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U.P. Electric supply Co. Ltd. Versus R.K. Shukla

1970 AIR 237, 1970 (1) SCR 507, 1969 (2) SCC 400 - C.A. 1567 Of 1968 - Dated:- 30-4-1969 - Shah J.C. And Mitter G.K., JJ. M. C. Chagla, Harish Chandra, H. K. Purl and Bishambar Lal for the appellant. S. P. Nayar , J. P. Goyal and V. C. Prashar, for the respondent. JUDGMENT: Shah J.C., These three groups of appeals arise out of orders made by the Presiding Officer, Labour Court (11), U.P., Lucknow awarding retrenchment compensation to certain employees of the U.P. Electric Supply Company Ltd. (in .....

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said licenses and in exercise of the power under s. 6 of the Indian Electricity Act, 1910, the State Electricity Board, U.P.-hereinafter referred to as "the Board took over the undertaking of the Company at Allahabad and Lucknow from the mid-night of September 16, 1964. The Company accordingly ceased to carry on the business of generation and distribution of electricity in the areas covered by the original licences. All the workmen of the undertakings at Allahabad and Lucknow were taken ov .....

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nt of the Board with effect from September 17, 1964 "in the posts and positions which they previously held", but without giving credit for their past services with the Company. The workmen contended that they were entitled to retrenchment compensation and salary in lieu of notice, and prayed for computation of those benefits in terms of money and for directions to the Company to pay them the amount so computed. A group of 56 workmen employed at the Company s undertaking at Lucknow also .....

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g the Labour Court awarded retrenchment compensation at the rate specified, salary in lieu of one month s notice, and also, wages for 30 days for earned leave not enjoyed by the workman before the closure of the undertaking, and costs. The Company has appealed to this Court against the orders with special leave. The orders for payment of retrenchment compensation are resisted by the Company on two grounds- (i) that the Labour Court was incompetent to entertain and decide the applications for awa .....

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tes Act, 1947, and not the U.P. Industrial Disputes Act, 1947, apply. The question is academic, because on the points in controversy between the parties, the statutory provisions of the Industrial Disputes Act, 1947, and the U.P. Industrial Disputes Act, 1947, are substantially the same. We may, however, briefly refer to this argument since, relying upon a judgment of this Court to be presently noticed, counsel for the workmen insisted that s. 33-C(2) of the Industrial Disputes Act alone may app .....

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s, it is hereby declared that nothing contained in this Chapter shall be deemed to affect the provisions of any other law for the time being in force in any State in so far as that law provides for the settlement of industrial disputes, but the rights and liabilities of employers and workmen in so far as they relate to lay-off and retrenchment shall be determined in accordance with the provisions of this Chapter." After this sub-section was incorporated in the Industrial Disputes Act, 1947, .....

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nchment shall be determined in accordance with the provisions of Sections 6-H to 6-Q." By virtue of s. 6-R(2) the provisions of the U.P. Industrial Disputes Act, prima facie, apply in the matters of lay-off and retrenchment, because under the Seventh Schedule to the Constitution legislation in respect of "Trade Unions, Industrial and Labour Disputes" falls within Entry 22 of the Concurrent List and both the State and the Union are competent to legislate in respect of that field of .....

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ss. 6-J to 6-Q. Competence of the State Legislature to enact s. 6-R(2) is not denied. Act 1 of 1957 received the assent of the President and by virtue of Art. 254(2) of the Constitution s. 6-R(2) of the U.P. Act prevails, notwithstanding any prior law made by the Parliament. The provisions of the U.P. Act including s. 6-R(2) therefore apply in determining the rights and obligations of the parties in respect of retrenchment compensation. The observation to the contrary made by this Court in Rohta .....

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to refer only to, the provisions of the U.P. Industrial Disputes Act, 1947. Section 4-A of the U.P. Act authorises the State Government to constitute one or more Labour Courts for the adjudication of industrial disputes relating to any matter specified in the First Schedule and for performing such other functions as may be assigned to them under the Act. The items specified in the First Schedule are- 1. The propriety or legality of an order passed by an employer under the Standing Orders; 2 . T .....

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to any matter whether specified in the First Schedule or the Second Schedule. Item 10 of the Second Schedule relates to "Retrenchment of workmen and closure of establishment". Prima facie, disputes relating to retrenchment of workmen and closure of establishment fall within the exclusive competence of the Industrial Tribunal, and not within the competence of the Labour Court constituted under s. 4-A. The Company had expressly raised a contention that they had not retrenched the workme .....

