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1999 DIGILAW 228 (KAR)

KAP STEEL LIMITED v. STATE OF KARNATAKA

1999-04-08

V.GOPALA GOWDA

body1999
V. GOPALA GOWDA, J. ( 1 ) THE petitioner is a company. It has resorted to lay-off its workmen from September 7, 1998. The fourth respondent-union has complained to the first respondent about non-compliance of section 25-F of the Industrial Disputes Act, 1947 (hereinafter referred to as "the Act" ). According to the union, there are more than hundred workers in the petitioner-company whereas the management contended that there are only ninety six workers, and, therefore, permission of the Government was not obtained for laying off the workers. Consequently a showcause notice as per Annexure-C, dated September 24, 1998, was issued to the management as to why action should not be taken against them under Section 25q of the Act. The management replied as per annexure-D narrating the reasons for laying off the workers and requesting not to take any penal action. Thereafter, the fourth respondent union has sought for recovery certificate. Accordingly, the impugned recovery certificate at Annexure-H had been issued. Pursuant to the recovery notice, recovery certificate for a sum of Rs. 13,92,695 has been issued as per Annexure R-12 towards lay-off compensation payable to the workmen for the period September 7, 1998, to december 31, 1998. The recovery notice at Annexure-H is sought to be quashed by the petitioner in this writ petition. ( 2 ) THE main grievance of the petitioner is that the second respondent has not determined the contentions issued/raised by it with regard to the number of workers employed by the company and as to whether the workmen were justified in claiming lay-off compensation. While contending that the total number of workers in the petitioner-company is only 96, the petitioner has disputed the list furnished by the union. In other words, it is contended that without determining the total strength of workmen in the petitioner-company, the impugned recovery notice is issued only on the ground that the petitioner has not produced the documents. ( 3 ) MR. Sreevatsa, learned counsel for the petitioner submits that notice was issued to the petitioner-company only in respect of the claim for the period September 7, 1998, to October 31, 1998, and for the other period no notice was issued, and, therefore, the recovery certificate, and the demand notice are bad in law. Counsel further submits that as per Clause 17. Sreevatsa, learned counsel for the petitioner submits that notice was issued to the petitioner-company only in respect of the claim for the period September 7, 1998, to October 31, 1998, and for the other period no notice was issued, and, therefore, the recovery certificate, and the demand notice are bad in law. Counsel further submits that as per Clause 17. 5 of the standing Orders, right is conferred upon the employer to lay-off the workmen for 45 days in a period of 12 months and the employer has the discretion to keep the employees laid off without paying any lay-off compensation or to retrench them, as provided under the first proviso to section 25c of the Act. of the Act. Counsel submits that the petitioner is not liable to pay compensation beyond 45 days of the lay-off, to the workmen under Section 25c of the Act. ( 4 ) THE recovery certificate at Annexure R-12 is bad in law as the same was not preceded by an enquiry determining the rights of the parties as required in law. On this ground alone, the recovery certificate is liable to be quashed. Further, the recovery certificate pertains to the period september 7, 1998, to December 31, 1998, but in the showcause notice issued to the petitioner as per Annexure-F, the period mentioned is from September 7, 1998, to October 31, 1998. The impugned recovery notice at Annexure-H is also liable to be quashed. ( 5 ) THE submission made on behalf of the petitioner that the petitioner-company is not liable to pay lay-off compensation beyond 45 days of lay-off as Chapter V-A of the Act is applicable, cannot be accepted. The first proviso to Section 25c of the Act reads thus: "provided that if during any period of twelve months, a workman is so laidoff for more than forty five days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty five days, if there is an agreement to that effect between the workman and the employer. " ( 6 ) THE last portion of the above extracted provision makes it clear that lay-off compensation is not liable to be paid beyond 45 days, only if there is an agreement to that effect between the workman and the employer. In the present case, according to learned counsel/for the petitioner, clause 17. " ( 6 ) THE last portion of the above extracted provision makes it clear that lay-off compensation is not liable to be paid beyond 45 days, only if there is an agreement to that effect between the workman and the employer. In the present case, according to learned counsel/for the petitioner, clause 17. 5 of the certified Standing Orders of the petitioner-company empowers the petitioner to lay-off the employees beyond 45 days without paying the lay-off compensation. Counsel also states that memorandum of settlement dated March 18, 1991, arrived at between the petitioner and the fourth respondent is the "agreement" referred to in the proviso to Section 25c of the Act. The submission of learned counsel is misplaced. In Clause 20 of the memorandum of settlement entered into between the management and the workmen, it is agreed between the parties that the wages for the period of lay-off shall be computed and paid to the workmen as per the provisions of the Act. The Act excludes the liability to pay lay-off compensation beyond 45 days only if there is an agreement to that effect. In the instant case, there is no agreement to that effect. What has been agreed under the memorandum of settlement is payment of lay-off compensation as per the provisions of the Act. There, (sic) "agreement" stipulated in the proviso to Section 25c of the act. The memorandum of settlement, referred to by learned counsel for the petitioner, cannot be the agreement mentioned in Section 25c. It is a settlement arrived at under Section 12 (3) of the act with regard to the quantum of lay-off compensation payable to the workers, and the same cannot be construed as an "agreement" specified in the proviso to Section 25c of the Act. The submission made on behalf of the petitioner is thus liable to be rejected and it is rejected. ( 7 ) AS it is found that there is no agreement specified in the proviso to Section 25c of the Act, the petitioner-company is liable to pay lay-off compensation beyond 45 days, at least in respect of the employees admitted by them. The reliance placed by learned counsel for the petitioner in relation to Clause 17. ( 7 ) AS it is found that there is no agreement specified in the proviso to Section 25c of the Act, the petitioner-company is liable to pay lay-off compensation beyond 45 days, at least in respect of the employees admitted by them. The reliance placed by learned counsel for the petitioner in relation to Clause 17. 