the schemes framed there under like rate of contributions, etc.,

 

Further, notwithstanding the allotment of a separate code number, you are advised to continue to comply with all the instructions contained in original coverage letter No, issued at Bombay under Code No. MH/948 dated and such other instruction issued from time to time.

 

Please note that the allotment of separate code number will not in any way affect the continued applicability of the /Act to all the units.

 


 

3. Sri B. C. Prabhakar, learned counsel for the petitioner, would submit as follows :

 

(a) The conclusion of the respondent that the petitioner establishment is a branch of Amelnar unit in Maharashtra is without any basis. The order is contrary to the findings recorded by the respondent. There is no functional integrality nor commonness between the petitioner-establishment and the unit at Amelnar, and hence the order is unsustainable both on law and on facts.

 

(b) The respondent has fallen into an error in holding that the petitioner is a branch of Amelnar unit in Maharashtra on the ground that it is a continuation of M/s Margarine & Refined Oil Co., (P) Ltd., a closed unit without considering the material in their proper perspective. It is his further submission that sufficient opportunity of being heard was not given on this point.

 

4. Sri D. V. Shylendra Kumar, learned Senior Standing Counsel for the Central Government, appearing for the respondent, argued that the Act is a beneficial enactment for the employees. Therefore, it must receive strict construction to advance the objects of the Act. it is his further contention that even if there is any defect in the order, since it is a curable defect this Court shall refuse to interfere in the exercise of its jurisdiction under Article 226 of the Constitution in order to preserve the objects of the Act.

 

5. Sri D. V. Shylendra Kumar would further argue that, the petitioner suffers no legal injury and hence this court shall refuse to interfere with the order keeping in view of the larger interest of the employees, . even though the order is technically defective. Elaborating his arguments, he would submit that the impugned order, though unsustainable on one ground being contrary to the reasons assigned by the respondent, it is sustainable, on an alternate ground that the establishment is the continuation of M/s Margarine & Refined Oil (P) Co., Ltd. In this context he brought to my notice the decision of he Supreme Secretary to the Government of India & Others v. Smt. Alka Subash Gadia and Another 1990 Indlaw SC 636 = 1991 (1) JT 549 and asked this Court not to interfere with the order under Article 226 of the Constitution as the impugned order though technically defective has achieved the object of the Act and as the same could be sustained for alternate reasons. The supreme Court in the aforesaid case dealing with the extent an scope of judicial review under Article 226 and 32, has observed as follows :"*

12. This is not to say that the jurisdiction of the High Court and the Supreme court under Article 226 and 32 respectively has no role to play once the detention-punitive or preventive-is shown to have been made under the law so made for the purpose. This is to point out the limitations which the High Court and the Supreme Court have to observe while exercising their respective jurisdiction in such cases. These limitations are normal and well known, and are self-imposed as a matter of prudence, propriety, policy and practice and are observed while dealing with cases under all laws. though the constitution does not place any restriction on these powers, the Judicial decisions have evolved them over a period of years taking into consideration the nature of the right infringed or threatened to be infringed, the scope and object of the legislation or of the order of decision complained of the need to balance the rights and interests of the individual as against those of the society, the circumstances under which and the person by whom the jurisdiction is invoked, the nature of relief sought etc. To illustrate these limitations : (1) in the exercise of their discretionary jurisdiction the High Court and the Supreme Court do not, as courts of appeals or revision, correct mere errors of law or of facts; (ii) the resort to the said jurisdiction is not permitted as an alternative remedy or relief which may be obtained by suit or other mode prescribed by statute. Where it is open to the aggrieved person to mover another tribunal or even itself in another jurisdiction for obtaining redress in the manner provided in the statute, the Court does not, by exercising the writ jurisdiction, permit the machinery created by the statute to be by-passed; (iii) it does not generally enter upon the determination of questions which demand an elaborate examination of evidence to establish the right to enforce, which, the writ is claimed; (iv) it does not interfere on the merits with the determination of the issues made by the authority invested with statutory power, particularly when they relate to matters calling for expertise, unless there are exceptional; circumstances calling for judicial intervention, such as, where the determination is mala fide or is prompted by extraneous considerations or is made in contravention of the principles of natural justice or any constitutional provisions; (v) the Court may also intervene where (a) the authority acting under the concerned law does not have the requisite authority or the order which is purported to have been passed under the law is not warranted or is in breach of the provisions of the concerned law or the person against whom the order is directed, or (b) where the authority has exceeded its powers or jurisdiction or has failed or refused to exercise jurisdiction vested in it; or (c) where the authority has not applied its mind at all or has exercised its power dishonestly or for an improper purposes; (vi) where the court cannot grant a final relief, the Court does not entertain petition only for giving interim relief. If the Court is of opinion that there is no other convenient or efficacious remedy open to the petitioner, it will proceed to investigate the case on its merits and if the Court finds that there is an infringement of the petitioner's legal rights, it will grant final relief but will not dispose of the petition only by granting interim relief; (vii) where the satisfaction of the authority is subjective, the Court intervenes when the authority has acted under the dictates of another body or when the conclusion is arrive at by the application of a wrong test or misconstruction of a statute or it is not base don material which is of rationally probative value an relevant to the subject matter in respect of which the authority is to satisfy itself. If again the satisfaction is arrives at by taking into consideration material which the authority properly could not, or by omitting to consider matters which it ought to have the Court interferes with the resultant order, (viii) In when some legal or fundamental right of the individual is seriously threatened, though not actually invaded.

 


 

6. In the light of the aforesaid pronouncement of the Supreme Court, it is necessary to examine whether the respondent had exceeded his jurisdiction or failed or refused to exercise the jurisdiction or in exercising it jurisdiction has applied his mind at all to the facts of the case and the law relating thereto; whether the order impugned in this petition has achieved the objects of the Act in the manner prescribed and established by law and whether the petitioner has made out a case for interference of this Court in exercise of its jurisdiction under Article 226 of the Constitution of India.

 

7. There is no dispute as to the extent of power of this Court to interfere with any order, if such order has resulted in violation of principles of natural justice or refusal or failure to exercise jurisdiction has failed to apply its mind to all the interest of society at large.

 

8. Sri. B. C. Prabhakar, learned Counsel for the petitioner, submits that the order impugned in this petition is liable to be quashed for the order does not reconcile with the reasons assigned by the respondent. Elaborating his intention he would argue that the respondent has held an enquiry under Section7 (A) of the Act to determine, whether the petitioner-establishment is branch of the Amelnar unit in Maharashtra belonging to the Company? and the communication provisionally allotting Provident Fund Code number also indicates that the petitioner establishment is a branch of the company's unit at Amelnar. Examining the case in the context, it is held that there is no sufficient material to treat the establishment as a branch unit of M/S Wipro Ltd., Bombay and, therefore, not entitled for fresh infancy protection in terms of Section16 (1) (d) of the Act, is arbitrary. He further submits that the respondent appeared to have relied on the acquisition of plants, machineries and other assets of M/S Margarine & Refined Oil Co. (P) Ltd., Bombay. The acquisition of Plants, machineries and other assets of M/S Margarine & Refined Oil Co., (P) Ltd., by the Company may be a relevant material to consider whether or not the establishment is the continuation of M/s Margarine & Refined Oil Co., and cannot be a material to hold that the establishment is a branch unit of Wipro Ltd., Bombay. It is his further submission that the later question was neither enquired into nor determined an therefore the order suffers from arbitrariness and hence calls for interference. In this context he brought the relevant portion of the impugned order to my notice which reads as follows :."*

