S.C.R. SUPREME COURT REPORTS

THE ASSOCIATED CEMENT COMPANIES

LIMITED, CHAIBASSA CEMENT WORKS,

JHINKPANI

v.

THEIR WORKMEN

703

(S. R. DAs,C.J., S.K.DAs and M.HIDAYATULLAH, JJ.)

Industrial Dispute-Lay-off compensation-Disqualification­

C ement factory-Limestone quarry-Whether both parts of one

estab/,ishment-Lay-off of workers in cement factory due to strike in

limet;tone quarry-" In another part of the establishment " meaning

of_:.Test for determining whether a f>articular unit is part of a bigge1

establishment-Factories Act, z948 (63 of z948), s. 2(m)-Plantations

Labour Act, z95r (69 of r95r), s. 2(f)-Mines Act, r952 (35 of z952),

ss. 2(j), r7-Ind11strial Disputes Act, z947 (z4 of z947), ss. 2(kkk),

I8(3), 25C, 25E, 33.

The cement factory in question which is in the State of

Bihar belonged to the appellant company and a limestone quarry

owned by the same company was situate about-a mile and a half

from the factory. Limestone being the principal raw material for

the manufacture qf cement, the factory depended exclusively for

the supply of limestone on the said quarry. On behalf of the

labourers in the limestone

quarry certain demands were made on

the management of the company but as they were rejected they

went on strike; and on account of the non-supply of limestone

due

to the strike, the management had to close down certain

sections of the factory and to lay-off

the workers not required

during

the period of closure of the sections concerned.

Sub­

sequently, after the dispute between the management and the

workers of the limestone quarry was settled and the strike came

to an end, a demand was made on behalf of the workers of the

factory who had been laid-off during the strike, for payment of

lay-off compensation under s. 25C of the Industrial Disputes Act,

1947,

but the management refused the demand relying on cl. (iii)

to s. 25E of the Act, which provided that

"no compensation shall

be paid to a workman who had been laid-off

............... if such · laying-off is due to strike ............ on the part of workmen in

another

part of the establishment

". The Industrial Tribunal

took

the view that the limestone quarry was not part of the

establishment of the cement factory and that the workmen in the

latter were not disentitled to lay-off compensation by reason of

cl. (i_ii) of s. 25E of the Act. The appellant company appealed by

special leave to the

Supreme Court and. contended that the

decision of the Tribunal was erroneous because the facts of the

case showed (a) that in respect of both the factory and the lime­

stone quarry there was unity of ownership, unity of management,

supervision

and control, unity of finance and employment, unity

I959

September II

7-04 SUPREME COURT REPORTS [1960(1)]

z959 of labour and conditions of service of workmen, functional integ-

rality, general unity

of

fUrpose and geographical proximity, and

Associated Cemenl (b) that the strike was decided on by the same Workers' Union

companies which consisted of the workmen at the factory and the quarry.

v. It was contended for the respondents inter alia (r) that the

Their Workmen conclusion of the Industrial Tribunal that the factory and the

limestone quarry are not parts

of one establishment is a finding

of fact which should not be disturbed in

an appeal by special

leave,

(2) that the effect of the

Expla1mtion to s. 25A of the Act

is to negative the idea

of a factory and a mine forming parts of

one establishment, and

.(3)

~hat since in the matter of reference of

industrial disputes, the Act gives jurisdiction to two distinct

authorities, the Central Government in respect of the limestone

quarry and the State Government in respect of theJactory, the

two units, the factory

and mine, cannot be treated as one

establishment. HelJ: (r) that the question whe.ther the factory and the·

limestone quarry form one establishment depends upon the

true

scope and effect of the expression

"in aqother part of the

establishment" in cl. (iii) of s. 25E of the Industrial Disputes

Act,

1947, and involves a consideration of the tests which should

be applied in determining whether a particular unit is

part of a

bigger establishment, and though for

that purpose certain preli­

minary facts must be found, the final

conclusion to be drawn

therefrom is not a mere question

of fact ;

(2) that the true scope and effect of the Explanation to s.

25A

of the Act 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 deter­

mining

that question;

(3) that existence of two jurisdictions does not necessarily

imply

that for all purposes

of the Act, and particularly for

payment of unemployment compensation, the factory and

quarry

must be treated as separate establishments ; and,

(4) that on the facts of the present case the limestone quarry

and the factory constituted one establishment within the meaning

of

cl. liii) of s.

