judgement:
ivil Appeal No. 3029 of 1986.
From the Judgment and Order dated 8.7.1985 of the Bombay High Court in Misc.
Petition No. 488 of 1968.
R.P. Bhatt, D.N. Mishra and Mrs. A.K. Verma for the Appellant.
C.V. Subba Rao for the Respondent.
The Judgment of the Court was delivered by VENKATARAMIAH, J.
This appeal by special leave is filed against the Judgment dated 8.7.1985 in Miscellaneous Peti tion No. 488 of 1968 on the file of the High Court of Bombay holding that the appellant was bound to comply with the provisions of the Employees ' Provident Funds and Miscellane ous Provisions Act, 1952 (hereinafter referred to as 'the Act ') and the scheme thereunder and to make contributions in respect of its employees working in its workshop at Antop Hill, Wadala in Bombay.
The appellant is a company which is carrying on business as "engineers and engineering contractors" and is engaged in building and construction industry.
By the Notification bearing No. GSR 1398 787 published in the Gazette of India dated 26.9.1964 (Part II, Section 3(i), page 1546) issued under section 1(3)(b) of the Act, the Act was extended to establishments of engineers and engineering contractors not being exclusively engaged in building and construction industry.
By the notice dated 11th October, 1967 the Regional Provident Fund Commissioner of Bombay called upon the appellant company to show cause why it should not be directed to comply with the Act in respect of the workmen employed at its workshop at Antop Hill, Wadala in Bombay.
The appellant submitted its representation on 13th October, 1967 claiming that the Act was not applica ble to it since the appellant was exclusively engaged in building and construction industry and the workshop in question had been set up only for the purpose of carrying out work ancillary to the building and construction industry in which it was engaged and that the appellant was not carrying on any work for others at the said workshop.
The Regional Provident Fund Commissioner negatived the conten tion of the appellant and directed that the appellant should make contributions with effect from 1st December, 1963 in accordance with the scheme framed under the Act in respect of the workmen employed at its workshop who were just 70 or 80 in number while the total working force of the appellant in its building and construction industry was in the order of 2,000.
The appellant had established another workshop for its own purpose at Calcutta.
On being served with a similar demand it had filed a writ petition in Writ Petition No. 614 of 1967 in the Calcutta High Court contending that the Act did not apply to such an establishment.
In view of the above writ petition which was pending on the file of the Calcutta High Court, the appellant represented to the Regional Provi dent Fund Commissioner, Bombay to stay further action under the Act till the disposal of the writ petition filed in the Calcutta High Court.
The Regional Provident Fund Commission er rejected the said request of the appellant and directed it to comply with the demand already made in respect of the workshop at Bombay.
After some correspondence, the appellant filed Miscellaneous Petition No. 488 of 1968 on the file of the High Court of Bombay, out of which this appeal by spe cial leave arises, questioning the validity of the notice issued to it calling upon it to comply with the provisions of the Act and the scheme made thereunder in respect of its workshop at Bombay.
It should be stated at this stage that the writ petition filed before the Calcutta High Court was allowed and the notice issued to the appellant to comply with the Act and the scheme made thereunder in respect of the workshop at Calcutta was quashed by the judgment of the High Court dated January 6, 1970 and that judgment has become 788 final.
When the writ petition, out of which this appeal arises was taken up for hearing by the High Court of Bombay, it was brought to the notice of the High Court of Bombay that a similar notice issued in respect of the workshop at Calcutta had been quashed and a similar order should be passed on the petition before the Bombay High Court also.
The High Court of Bombay declined to follow the decision of the Calcutta High Court and proceeded to pass the judgment upholding the demand made by the Regional Provident Fund Commissioner.
Aggrieved by the decision of the High Court of Bombay, the appellant has filed this appeal by special leave.
The following basic facts are not in dispute in this appeal: (i) that the appellant is engaged in building and construction industry and the appellant does not carry on any other business or profession; (ii) that the workshop in Bombay is estab lished only for the purpose of maintaining and repairing the equipment used by the appellant in its building and construction industry; and (iii) that the workshop in question does not undertake any job other than maintaining and repairing the equipment of the appellant.
The High Court in the course of its common judgment delivered in two writ petitions, one filed by the appellant out of which this appeal arises and another Writ petition filed by a company called Patel Engineering Co. Ltd., has observed thus: "In our view, on their own showing, the peti tioner companies are not only engaged in building and construction industry, but are also engaged in running workshops for main taining and repairing equipment such as piling machines, drills, air compressor pumps, con crete miners and allied tools.
