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1980 DIGILAW 91 (ORI)

ORISSA KHADI AND VILLAGE INDUSTRIES BOARD v. NOROTTAM SAHU

1980-07-08

K.B.PANDA, P.K.MOHANTI, R.N.MISRA

body1980
JUDGMENT : R.N. Misra, J. - These five writ applications have been referred to a larger Bench for resolving a conflict between a reported decision of this Court in the case of Sisir Kumar Mohanty Vs. State of Orissa and Another, and an unreported decision in Narottam Bahu v. State of Orissa and Ors. O.J.C. No. 513 of 1971-D/25-9-1972. Even if there be no conflict in the two decisions, we have been asked to examine the correctness of the reported decision referred to above. Since a common question arises in all these five applications, these have been heard together and are being disposed of by a common judgment. 2. Under the Orissa Khadi & Village Indistries Board Act, 3 of 1956 (hdeinafter referred to as the 'Act'), the Board as defined in Section 2(a) of the Act was constituted by the State Government u/s 3(1) thereof on 15-6-1956. In terms of Section 3(2), the Board established under Sub-section (1) thereof becomes a 'body corporate' incorporated by its name with perpetual succession and common seal. Section 4(1) of the Act provides that the Board shall consist of fifteen members and under Sub-section (2), the State Government on being satisfied that the constituted Board is not functioning properly or is incompetent to discharge its functions, may decide to dissolve it and upon the Governmental decision being accepted by the Orissa Legislative Assembly by a Resolution the Board is to stand dissolved. On 12-3-1968, the Board was so dissolved and on the following day, Government in the Indistries Department required the Director of Industries to take over the management of the dissolved Board as provided u/s 15 of the Act. Annexure-2 is the Government letter dated 13th March, 1968, which clearly stated: ...It has now been decided to place you in charge of the affairs of the Board.... In September, 1968, the employees were called upon to hand over charge of their respective offices as the Board had been dissolved. On 24-9-1969, the Board was reconstituted. Some of the old employees were given fresh appointment. Disputes arose between the workmen and the management relating to termination of service with effect from 14th September, 1968 and subsequent re-employment. The State Government referred the disputes u/s 12(5) read with Clause (d) of Sub-section (1) of Section 10 of the Industrial Disputes Act, 1947, for adjudication of the Labour Court. Disputes arose between the workmen and the management relating to termination of service with effect from 14th September, 1968 and subsequent re-employment. The State Government referred the disputes u/s 12(5) read with Clause (d) of Sub-section (1) of Section 10 of the Industrial Disputes Act, 1947, for adjudication of the Labour Court. The disputes were in regard to the legality of the termination of employment of the different opposite parties and offering fresh appointment with break of service. Five separate cases were registered before the Labour Court and were disposed of by different awards. The Labour Court took the view that the termination was bad and the workmen were entitled to restoration of service with full back wages. The fresh appointment were treated to be not appropriate. The Board assails the award in each of these cases by filing separate writ petitions. 3. The Management took the stand before the Labour Court that the dissolution of the Board in March, 1968, amounted to a closure of the business and the sole benefit to which a workman thereupon became entitled was as envisaged in Section 25-FFF of the Industrial Disputes Act, as has been held by a Bench of this Court in the reported decision Sisir Kumar Mohanty Vs. State of Orissa and Another. It is contended that notwithstanding such a clear decision of this Court which was binding on the Labour Court, the impugned awards have held that there was no closure of the business and the Board functioned to carry on its business notwithstanding dissolution through the Director of Industries and as such the termination was bad and there was no occasion for any re-employment. In the reported decision this Court came to hold: On an analysis of Sections 3 and 4 it would be clear that Section 3 concerns itself with the incorporation of the Board and once the Board is incorporated the law of Corporation seems to have been applied and the perpetual succession and common seal are provided for. Section 4 concerns itself with the constitution of a particular Board and provides that 15 members, both official and non-official, including the President and the Secretary all of whom are to be nominated by the State Government will constitute the Board. There is clearly distinction between incorporation of the Board and its constitution. Section 4 concerns itself with the constitution of a particular Board and provides that 15 members, both official and non-official, including the President and the Secretary all of whom are to be nominated by the State Government will constitute the Board. There is clearly distinction between incorporation of the Board and its constitution. The proviso to Section 4(2) provides the machinery for dissolving the Board, and it is stated that once the State Government on being satisfied that the Board does not function properly or is incompetent to discharge its functions lays a proposal before the Orissa Legislative Assembly and the said proposal is accepted by a resolution of that assembly, the Board stands dissolved.... Three contentions had been advanced in the