25E of the Act and that the workmen at the

factory were not entitled

to

claim lay-off compensation.

CJ:vIL APPELLATE JURISDICTION: Civil Appeal No.

87of1958.

Appeal by special leave from the Award dated

October 10, 1956, of the Industrial Tribunal, Bihar,

Patna, in Reference No. 6of1956.

R. J. Kol.ah, 8. N. Andley and Rameshwar NaJ,h, for

the appellants.

B. 0. Ghoae andP. K. Ohatterjee, fortherespondents.

S.C.R. SUPREME COURT REPORTS 705

1959. September 11. The Judgment of the Court

z959

was delivered by Associated Cemenl

S. K. DAS J.-This appeal by special leave from an

a.ward dated Octuber 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, 194 7 (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 call(;ld

Jhinkpani in the district of Chaibasa in Bihar. The

latter factory is commonly. known as the Chaibasa

Cement \Vorks. 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 t}).e quarry

were members. There was another union consisting of

the contractor's labourers which was known as the

A. C. C. Limestone Contractor's Maidoor Union. On

January 3, 1955, the Union made certain demands on

the management on behalf of the labourers in the lime­

stone quarry, but these were rejected by the manage­

ment. Then, by a subsequent letter dated February 18,

Companies

v.

TMir Workmen

S. K. Das]

706 SUPREME COURT REPORTS [1960(1)]

r959 1955, the General Secretary of the Union gave a

. notice to the Manager of the Chaibasa Cement Works

Associated Cement h "' h h U . ,

Companies to t e e11ect t. at t. e . mon ~roposed to orgamse a

v. general stay-m-stnke m the limestone quarry from

Their Worl1men · March 1, 1955, if certain demands, details whereof are

unnecessary for our purpose, were not granted on or

s. K. Das]. 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

em­

ployees 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 tl\.e 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 Tribu­

nal at Dhanbad. This reference was, however, with­

drawn 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

S.C.R. SUPREME COURT REPORTS 707

was refused by the management. This gave rise to r959

an industrial dispute whdich wa

0

s rfefehrreAd by thhe Associated Cement

Government of B1ha.r un er s. 1 o t e ct to t e Companies

Industrial Tribunal, Bihar. The terms of reference v.

set OUt the dispute in the following words :- Their Workmen

" Whether the workmen of the Chaibasa Cement

Works are entitled to compensation for lay.off for s. K. Das

1

·

the period from April 1, 1955, to July 4, 1955."

The parties filed written statements before the Indus­

trial 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.

" 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 establish­

ment and who has completed not less than one year

of continuou!J service under an employer is laid-off,

he shall be

pa.id by the employer for all days during

which he is so laid-off, except for such weekly

holi­

days 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

pa.ya.hie to him had he not been so la.id-off."

"S. 25E. No compensation shall be pa.id to a.

workman who has been la.id.off.-

(i) .••••••••.•••••••.••.•••

(ii) ••.•••••••••••.••.••••••

(iii) if such laying-off is due to a strike or

slowing-down of production on the pa.rt of .

workmen in another pa.rt of the establish­

ment."

708 SUPREME COURT REPORTS (1960(1)]

x959 Now, the central point round which the controversy

A

• ., d c between the parties has raged is this. Was the lay-off

ssoci ' ement f th k . . . f h Ch 'b

Companies o e wor ers m certam sect10ns o t e a1 asa

v. Cement Works due to a strike on the part of workmen

Their Workmen in another part of the establishment within the mean­

ing of cl. (iii) of s. 251<~ ? In other words, was the lime-

s. K. Das].

stone quarry at Rajanka part of the establishment

known as the Chaibasa Cement Works? The conten­

tion of the management was and is that the Cement

Works and the limestone quarry form one establish­

ment 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 esta­

blishments.