Facts reveal that M/S Wipro Limited a Bombay-based company, having multifarious activities, have a consumer product Division too. This Consumer Product Division have two factories, the one located at Amelnar, Maharashtra and the other at Tumkur, Karnataka. It is also revealed that the Karnataka Unit was to have been set up at Mysore Road, Bangalore, in the premises of M/S Margarine and Refined Oil Co., Ltd., which when, it was acquired by this Bombay based Company was under closure. The various concessions and incentives, offered by the Karnataka Government for setting up industrial unit, in industrially backward places, like Tumkur, prompted the company to change its mind and set up it unit at Tumkur, making use of a second hand machinery, obtained from its Amelnar factory at a depreciated value and those of M/S Margarine and Refined Oil Company Limited, which remained closed. The fact that the Tumkur unit had received a second hand machinery from Amelnar factory may have some bearing on fixing the unity of purpose between the two. But that alone cannot decide the issue in the absence of further corroboration from other supporting evidence. It is also an admitted fact that the Tumkur Unit had received financial assistance to the extent of Rs. 2.42 Crs. from the Company's Headquarters of Bombay as evident from the Unit's balance sheet for 1986-87. This too, cannot tilt the balance in favour of the proposition. That the Tumkur Unit is an offshoot of the Company's Amelnar factory. A company which owns more that one industrial unit can always chanalise funds to the unit for their growth. Moreover the various financial and banking institutions have, thereafter sanctioned loans of different types to the extent of Rs. 435 lakhs, towards modernisation and working capital, which to an extent, show that the Tumkur unit, mainly depended on the term loan facilities received from the Bank and other financial institutions. The only item which can make some difference was the sanction of Rs. 115 lakhs by the State Bank of India, as per their letter of 6th April, 1988, forwards modernisation of Vanaspathi Plant at Tumkur. This gives an impression that the Company, after setting up of the Tumkur Unit, making use of the second hand machineries received from Amelnar factory during 1986-87 went in for modernisation in 1988 by taking a loan of Rs. 115 lakhs from State Bank of India for the purpose. Looking at the activities carried on both at Amelnar factory and Tumkur Unit, one can draw the conclusion that there is certain similarity in their activities. While the factory at Amelnar manufactures Vanaspathi, Shikakai (Toilet soap), the factory at Tumkur produces Vanaspathi, toilet Soap, Fatty Acids and Glycerine. It is therefore quite likely that the Amelnar factory, after making use of the machinery in its unit, for sometime, passed on the used machinery to Tumkur Unit as its depreciated value, which making use of it along with the machineries, etc. of M/s Margarine and Refined Oil Company Limited has set up the factory at Tumkur. This establishes between the two some nexus, which again is not conclusive.Sri Birjay, sought to reinforce his case, by drawing support from the various orders and licences issued by the Central and State Government under different enactments. The industrial Department of Karnataka Government vide its order dated 5.12.1988 allowed a package of incentives and concessions, which are normally admissible to a new industrial unit. The Director General of Technical Development's letter dated 9.2.1989, allotting registration number for manufacture of fatty acids, glycerine and toilet soap. The-Ministry of Industries' letter dated 28th December 1988, permitting them to manufacture industrial oxygen gas, licence dated 22nd August 1989, issued issued by the Drugs Controller of Karnataka, for manufacture of Cosmetics, etc., etc., . are cited by Sri Birjay to support his client's case that his case was a new establishment, having been set up for the first time in April 1988. He sought to draw support from the fact that neither the raw materials required for Tumkur Unit are received from the common source of Amelnar factory of vice-versa. On this scope, the submitted that there is neither financial integrality, nor financial unity, nor inter-transfer of employees. In order to but tress his case, he sought to rely on the Karnataka High Court rulings in Mahipal Singh Shanker Singh v. Regional Provident Fund Commissioner 1972 LIC 202 ) and Ganapaty Bhanderkar v. Regional Provident Fund Commissioner 1989 (2) LLJ 480 ) on Bombay High Court rulings in Dharmasi Murarji Chemicals Co. Ltd. v. Regional Provident Fund Commissioner 1984 Indlaw MUM 56 ) Karula Rubber Co. Pvt. v. Regional Provident Fund Commissioner 1984 Indlaw MUM 56 ) Karula Rubber Co. Pvt. b. Regional Provident Fund Commissioner 1991 ILR 448 ), on Gujarat High Court ruling in Gujchem Distilleries India Ltd. v. Regional Provident Fund Commissioner 1985 LIC 1714 ) and on Rajasthan High Court ruling in ILR 1991 p. 202.No doubt, all the above rulings of different High Courts by the large, lay down the proposition of law that an individual or a company can own more than one industrial units, each of which can be independent, that clubbing of unit is not permissible it one can survive without the assistance of law. (must be others).

 

Two things which are prominently discernible in this case and which have bearing on clubbing of Tumkur Unit with Amelnar Unit are the flow of initial capital of Rs. 2.42 crores from the Company, and the transfer of an old used machinery from Amelnar unit to Tumkur unit. Here, again, the company is a jurisdic person which can always provide funds to individual unit, from out of its own resources, keeping at the same time, the separate identity of each of the units. This is one such case on hand. On the fact that a second hand machinery has come from Amelnar unit to Tumkur unit. we cannot draw a firm conclusion that Amelnar and Tumkur factories are one and the same, since it is only a stray factor which cannot tilt the balance in favour of the proposition that Tumkur Unit is a part of Amelnar factory.

 


 

9. Sri B. C. Prabhakar, learned Counsel for the petitioner, submits that in order to hold that two or more units of the same employer as one establishment, there must be unity of employment inter-dependency, inter-transfer of employees, unity of finance and functional integrality and none of these conditions exist in the case, to hold that the petitioner-establishment is a branch unit of Amelnar unit at Maharashtra. In this context, the petitioner, placed reliance on the Decisions of the Supreme Court in the cases of The Associated Cement Companies Ltd. v. Their Workmen 1959 Indlaw SC 115 and Management of Pratap Press, New Delhi v. Secretary Delhi Press Workers Union Delhi 1960 Indlaw SC 55 .In the Associated Cement Company's case (supra) the Supreme Court had an occasion to consider the question, what is one establishment? and what are the relevant material necessary for determining the oneness or unity of an industrial Establishment when it consists of parts, units etc. It reads thus :"*

11. The Act not having prescribed any specific tests for determining what is 'one establishment', we must fall back on such considerations as in the ordinary industrial or business sense determine the unit of an industrial establishment having regard no doubt to the scheme and object of the Act and other relevant provisions of the Mines Act 1952, or the Factories Act, 1948. What then is 'one establishment' in the ordinary industrial or business sense? The questions of unity or oneness presents difficulties when the industrial establishment consists of parts, units, departments, branches, etc. If it is strictly unitary in the sense of having one location and one unit only, there is little difficulty in saying that it is one establishment. Where, however, the industrial undertaking has parts, branches, departments, units etc. with different locations, near or distant, the question arises what test should be applied for determining what constitutes 'one establishment'. Several tests were referred to in the course of arguments before us, such as, geographical proximity, unity of ownership, management and control, unity of employment and conditions of service, functional integrality, general unity of purposes etc. To most of these we have referred while summarising the evidence of Mr. Dongray and the findings of the Tribunal thereon. It is perhaps, impossible to lay down any one test as an absolute and invariable test for all cases. The real purposes of these tests is to find out the true relation between the parts, branches, units, etc. it in their true relation they constitute one integrated whole, we say that the establishment is one, if on the contrary they do not constitute one integrated whole, such unit is then a separate unit. Now the relation between the units will be judged must depend on the facts proved, having regard to the scheme and object of the statute which given the right of unemployment compensation and also prescribes a disqualification thereof. Thus, in one case the unity of ownership, management and control may be the important test; in another case functional integrality or general unity may be the important test; in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. Indeed in a large number of cases several tests may fail for consideration at the same time. The difficulty of applying these tests arises because of the complexities of modern industrial organisation many enterprises may have functional integrity between factories which are separately owned, some may be integrated in part with units or factories having the same ownership and in part with factories or plants which are independently owned.

 


Of all these tests the most important appears to us to be that of functional 'integrality' and the question of unity of finance and employment and of labour. Unity of ownership exists exhypothesi. Where two units belong to proprietor there is almost always likelihood also of unity management. In all such cases therefore the Court has to consider with care how far there is 'functional integrality' meaning thereby such functional interdependence that one unit cannot exist conveniently and reasonably without the other and on the further question whether in matters of finance and employment the employer has actually kept the two units distinct or integrated.

 


 

10. To determine, whether different units of one employer constitute, 'one establishment' or 'separate establishment' various tests. Such as unity of ownership management and control, unity of employment, functional integrality and general unity of purposes will have to be applied. But it is not possible to lay down any one test as the absolute and invariable test for all cases. It depends upon the facts and circumstances of each case. However, if by their relationship with each other the branches, units or parts constitute one integrated whole, it can be said that it is 'one establishment'. If they do not constitute one integrated whole, it can not be said that it is 'one establishment'. If they do not constitute one integrated whole each unit is separate. If one unit can exist conveniently and reasonably without the other, they are not one but separate units. The test of integrality or commonness is the basis to hold that several units of one employer is 'one establishment.' In this context, it is material to restate the relevant portion of impugned order which reads -"*

Two things which are prominently discernible in this case and which have some bearing on clubbing of Tumkur Unit with Amelnar unit are the flow of initial capital of Rs. 2.42 crores from the company and the transfer of an old used machinery from Amelnar unit to Tumkur District. Here, again the company is a jurisdic person which can always provide funds to individual unit, from out of its own resources, keeping of the same time, the separate identity of each of the unit. This is one such case on hand. On the fact that a second hand machinery has come from Amelnar unit to Tumkur unit, we cannot draw a firm conclusion that Amelnar and Tumkur factories are one and the same, since it is only a stray factor which cannot tilt the balance in favour of the proposition that Tumkur unit is a part of Amelnar factory.

 


 

11. It is thus clear that there is material to hold that the petitioner-establishment and Amelnar unit in Maharashtra constitute one integrated whole. On the other hand there is material to show that one can exist conveniently and reasonably without the other. In the absence of functional integrality between the petitioner establishment and Amelnar unit at Maharashtra, it is not possible to hold that the establishment is a branch of M/s Wipro Ltd., Bombay and hence is not entitled for fresh infancy protection in terms of Section16 (1) (d) of the Act. The order of the respondent being contrary to its own finding is unsustainable in law.

