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TABLE OF CONTENTS

TABLE OF CONTENTS...........................................................................................................2

FACTS.......................................................................................................................................3

ISSUES DEALT BY THE COURT..........................................................................................4

RULES.......................................................................................................................................4

ANALYSIS................................................................................................................................4

CONCLUSION..........................................................................................................................9
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FACTS

 The Petitioners in this case are the workers of the Respondent Company. The
company had its Head Office in Bombay. It manufactures tyres at its Bombay factory
and sells the tyres and other accessories in the markets throughout the country.
 There was a strike in the Bombay factory from 3rd March, 1967 to 16th May, 1967
and again from 4th October, 1967. As a result of the strike there was a short supply of
tyres etc. to the Distribution office. In the Delhi office, there were 30 employees at
that time.
 Thereafter, 17 workmen out of 30 were laid-off by the management as per their notice
dated the 3rd February, 1968. After that the management was unable to give
employment to the following workers due to much reduced production in the
company's factory resulting from strike in one of the factory departments.
 These workmen then were laid-off in accordance with law with effect from 5th
February, 1968.
 The lay-off of the 17 workmen whose names were mentioned in the notice was
recalled by the management on the 22nd April, 1968. The workmen were not given
their wages or compensation for the period of lay-off.
 Dispute arose and it was raised by the Delhi Administration on April 17 th even when
the lay-off was in operation. The primary question was Whether the action of the
management to 'lay-off' 17 workmen with effect from 5th Feb. 1968 is illegal and/or
unjustified, and if so, to what relief are these workmen entitled? The Presiding officer
of the Additional Industrial Tribunal, Delhi has held that the workmen are not entitled
to any lay-off compensation.
 Hence there was an appeal by their Union. It was learnt that of the workmen had
already settled their disputes with the management and their cases were not being
represented by the Union.

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ISSUES DEALT BY THE COURT

I. Whether the management had a right to lay-off their workmen

II. Whether the workmen are entitled to claim wages or compensation.
III. What is the proper interpretation of Section 11-A of the Industrial Disputes Act?
IV. Whether Section 11-A applies to industrial disputes which have already been referred
for adjudication and were pending as on 15th Dec., 1971?

RULES

1. Industrial Disputes Act, 1947 Section 2 (kkk), 11-A, 25B, 25C, 25M and 33.
2. Industrial Employment (Standing orders) Act, 1946

ANALYSIS

The court has tried to give the word ‘layoff’ as wide interpretation as possible. But the
definition in the Industrial dispute Act under the section 2(kkk) means:
“the failure, refusal or inability of an employer on account of shortage of coal, power or raw
materials or the accumulation of stocks or the breakdown of machinery [or natural calamity
or for any other connected reason] to give employment to a workman whose name is borne
on the muster rolls of his industrial establishment and who has not been retrenched.”
is quite elaborate and wide in itself and it tries to cover most of the aspects in it.1

If we take a look at the simple meaning of lay off it just means the time during which the
workmen have been discharged. This discharge may be for different reasons it may be legit or
maybe not. Usually layoffs are declared when the government (Central or State) declares it.
When Layoffs are declared compensation is awarded to the workmen but sometimes they
might not be awarded compensation because the layoff might be justified with proper
reasons.

1
Industrial Disputes Act, 1947

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Section 25C of the Act contains Right of workmen laid-off for compensation, which explains
that if the employer lays off any worker continuously or intermittently he shall be paid by the
employer for all days during which he is so laid-off, except for such weekly holidays as may
intervene, compensation which shall be equal to fifty per cent. of the total of the basic wages
and dearness allowance that would have been payable to him had he not been so laid-off.
Firstly it is extremely important to understand why case layoffs are declared. There might be
several issues because of which there is a layoff like no production, no raw material, no Cash
flow to pay the workers etc.