In each of these workshops twenty or more persons are employed.
The said workshops by themselves are not ones engaged in building and construction industry.
Though it is true that these work shops do not undertake any job other than maintaining and repairing the equipment of the petitioner companies, still these workshops are not engaged in building and construction industry.
They 789 are only aiding and facilitating the petition er companies which are carrying on building and construction industry.
No doubt they do not undertake any job of maintaining and repairing equipment which does not belong to the petitioner companies.
Nonetheless these workshops themselves constitute establishment which employ more than twenty persons to do jobs which do not constitute building and construction industry.
The petitioner compa nies are thus engaged not only in building and construction industry but also running either respective workshops.
The said workshops themselves thus constitute establishments of engineers and engineering contractors.
The workshops are not engaged in building and construction industry at all.
That is suffi cient to hold that the petitioner companies are engineers and engineering contractors which are not 'exclusively engaged in building and construction industry '.
Once it is shown that they are engineers and engineering con tractors not being exclusively engaged in building and construction industry, by virtue of the notification of the Central Government under clause (b) of sub section (3) of section of the Act, the Act applies to them." The notification issued under section 1(3)(b) of the Act makes the Act applicable to establishments of "engineers and engineering contractors, not being exclusively engaged in building and construction industry".
It follows that any establishment carrying on the business of engineers and engineering contractors which is exclusively engaged in building and construction industry does not fall within the scope of the notification and hence the Act would not be applicable to such an establishment.
Any such establishment which carried on an activity which forms part of the build ing and construction industry should naturally be exempted from the operation of the Act because the expression 'build ing and construction industry ' refers collectively to all activities which have to be performed in connection with the building and construction industry.
In order to discharge effectively its functions as engineers and engineering contractors engaged in building and construction industry, an establishment has to maintain a workshop or workshops where the work of smithy, welding, cutting, carpentry etc.
are carried on.
Without these operations it is not possible for any person to carry on satisfactorily the work building and construction industry.
The reason for taking this view is obvious.
An establishment exclusively engaged in running a hospital does not cease to be an establishment exclusively carrying on the said business merely 790 because it sets up a Pharmacy Section for preparing and compounding medicines to be used exclusively by the patients at its hospital.
Similarly an estalblishment which is exclu sively engaged in providing shipping transport facilities does not cease to be an establishment exclusively carrying on the said business merely because it sets up an on shore workshop for effecting repairs exclusively to its own ships.
Such illustrations may be multiplied.
The point which is made out by these illustrations is that where an establish ment is engaged exclusively in carrying on a particular type of business by setting up any place of work with a view to carrying on the work of repairs etc.
to the tools, equip ment, vehicles etc.
used in its business or to carry on any other activity which is essential for its business effec tively and which is not used to carry on the work for the benefit of any third party but utilised exclusively for the business of the establishment, such establishment does not cease to carry on exclusively the business in which it is engaged.
It cannot also be said that the establishment has commenced to carry on another industry by the setting up of such a place of work.
In the instant case there is no dispute that the work that is being carried on at the appellant 's workshop at Bombay is work of maintaining and repairing of the equipment belonging to the appellant only.
The appellant is not earn ing any income or profit by carrying on the work of any other establishment at the said workshop.
In the above situation, we find it difficult to agree with the High Court that the workshop establishment by the appellant at Bombay is an independent establishment of engineers and engineering contractors which is not exclusively engaged in building and construction industry.
The High Court was in error in treat ing the workshop in question as a separate unit of the business of the appellant forming a separate establishment for purposes of determining whether the Act is applicable to the appellant or not.
It should have taken all the business operations carried on by the appellant in their totality into consideration in order to ascertain whether the appel lant is engaged exclusively in building and construction industry or not.
If the High Court had approached the case from the above angle it would not have committed the error of declaring the workshop at Bombay alone as an establish ment governed by the Act.
By splitting up the several opera tions carried on by the appellant in connection with the building and construction industry into separate units and thereby treating the workshop alone as a separate establish ment, the High Court misled itself into thinking that the workshop of the appellant at Bombay was governed by the Act.