 

12. Sri D. V. Shylendra Kumar was brought to my notice a letter addressed by the Company requesting for a Provident Fund Code number describing, the petitioner establishment as a Branch. It is not known in what context the expression 'Branch' is used in the said letter. However, in the absence of functional integrality between the two, the petitioner cannot be a Branch just because a reference is made in the letter to that effect.

 

13. Sri D. V. Shylendra Kumar next submits that, even if the petitioner is not a branch of Amelnar unit in Maharashtra, the order refusing fresh infancy protection to the petitioner, in terms of Section16 (1) (d) of the Act is still unassailable as it is the continuation of M/s Margarine & Refined Oil Co. (P) Ltd. a covered establishment. It is the case of the respondent that M/s Margarine & Refined Oil Co., (P) Ltd., was a covered establishment utilising the plant, machinery and other assets of M/s Margarine & Refined Oil Co., (P) Ltd. therefore it is the continuation of M/s Margarine and Refined Oil Co., (P) Ltd., in a new name. As M/s Margarine & Refined Oil Co., had contained infancy protection the same cannot be extended to the petitioner, which is the continuation of M/s Margarine & Refined Oil Company. In this context Sri Shylendra Kumar, learned Counsel for the respondent, had placed reliance on the judgment of the Supreme Court in Lakshmi Rattan Engineering Works v. Regional Provident Fund Commissioner, Punjab 1968 (1) LLJ 741 . That in the said case the Government of India, Ministry of Rehabilitation started a diesel engine factory at Faridabad in 1952. On 23.5.1955 the appellant therein purchased the said factory from the Government of India. In 1956 the appellant was informed by the respondent that it should deposit the due, on account of contribution and administrative charges under the Act. The appellant contended that it acquired the factory in 1955 and three years for the purpose of Section16 (1) (b) of the Act should be continued from the date on which it acquired the factory. Clause (ix) of the agreement for transfer of the factory provided that -"*

The purchaser agrees to take over and to employ all the 168 workers at present working in the said factory whose names and other particulars are mentioned in Schedule 4 annexed hereto on the wages specified therein with effect from the date on which the possession of the said factory is handed over to the purchaser."Considering all these materials, the Supreme Court has held -

 

 


 

 

 


 

 

Sri Shylendra Kumar further submits this view is reiterated by the Supreme Court in State of Punjab v. Satpal 1969 Indlaw SC 26 wherein it is held

 

 

 


 

 

Per contra, Sri B. C. Prabhakar, the learned Counsel appearing for petitioner would argue that it is true that M/s Margarine & Refined Oil Company has been described as a going concern in the transfer documents but it is a misnomer. M/s Margarine Company was closed long back, it had stopped its operation, discharged all the employees as long back as on 1980. It was a closed establishment and its purchase by a new and independent company to start a new establishment will not result in the continuity of the closed establishment. The respondent has also admitted that M/s Margarine & Refined Oil Co., was closed. Hence the description of M/s Margarine & Refined Oil Co. as a 'going concern' is nothing but a misnomer.

 

14. It is further contended by Sri B. C. Prabhakar that enquiry under Section7A of the Act was held on the issue, whether or not the petitioner establishment is a branch of Amelnar unit in Maharashtra and not on whether the petitioner is the continuation of M/s Margarine & Refined Oil Co. Therefore the petitioner had no sufficient opportunity to produce material to show that is not a continuation of M/s Margarine & Refined Oil Co. He further submits that even otherwise the material on record would establish that the petitioner-establishment is not a continuation of M/s Margarine & Refined Oil Co.

 

15. In this context, Sri. B. C. Prabhakar placed reliance on a number of Decisions, including P. G. Textile Mills (P) Ltd. v. Union of India & Others, 1978 Indlaw SC 45 and Gammon India Ltd. v. Regional Provident Fund Commissioner 1990 (2) CLR 646. In P. G. Textile Mills (P) Ltd., case wherein the facts are almost similar to the facts of this case, the High Court of Gujarat has held -

 

 

 


In Gammon India Ltd. case Supra this Court after considering the judgment of the Supreme Court in 1984 Indlaw SC 297 has held -

 

15.

 


 

 

16. It is clear from the aforesaid Decisions that where a new industrial establishment is started by a new owner/company having purchased and utilising the plants and machineries and other assets of a closed establishment, with new employees, at different place with additional expenditure, it cannot be said that the new establishment is the continuation of the closed establishment.

 

17. It is seen from the records produced by Sri D. V. Shylendra Kumar, that M/s Margarine and Refined Oil Co. (P) Ltd., had stopped its operation, it had discharged all its employees except two, as long back as on 12.4.1980. Production was stopped it was a closed unit. That in 1985, the company purchased the assets of M/s Margarine and Refined Oil Company excluding lands and buildings as a going concern for a sum of Rs. 21 lakhs agreeing to continue two employees. The petitioner-establishment secured all the incentives and concessions from the Government purchased second hand machineries at a depreciated value from Amelnar unit and installed the factory at Tumkur, utilising the machineries purchased from M/s Margarine and Refined Oil Co. and their Amelnar unit secured financial assistance to the tune of Rs. 2.42 crores from the Head Office with a further loan of Rs. 435 lakhs from various banks towards modernisation and working capital. The employees are all new employees. In these circumstances it is not possible to hold that the petitioner establishment is the continuation of M/s Margarine and Refined Oil Co. Ltd.

 

18. The respondent appeared to have come to the conclusion that the petitioner-establishment is a continuation of M/s Margarine and Refined Oil Company Ltd. on the basis of the description of M/s Margarine and Refined Oil Co. Ltd., as a 'going concern' in the transfer documents. It is true that M/s Margarine and Refined Oil Co. Ltd., was described in the transfer documents between the Company and M/s Margarine and Refined Oil Company as a 'going concern. In this context, the contention of Sri B. C. Prabhakar is that even though M/s Margarine and Refined Oil Company Ltd., is described as a going concern in the documents. It was actually not a going concern. The expression going concern is only a misnomer. The closure of the company is also admitted by the respondent. That M/s Margarine and Refined Oil Co. was closed long back and it was not functioning at all. Therefore the purchase of the closed establishment in order to start a new establishment by a new company will not result in the continuity of the establishment. The judgment of the Supreme Court in Lakshmi Rattan Engineering Works (supra) and Satpal (supra) cases are not applicable to this case as the facts are distinguishable from one another. That in the said cases the industrial undertakings which were in operation were taken over by the appellants therein, whereas M/s Margarine and Refined Oil Co. (Ltd.) was a closed concern.

 

19. Sri D. V. Shylendra Kumar, learned Counsel for the respondent would submit that M/s Margarine and Refined Oil Co. Ltd., was admittedly purchased by the company as a going concern. When it was purchased as a going concern it is now not open to the petitioner to contend that it was a closed unit contrary to his own document and hence the establishment started from and out of the resources of M/s Margarine and Refined Oil Co. Ltd., shall be held to be the continuation of the said establishment. Per contra Sri B. C. Prabhakar, submits that the description of M/s Margarine and Refined Oil Company Ltd., in the documents as a going concern was only a misnomer."Going concern" according to Mr. Prabhakar, who gets support from Mitra's Legal Dictionary, is a business in actual operation and working order, in which the transfer of ownership would effect no interruption of business. A valuation of business on the basis of a going concern is higher than on a break up value. In this connection it is also useful to notice the meaning of the word "going concern". Black's Legal Dictionary, page 622, gives the following meaning -

 

 


 

20. Hence the description of an undertaking, which is not in actual operation and working order and which has discharged its workmen and stopped production and whose work has come to a grinding halt for over a period of years as a "going concern" is complete misnomer.

 

21. It is not the case of the respondent that M/s Margarine and Refined Oil Co. Ltd., was in actual operation and working order as on the date of the transfer. On the other hand the respondent has stated in the order that it was a closed company. It is seen from the records that all the employees were discharged as long back as on 12.4.1980, 5 years thereafter the factory was sold. Therefore the contention of Sri B. C. Prabhakar that the description of M/s Margarine and Refined Oil Co. Ltd., as a going concern is a misnomer commends acceptance. Even the sale of registration certificate and employment of two persons will not change the nature of transaction. In these circumstances is is to possible to held that the petitioner establishment is the continuation of M/s Margarine and Refined Oil Co. (P) Ltd., and hence continued to be an establishment in operation and not entitled for infancy protection in terms of Section16 (1) (d) of the Act. the petitioner-establishment on the other hand, is a new and independent establishment and hence entitled for infancy protection in terms of Section16 (1) (d) of the Act. The impugned order is therefore liable to be quashed.

 

22. In the result -

 

(a) The petition is allowed. Rule made absolute.

 

(b) The order passed by respondent in No. E/4/93 dated nil and communicated to the petitioner through letter No. KN/PF/ENF-V/TMK-DVN/147/KN/14294-93 dated 15.2.1993. Annexure-4 is hereby quashed.

 

(c) In the circumstances of the case, no order as to costs.