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 Tribu­

nal 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

conten­

tion 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 onesided and the only wit­

ness

examined was Mr. Dongray, Manager of the

Chaibasa

Cement Works. Now,. the relation between

the limestone quarry and the factory can be consider-

-ed 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,

S.C.R. SUPREME COURT REPORTS 709

with particular reference to the industrial process of r959

making cement. On all that above points Mr. Dongray A . -;-;; c

1

gave evidence. It was not disputed that the Company ss~;:;ani;;nen

owned the limestone quarry as also the factory and v.

there was unity of ownership. Mr. Dongray's evidence Their Workmen

further showed that there was unity of control,

management

and employment. He said that the s. K. Das f.

limestone quarry was treated as a part and parcel of

the

Chaibasa Cement \Vorks, 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."-

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 con­

ditions of employment, Mr. Dongray said :-

" All requirements of the quarry are sent by the

Manager there to the office of the Cement 'Works

and if they are available in the Cement Works Stores,

they are issued from there; otherwise I indent them

from the Bombay office or purchase them locally.

• There is no account office in the quarries and their

account is maintained in the Cement Works' Office. I

as Manager of the Chaibasa Cement.Works make pay­

ment for the indents or requirements of the quarries

stated above. The quarry has no separate banking

account. The Quarry Manager is

not entitled to operate

banking account apart

from myself. At the quarries

there are daily-rated workers and monthly-paid staff.

90

1959

Associated Ceman~

Companies

v.

Their Workmen

S. K. Das J.

710 SUPREME COURT REPORTS [1960(1)]

To the daily-paid workers in the quarries, the cashier

of the Cement Works or his Assistant makes pay-

. ment, when required. The monthly-paid staff

of the

quarries come to the

Cement Office for receiving pay­

ment. In the Cement Works we have got a system

of allocation of work for different jobs every day. It

is done by the Departmental Heads. Same system

prevails

in the quarries also. The Quarry Manager

does

the distributi?n as head of that department.

Attendance.Register is maintained

at the quarry in

the same way as it is done in the different

depart­

ments of the Cement Works. There is only one com­

mon pay sheet for all the monthly-paid staff,

whether he is at the factory or in the quarries. For

the daily-rated workers we have got different sheets

department-wise

and there is one such

sheet for the

daily workers of the quarry as well. There is one

summary sheet of the payment showing the pay­

ment of all the departments including the payment

in the quarries as well. I have to send statutory

intimation to the authorities under the Mines Act

regarding

the quarries for working faces and other

accidents etc. The staff and workers working in the

quarries are transferable to the Cement Works

accor­

ding to the exia,encies of t.he work and also vice

versa.

There have been

a few instances of such

transfers..

The

terms and conditions of service, for

instance, T. A., leave, provident fund, gratuity, etc.,

a.re 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 oomes to me from the

Manager there from time to time. I as Manager of

the Cement Works make payments of royalties in

in reSJY3Ct of limestones raised from the quarries.

Payments for. compensation, maternity benefits,

accidents_, etc., in the quarry a.re ma.de under my

authority by the factory office and not by the

Quarry Manager."

Exhibits 1 to 26 filed on behalf of the management,

which showed the working of the quarry and the

S.C.R. SUPREME COURT REPORTS 711

factory, supported the aforesaid evidence of Mr. .r959

Dongray ; they showed, as has been observed by the • . -,

4

c _,

T

.b l . If h h • ta• • nssocta I ""'"'

r1 una. itse , t at t e management was mam mmg Companies

one common account and the final authority on the v.

spot in respect of the quarry as also in respect of other Their Workme"

departments of the factory was Mr. Dongra.y, the

Manager. There were also ,other documents to show s. K. Das J.

that the transfer of members of the staff from the

quarry to the factory and vice versa was ma.de by 'Mr.

Dongra.y 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 proxi-

mity 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 pur-

pose

and functional integrality, this was a.lso 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

a.t Ra.ja.nka.. His evidence no doubt disclosed that

some excess limestone wa.s sent to the factory at

Khelari as well. On this point Mr. Dongra.y said:-

" Limestone from this quarry is at times sent

to the Khela.ri Cement Works, but that is very rare

a.nd in small quantity. It is done only in cases of

emergency.:•

Mr. Dongray explained that the normal number of

departmental workers in the qua.Hy 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 wa.s in the neighbourhood of950

a.nd the total monthly-pa.id staff varied from 100 to

105. The wages paid to the workers in the quarry

were debited

to limestone account of the Cement

Works,

a.nd in the matter of costing, the amount spent

on limestone was

also debited. The bank accounts,

however,were

in the name of the

Company a.nd 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.