said case as referred to in the judgment, but in paragraph 5, it has been clearly stated: While all these contentions were formulated by Mr. Mohanty, at the time of argument he indicated to us that he would confine his argument in this case mainly 'to one aspect, namely, that the Khadi Board is an 'Industry' and is governed by the provisions of the Industrial Disputes Act. On the aforesaid premises he next contended that the provisions of Section 25-FFF of the Industrial Disputes Act were attracted and the State Government as the successor of the Board who was the employer of the, Petitioner, was bound to make payment of the dues in terms of Section 25-FFF to the Petitioner. He indicated to us that if this aspect of the matter is decided, he, would reserve his other contentions to be raised in some other suitable proceeding, and since the Petitioner is only a workman he is not interested to canvass the larger issues referred to above. It is thus clear that the submission that relief u/s 25-FFF of the Industrial Disputes Act was available was advanced on behalf of the Petitioner. Once the Court found that the Board was an 'industry', on Petitioner's own submission Section 25-FFF of the Industrial Disputes Act was applied. 4. In the unreported decision Narottam Sahu v. State of Orissa and Ors. O.J.C. No. 513 of 1971-D/25-9.1972, this Court observed: ...The position that emerges from these is that the Board constituted u/s 3 is a permanent one. At any given time the Board constituted u/s 4 can be dissolved in accordance with the provisions of Section 4(2a). 4. In the unreported decision Narottam Sahu v. State of Orissa and Ors. O.J.C. No. 513 of 1971-D/25-9.1972, this Court observed: ...The position that emerges from these is that the Board constituted u/s 3 is a permanent one. At any given time the Board constituted u/s 4 can be dissolved in accordance with the provisions of Section 4(2a). Provision is made for the interregnum in Section 4(2b) of the Act and Section 15 has been deleted, as such a situation can never happen because the Board is an incorporated body entitled to acquire and hold property. The transitory provision in Section 5 of the Amending Act, therefore, only deals with revesting of assets and liabilities in the Board upon reconstitution. On this analysis, the contention of the Board that the Petitioner was an employee of the dissolved Board and the new Board has nothing to do with him is without any force. Having held so, the Court took the view that Petitioner of that case should work out his remedies in an appropriate proceeding under the industrial Disputes Act. Nothing has been said in the unreported decision which can be taken to be in conflict with the decision in the reported case. There is, therefore, no necessity nor scope to attempt resolving of any conflict. 5. Counsel for the Board have contended that the award in each of these cases is wrong, inasmuch as the workmen were entitled to the only relief of compensation u/s 25-FFF of the Industrial Disputes Act, as already found in the reported decision. There can be no restoration of service with award of back wages. We have already pointed out that the reported decision is no authority for the Board proposition now canvassed by the Board. We shall, therefore, proceed to examine the correctness of the submission independent of the earlier decision. 6. The Labour Court has recorded a clear finding that with the dissolution of the Board, the commercial activity of the Board did not come to an end. Upon dissolution of the Board, Government entrusted the affairs of the Board to the Director of Industries and the Director of Industries continued the business hitherto conducted by the Board. New investments were, made; even expansion was proposed as would appear from the statutory annual reports of the Board. Upon dissolution of the Board, Government entrusted the affairs of the Board to the Director of Industries and the Director of Industries continued the business hitherto conducted by the Board. New investments were, made; even expansion was proposed as would appear from the statutory annual reports of the Board. The Labour Court has referred to the evidence placed before it for coming to the conclusion that upon dissolution. It was not the intention to dose down the business. In some of the awards it has been pointed out: During the current financial year (covered by the period of dissolution), The Khadi and Village Industries Commission had allotted a sum of Rs. 56,67,959 as grant and Rs. 12,76,120 as loan for development of different village industries in the State. These amounts were required to be sanctioned and disbursed to different village industries. Some more amounts were expected to be received the Board was reconstituted the State Government had to take the responsibility of sanctioning and disbursing the amounts to the village industries.... The Board was dissolved u/s 4 of the aforesaid Act. It has been decided after a joint consultation that the Director of Industries. Orissa, would implement the programe for the present until another Board was constituted.... The labour Court has also observed: ...The report (Ext. 11) nowhere states that the Board had stopped all its activities on dissolution. Further reference has also been made to the position that according to the Secretary, Khadi, Honey Processing Unit, Saranjam Karyalaya, Potteries and Soap Industries used to be departmental activities of the erstwhile Board. Though he denied the suggestion that except Khadi industry, all other activities of the Board continued unabated during the dissolution, he could not give the exact date or