 

 

 

 

 

 

H. S. Thukral (Lawyer)     27 June 2008

 


1960 INDLAW SC 55

[SUPREME COURT OF INDIA] 

 

Pratap Press, Etc

v

Their Workmen

 

 

K. C. Das Gupta

 

23 Feb 1960

 

BENCH

K. C. Das Gupta

 

COMPARATIVE CITATIONS

1960 (1) LLJ 497, 1960 AIR(SC) 1213, 1960 INDLAW SC 55

 

CASES REFERRED TO

Associated Cement Companies Limited, Chaibassa Cementwo v Their Workmen 1959 Indlaw SC 115

Workers In Hindi Prachar Press (Madras Press Labour Union) v Hindi Prachar Press 1958 Indlaw MAD 64

 

THIS JUDGMENT WAS FOLLOWED IN 35 CASE(S)

 

 

CASE NO

Civil Appeal Nos. 189 and 482 of 1958,

 

 

KEYWORDS

Labour & Industrial Law, Tribunal, Welfare, Victimization, Sovereign, Lay-Off

 

 

.JUDGMENT TEXT

 

The Judgment was delivered by DAS GUPTA, J

 

Per Das Gupta, JWhen an entrepreneur - whether an individual proprietor or a partnership firm, or incorporated company - is engaged in several activities each of which comes within the definition of "industry" in the Industrial Disputes Act, the question often arises whether these several activities together form one industrial unit or are distinct separate industrial units. It seldom happens that the several ventures can show in every year equally successful results and so when a dispute arises between such an owner and the workmen engaged in one of the ventures over bonus, not only the quantum of the bonus which may be reasonably payable to workmen, but the very question whether any sum will be payable at all or not, may well depend on whether the overall results, or the results of the particular venture whether the workmen with whom the dispute has arisen are employed are taken into consideration. A proper decision of such a dispute therefore requires in the first place a determination of the question whether the several ventures in which the employers of these workmen are engaged form one industrial unit with the particular venture in which these workmen are employed. That precisely is the question which has arisen in these two appeals between the management of the Pratap Press and its workmen. This press was started by its proprietor Sri Narendra in 1951. He started the publication of the paper Vir Arjun in April 1954. He was also one of the partners of the firm which owned another paper the Daily Pratap. A dispute over a claim of bonus raised by the workmen of the press having been referred to the industrial tribunal, the workmen contended in the first place that the three activities - the press, the Vir Arjun as also the Daily Pratap - were in reality the industrial ventures of one family consisting of Sri Narendra and his sons and the working results - whether profit or loss of these three concerns - should be pooled together for the decision of the question what bonus, if any, should be paid. Their alternative contention was that the results of the press only should be considered. The employer contended that the workmen's contention that the three concerns should be treated as one could not be accepted inasmuch as the ownership of the Daily Pratap was a partnership firm of which he was only one of the partners while the other two, viz., the press and the Vir Arjun, were owned by him. His case was that these two, the press and the Vir Arjun, were parts of one single industry and the total results of these two have to be considered in deciding whether bonus should be allowed or not. The industrial tribunal accepted the employer's contention that the results of the Daily Pratap could not be taken into consideration for the simple reason that the ownership of the Daily Pratap was different from the ownership of the Pratap Press and the Vir Arjun paper. On the next question whether the Pratap Press and the Vir Arjun form one industrial unit or two distinct industrial units its decision was however against the employer's contention. On a consideration of the material before it, it held that the Vir Arjun was a distinct and separate industrial entity from the Pratap Press and so the results of the Vir Arjun could not be taken into consideration in deciding the question of bonus. It may be mentioned here that the question is of considerable importance in the facts of these appeals as admittedly if the working results of Vir Arjun are taken into consideration, the position would be that Vir Arjun having incurred losses in each of these years these would wipe out the profits made by the Pratap Press in those years and no surplus profits would remain for distribution as bonus.The question whether the two activities in which the single owner is engaged are one industrial unit or two distinct industrial units is not always easy of solution. No hard-and-fast rule can be laid down for the decision of the question and each case has to be decided on its own peculiar facts. In some cases the two activities each of which by itself comes within the definition of "industry" are so closely linked together that no reasonable man would consider them as independent industries. There may be other cases whether the connexion between the two activities is not by itself sufficient to justify an answer one way or the other, but the employer's own conduct in mixing up or not mixing up the capital, staff and management may often provide a certain answer.

 

An instance in the first class of cases is furnished by the case of Hindi Preacher Press case 1958 Indlaw MAD 64] where the question was whether the workmen of the press were entitled to a bonus. The tribunal found that the press was only a department or a section of the activities of an organization or an institution know as Dakshina Bharat Hindi Prachar Sabha. The main object of that institution was the propagation of knowledge of Hindi in South India. For that purpose there were several sections like library section, publicity section, book sales section, training centres for teachers who are paid stipends and are given free lodging, etc. It was held that the various connected activities of the institution were carried on through various departments which are interdependent on one another and the income and expenditure of the institution as a whole must be taken into consideration for the purpose of ascertaining the available surplus to meet the demand for bonus made by workmen employed in one of such departments. G. G. Industries Mazdoor Union v. G. G. Tin Factory, Agra 1952 (1) LLJ 507], on the other hand is a case where a decision was based on the employer's conduct. The employer was the sole proprietor of the G.G. Tin Factory. He was also the sole proprietor of the G.G. Chocolate Factory, the G.G. Toy Factory, the G.G. Fruit Factory and the Krishna Ice Factory. The dispute before the tribunal was as regards the increments in the wages of the workmen employed in the G.G. Tin Factory and bonus claimed by the workmen of the said factory for the year 1949. If all the factories of which he was the sole proprietor were to be regarded as units of the one and the same industry, the overall picture was a net less of about Rs. 1, 25, 000. The Labour Appellate Tribunal however found that for each factory separate accounts were kept and separate balance sheets prepared. The capital invested by the proprietor in respect of each of those factories had been kept distinct. In deciding that the G.G. Tin Factory should be considered a separate and distinct industrial unit the tribunal observed :

 


 

 

In Pipe Mill Mazdoor Union, Lucknow v. Indian Hume Pipe Company, Ltd. 1951 (1) LLJ 379], the question arose whether the industry carried on by the Lucknow branch of the company was a separate entity from the several other branches. The company had supplied some written information with regard to the Lucknow branch at the request of the regional conciliation board. This information showed that the accounts of the Lucknow branch was kept separately, that the amount of capital employed in the factory at Lucknow was also separately shown in 1947-48 and again in 1948-49. The Appellate Tribunal observed :

 

 

 


 

 

The Tribunal decided to consider on that basis whether any bonus could be awarded to the workmen of the Lucknow branch.

 

In Associated Cement Company v. Their workmen 1959 Indlaw SC 115] this Court had to consider the question whether the employers' defence to a claim for lay-off compensation by the workers of the Chaibasa Cement Works that laying off was due to a strike in another part of the establishment, viz., limestone quarry at Rajanka, was good. In other words, the question was whether the limestone quarry of Rajanka formed part of the establishment known as the Chaibasa Cement Works within the meaning of S.25E (iii) of the Industrial Disputes Act. While pointing out that it was impossible to lay down any one test as an absolute and invariable test for all cases, it observed that the real purpose of those tests would be to find out the true relation between the parts, branches, units, etc. This Court, however, mentioned certain tests which might be useful in deciding whether two units form part of the same establishment. Unity of ownership, unity of management and control, unity of finance and unity of labour, unity of employment and unity of functional "integrality" were the tests which the Court applied in that case. It is obvious there is an essential difference between the question whether the two units form part of one establishment for the purposes of S. 25E (iii) and the question whether they form part of one single industry for the purposes of calculation of the surplus profits for distribution of bonus to workmen in one of the units. Some assistance can still nevertheless be obtained from the enumeration of the tests in that case. Of all these tests the most important appears to us to be that of functional "integrality" and the question of unity of finance and employment and of labour. Unity of ownership exists ex hypothesie. Where two units belong to a proprietor, there is almost always likelihood also of unity of management. In all such cases, therefore, the Court has to consider with care how far there is "functional integrality" meaning thereby such functional interdependence that one unit cannot exist conveniently and reasonably without the other and on the further question whether in matter of finance and employment the employer has actually kept the two units distinct or integrated.Coming now to the facts of the present appeals, we find that the functions of the press and the Vir Arjun paper cannot be considered to be so interdependent that one cannot exist without the other. That many presses exist without any paper being published by the same owner is common knowledge and is not seriously disputed. Nor is it disputed that an industry of publishing a paper may well exist without the same owner running a press for the printing of the paper. The very fact that Daily Pratap owned by a partnership firm was being printed at the Pratap Press belonging to Sri Narenda itself shows this very clearly. It cannot therefore be said that there is such functional interdependence between the press unit and the paper unit that the two should reasonably be considered as forming one industrial unit.