712 SUPREME COURT REPORTS [1960(1)]

z959 All the aforesaid evidence, oral and documentary,

Assoeiated Cement was apparently acce:pted by the T~ibunal as correct;

Companios for the learned Chairman summarised the evidence of

v. Mr. Dongray without any serious adverse comment.

Their WorAmen He then referred to certain contentions urged on behalf

of the Union, which he said were not without force.

s. K. Das f. We may now state those.contentions. The first con­

tention was that under the provisions of the Act, the

appropriate authority in reapect of the factory at

Jhinkpani was the State Government of Bihar, where­

as the appropriate authority in respect of the limestone

quarry, which was a. mine as defined in the Mines Act,

1952, was

the

Central Government. The second con­

tention 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 provi­

sions 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 unity of owner­

ship only. The other criticism was that Mr. Dongray

admitted that, if necessary in the interest of service,

the workmen at the Chaibasa Cement Works could be

transferred to some other factory of the Company and

therefore transferability was not a sure test. This

criticism was also not germane, because the Company

S.C.R. SUPREME COURT REPORTS 713

never claimed that transferability was the only sure z959

test. A third criticism also advanced on behalf of the • . -c

k h M D d

. d h

II h

associated e1111nl

wor men was t at r. ongra.y a m1ttE) t at a t e Companies

accounts of the different factories and limestone v.

quarries of the Company were ultimately consolidated Their Workmen

into one Profit and Loss Account, a criticism which in

our view was equally

not pertinent to the question

at s. K. Das l·

issue. The learned Chairman then expressed his final

finding

in the following words:-" ]'rom these and other admissions made by Mr.

Dongray it would appear that it is only for economy

and convenience that he was given charge of the

control

of both the concerns but his capacity was

dual. While he was controlling

the Cement Works

as

it Works Manager he had the control of the

quarries as its Agent under the

Mirn~s Act'. It hae

also to be noted that if both these establishmentE

which are inherently different

by their very naturE

are treated as one

and the same, anomalous position

may arise in dealing with the employees in the

quarries

in matters of misconduct and such other

things

if there is a pendency of

a dispute in the

Cement Works

and

vice versa. Obviously, the em­

ployees of the Cement Works have to be dealt with

by the State Tribunal while the employees of the

quarries by the-Central Tribunal. This also nullifies

the force of the management's contention that both

are parts of the same establishment. Considering

these

it has to be held that the contention of the mam!-gement fails and that of the Union must

prevail."

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 Indus­

trial Tribunal is a finding of fa.ct. 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 a~

714 SUPREME COURT REPORTS [1960(1)]

'959 anomalous position which, it thought, would arise if

- the factory and the quarry were held to be one esta.

Associated Cement bl" h t Th t" b "£ th T "b l d h"

Companies IS men . e. ques 1011 e ore e rI una , an t 1s

v. is also the quest10n before us, was the true scope and

Their Workm"' effect of cl. (iii) of s. 25E of the Act, with particular

reference

to the expression

" in another part of the

s. K. Das J. establishment" occurring therein. That question was

not a pure question of fact, as it involved a consider­

ation of the tests which should be applied in determining

whether a particular

unit is part of a bigger

establish­

ment. 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 linding of fact should not be disturbed in an appeal

by special leave. In this case we cannot relieve our­

selves 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 sugge~ted 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 250, 25D and 25E,

"industrial establishment " means-

(i) a factory as defined in clause (m) of section 2

of the Factories Act, 1948; or

(ii) a mine as defined in clause (j) of section 2 of

the Mines Act, 1952; or

(iii) a plantation as defined in clause (f) of sec-

tion 2

of the Plantations Labour Act,

1951."

The argument is that the Explanation states in clear

terms what an industrial establishment means in

certain sections of the Act including ~· 25E, and on a

proper construction it negatives the idea of a factory

and a mine forming parts of one establishment.

Curiously enough, s. 25E does not contain the

S.C.R. SUPREME COURT REPORTS 715

expression "industrial establishment". It uses the r959

word" establishment" only. We agree, however, that Associated Cemml

ifs. 25E is read with s. 250 and the definition of "lay-companies

off" in s. 2 (kkk) of the Act, as it must be read, the v.

word "establishment" in s. 25E has reference to an Their Workmen

industrial est.ablishment. On the footing that the

word " establishment " in s. 25E means an industrial s. K. Das f.

establishment, what then is the effect of the Explana-

tion?