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on which they were employed by the Company. This clearly raises the question whether there was retrenchment of workmen, which gave rise to liability to pay retrenchment compensation. A dispute relating to retrenchment is exclusively within the competence of the Industrial Tribunal by virtue of item 10 of the Second Schedule to the U.P. Industrial Disputes Act, and is not within the competence of the Labour Court. Section 6-H of the U.P. Act provides : (1) Where any money is due to a workman fro .....

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nt is satisfied that any amount is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same as if it were an arrear of land revenue. (2) Where any workman is entitled to receive from the employer any benefit which is capable of being computed in terms of money, the amount at which such benefit should be computed may, subject to any rules that may be made under this Act be determined by such Labour Court as may be specified in this behalf by the .....

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y in the same terms as sub-ss. (1) & (2) of S. 6-H of the U.P. Industrial Disputes Act) was examined. It was held by this Court in The Central Bank of India Ltd. v. P. S. Rajagopalan etc.([1964] 3 S.C. 140) that the scope of s. 33-C(2) is wider than that of S. 33-C(1). Claims made under s. 33-C(1) can only be those which are referrable to settlement, award or the relevant provisions of Ch. V-A, but those limitations are not to be found in S. 33-C(2). The three categories of claims mentioned .....

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s. 33C(2) can itself be deemed to be a kind of execution proceeding; but it is possible that claims not based on settlements, awards or made under the provisions of Chapter V-A, may also be competent under s. 33C(2) and that may illustrate its wider scope. We would, however, like to indicate some of the claims which would not fall under s. 33C(2), because they formed the subject matter of the appeals which have been grouped together for our decision along with the appeals with which we are deali .....

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employer and is entitled to the benefits due to him under a pre-existing contract, cannot be made under s. 33C(2)." The same view was reiterated in Bombay Gas Co. Ltd. v. Gopal Bhiva and Others[1964]. Mr. Goyal on behalf of the workmen, however, contended that in a recent judgment of this Court a different view has been expressed. He invited our attention to The Board of Directors of the South Arcot Electricity Distribution Co. Ltd. v. N. K. Mohammad Khan, etc.([1969] 2 S.C.R. 902). In tha .....

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. This Court observed that s. 25FF(b) applied as the terms of service under the new employer were less favourable than those under the old employer, and under the terms of ss. 15 (1 ) & (2) of the Acquisition Act and ss. 9A and 10 of the Industrial Employment (Standing Orders) Act, 1946, liability to pay retrenchment compensation rested upon the previous employer and on that account the Labour Court was competent to entertain the petitions under s. 33C(2). The language of s. 25FF in the view .....

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ineer, East India Coal Co. Ltd. v. Rameswar and Others([1968] 1 S.C.R. 140); State Bank of Bikaner ([1968] 1 L.L.J. 589) ; and Jaipur v. R. L. Khandelwal Punjab National Bank Ltd. v. K. L. Kharbanda([1962] Supp. 2 S.C.R. 977); Central Bank of India v. P. S. Rajagopalan and Others([1964] 3 S.C.R. 140); and Bombay Gas Company Ltd. v. Gopal Bhiva and Others[1964], and proceeded to observe that the right which has been claimed by the various workmen in their applications under S. 33C(2) of the Act w .....

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d Others([1964] 3 S.C.R. 140), to which we have already referred, makes it clear that all disputes relating to claims which may be computed in terms of money are not necessarily within the terms of S. 33C(2). Again in Chief Mining Engineer, East India Coal Co. Ltd. v. Rameswar and Others ([1968] 1 S.C.R. 140) Shelat, J., observed : "........ that the right to the benefit which is sought to be computed under S. 33C(2) must be an existing one, that is to say, already adjudicated upon or provi .....

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(2). Consequently, the benefit provided in the bonus scheme made under the Coal Mines Provident Fund and Bonus Schemes Act, 1948, which remains to be computed must fall under sub-s. (2) and the Labour Court therefore had jurisdiction to entertain and try such a claim, it being a claim in respect of an existing right arising from the relationship of an industrial workman and his employer." That judgment clearly indicates that in order that a claim may be adjudicated upon under S. 3 3C (2), t .....

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unal. The legislative intention disclosed by ss. 33 C ( 1 ) and 3 3 -C (2) is fairly clear. Under s. 33-C(1) where any money is due to a workman from an employer under a settlement or an award or under the provisions of Ch. V-A, the workman himself, or any other person authorised by him in writing in that behalf, may make an application to the appropriate Government to recover of the money due to him. Where the workman who is entitled to receive from the employer any money or any benefit which i .....

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ions of Ch. V-A, or by virtue of a statute or a scheme made thereunder, mere denial by the employer may not be sufficient to negative the claim under s. 33-C(2) before the Labour Court. Where however the right to retrenchment compensation which is the foundation of the claim is itself a matter which is exclusively within the competence of the Industrial Tribunal to be adjudicated upon a reference, it would be straining the language of section 33C(2) to hold that the question whether there has be .....