 

Along with this it is necessary to consider the conduct of the businessman himself. Has he mixed up the capital of the two, the profits of the two and the labour force of the two units ? These are matters on which the employer is the best person to give evidence from the records of his concerns. No evidence has however been produced to show that at any time before the dispute was raised he treated the capital employed in the two units as coming from one single capital fund, nor anything to show that he pooled the profits or that the workmen were treated as belonging to one establishment. It is interesting to note that there is no record showing whether for his own purposes he treated the assets of the units as forming one composite whole or the assets of two distinct units has been produced. The profit and loss accounts which we find on the record appears to have been prepared sometime on 26 December 1951 - apparently after the reference had been made and the dispute whether these units were one or two, had arisen. No weight can therefore be attached to the fact that in this profit and loss account both the receipts from the press and the receipts from the Vir Arjun were shown as the income.Some account books appear to have been produced in Court but it is nobody's case that these throw any light on the question whether the capital fund or the labour force for the two units were treated as one and the same. It is reasonable to think that the account books were produced only to show the actual working results of the Vir Arjun. It has to be noticed that the tribunal thought that the accounts had not been kept in a satisfactory manner and there was room for suspicion about the correctness of the same.

 

The position, therefore, is that the activities of the press are independent of the activities of the paper unit and there is no record from which it can be ascertained how the employer himself treated these two units. When in this position of things we find the employer himself making a statement that

 


the conclusion reached by the tribunal that the press and the Vir Arjun paper are distinct and separate industrial units, appears to be reasonable and cannot be successfully challenged.

 

Once this conclusion is reached, the question of what bonus is payable depends on a proper calculation of the available surplus of the Pratap Press itself without taking into consideration the loss incurred by the Vir Arjun. No objection has been taken before us to the calculation made by the tribunal on that basis. As the only point raised in this appeal, viz., that the Vir Arjun and the Pratap Press form one industrial unit, fails, the appeal is dismissed with costs.

 

The position is the same in the other appeal, i.e., Appeal No. 189 of 1959. There also the only question raised is that the Pratap Press and the Vir Arjun are two parts of one industrial unit. For the reasons already mentioned in the first appeal we must hold that these must be held to be distinct industrial units and that the workmen of the press entitled to such bonus as the working results of the Pratap Press justify. This appeal is also therefore dismissed with costs.

H. S. Thukral (Lawyer)     27 June 2008

 


[SUPREME COURT OF INDIA] 

 

D.C.M. Chemical Works

v

Its Workmen

 

 

K. N. Wanchoo

 

01 Mar 1962

 

BENCH

K. N. Wanchoo

 

COMPARATIVE CITATIONS

1962 (1) LLJ 388, 1962 (4) FLR 409, 1962 (3) SCR 516, 1962 INDLAW SC 16

 

CASES REFERRED TO

Fine Knitting Company, Limited v Industrial Court and Others 1962 Indlaw SC 29

Honorary Secretary, South India Millowners Association and Others v Secretary, Coimbatore District Textile Workers' Union and Others 1962 Indlaw SC 211

Management of Pakshiraja Studios v Workers In Pakshiraja Studios Represented By The Secretary, Commercial and Allied Employees' Union 1961 Indlaw SC 514

Pratap Press, Etc v Their Workmen 1960 Indlaw SC 55

Associated Cement Companies Limited, Chaibassa Cementwo v Their Workmen 1959 Indlaw SC 115

Messrs. Crown Aluminium Works v Their Workmen 1957 Indlaw SC 142

 

THIS JUDGMENT WAS FOLLOWED IN 9 CASE(S)

 

 

CASE NO

Civil Appeal Nos. 4 and 5 of 1962,

 

 

KEYWORDS

Labour & Industrial Law, Tribunal, Dearness Allowance, Fair Wage, Financial Capacity, Lay-Off

 

 

.JUDGMENT TEXT

 

The Judgment was delivered by WANCHOO, J

 

Per Wanchoo, JThese two appeals by special leave arise out of the same award of the Industrial tribunal, Delhi, and will be dealt with together. Appeal No. 4 is by the management of the D.C.M. Chemical Works while Appeal No. 5 is by the workmen. The management hereinafter will be referred to as the appellant for the purposes of both appeals and the workmen will be referred to as respondents. A dispute arose between the parties with respect to various matters including wage scales, dearness allowance and gratuity. As the parties could not come to terms, it was referred to the Industrial tribunal for adjudication and there were as many as eleven issues which were the subject-matter of reference. The main point, however, on which the parties differed was whether in determining the wage structure, etc., of the chemical works which is a constituent unit of the Delhi Cloth and General Mills, Limited (hereinafter called the company), the overall position of the company should be taken into account or only the position of this one unit, namely, the chemical works. The respondents contended that the chemical works was an integral part of the company and therefore the overall position of the company should be taken into account and the wage structure, etc., fixed accordingly; in particular it was pointed out that there were differences in wage structure, etc., between the various units which were controlled and owned by the company and which were all situate in the same area in Delhi and that these differences should be eliminated and all the enterprises in Delhi controlled by the company should be treated on the same footing. On the other hand, the contention of the appellant was that though the chemical works was one unit of a large number of industries controlled by the company, some of which were situate in the same area in Delhi, the various units were independent industries and each unit had to be considered on its own and the wage structure, etc., fixed on the basis of the financial position of each unit; in particular, it was urged that two of the main units in Delhi were the textile mills run by the company and the claim of the respondents that the chemical works should in all matters be treated on a par with the textile units, was untenable, on the ground, among others, that it would be against the principle of Industry-cum-region. Before, therefore, we take up the particular matters raised in the two appeals before us, we shall first have to consider whether the claim of the respondents that the overall position of the company should be taken into account in fixing the wage structure, etc., of the chemical works is sound; for if that position to accepted, the award may have to be set aside as the tribunal has held that in the circumstances of this case, the chemical works should be treated as an independent unit and that the wage structure, etc., therein cannot be fixed on the basis of the overall position of the company.In order to appreciate the various contentions put forward by the parties on this question, it may be useful to look into the history of the company and how it has grown. The company came into existence in 1889 with a modest capital of about Rs. 10 lakhs. It seems that the policy of those in control of the company was to plough back a substantial part of the profits into the industry itself and to create a reserve for that purpose. Originally the company started with a textile mill but in course of time, with the help of ploughed back profits and also with the aid of further capital, the company set up a large number of other industrial concerns in Delhi and elsewhere. In Delhi itself, the company now has the Delhi Cloth Mills, the Swatantra Bharat Mills, which are both textile concerns, the D.C.M. Tent Factory established in 1940, and the chemical works with which we are concerned in the present appeals. Besides, there are other industrial concerns owned and controlled by the company outside Delhi, as for example, the Daurala Sugar Works established in 1932, the Lyallpur Cotton Mills in 1934 and the Mawana Sugar Works in 1940.

 

The chemical works were started in 1942 and the only line of production at that time was sulphuric acid. In 1943, an alum plant was set up, in 1944 a soap plant, in 1945 a superphosphate plant and in 1946 a contact sulphuric acid plant. In 1947, a vanaspati plant was established and also a power-house was erected in order to meet the requirements of the vanaspati plant. In 1948-49, a caustic soda plant was added, so that what began as a modest subsidiary to the textile mills, has now expanded into a full-fledged unit for production of chemicals and vanaspati. The total capital which was originally about Rs. 10 lakhs when the company started in 1889 has now grown to Rs. 4 crores. Even so, the capital employed in the chemical works has always been found from the reserves of the company and is now of the order of over a crore. It is also not in dispute that very little out of the production of the chemical works is used in the textile mills of the company and that by far most of the production is sold in the open market. Further, even the small part of the production that is used by other units is charged at market rates and not at cost price, so that for all practical purposes, the chemical works is being run as an independent unit.Certain features have, however, been pointed out by the respondents to show that the overall position of the company should be taken into account in determining the wage structure, etc., of the chemical works which should be treated as an integral part of the entire industry of all kinds carried on by the company. These features are :

 

No unit has any separate paid up capital and there is no separate depreciation fund or reserve fund for each units;

 

the company publishes one balance-sheet showing the total profits of all the under-takings after taking into account losses incurred in any undertaking;

 

the shareholders of the company are the shareholders in all the units;

 

the company has got one board of directors and a common managing agency and the policy of the various units is determined on the basis of the company as one integrated unit;

 

the profits of the company are all pooled together and the profits in any undertaking are not earmarked for expenditure in that undertaking;

 

the dividends are paid from the profits of the company as a whole;

 

the company has a single provident fund for all its employees in all its units and the company has established various units from the profits earned by the company as a whole in the past and income-tax is paid on the entire profits of the company made by all the units after taking into account the losses, if any, incurred by a particular unit.