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

F'actories Act, 1948,

or a mine as defined in cl. (j) of s. 2 of the Mines Act,

1952,

or a plantation as defined in cl. (f) of s. 2 of the

Plantations Labour Act, 1951 ; but it cannot be

a

combination of any two of the aforesaid categories;

therefore, a factory

and a mine together, as in the

present case, cannot form one establishment. This

argument proceeds on the assumption

that the

Expla-

nation while stating what undertakings or enterprises

come within

the expression

"industrial establishment "

necessarily lays down the test of 'one establishment'

also. We do not think

that there is

any warrant for

this assumption. The Explanation only gives the

meaning of the expression " industrial establishment "

for certain sections of the Act ; it does not purport to

lay down any test as to what constitutes one ' establish-

ment'. Let us take, for example, a factory which

has different departments in which manufacturing

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 cl. (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 cl. (m) of s. 2 of the Factories

Act, 1948, is an industrial establishment. It has no

bearing on the question if in the example ta.ken, the

factory as a whole or ea.ch 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

716 SUPREME COURT REPORTS [1960(1)]

z959 of the Explanation is tnat it explains what categories,

- factory, mine or plantation, come within the meaning

Assocciatped Cement of the expression "industrial establishment" ; it does

omanies d l "hh . h .

v. not ea wit t e quest10n as to w at constitutes one

Their workmen establishment and lays down no tests for determining

that question. We cannot, therefore, accept the a.rgu-

s K. Dos J. ment of learned counsel for the respondent that a.

factory and a mine, a mine which supplies the raw

material to the factorly, can never be one establish­

ment under the Act; that we do not think is the effect

of the Explanation to s. 25A.

The Act not having prescribed any specific tests for

determining

what is 'one establishment ',

we must fall

back on such considerations as in the ordin_ary indus­

trial or business sense determine the unity of an

industrial est&.blishment, having regard no doubt to

the scheme and object of the Act and other rel~va.nt

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 establish­

ment. Where, however, the industrial undertaking

has parts, branches, departments, units etc. with

different locations, near or distant, the question a.rises

what tests should be applied for determining what

constitutes ' one establishment'. Severa.I 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 refer­

red 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

S.C.R. SUPREME COURT REPORTS 717

that the establishment is one; if on the contrary they x959

do not constitute one integrated whole, each unit is Assoaia-;;;Ceme111

then a separate unit. How the relation between the companies

units will be judged must depend on the facts proved, v.

having regard to the scheme and object of the statute Their Work111111

which gives the right of unemployment compensation

and also prescribes disqualification therefor. Thus, in s. K. Das J.

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 import-

ant 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 apply-

ing these tests arises because

of the complexities of

modern industrial organisation; many enterprises may

have functional integrality between factories which

a.re separately owned; some niay be integrated in part

with units or factories having the same ownership and

in part with factories or plants which are independ-

ently 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

(1)) there is an example of an indust-

rial

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

shGtdown caused by a strike or other labour dispute

at any one of the plants might conoeivably 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 with­

out limestone from the quarry, the factory cannot

function. Ours is a case where all the tests are fulfilled,

(1) (1950) 28 A.L.R., 2d. 272.

91

718 SUPREME COURT REPORTS [1960(1)]

z959 as shown from the evidence given on behalf of the

A.ssociatedC•m•"' appell~nt to which ~e have earlier referred. There

Companies are umty of ownership, unity of management, super-

v. vision and control, unity of finance and employment,

Their Wo•kmen unity of labour and conditions of service of workmen,

functional integrality, general unity of purpose and

s. K. Das J. 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 \Yorks consisting of the

factory and the limestone quarry form one establish­

ment. 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 sufficientiy explained by Mr. Dongray, particul­

arly the existence of two sets of Standing Orders by

reason of the statutory requirement of approval by

different authorities-one set by the Labour Commis­

sioner, 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 or.e establishment. It is neces­

sary 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 Indus­

trial 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

unemploy­

ment 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

S.C:R. SUPREME COURT REPORTS 719

liberally construed,

and when there are disqualifying

provisions, the

latter should be construed strictly with

reference to the words used therein. Now, s.