month when Khadi industry under the Board came to a close. The Labour Court also took note of the fact: He (Employer's witness) states that the employees who continued in employment under the Director of Industries during the period of dissolution of the Board were not employees of the State Government as stated in Exts. D, E, F, G and N. They were not employees of the Board because the Board was non-existent and further the Director of Industries had no power to appoint persons other than work-charged employees; contingent menials and persons holding sanctioned posts.... D, E, F, G and N. They were not employees of the Board because the Board was non-existent and further the Director of Industries had no power to appoint persons other than work-charged employees; contingent menials and persons holding sanctioned posts.... No separate service books are there in respect of the said employees for the period under dissolution. The same service books which were there were continued after reconstitution of the Board. He referred to page 2 of Ext. 11 and stated that it has been mentioned therein that Government decided to retain 120 employees to carry on the village industries programme after transferring the departmental Khadi activities to the voluntary organisation in consultation with the Khadi Commission. After referring to the evidence of M. W. 1 at length, the Labour Court has concluded thus: ...there had been no closure of the activities of the Board within the meaning of the Industrial Disputes Act. Serious grievance was made on the ground that no reference was made to the evidence of the workmen. It has not been pleaded that there was any admission by the workmen against their stand. The Labour Court, therefore, justifiedly relied on the evidence of the adversary - admissions of M.W. 1, for finding out the true factual position. It is the settled legal position that whether there has been a closure or not is a question of fact. See, The Management of Express Newspapers Ltd. Vs. Workers and Staff Employed under it and Others and Kalinga Tubes Ltd. v. Their Workmen 35 (1969) C.L.T. 223. We do not think that there is scope to disturb the clear finding in this proceeding. 7. Mere supersession of a particular Board u/s 4(2a) of the Act does not wipe out the existence of the Board. The Board is an incorporated body with perpetual succession. That is the effect of Section 3 of the Act. The Board that is dissolved is the one constituted u/s 4, Dissolution of such a Board does not take away the legal existence of the incorporated body and that body inspite of dissolution can carry on the commercial activities. In fact, the Director of Industries was a substitute of the Board for carrying on the business. The Board that is dissolved is the one constituted u/s 4, Dissolution of such a Board does not take away the legal existence of the incorporated body and that body inspite of dissolution can carry on the commercial activities. In fact, the Director of Industries was a substitute of the Board for carrying on the business. The finding of the Labour Court that the same Board continued to be In existence though its affairs were being managed by a Director In place of a Board constituted u/s 4 of the Act, in our opinion, is not open to challenge. 8. The Labour Court has also found that these were, cases of retrenchment and in the absence of compliance with the provisions of Section 25-F of the Industrial Disputes Act, the order of retrenchment was invalid. Once it is held that the Board continued its business in the hands of the Director of Industries, the finding of the Labour Court that it was a case of retrenchment receives support. The Labour Court has again found: The evidence of M.W. 1, considered along with the documents filed by the management referred to above also indicate that consequent upon the reduction of the activities of the Board, some employees were treated surplus and, therefore, the Government decided that consequent upon dissolution of the Board and reduction of its activities, there should be termination of employment of some of the employees. Short of closure of the industry, there can he no scope to contend in the present background - namely reducing the industrial activity and while retaining some workmen asking the rest to go as they were surplus with reduced workload - that it was not retrenchment. Even if we go by the traditional of retrenchment as in Pipraich Sugar Mills Ltd. Vs. Pipraich Sugar Mills Mazdoor Union and not the liberal approach in the case of The State Bank of India Vs. Shri N. Sundara Money the present instances would indeed be cases of retrenchment. The reason given for termination of service in September, 1958, supports the stand of retrenchment and not termination upon closure of business. Admittedly there was no compliance with Section 25-F of the Industrial Disputes Act. In that view of the matter, the order of termination of service has been rightly held to be invalid. The reason given for termination of service in September, 1958, supports the stand of retrenchment and not termination upon closure of business. Admittedly there was no compliance with Section 25-F of the Industrial Disputes Act. In that view of the matter, the order of termination of service has been rightly held to be invalid. We are not inclined in the facts of the case to interfere with the conclusion of the Labour Court. The award in each of the cases seems to be not open to any attack. Each of the writ application s accordingly fails and is dismissed. There will be no older for costs. K.B. Panda, J. 9. I agree. P.K. Mohanti, J. 10. I agree. Final Result : Dismissed