 

It is urged, therefore, on behalf of the respondents that these features are sufficient to establish that all the different industries carried on by the company are one integrated whole and therefore in fixing the wage structure, etc., for the chemical works, this overall position should be taken into account. There is, however, in our opinion, a very cogent reply to these features pointed out on behalf of the respondents, and that is, that the company is a single limited concern owning and controlling various industrial units of different kinds under it and therefore under the company law as the company is one legal entity, these features are bound to be common and may not be enough to lead to the conclusion that the various undertakings carried on by the company are one integrated whole and therefore when wage structure, etc., has to be fixed in any particular unit, the overall position of the company as a whole must be taken into account.On the other hand, there are certain features which have been pointed out by the tribunal and which are not in dispute which go to show that the company has been treating its various units as independent concerns in actual practice. Each unit has separate books of account and separate profit and loss account showing how each particular business is faring. Each unit has separate muster-rolls for its employees and transfers from one unit to the other, even where such transfers are possible considering the utterly different kinds of businesses that the company is carrying on, usually take place with the consent of the employees concerned. Further each unit has got its own separate wages and separate dearness allowance and other different allowances and bonus is also paid differently in each concern. Further, even where sales take place from one unit to another, they take place at market-rate and not at cost price and are adjusted on this basis in the books of account. Lastly, though there is a common board of directors and a common managing agency of the company, each unit has its own separate management as it is bound to be for the business carried on by different units is in many cases utterly different.

 

It is on these facts that we have to see whether the chemical works can be said to be so integrated with the other units of the company as to justify the conclusion that it is part of the same business, and the entire business carried on by the company is one establishment, and therefore it would not be right to have different wage structure, dearness allowance, etc., in the same establishment This matter was considered by this court in connexion with lay-off in Associated Cement Companies, Limited (Chaibasa Cement Works, Jhinkpani) v. Their workmen 1959 Indlaw SC 115] where tests were laid down for determining whether a particular unit is part of a bigger establishment. These tests included geographical proximity, unity of ownership, management and control, unity of employment and conditions of services functional integrality and general unity of purpose. But it was pointed out that it was impossible to lay down any one tests as an absolute and invariable test for all cases and the real purpose of these tests was to find out the true relation between the parts, branches and units. If in their true relation they constitute one integrated whole, then the establishment is one; if, on the contrary, they do not constitute one integrated whole, each unit to then a separate unit. How the relation between the units will be judged must depend on the facts proved. Thus in one case the unity of ownership, management and control may be the important test, in another case functional integrality or general unity may be the important test; and in still another case, the important test may be the unity of employment. It was pointed out that in a large number of cases, several tests may fall for consideration at the same time and the difficulty of applying these tests arises because of the complexities of modern industrial organization. The matter was considered again by this Court in Pratab Press, etc. v. Workmen 1960 Indlaw SC 55]; Pakshiraja Studios v. Workmen 1961 Indlaw SC 514]; South India Millowners' Association v. Coimbatore District Textile Workers' Union 1962 Indlaw SC 211 (infra)] and Fine Knitting Co., Ltd. v. Industrial Court, Bombay 1962 Indlaw SC 29 (infra)]. In the case of Fine Knitting Co., this Court was considering one limited company but it was hold in the circumstances that even though there was unity of ownership, management and control, the two parts of the same concern were different units as there was no functional integrality between them. It is on the basis of these tests that we have to consider whether the tribunal was right in its conclusion that the chemical works has to be treated as an independent unit.The common features which have been emphasized on behalf of the respondents are in our opinion clearly capable of explanation on the ground that the company is a limited concern and carries on different kinds of business.But as in law under the Companies Act, the company being a limited concern to one legal entity, the common features on which the respondents rely, follow from that one single circumstance, namely, that the company is a limited concern governed by the company law. It would, therefore, in our opinion be not right to emphasize these common features and to hold on their basis only that the various businesses carried on by the company have to be treated as one integrated whole for the purposes of wage structure, etc. The outstanding fact in the present case is that though a large number of businesses is being carried on by the company, their nature in many cases is utterly different and one has, generally speaking, nothing to do with the other. The three main lines of business which the company is carrying on are sugar, textiles and chemicals. It is obvious that there is nothing common between these three different lines of business and there can be no question of one depending upon the other and there cannot be functional integrality generally speaking between these three lines of business. There might be some connexion between the chemical works and the textile mills of the company inasmuch as come of the chemicals might be used in the textile mills; but the evidence shows that a very small proportion of the chemicals produced in the chemical works is used in the textile mills and that most of the production is sold in the open market. It cannot therefore be said that the chemical works as it now exists is there for the purposes of the textile mills and is thus integrated with the textile mills. Even in the matter of employment, the evidence is that there is separate recruitment of labour for the different units and each unit has separate muster-rolls of employees and this is quite natural considering that different skill lie required for the three lines of business carried on by the company. It cannot also be said that there is any essential dependence of the chemical works on the textile units or that one cannot be operated without the other. Further the way in which the company has been dealing with different units in the past also shows that they have been treated as independent units. Each unit has its own separate labour union and separate agreements are entered into between the company and its unions with respect to the conditions of service which are also different for different units. Even in the matter of bonus there are differences between the different units and these differences sometimes arose out of the different agreements between the various units and their unions. It appears that even in the case of units carrying on the same business, as for example, textile, the workmen themselves contended in an earlier adjudication that the Delhi Cloth Mills and the Swatantra Bharat Mills were two distinct and separate units of the company. In any case whatever may be said as to the units in the same line of business, it is in our opinion perfectly clear that there is no nexus of integration between different lines of business carried on by the company on the facts which have been proved in this case. We are of opinion therefore that the ratio of the decision in the Fine Knitting Co. case 1962 Indlaw SC 29] (supra) applies to the facts of this case and it must be hold that the chemical works is an independent unit and therefore in fixing the wage structure, etc., we have to look to the position of the chemical works only and cannot integrate it with other units and consider its wage structure, etc., on the basis of such integration.It is in the background of the above finding, namely, that the chemical works is an independent unit that we now come to the specific points raised in the two appeals. We shall first take the appeal by the workmen. The following four contentions only were pressed before us on their behalf :

 

(i) Even considering the chemical works as an independent unit, the tribunal should have fixed a wage structure including incremental scales;

 

(ii) the tribunal should have given the same minimum scales to the workmen employed in the canteen as are being given to the other workmen in this concern;

 

(iii) the tribunal should have made those members of the civil engineering department who had been working for more than one year permanent and should have given them the same terms and conditions of service as are enjoyed by other workmen of the concern; and

 

(iv) the tribunal should have awarded further bonus to the workmen.

 

Re. (i) : The contention on behalf of the respondents in this respect to that there are no incremental scales in this concern and the tribunal should have at any rate made a beginning by fixing some incremental scales for the workmen. The tribunal, however, has refused to fix incremental scales on the ground that the concern has neither financial ability nor stability to justify the fixing of incremental scales at the present time. It is not in dispute that throughout the course of its existence, the chemical works has made profits only in two years and that for the rest of the time it has been making losses which had to be met by the company out of the profits of other units. Reliance in this connexion has been placed on behalf of the respondents on certain observations in the Tariff Commission Report and on a book called Fertilizers Statistics in India to show that the chemical industry has a very prosperous future in front of it. Reliance has also been placed on a communication addressed by the appellant to the respondents in which it has been said that judging from sound business principles, the chemical works had not yet turned the corner of losses, but the position appeared brighter, and it was hoped that with the co-operation of labour, the chemical works would be an asset to the D.C.M. family. Our attention has also been drawn to various annual reports in which an optimistic picture has been painted by the directors for the benefit of the shareholders. We agree however with the tribunal that in spite of the possibility that in time to come the chemical works might acquire stability and prove a source of increasing profit to the company, the fact remains that up to now the chemical works has been running at a loss except for two years and one cannot be certain that it will start earning profits soon. In these circumstances it seems to us that the tribunal was justified in not framing an incremental scale of wages at the present juncture as that would put a heavy strain on the finances of the chemical works which has yet to attain financial stability. At the present moment the losses incurred in this unit have to be met from the profits earned in other units of the company and in this situation we do not think that the tribunal was wrong in refusing to frame incremental scales.It is, however, urged on behalf of the respondents that if in the course of the last twenty years, the capital invested in the chemical works ham increased tremendously as compared to the modest amount with which it was started in 1942 and if the company can find capital for the purpose of expansion, it should be able to pay incremental scales of wages by dipping into the same source from which it has been able to find capital. In effect this argument means that even though the concern may be making losses year after year, it should find money for paying the labour force higher wages in spite of the circumstance that that may load it into incurring further losses. The argument seems to be that even though there may be losses, the concern must pay higher wages to the workmen and if necessary pay them out of what may be called capital. Now this argument would, in our opinion, be unanswerable if the claim was for what is called minimum wage-See Crown Aluminium Works v. Their workmen 1957 Indlaw SC 142]. If the wages paid by the appellant in the present case were below the minimum wage, the tribunal would certainly be justified in ordering it to pay the minimum wage, for no industry can have a right to exist if it cannot pay wages at the bare subsistence level.