We agree with the decision of the Calcutta High Court that such a workshop in which works connected with the business of building and 791 construction industry were being carried on in connection with such business of the owner cannot be construed as a separate establishment for purposes of the Act.
We, there fore, set aside the judgment of the High Court and quash the impugned notice issued by the Regional Provident Fund Com missioner, Bombay, calling upon the appellant to comply with the provisions of the Act and the scheme made thereunder in respect of the workmen employed at its workshop at Bombay.
The appeal is accordingly allowed.
There is no order as to costs.
N.P.V. Appeal allowed.

summary:
By a Notification dated 26 9 1964 issued under Section 1(3)(b) of the Employees ' Provident Funds Miscellaneous Provisions Act, 1952, the Act was made applicable to the establishments of engineers and engineering contractors not being exclusively engaged in building and construction industry.
The Regional Provident Fund Commissioner called upon the appellant company carrying on business as "engi neers and engineering contractors" and engaged in building and construction industry, to show cause why it should not be directed to comply with the Act in respect of the workmen employed at its workshop in Bombay.
The appellant contended that the Act was not applicable since it was exclusively engaged in building and construction industry and that the workshop had been set up only for the purpose of carrying out its work, ancillary to the building and construction industry, and not any work for others.
The respondent nega tived the contention and directed the appellant to make contributions with effect from 1st December, 1963 in respect of the workmen employed at its workshop.
The appellant assailed the validity of this notice in the Bombay High Court, which declined to follow the decision of the Calcutta High Court quashing a similar notice issued by the department in respect of the appellant 's workshop in Calcutta, dismissed the petition and upheld the demand of the department.
It held that the Act applied as the appel lant was not only engaged in building and construction industry 785 but was also engaged in running workshops for maintaining and repairing equipment such as piling machines, drills, etc., and hence it was an establishment of engineers and engineering contractors which was not ' 'exclusively engaged in building and construction industry." Allowing the appeal by special leave, this Court, HELD: 1.1 Where an establishment is engaged exclusively in carrying on a particular type of business by setting up any place of work with a view to carrying on the work of repairs etc.
to the tools, equipment, vehicles etc.
used in its business or to carry on any other activity which is essential for its business effectively and which is not used to carry on the work for the benefit of any third party but utilised exclusively for the business of the establishment, such establishment does not cease to carry on exclusively the business in which it is engaged.
It cannot also be said that the establishment had commenced to carry on another industry by the setting up of such a place of work.
[790B C] 1.2 Any such establishment which carries on an activity which forms part of the building and construction industry should be exempted from the operation of the Act because the expression "building and construction industry" refers collectively to all activities which have to be performed in connection with the building and construction industry.
[789F] In order to discharge effectively its functions as engineers and engineering contractors engaged in building and construction industry, an establishment has to maintain a workshop or workshops where the work of smithy, welding, cutting, carpentry etc.
are carried on.
Without these opera tions it is not possible for any person to carry on satis factorily the work of building and construction industry.
[789G] 1.4 Such a workshop in which works connected with the business of building and construction industry were being carried on in connection with such business for the owner cannot be construed as a separate establishment for purposes of the Act.
[790H] In the instant case, the work that is being carried on at the appellant 's workshop is work of maintaining and repairing of the equipment belonging to the appellant only.
The appellant is not earning any income or profit by carry ing on the work of any other establishment.
It cannot, therefore, be said that the workshop established by the appel 786 lant is an independent establishment of engineers and engi neering contractors which is not exclusively engaged in building and construction industry.
[790D E] 1.5 The High Court was in error in treating the workshop in question as a separate unit of the business of the appel lant forming a separate establishment for purposes of deter mining whether the Act is applicable or not.
It should have taken all the business operations carried on by the appel lant in their totality into consideration in order to ascer tain whether the appellant is engaged exclusively in build ing and construction industry or not.
By splitting up the several operations carried on by the appellant in connection with the building and construction industry into separate units and thereby treating the workshop alone as a separate establishment, the High Court misled itself into thinking that the workshop of the appellant was governed by the Act and thus committed the error of declaring the said workshop as an establishment governed by the Act.
[790F G]


judgement:
Civil Appeal No. 79 of 1954.
938 Appeal from the judgment and order dated March 10, 1953, of the former Pepsu High Court in Letters Patent Appeal No. 493 of Samvat 2005 arising out of the judgment and order dated January 18, 1949, of the said High Court in E. As.