In the present case, the layoff was declared by the employer because of the fact that due to
the short supply of tyres, it was not possible for the company to give employment to the
workmen due to the reduced production in the company’s factory resulting from strike in one
of the other factory departments. But 17 workmen were laid off by the management without
giving them compensation. But it is noticed that the matter being dealt with layoffs in
Chapter VA are not applicable to certain establishments and respondent company does not
fall under this category at all because it employed only 30 workmen at that relevant time so
therefore the court has not given any importance on the type of establishment it is but it
focused more on whether the laid off workmen were entitled for compensation?

According to the act and the explanation in section 25C it is very clear that lay off can be
declared either by adequate notice or if it is mentioned in the standing orders. The definition
or the act nowhere mentions or confers any power on the management to layoff a workman.
The power to lay-off for the failure or inability to give employment has to be searched
somewhere else. No section in the Act confers this power.2

Section 25B has expressly used the words such as “If the power to lay-off for the failure or
inability to give employment has to be searched somewhere else. No section in the Act
confers this power” which indicates that a workmen can be laid off under the act. But
expressly nowhere in the whole act the management has been given any power to do the
same. Such a power, therefore, must be found out from the terms of contract of service or the

2
M.J.Arputharaj* and R. Gayatri, “A critical analysis on efficacy of mechanism to industrial disputes resolution
in India”, ISSN: 2347-3215 Volume 2 Number 8 (August-2014) pp. 328-344 www.ijcrar.com

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Standing orders governing the establishment. In the instant case the number of workmen
being only 30, there were no Standing orders certified under the Industrial employment
(Standing orders) Act, 1946. Nor was there any term of contract of service conferring any
such right of lay-off. In such a situation the conclusion seems to be inescapable that the
workmen were laid-off without any authority of law or the power in the management under
the contract of service.

Section 25E clearly mentions –

“No compensation shall be paid to a workman who has been laid-off-
If he does not present himself for work at the establishment at the appointed time during
normal working hours at least once a day.”

This clearly indicates that it is not discharge of the workmen. Under normal circumstances
the discharge would be indicated by prior notice and it would not require them to make
themselves present at the establishment. The whole purpose of the discharge would be
defeated then.

The Supreme Court upheld the judgment of the tribunal, by enlarging the Tribunal's
jurisdiction to adjudicate disputes relating to punishment of discharge/dismissal of a
workman under section 11A of the Act. For the application of Section 11-A it is necessary
that an industrial dispute of the type mentioned therein should have been referred to an
Industrial Tribunal for adjudication. If the Tribunal comes to the conclusion that the order of
discharge or dismissal was not justified, it has to set aside the order and direct the
reinstatement of the workman on such terms as it thinks fit. The Tribunal is also empowered
to give any other relief. The proviso imposes a duty on the Tribunal to rely only on the
materials on record.

The limitations imposed on the powers of the Tribunal by the decision in Indian Iron and
Steel Co. Ltd3.,case may no longer be invoked by an employer. The Tribunal is now at liberty
to consider not only whether the finding of misconduct recorded by an employer is correct,
but also to differ from the said finding if a proper case is made out. What was once largely in

3
Indian Iron and Steel Co. Ltd., AIR 1958 SC 130

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the realm of the satisfaction of the employer, has ceased to be so, and now it is the
satisfaction of the Tribunal that finally decides the matters.

Thus, the power to interfere with the punishment and alter the same has been now conferred
on the Tribunal by Section 11-A. Earlier, once the conduct is proved, the Tribunal had to
sustain the order of punishment unless it was harsh indicating victimization. Now, the
Tribunal can also give any other relief to the workman, including the imposing of a lesser
punishment (vi) The expression materials on record in the proviso to Section 11A includes
not only the material which were available at the domestic enquiry but, also includes the
following:
(a) The evidence taken by the management at the enquiry and the proceedings of the enquiry:
or
(b) the above evidence and in addition any further evidence led before the Tribunal, or
(c) evidence placed before the Tribunal for the first time in support of the action taken by an
employer as well as evidence adduced by workmen contra.