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ons precedent to the accrual of liability. Where, however, the dispute is whether workmen have been retrenched and computation of the amount is subsidiary or incidental, in our judgment, the Labour Court will have no authority to trespass upon the powers of the Tribunal with which it is statutorily invested. In the unreported judgment of this Court in The Board of Directors of the South Arcot Electricity Distribution Co. Ltd. v. N. K. Mohammed Khan, etc.([1969] 2 S.C.R. 902) apparently the only .....

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rguments were advanced before us, and which have an important bearing on the claims made : we propose briefly to deal with these arguments. Assuming that the Labour Court had jurisdiction to determine the liability of the Company to pay retrenchment compensation no order awarding retrenchment compensation could still be made without recording a finding that there was retrenchment of the workmen and compensation was payable for retrenchment. Section 6-0 of the U.P. Industrial Disputes Act (which .....

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f the workman has not been interrupted by reason of the transfer; (b) the terms and conditions of service applicable to the workman after such transfer are not in any way less favourable than those applicable to him immediately before the transfer; and (c) the employer to whom the ownership or management of the undertaking is so transferred is, under the terms of the transfer or otherwise, legally liable to pay to the workman, in the event of his retrenchment, compensation on the basis that his .....

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were not in any way less favourable to the workmen than those applicable to them immediately before the undertakings were taken ,over, and that the employer to whom the ownership or management of the undertakings were so transferred was, under the terms of the transfer or otherwise, legally liable to pay to the workmen, in the event of their retrenchment, compensation on the basis that their services had been continuous and had not been interrupted by the taking over. The workmen denied that cla .....

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iding the issue, the Labour Court could not compute the amount of compensation payable to the workmen. On the assumption that the workmen had been retrenched and their claim fell within the proviso to s. 6-0. It was urged by Mr. Goyal on behalf of the workmen that this plea was not raised or argued before the Labour Court, and it cannot be permitted to be raised in this Court. But this contention was raised in the reply filed by the Company, and the judgment of the Labour Court does indicate tha .....

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by Mr. Chagla for the Company may be considered. It was urged that the obligation to pay retrenchment compensation in the event of liability arising must in law be deemed to be taken over by the Board. In The Board of Directors of the South Arcot Electricity Distribution Company Ltd. v. N. K. Mohammad Khan, etc.([1969] 2 S.C.R. 902), to which we have already made a reference, it was contended on behalf of the Electricity Company that the liability to pay retrenchment cornpensation did not fall .....

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icity Act, 1910, provides : "(1) Where a license has been granted to pay person, not being a local authority, the State Electricity Board shall- (a) in the case of a license granted before the commencement of the Indian Electricity (Amendment) Act, 1959, on the expiration of each such period as is specified in the license; and (b) have the option of purchasing the undertaking and such option shall be exercised by the State Electricity Board serving upon the licensee a notice in writing of n .....

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aking is delivered to the intending purchaser under sub-section (6) of section 6 (i) the undertaking shall vest in the purchaser .......... free from any debt, mortgage or similar obligation of the licensee or attaching to the undertaking : Provided that any such debt, mortgage or similar obligation shall attach to the purchase money in substitution for the undertaking; (ii) the rights, powers, authorities, duties and obligations of the licensee under his license shall stand transferred to the p .....

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to the purchase money payable to the Company in substitution for the undertaking. Sections 6 and 7 of the Indian Electricity Act do not support the case of the Company that the liability is enforceable against the Board after it takes over the undertakings. The provisions of ss. 57 and 57A of the Indian Electricity (Supply) Act, 1948, also do not assist the case of the, Company. Sections 57 & 57A of the Electricity (Supply) Act, 1948, deal with the licensee s charges to consumers and the Ra .....

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accidents, strikes or circumstances which the management could not have prevented; (b) expenses on replacement or removal of plant or works other than expenses requisite for normal maintenance or renewal; (c) compensation payable under any law for the time being in force and for which no other provision is made. (2) On the purchase of the undertaking, the Contingencies Reserve, after deduction of the amounts drawn under sub-paragraph (1), shall be handed over to the purchaser and maintained as s .....

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ing to hand over the Contingencies Reserve to the purchaser. If any amount of compensation is payable to the employees of the outgoing licensee under any law for the time being in force, it is chargeable to the Contingencies Reserve. If the retrenchment compensation becomes properly due to the employees of the Company, it would, by virtue of cl. V subcl. (2) proviso, be charged upon the Contingencies Reserve and the balance alone would be handed over to the purchaser. It was urged that the Conti .....

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