78 96 of Samvat 2001.
Naunit Lal, for the appellants.
Mohan Behari Lal, for the respondents.
November 11.
The following Judgment of the Court was delivered by KAPUR J. This is an appeal brought pursuant to a certificate under article 133(1)(c) of the Constitution from the judgment and order of the Division Bench of the erstwhile Pepsu High Court pronounced on March 10, 1953, modifying in appeal the order of the Liquidation Judge.
The facts are fully recited in the judgments of the courts below and comparatively a brief recital will be sufficient for the purpose of this judgment.
The appellant company was incorporated in 1934 under the Companies Act of the erstwhile Patiala State.
It carried on the business of commission agency for dealing in forward transactions in various kinds of grain and other commodities.
The respondent firm Ganpat Rai Hira Lal of Narnaul besides being a shareholder of the appellant company had dealings with it and entered into several forward transactions of sale and purchase of grain and other commodities.
The appellant, acting as a commission agent of the respondent and its other constituents entered into several transactions of forward delivery at Hapur with Firm Pyarelal Musaddi Lai, who were carrying on commission agency business at Hapur (and will hereinafter be termed the Hapur firm).
The total profits of the transactions entered into by the appellant with the Hapur firm was Rs. 48,250 on which the Hapur firm paid Rs. 14,730 8 as income tax.
The profits accruing on the transactions entered into on behalf of the respondent amounted to Rs. 29,275 2 6 on which the proportionate income tax claimed to have been paid was 939 Rs. 9,314 13 4.
On May 20, 1943, the appellant was ordered to be wound up and Udmi Ram Aggarwal, a pleader of the old Patiala High Court was appointed its liquidator.
The list of contributories was settled on October 21, 1943, and the respondent was placed on that list.
Though this matter was challenged in the appeal before the High Court it is no longer in controversy between the parties.
The Official Liquidator on March 18, 1944, applied under section 186 of the Patiala Companies Act, for a payment order for Rs. 12,204 12 3 against the respondent and in support of his claim he filed, with this application, copies of the respondent 's account in the books of the appellant showing how the amount claimed was due from the respondent.
This amount included the sum of Rs. 9,476 13 0, on account of income tax paid by the Hapur firm for and on behalf of the respondent on the profits of the forward transactions at Hapur and the commission of the Hapur firm.
The respondent raised several objections and pleaded inter alia that the Hapur firm with whom the appellant had entered into forward transactions had no right to demand any income tax from the appellant as no profit had accrued to the appellant which was acting as a commission agent and " was only entitled to the commission ".
It was also pleaded that as on the total number of transactions entered into between the respondent and the appellant there was a loss, the respondent was not liable to pay any income tax and that the respondent had no taxable income in the year under dispute or in any other year.
On May 23, 1944, the respondent filed an application in which it was submitted that the Hapur firm, who were agents of the appellant at Hapur, had retained Rs. 14,730 8 0, " which was in trust with them under section 42 of the Income Tax Act " and prayed that the Official Liquidator be directed to apply to the Income Tax authorities for a refund of the amount retained and paid by the Hapur firm, as no tax was really due on the transactions entered into by the appellant with the Hapur firm and none was payable by the respondent.
940 After evidence was led by both parties the payment order was made by the learned Liquidation Judge on January 18, 1949, for a sum of Rs. 8,191 0 9 which included a sum of Rs. 6,867 9 6 the proportionate amount of income tax due on the profits accruing on the respondent 's transactions.
Against this order the respondent took an appeal to the Division Bench and canvassed two points: (1) that the respondent could not be settled on the list of contributories and (2) that it was not liable for the amount retained for payment of income tax from out of profits on the transactions entered into on its behalf by the appellant with the Hapur firm and subsequently paid by the latter.
The court negatived the former contention and held that the respondent had rightly been settled on the list of contributories and upheld the latter contention and held, following a judgment of the Judicial Committee of the Ijlas khas of Patiala in Panna Lal Mohar Singh vs Aggarwal Chamber (1), that the Official Liquidator of the appellant was riot entitled to claim the amount of income tax paid by the Hapur firm.
The Judicial Committee ljlas khas had held : " Before the liability of the contributory can be fixed it must be shown that his income was such on which income was assessable. .
It is not denied that the contributory was carrying on other transactions in India a, , it stood before partition through other person.