250

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

un­

employment is involuntary; in other words, due to no

fault of the employees themselves; that is why noun­

employment compensation is payable when suitable

alternative employment is offered and the workman

refuses

to accept it as in cl. (i) of s. 25E ; or the

work­

man does not present himself for work at the establish­

ment as in cl. (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

cl. (iii). Obviously, the last clause treats the

work­

men 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 claim­

ing 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 we

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 respons­

ible 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 manage­

ment 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, and Mr.

Dongray acted as the agent, that is, representative of

the owner, viz., the

Company ; and this arrangement

which was in consonance wit.h

the provisions of the

Mines Act, 1952, it is argued, made the factory and the

quarry two/separate establishments. We are unable

to accept this argument as correct. We do not think that s. 17 of the Mines Act, 1952, ha.s a.ny relevance

I959

Asso~iated Cement

Companies

v.

Their Workm•n

S. K. Das].

720 SUPREME COURT REPORTS [1960(1)]

'

9

$

9

to the question whether the limestone quarry was

.i<So,iated Cement part of a bigger establishment. It prescribes the

Companies appointment of a Manager for purposes of the Mines

v. Act, 1952, and does not deal with the question of ' one

fhefr Workmen establishment' within the meaning of cl. (iii) of s. 25E

• K of the Act. The fact that the quarry Manager worked

s. . Das].

under the overall control and supervision of Mr.

Dongray showed, on

the facts proved in this case, just

the contrary of what learned counsel for the: respondent

bas contended; it showed that the factory and the

quarry were treated as one establishment.

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

abol}t 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

pur.

poses 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

...

S.C.R. SUPREME COURT REPORTS 721

a. Labour Court or Tribunal is made binding "on a.ll .r959

persons who were employed in the establishme~t or Associated C•m•nl

part of the establishment, as the case may be, to which Companies

the dispute relates on the date of the dispute and all v.

persons who subsequently become employed in that Thei.rWorkmen

establishment or part." It is contended that it will be s. K.Das

1

.

difficult to apply s. 18(3) if the factory' and the lime-

stone

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 establish-

ment.

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

I~quiry, 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,

dfohotomy one may call it, necessarily imply that

for all purposes of the Act, and particularly for

722 SUPREME COURT REPORTS [1960(1)]

r959 payment of unemployment compensation as per the

.-. provisions in Ch. VA, the factory and the quarry

Associated Cement · b d t t bl" h t W

Companies must e treate as separa e es a Hi men s. Y .. are

v. unable to find any such necess1try implication. There

Their workmen is no provision in the Act wh!ch says that the existence

of two jurisdictions has the consequence contended for

s. K. Das J. by learned counsel for the respondent; nor do we firtd

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_ ofune111:ploy­

ment compensation as provided for by the fJftlvisions

in Ch. VA of the Act. We have poirttt\d out earlier

that the object of unemploym!i!lt compensation is to

relieve hardship ca.used by involuntary unemploy­

ment, that is, unemployment not due to any fault of

the employees. If in the ordinary business srnse 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

ther!l 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

a ward in respect of the limestone quarry, it will be

binding in

the circumstances mentioned in the

sub­

section, on the workmen in that part of the establish­

ment which is the limestone quarry. Similarly, a

Rettlement 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

S.C.R. SUPREME COURT REPORTS 723

to a matter connected with the dispute in respect of z959

which a proceeding is pending. Sub-section (2) relates . -d c

1

d

. h h d" . Assot1ate emtn

to a matter not connecte wit t e ispute m respect c panies

of which the proceeding is pending. In one .case om v.

permission of the authority before which the proceed-Their Workmen

ing is pending has to be obtained for punishing etc.;

in the other ca8e, an application for approval of the s. K. Das J.

action taken by the em ploy er has to be made. We see

no difficulty in applying

s. 33 in a case like the

mie

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 Goven1ment. 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 argu-

ment is valid, if the assumption is correct. If, how-

ever, there is

no warrant for the assumption, as we

have held there is none, then the argume.nt 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.