Court observed that no change has been affected by Section 11-A in Section 33 of the Act.
Therefore, an employer under Section 33(1) for permission or Section 33(2) for approval has
still to be dealt with according to the principles laid down by the Court in its various
decisions. The court had earlier held that even in cases where no domestic enquiry has been
by an employer before passing an order of dismissal or discharge, the employee has the right
to adduce evidence for the first time before the Tribunal. But Court pointed out that it does
not mean that there is no obligation what is on the part of the employer to hold an enquiry
before passing an order discharge or dismissal. The Court said that the employer is expected
to hold proper enquiry according to the standing orders and principles of natural justice.
Enquiry should not be a mere formality. The Court said that if an employer has conducted a
proper enquiry and he has arrived at a correct find regarding the misconduct, the Tribunal,
even though it has freedom to life from the conclusions reached by the employer, will have to
give very cogent reasons for not accepting the view of the employer.

Moreover, if an employer holds a proper enquiry, he will escape the charge of having acted
arbitrarily a mala fide. Conducting of proper and valid enquiry by an employer will also be
conducive to harmonious and healthy relationship between the management and the

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workmen. Therefore, the Court held that Section 11-A does not apply to disputes which had
been referred prior to Dec 15 1971. It applies only to those disputes which are referred for
adjudication on or after Dec. 15, 1971.

OTHER JUDGMENTS:

It was held in The Management of Hotel Imperial, New Delhi & others v. Hotel Workers'
Union4 that if in the absence of such power in express terms or in the contract through
standing orders, the management would have no power to forbid the employees from coming
and call it suspension on their own. The case would have been different if it would have been
in the contract or it was written anywhere then they would not be liable to pay compensation.
The same was re-iterated in the case of V. P. Gindroniya v. State of Madhya Pradesh &
Ors.5

In Kanhaiya Lal Gupta v. Ajeet Kumar Dey and others 6 a learned single Judge of the
Allahabad High Court seem to have rightly held that in the absence of any term in the
contract of service or in the statute or in the statutory rules or standing orders an employer
has no right to lay-off a workman without paying him wages.

In Steel and General Mills Co. Ltd. v. Additional District Judge, Rohtak and others 7 the
Punjab and Haryana High Court have relied on the above judgment to establish the same fact
that if the contract of service mentions about notice of lay off or standing orders there in only
then can it be called lay-off or else not and then compensation will have to be given. So
finally, the court after hearing the matter from both the sides decided that the workers must
be paid 75% of their basic wages and dearness allowance would be paid to the workmen
concerned for the period of layoffs.

4
1959 AIR 1342
5
1970 AIR 1494
6
(1967) IILLJ 761 All
7
[1972] 1 Labour Law Journal, 2847

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CONCLUSION

Industrial Disputes act is a very widely spreaded act which tries to cover all the issues
possible so that the disputes can be settled as peacefully as possible. This present case it
discusses a very small aspect of lay-offs. It has been clearly defined in the Act through an
amendment which is definitely very necessary to understand the scope of how the law
interpret the particular term and how it should be implemented.

Looking at the facts of the case it is extremely necessary to see the circumstance in which the
layoff was declared though there might be precedents which have already answered the issues
present. The precedents matter till a certain extent where the courts have said that it is
important that if the layoffs have been declared through a prior notice or given in the standing
orders then it would be completely fine to not pay compensation but if it is being done
arbitrarily or without considering the time period then the compensation is a must.

This also has a human right aspect because looking at the scenario if the workmen are asked
to be present in the day of layoff just for the sake of it that means they are travelling for work
which will incur them some cost. The compensation is for their basic living which is their
right and cannot be stopped when it is prescribed by the law.

As per the Apex Court, the new Section 11-A abridges the night of the employer and gives
power to the Tribunal for the first time to different both on a finding of misconduct arrived at
by an employer as well a punishment imposed by him, there should be clear, express and
manifest indication in the section regarding its retrospective effect and as there is none- the
section has only prospective effect.

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