It was therefore his entire income that was to be taken into consideration to assess his liability to income tax." The appellant then applied for a certificate to appeal under article 133(1)(c) which was granted in the following terms: " The first question is whether a decision given by one Judge of the Judicial Committee can be regarded in law as a decision of the Committee.
The second is whether the principle laid down by the learned Judge of the Judicial Committee that the Aggarwal Chamber of Commerce was not entitled to recover from its clients the proportionate share of the income tax paid by it unless it was shown that the total amount (1) C. A. 60 Of 2005 section 941 of income of the clients was assessable to income tax, was sound.
Accordingly we allow the petition and grant the certificate.
" The first point has not been canvassed before us and in the view that we have taken it would be unnecessary to go into that matter.
The sole point for decision is whether the respondent is liable for income tax, which has been paid by the Hapur firm on the transactions, which were entered into by the appellant with the Hapur firm for and on behalf of the respondent? There is no finding by the High Court that the respondent had entered into any forward transactions in British India or at Hapur with any firm other than the Hapur firm and this matter was not agitated before us, nor is there any finding as to the total world income of the respondent and there is no material on the record from which it could be determined.
The appellant is a non resident company and the respondent is a non resident, residing at Narnaul in what was the Indian State of Patiala.
The appellant entered into forward transactions on behalf of the respondent at Hapur in which there was a considerable amount of profit.
The High Court has found that the Hapur firm paid Rs. 6,867 9 0 on account of income tax which was payable on the profits made on the transactions entered into with the Hapur firm for and on behalf of the respondent.
The respondent challenged its liability to pay income tax on the ground that it was liable: " only on his total earnings during the year under assessment and since, as is clear even from the books of the respondent, he had suffered heavy losses in his business at Narnaul, his total income was not assessable to any income tax.
" The learned Liquidation Judge held the respondent liable for the amount of the income tax by applying section 69 of the Contract Act.
The Division Bench on appeal disallowed this item on the ground that it had not been shown that the " total earnings" of the respondent were taxable under the Act.
Neither of the 942 courts below have discussed the relevant provisions of the Act, not even section 42 which was mentioned by the respondent in his application of May 23, 1944, nor have they given a finding as to the jural relationship of the Hapur firm with the respondent.
The agency of the Hapur firm was not seriously disputed before us nor repudiated.
The case seems to have proceeded on the basis of this agency in the courts below.
The Hapur firm was employed by the appellant for forward transaction business of the respondent who has accepted the transactions entered into as also the amount of the profit accruing on those transactions and is only disputing the amount of income tax deducted, retained and paid on those profits.
Under the law the Hapur firm would be an agent of the respondent for that part of the business of the agency as was entrusted to it and " privity of contract arises between the principal and the substitute ".
Section 194 of the Contract Act; De Bussche vs Alt (1).
It is now necessary to refer to the relevant provisions of the Income tax Act in force in the assessment year 1942 43 (hereinafter termed the Act).
It is not clear as to what was the signification of the words " total earnings " used by the High Court because it is not used in the Income Tax Act which uses two expressions ; " total income " and " total world income " in sub section 15 of section 2 of the Act.
The definition of " total income " comprises two things (i) the total amount of income, profits and gains referred to in section 4(1) and (ii) computation in the manner laid down in the Income Tax Act.
" Total world income " includes all income, profits and gains wherever accruing or arising except income to which under the provisions of section 4(3) the Act does not apply.
Thus in the case of the respondent who is a " nonresident" "total income" would comprise income, profits and gains received or accrued in British India or deemed to be received or to accrue in British India.
Section 17 of the Act which was relied upon by the respondent 's counsel occurs in Chapter III dealing with (1)(1878) , 311, 943 Taxable income ".
It provides for the determination of tax payable in certain special cases of which the, case of a non resident is one.
It provided: " Where a person is not resident in British India and is a British subject as defined in section 27 of the British Nationality and Status of Aliens Act, 1914 (4 & 5 Geo.
V. Ch.
17) or a subject of a State in India or Burma, or a native of a Tribal Area, the tax, including super tax, payable by him or on his behalf on his total income shall be an amount bearing to the total amount of the tax including super tax which would have been payable on his total world income had it been his total income the same proportion as his total income bears to his total world income. . .
Section 17 does not deal with or affect the rights and liabilities of persons required under the Act to make deductions of income tax from sums payable to non residents or the consequences of failure to make such deductions.