Oram (1) and Coles

v. Dickinson (

2

). 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

Viet.

c. 78 in employing the chikJ without a

s0hool

master's certificate. It was held that a child employed

on the premises where the bleaching, dyeing and finish­

ing were performed was employed in an incidental

printing process within the second section of 8 and 9

Viet.

c. 29; and that the place where

h~ was so employ"

ed formed pa.rt of ·~the establishment where the chief

process of printJng was carried on " within the mean­

ing of that 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

{I) (1862)

I2 C.B. (N.S.) 125; 142 E.R. 1090.

(2) (1864) 16C,B. (N,S.) 604; 143 E.R.126-f.

I959

.A ssotiated Cement

Companies

v.

TJteir Workmen

S. K. Da< J.

724 SUPREME COURT REPORTS [1960(1)]

increase of the business and by the detorioration

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 con­

tinued 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."

In the second case the question was . this : by the

73rd section of 7 and 8 Viet. c. 15, premises which are

used solely for the manufacture of paper were

exclud­

ed from the operation of the Factory Acts; there were

two mills, one at Manchester and the other in Hert­

fordshire. The Manchester mill prepared what was

called half-stuff which was sent to

the mill in

Hertford­

shire to be manufactured into paper, and the question

was

if the Manchester mill was exempted from the

operation of the Factory Act.s. 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

Doncild L. Nordling

v. Ford Motor Company('). This decision is perhaps

more in point as it related to unemployment compensa­

tion. The statute in that case provided that an indi­

vidual 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 a.nd operated

by the same corporation in Michigan. The Minnesota.

Supreme Court to which an application was made for

I•) (19~0) 28 A,L.R. 2d. •7•·

..

S.C.R. SUPREME COURT REPORTS 725

a certiorari to review a decision of the director of the I

959

division of employment and security reviewed the A . -, d c ment

h

, h h

11 b l' d

£ d · ' sso<ia e e

tests w lC ave genera y een app re or etermmmg companies

what is meant by the term ' establishment' within the v.

meaning of the statute concerned ; it pointed out that Their Workmen

there was no uniformity of decision on the question

and it was not possible to lay down an absolute or

5

· K. Das f.

invariable test. The decision was based on the broa.der

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 estab-

lishment.

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

diffi­

culty. 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 consti­

tute 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 constitut­

ed one establishment within the meanin~ of cl. (iii) of

~

726 SUPREME COURT REPORTS [1960(1))

r959 s. 25E of the Act. It was conceded on behalf the

, .-d respondent workmen that the lay-off in the factory was

nsso"ate Cement d 1 f l' b f

Companies ue to the non-supp y o Imestone y reason o the

v. strike in the limestone quarry and the strike was

Their Workmen decided on by the same Union which consisted of the

workmen at the factory and the quarry. That being

5

• K. Das J. the position, the disqualification in cl. (iii) aforesaid

clearly applied

and the workmen at the factory were

not entitled to claim lay-off compensation.

r959

September z4

The result, therefore, is that the appeal succeeds

and is allowed and the award of the Industrial Tribu­

nal 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.

Appeal allowed.

THE

STATE OF BIHAR

v.

HIRALAL KEJRIWAL AND ANOTHER

(SYED JAFER IMAM and K. SuBBA RAo, JJ.)

Repeal of Statute-Saving clause-Interpretation of-Cotton

Textiles (Control of Movement) Order, r948, whether continues in

force-Essential Supplies (Temporary Powers) Act, r946 (XXIV oj

r946),, ss. r(3) and 3(r)-Essential Commodities Ordinance, r955,

(Ordinance I

of r955), s. r6-Esscntial

Commodities Act, r955 (X of

r955), S, I6.

Appeal

by

special leave-Interference in-Constitution of India,

Art. r36.

In exercise of the powers under s. 3 of the Essential Supplies

(Temporary Powers) Act, 1946, the

Central Government made the

Cotton Textile (Control of Movement) Order, 1948. The 1946

Act was to expire on January 26, 1955, but before that, on

January 21, l<j55, the Essential Commodities Ordinance was

promulgated which conferred

on the

Central Government a power

similar to

that conferred by s. 3 of the 1946 Act. Section

16 of

the Ordinance provided

that all

Orders made under the 1946 Act

in so far as such Orders could be made under the Ordinance shall

continue in force

and that accordingly any appointment made,

license or permit granted

or direction issued under any such

Order shall continue in force. The Essential Commodities Act,

1955 by s. l6(1)(a) repealed the Ordinance and by s, l6(1)(b)