5 of the certified Standing Orders of the company on the decision in the case of Rajasthan State Road Transport Corporation v. Krishna Kant, AIR1995 SC 1715 , 1995 (2 )CTC208 , [1995 (71 )FLR211 ], JT1995 (4 ) SC 348 , (1995 )II llj728 SC , (1995 )2 MLJ48 (SC ), 1995 (3 )SCALE440 , (1995 )5 SCC75 , 1994 Supp (1 )SCC268 , [1995 ]3 SCR1118 , 1995 (2 )UJ318 (SC ), (1995 )2 UPLBEC1295 has no application to the case on hand. In that case, the Supreme Court has quoted the following observation in buckingham and Carnatic Co, Ltd. v. Venkataiah, AIR1964 SC 1272 , [1963 (7 )FLR343 ], (1963 )II LLJ638 SC , [1964 ]4 SCR265 : "3, The certified Standing Orders represent the relevant terms and conditions of service in a statutory form and they are binding on the parties at least as much, if not more, as private contracts embodying similar terms and conditions of service. " ( 8 ) WHAT has been certified is the Clause in the Standing Order and the same cannot form "agreement" prescribed under the proviso to Section 25c of the Act. What has been agreed to in the memorandum of settlement is to compute the lay-off compensation in terms of the provisions of the Act. The petitioner has to show an agreement arrived at by it with the fourth respondent independently that it is not liable to pay lay-off compensation beyond 45 days to its employees who are laid off. In the absence of such an agreement, the memorandum of settlement arrived at cannot be pressed into service. The language employed in the proviso to Section 25c is unambiguous that it clearly spells out that there must be an agreement between the employer and the workmen for nonpayment of lay-off compensation beyond 45 days of lay-off. The words "to that effect" employed therein relates to agreement for nonpayment of lay-off compensation. Clause 17. The language employed in the proviso to Section 25c is unambiguous that it clearly spells out that there must be an agreement between the employer and the workmen for nonpayment of lay-off compensation beyond 45 days of lay-off. The words "to that effect" employed therein relates to agreement for nonpayment of lay-off compensation. Clause 17. 5 of the certified Standing Orders of the company shall not be construed as an agreement mentioned in the first proviso to Section 25c of the Act, as contended by learned counsel for the petitioner to assert that the company is not liable to pay lay-off compensation beyond 45 days from the date of lay-off. In the absence of such specific agreement, the petitioner cannot escape from the liability of payment of lay-off compensation to its workmen beyond 45 days of the lay-off, to the extent of 50 per cent. or as per the terms of the memorandum of settlement arrived at between the parties. Therefore, the stand taken by the petitioner in this regard is misconceived and is rejected only to the limited extent of admitted workers in the company. For all these reasons, the reliance placed by learned counsel for the petitioner on the decision of the Apex Court has no application to the facts of the case. ( 9 ) THOUGH the order at Annexure R-12 is bad in law and cannot be sustained, the same cannot be quashed, as there is no prayer to quash the same. The petitioner and their counsel have not sought for quashing the said recovery certificate. Mere quashing of the demand cause notice at annexure-H will not be helpful to the petitioner. ( 10 ) FOR the aforesaid reasons, the writ petition is allowed. The impugned notice at Annexure-H is quashed. The matter is remitted back to the second respondent to decide the claim and conclude the proceedings within four weeks from today. The petitioner is directed to pay lay-off compensation to the admitted employees in terms of the memorandum of settlement arrived at by them with the fourth respondent union within two weeks from today, till the dispute with regard to the claim of workmen with regard to number of employees is resolved by the second respondent. The petitioner is directed to pay lay-off compensation to the admitted employees in terms of the memorandum of settlement arrived at by them with the fourth respondent union within two weeks from today, till the dispute with regard to the claim of workmen with regard to number of employees is resolved by the second respondent. If the claim of the fourth respondent union that Chapter V-B is applicable is proved, the petitioner shall pay the lay-off compensation to the workmen at the rate specified in Section 25m of the Act. ( 11 ) THE parties are directed to appear before the second respondent on April 20, 1999, at 3. 00 p. m. , and not to take adjournment with a view to expedite the proceedings and to conclude the same within four weeks thereafter. ( 12 ) LEARNED Additional Government Advocate is permitted to file his memo of appearance within four weeks. ORDER ON "for BEING SPOKEN TO" ( 13 ) AFTER disposing of the matter on April 8, 1999, the matter was got posted "for being spoken to in view of the fact that there was no prayer for quashing the order at Annexure R-12. An application has been filed by learned counsel for the petitioner today, seeking amendment to the prayer column to include quashing of Annexure R-12. The application has not been opposed by the respondents. For the reasons stated in my order dated April 8, 1999, and since quashing of annexure R-12 is very much necessary, in the interest of justice the application is allowed and the petitioner is permitted to amend the prayer column suitably. Counsel for the petitioner has carried out necessary amendment also in the prayer portion. ( 14 ) IN view of the prayer made to quash the order at Annexure R-12, the prayer is allowed. In the operative portion of the order dated April 8, 1999, in addition to quashing of Annexure-H, annexure R-12 shall also be included. Thus, the second sentence in paragraph 7 of the order shall be read as "the impugned notice at Annexure-H and the recovery certificate at Annexure r-12 are quashed".