 

Where it is a case of payment of minimum wage, the tribunal can insist on the same being found, if necessary, even out of capital. But this to not a case of bare minimum wage and we are dealing with a case of fair wage which is above the bare minimum wage. It is not even the case of the respondents that they are not getting the bare minimum wage. Their case is that they should be given a fair wage, and that the present wages, though above the bare minimum wage, are still not fair enough and therefore should be increased and an incremental scale should be fixed. In such a situation we are of opinion that the present financial condition of the concern and its stability are both necessary to be considered before an increased fair wage can be given. Both the present capacity of the employer to pay the increased rates of incremental wages and its future capacity have to be taken into account in determining an increased level of fair wages based on an incremental scale. Thus both financial ability at present and financial stability in the near future must be there to justify fixation of an increased fair wage on an incremental scale. We do not think it will be right to insist on an increased fair wage on an incremental scale in a case where the financial capacity and the financial stability as judged by business principles are both lacking. Nor would it in our opinion be right to compel the employer to bear the burden of an increased fair wage on an incremental scale and tell him to find money from what may in effect be capital, for such a situation in ordinary cases can lead only to one result, namely, the closure of the business concern, which may be more detrimental to the workmen. Therefore carrying on with the present scale of fair wages and hoping that the financial ability and stability of the concern will improve, with the result that increased fair wage on an incremental basis may be fixed in future to the only alternative at present even in the interest of the workmen employed in this concern. We therefore agree with the tribunal that in the circumstances no case has been made for fixing an incremental scale of wages at the present juncture. The contention on this head must therefore be rejected.Re. (ii) : As to the canteen workmen, it appears that the canteen to run by the appellant departmentally on a no-profit-no-loss basis. The workmen employed in the canteen are the workmen of the appellant and their number is sixteen or seventeen. The minimum basic wage for unskilled workmen in this concern at the relevant time was Rs. 38 plus Rs. 55, i.e., Rs. 93; but the workmen in the canteen get consolidated wages and all of them (except one) get much less than the minimum, the figures varying from Rs. 50 to Rs. 78. The tribunal has held that there is no reason why the conditions of service of the workmen in the canteen should not be brought on a par with the conditions of service of the rest of the workmen. It, therefore, ordered that the workmen in the canteen would be entitled to the same facilities relating to leave, provident fund, bonus, and gratuity, etc., as are available to the other workmen in the chemical works; but so far as wages and dearness allowance are concerned, it has not given them even the minimum as indicated above. The case of the appellant was that even if the minimum was paid to the workmen in the canteen, the Price of the various foodstuffs supplied by the canteen to the workmen would go up substantially and it was on that ground that the appellant resisted the increase in the wages of those workmen in the canteen who are getting leas than the minimum of Rs. 93. The tribunal has held-and we think rightly-that the fact that the bettering of the conditions of service of the workmen in the canteen may load to a rise in the price of things sold there, is no reason for refusing the demand of the workmen; but it has not carried into effect fully the implications of this observation. It has ordered that same conditions as to leave facilities, etc., should be extended to the canteen workmen but has stopped short of giving them the same wages and dearness allowance. The reason why the tribunal did not give the workmen the same wages and dearness allowance is that there was no satisfactory material before it to permit it to fix wages and dearness allowance for the workmen in the canteen. We are of opinion that there is no reason why the tribunal should not have at least granted the minimum which is paid to the other workmen in the concern to those workmen in the canteen who are getting lose than the minimum. We can see no reason for not giving them also the minimum wages as indicated above. This will certainly result in bringing the fifteen workmen who are getting between Rs. 50 and Rs. 78 per mensem as consolidated wages into an equal position, for each will then get the minimum, namely, Rs. 38 plus Rs. 55 and may remove part of the discontent. In the circumstances that is all that can be done in the absence of the material to which the tribunal has referred. Therefore, the wages of those fifteen workmen who are getting less than the minimum should be brought to the same level. There is no reason why they should not get such benefits as may be due to them, by their wages being brought to the same minimum as the wages of the other workmen in the concern. We, therefore, disagree with the tribunal with respect to the workmen employed in the canteen and order that the wages of those workmen who are getting less than the minimum paid to the other workmen in the concern should be brought to the same minimum level. The rest of the award on this head will stand. The minimum wages as above will be paid from the date the tribunal has ordered its award to come into force. Re. (iii) : The claim of the workmen in this connexion was that there were three hundred workmen employed in the civil engineering department and that they should be made permanent. The tribunal, however, rejected this contention and pointed out that most of the workmen were temporarily engaged to carry on construction work which was of a temporary nature and therefore they could not be made permanent simply because the construction had lasted for more than a year. This view of the tribunal is in our view correct in so far as the claim put forward with respect to all the three hundred workmen was concerned. It appears, however, that at the time when the tribunal recorded evidence, the large majority of these three hundred workmen had been discharged because they were no longer required and only about 65 remained in service. It appears from the evidence of the joint works manager that a skeleton staff on the civil engineering side is kept for maintenance of buildings and this skeleton staff is of a more or less permanent nature. The argument therefore before us is that at any rate this skeleton staff should be made permanent. It was, however, urged on behalf of the appellant that this was not the way in which the matter was put before the tribunal. The position now is however clear that a skeleton staff is kept on a permanent basis for the civil engineering department and it seems to us fair that the appellant should be directed to make this skeleton staff permanent and give them the same facilities and wages, etc., as are given to the other workmen. We, therefore, direct that the appellant shall make such of the skeleton staff as is maintained for civil engineering purpose permanent and give them the same conditions of service including the same minimum wages, etc., as to the rest of the workmen. It is however left to the discretion of the appellant to determine what should be the strength of this staff and which persons should be retained as permanent employees. We say this because the matter was not gone into from this point of view before the tribunal and we have no material on which we ourselves can determine the strength of the skeleton staff and the persons who should be made permanent on that account. This direction will be given effort to within three months of this judgment.Re. (iv) : The workmen have been given 2 1/2 months' basic wages as bonus for the years in dispute, namely, 1953-54 and 1954-55. They have claimed additional bonus. It is, however, conceded fairly on behalf of the respondents that if the chemical works to treated as an independent unit, their case for additional bonus on the basis of the Full Bench formula cannot succeed. The demand for additional bonus was rightly rejected by the tribunal, considering the chemical works as an independent unit. We may add that this case to distinguishable from the case of South India Millowners' Association 1962 Indlaw SC 211] (supra), for here the two lines of business are distinct and have nothing to do with each other.

 

This brings us to the appeal by the appellant. Five points have been urged on behalf of the appellant. They are :

 

(i) dearness allowance;

 

(ii) uniforms;

 

(iii) acid and gas allowance;

 

(iv) leave facilities; and

 

(v) gratuity.

 

We shall deal with them one by one.

 

