TMI Blog1959 (9) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... i 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 Febru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following words :- Whether the workmen of the Chaibasa Cement Works are entitled to compensation for lay-off for the period from April 1, 1955, to July 4, 1955. 4. 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. 5. 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 Sections 25C and 25E so far as they are material for our purpose. S. 25C. (1) Whenever a workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid-off, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idered 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 :- There is a Manager appointed for the quarries. The Manager is working under me. The Cement Works itself has about eight or nine departments under it. There are heads of each department. The Manager of the quarry has the same status as the heads of other departments at the Cement Works. 9. This was supported by a circular letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ersa. There have been a few instances of such transfers. The terms and conditions of service, for instance, T.A., leave, provident fund, gratuity, etc., are same for workers in the Cement Works as also the workers in the quarries. We got the application of the statutory provident fund rules extended to our department in the quarries also. The report of the working of the quarry comes to me from the Manager there from time to time. I as Manager of the Cement Works make payments of royalties in respect of limestones raised from the quarries. Payments for compensation, maternity benefits, accidents, etc., in the quarry are made under my authority by the factory office and not by the Quarry Manager. 10. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment. The second contention was that there were two sets of Standing Orders, one for the workmen of the factory and the other for the workmen in the limestone quarry. The third contention was that the limestone quarry had an office of its own and a separate attendance register, and the fourth contention was that under the provisions of the Mines Act, 1952 Mr. Dongray was an Agent in respect of the limestone quarry and there was a separate Manager who was responsible for the control, management and direction of the mine under the provisions of s. 17 thereof. The learned Chairman referred to certain criticisms made in respect of the evidence of Mr. Dongray. One criticism was that though the Company was the owner of both the factory and the limestone quarry, it had also factories and limestone quarries at other places in India and Pakistan and if the test of one ownership were the determining test, then all the factories and limestone quarries of the Company wherever situtate would be one establishment. This criticism was not, however, pertinent because the Company never claimed that all its factories in different parts of India and Pakistan formed one establishment by reason of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clause (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 there from 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 clause (iii) of s. 25E by adopting the short cut suggested by learned counsel. 14. We proceed now to consider what should ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufacturing processes are carried on with the aid of power. Each department, if it employs ten or more workmen, is a factory within the meaning of clause (m) of s. 2 of the Factories Act, 1948; so is the entire factory where 1,000 workmen may be employed. The Explanation merely states that an undertaking of the nature of a factory as defined in clause (m) of s. 2 of the Factories Act, 1948, is an industrial establishment. It has no bearing on the question if in the example taken, the factory as a whole or each department thereof should be treated as one establishment. That question must be determined on other considerations, because the Explanation does not deal with the question of one establishment. In our view, the true scope and effect of the Explanation is that it explains what categories, factory, mine or plantation, come within the meaning of the expression industrial establishment ; it does not deal with the question as to what constitutes one establishment and lays down no tests for determining that question. We cannot, therefore, accept the argument of learned counsel for the respondent that a factory and a mine, a mine which supplies the raw material to the factory, c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Indeed, in a large number of cases several tests may fall 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 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. 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. 17. 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 establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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. 25C 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 clause (i) of s. 25E; or the workman does not present himself for work at the establishment as in clause (ii); or when the laying-off is due to a strike or slowing down of production on the part of workmen in another part of the establishment as in clause (iii). Obviously, the last clause treats the workmen in one establishment as one class and a strike or 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 involun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 22. Nor do we think that Sections 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nting was carried on within the meaning of the Act. The decision proceeded mainly on the words of the statute; but Earle, C.J., said : It appears that the works at Mayfield having some years ago become inadequate, by reason of the increase of the business and by the deterioration and deficiency of the water of the river Medlock, the appellants transferred part of their works to Sandy Vale : but that the principal part of the work continued to be carried on at Mayfield, which was the principal seat of the firm. In a commercial sense, therefore, Sandy Vale clearly was part of one entire establishment. It was contended for the respondent that the statute did not mean forming part in a commercial sense, but in a popular and local sense. But I see no reason for confining the meaning to local proximity. The whole substantially forms one establishment. 24. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed; 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. 27. 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 clause (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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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