Re. (i) : So far as dearness allowance is concerned, the tribunal has ordered that the dearness allowance in the chemical works shall be fixed at the same rate as it to in the power-house which to a part of the chemical works. It may be mentioned that dearness allowance at the relevant time in the chemical works was Rs. 55 per mensem while in the power-house it was Rs. 66 per mensem. The contention on behalf of the appellant in this connexion to that the reason why there was this difference between the dearness allowance in the power-house and in the rest of the chemical works is historical. It is farther pointed out that though the difference in the two dearness allowances is Rs. 11, the actual difference in the total wage packet was only Rs. 3 inasmuch as the minimum basic wage in the power-house was Rs. 30 while in the chemical works it was Rs. 38 at the relevant time. Thus the minimum that an employee was getting in the power-honse was Rs. 96 while the minimum for the rest of the workmen was Rs. 93, and it is urged that the difference to not serious. The reason that the tribunal gave for increasing the dearness allowance for other workmen in the concern was that there was no ground for discriminating between the workmen in the power-house and the rest of the workmen. In increasing the dearness allowance on this sole ground, the tribunal ignored firstly the historical reason why there was this difference between the dearness allowance for the power-house staff and for the rest of the workmen and also ignored the difference in the basic minimum wages in the powerhouse and for the rest of the workmen. It further seems to have ignored its own earlier finding that the chemical works was running at a lose and did not have the financial capacity to bear further burden. As a matter of fact it appears that but for this discrimination which the tribunal found between the rate of dearness allowance for the power-house employees and the rest of the workmen, it may not have made any change in the dearness allowance payable to the rest of the workmen. It may be mentioned that the system of dearness allowance in the concern is to allow neutralization at the rate of 2 1/2 annas (now 17 nP) for each point rise over the working class cost of living index treating the base as one hundred for the year 1939. It may also be mentioned that since the reference was made, there has been a voluntary increase in the dearness allowance for the root of the workmen at the rate of Rs. 6 per mensem.The reason why this difference is existing between the rate of dearness allowance for power-house employees and rest of the workmen is that for sometime the power-house was integrated with the Swatantra Bharat Mills. Therefore, as an integral part of the cotton textile industry, the rates of basic wages and dearness allowance in the power-house ware the same as in the cotton textile business of the company. Thus the rates there at the relevant time were, as we have already said, Rs. 30 basic wage and Rs. 66 dearness allowance. At that time the minimum wage in the chemical works was Rs. 88 basic plus Rs. 55 dearness allowance, i.e., Rs. 93 in all. It appears, however, that there was some objection by the excise department of the Government as there was a gate between the Swatantra Mills and the chemical works. The excise department wanted this gate to be blocked in order to have better control over the excusable articles produced in the chemical works. The appellant therefore had to block up this gate in 1950 and therefore the power-house which existed on the chemical works side of thin gate was transferred from the Swatantra Mills to the chemical works. However as the power-house workmen were getting the textile rates, the company assured them that though they would thereafter be under the control of the Chemical works, they will be governed for the purposes of pay scales and dearness allowance, etc., by the rules of the Swatantra Mills. It is this circumstance which has resulted in different scales for the power-house staff and the rest of the workmen of the chemical works. It further appears that there was some retrenchment in the power-house in 1957 and the retrenched workmen were absorbed an far as possible in other units. At that time there was an agreement between the company and the power-house workmen and it was agreed that these workmen would be absorbed in other units but they would accept the conditions of service, etc., of those units where they were absorbed, with the result that only those who are left in the power-house continue on the textile scales of the Swatantra Bharat Mills. These circumstances, however, were not taken into account by the tribunal at all when it ordered that the powerhouse scale of dearness allowance should be introduced for the rest of the workmen also. The power-house scale to really the textile scale and the appellant contended that it would lead to a good deal of complications if the textile scale of dearness allowance is ordered to be introduced for the chemical works. We are of opinion that there to force in this contention raised on behalf of the appellant and the tribunal was not justified in increasing the dearness allowance for the chemical works merely because of this fortuitous circumstances arising out of historical reasons. In any case, the number of the powerhouse workmen is very small, say about thirty/forty, who are getting a different rate of dearness allowance. Further, it appears that there was not much difference between the total wage packet for the powerhouse workmen and for the rest and that was another reason why the tribunal should not have introduced the powerhouse scale for the rest of the workmen. It has, however, been urged on behalf of the respondents that the difference in the basic minimum wages between the power-house workmen and the rest of the workmen in the chemical works has disappeared after the recommendations of the textile wage board by which the minimum basic wage for textile workers has been increased by Rs. 8 and it became Rs. 38 from 1 January 1960. Therefore, it is urged that there is no reason why the tribunals award with respect to g making the dearness allowance for the rest of the workmen the same as the workmen of the power-house, should not be allowed to stand. Superficially, this argument looks attractive; but if one examines it in the light of the textile wage board's recommendation, it will be found that the linking of the dearness allowance for the chemical works' workmen with the powerhouse workmen would lead to endless complications, for the power-house workmen would be entitled to the same dearness allowance, etc., as would govern the textile workmen in the Swatantra Bharat Mills. The textile wage board report shows that it recommended not only that the basic wage should be increased but also that a large part of the dearness allowance should be merged with basic wage, the remainder alone remaining as dearness allowance. It it submitted on behalf of the appellant that it has carried out the recommendations of the textile wage board and the result of the same has been that the basic wages of the textile workmen which would apply to the power-house workmen would be fixed at about Rs. 88 or Rs. 89 and the dearness allowance would be reduced to about Rs. 15. It is urged that the practical linking of the dearness allowance for the rest of the workmen with the dearness allowance in the power-house which has been ordered by the tribunal on the ground that there should be no discrimination, would result in endless trouble, apart from the questions whether in view of the earlier finding of the tribunal as to the financial capacity of the appellant, it would be possible for the appellant to bear the extra burden of the increased dearness allowance. The operative order of the tribunal to that the workmen of the chemical works, excluding the workmen who are governed by Ex. W2, should be paid dearness allowance at the rate at which it is being given to the workmen of the power-house, and this undoubtedly, in our opinion, would load to endless trouble now that the recommendations of the textile wage board will, for historical reasons, apply to the workmen in the power-house.We are therefore of opinion that the ground on which the tribunal ordered the rate of dearness allowance for the other workmen of the chemical works to be paid on a par with the rate for the power-house is not sustainable and the tribunal went wrong In not giving due weight to the historical reasons for the rates prevailing In the power-house. Further we are of opinion that the Increase is not sustainable on its own merits on the ground of the financial capacity of the concern, which the tribunal Itself found was not sound, as the concern had been running at loss practically since It came into existence except for two years. The contention therefore on behalf of the appellant on this head must be accepted and the order of the tribunal Increasing the dearness allowance set aside.

 

Re. (ii) : As to uniforms, we see no reason to differ from the view taken by the tribunal. The reasons given by the tribunal for ordering that uniforms should be given to certain category of workmen are in our opinion sound. But the tribunal has made a mistake when It went on to order that protective equipment should also be given In addition to uniforms, to the persons found entitled to uniforms according to the directions of the tribunal. The tribunal seems to have over-looked the difference between uniforms and protective equipment, which Is provided in the Delhi Factory Rules. So far as protective equipment is concerned, it is given for certain specific purposes to be found in the rules and has no connection with uniforms which employers are ordered to supply to their workmen, for reasons entirely different. We are, therefore, of opinion that the direction of the tribunal that protective equipment should also be supplied to Persons found entitled to uniforms under its order, is not correct and should be set aside. So far as protective equipment to concerned, It will only be supplied to those who are entitled to It under the Delhi Factory Rules and not necessarily to all to whom uniform may have to be supplied under the orders of the tribunal. We order accordingly.Re. (iii) : As to acid and gas allowance, the tribunal has ordered the payment of Rs. 3 per month to certain categories of workmen. It appears that originally the appellant used to pay Re. 5 as acid and gas allowance In the nitric acid gas plant and Re. 3 In the contact plant. Later, however, this gas allowance was merged in pay. But It appears that gas allowance is still being paid to the workmen In the nitric acid gas plant. It is contended on behalf of the appellant that this was because the gas allowance in the case of these workmen was not merged In pay. There is, however, nothing on the record to prove this. As the record stands, we have no reason to hold that the gas allowance which was originally paid to the workmen of the nitric acid gas plant was not merged In their pay. On the whole, therefore, the reasons given by the tribunal for making the allowance of Rs. 3 to those workmen who are engaged In the manufacture of chlorine, sulphuric acid, caustic soda and hydrochloric acid appear to us to be sound and we are no reason to interfere with that part of the award.

 

Re. (iv) : So far as leave facilities are concerned, the tribunal has awarded that privilege leave should be granted as provided under the Factories Act. It has farther provided that casual-cum-sick leave should be granted for twelve days In the year. We do not think that this award is in any way unreasonable. The tribunal has, however, gone on to deal with festival holidays, and that in our opinion, the tribunal had no jurisdiction to do. The reference was in these terms :

 

 


 

There was no reference with respect to holidays. The tribunal has, however, taken the view that holidays are covered within the words "leave facilities" used in the order of reference. We are of opinion that this view is incorrect. Holidays are entirely different from leave facilities. On a holiday the entire business to closed and no one works while leave facilities deal with leave for Individual workers while that business as a whole is running. We may, in this connexion, refer to item 4 of Sch. III to the Industrial Disputes Act (14 of 1947), which to In these terms, "Leave with wages and holidays." This shows that holidays stand on a different footing altogether from leave with wages and a reference with respect to leave facilities cannot include a consideration of holidays. The tribunal's order with respect to holidays is set aside.Re. (v) : Lastly we come to the gratuity scheme sanctioned by the tribunal. It is true that in this concern there is already a provident fund schemes in force. But it to now well settled that both gratuity as well as provident fund schemes can be framed in the same concern if its financial position allows it. It is true that the financial position of the chemical works has not been round to be good and stable enough to warrant an incremental wage structure; but gratuity is a long-term provision and there is no reason to suppose that in the long run the appellant will not be in a flourishing Condition. As to the burden of the scheme, we do not think that, looking at it from a practical point of view and taking into account the fact that there are about 800 workmen in all in the concern, the burden per year would be very high, considering that the number of retirements is between three to four per centum of the total strength. Further, we find that in this very concern there is a gratuity scheme for clerks who number between 100 and 200 and are part of the labour force. We can see under the circumstances no reason why a similar gratuity scheme should not be framed for the rest of the workmen. We, therefore, see no reason to interfere with the order of the tribunal in this respect.

 

We, therefore, allow the appeals in part and dismiss them in part in the manner indicated in the course of this judgment. In the circumstances, parties will bear their own costs in both the appeals.

 

 

 

Pragadeesh (Lawyer/Factory certification consultant/Cyber crime Analyst)     27 June 2008

Hi!


This issue is a complicated one.As a compliance auditor u should see the following.


1.saravanan on reading:If there is two or more licences for a single factory in the same bulding and doing same business it is nothing but to escape from the local law.As we know If the manpower is above 500 then the factory should have a doctor,ambulance and other facilities.so they are splitting the licence as 250-250.


2.Rashmi on reading: Common muster roll(attendance) cannot be maintained for different licences.they are all single,different units.the above said factory will not be eligible for SA8000,WRAp and other site oriented audits.


If u r auditing for a specific buyer for a single unit  then the factory shoud maintain all records individually and should provide seperate way for that factory and with seperate facilities as per local factories act.


 

Saravana Rajan   29 June 2008

Thank You.


Saravana Rajan

Akanksha   15 May 2020

H.S Thukral

Your answer was very informative


Leave a reply

Your are not logged in . Please login to post replies

Click here to Login / Register  


Related Threads


Loading
Start a New Discussion Unreplied Threads

LCI Learning Hindu Laws


Popular Discussion


view more »




Post a Suggestion for LCI Team
Post a Legal Query