The very next chapter (Chapter IV) deals with deductions which the Act requires to be made in regard to different heads of income.
Section 18 provides for deduction at the source.
Sub section
3 A of this section was as under: S.18(3A) " Any person responsible for paying to a person not resident in British India any interest not being " interest on securities", or any other sum chargeable under the provisions of this Act, shall, at the time of payment, unless he is himself liable to pay income tax thereon as an agent, deduct income tax at the maximum rate.
" The proviso to this sub section made provision for payment of monies without deduction if there was a certificate of the Income Tax Officer to that effect.
Under section 18(7) of the Act a person making the deduction was required to pay the amounts so deducted to the Income Tax authorities.
In default of such deduction such person became an assessee in respect of the tax.
Chapter V of the Act deals with " Liability in Special Cases" which includes agents.
Section 40(2) 120 944 dealing with the case of trustees or agents of a person non resident in British India; provided S.40 (2) "Where the trustee or agent of any person not resident in British India and not being a minor, lunatic or idiot (such person being herein after in this such section referred to as a beneficiary).
is entitled to receive on behalf of such beneficiary, or is in receipt on behalf of such beneficiary of, any income, profits or gains chargeable under this Act, the tax, if not levied on the beneficiary direct, may be levied upon and recovered from such trustee or agent, as the case may be, in like manner and to the same amount as it would be leviable upon and recoverable from the beneficiary if in direct receipt of such income, profits or gains, and all the provisions of this Act shall apply accordingly.
" Thus under this section which is essentially a machinery and an enabling section the tax to be realised from a non resident could be levied upon the agent in the same manner as it could have been leviable upon and recoverable from a non resident.
Section 42(1) of the Act provided: " All income, profits or gains accruing or arising, whether directly or indirectly, through or from any business connection in British India, or through or from any property in British India, or through or from any asset or source of income in British India, or through or from any money lent at interest and brought into British India in cash or in kind, shall be deemed to be income accruing or arising within British India, and where the person entitled to the income, profits or gains is not resident in British India, shall be chargeable to income tax either in his name or in the name of his agent, and in the latter case such agent shall be deemed to be, for all the purposes of this Act, the assessee in respect of such income." In proviso 2 to this sub section any such agent who apprehended that he might be taxed as such agent could retain out of any money payable to such non.
resident a sum equal to the estimated liability under the sub ,section and in the event of any disagreement between the non resident and such agent a certificate 945 could be obtained from the Income Tax Officer as to the amount to be retained which shows that the Act had a provision for the determination of the question.
As was observed by Viscount Cave in Williams vs Singer (1): "The fact is that, if the Income Tax Acts are examined, it will be found that the person charged with tax is neither the trustee nor the beneficiary as such, but the person in actual receipt and control of the income which it is sought to reach.
The object of the Acts is to secure for the State a proportion of the profits chargeable, and this end is attained (speaking generally) by the simple and effective expedient of taxing the profits where they are found.
" See also Archer Shee vs Baker (2 ), Executors of Estate of Dubash vs Commissioner of Income Tax (3).
This has rightly been stated to be the underlying principle of the deduction under sections 40, 41 and 42.
Section 48 of the Act deals with refunds and if the respondent thought that it was not liable to the payment of any tax it could apply to the Income Tax Officer for refund.
Thus the Hapur firm being an agent could be held liable under sections 40(2) and 42(1) of the Act as an assessee for income tax on the profits made on the respondent 's transactions at Hapur and was therefore entitled under the proviso to section 42(1) to retain the estimated amount of income tax payable on the amount of the respondent 's profits which in this case was deducted, retained and actually paid.
This fact has not been challenged before us.
The ground on which this liability is attacked is that the total world income of the respondent was not taxable and therefore, on the profits made on the Hapur transactions, the British Indian Tax authorities could not levy any tax.
This contention disregards the provisions of and liability arising under sections 40(2) and 42(1) and the proviso thereto.
It also is contrary to the principle of taxing statutes that the profits are " taxed where they are found.
" In this case they were in the hands of the Hapur firm (I) , 411 (H.L.).
(2) (1927) i i T.C. 749, 770 (H.L.).
(3) , 189 (S.C.).
946 which was in receipt and control of the income.
The agent at Hapur, having lawfully and properly paid the tax under the Act that amount has been rightly deducted from the profits accruing on the Hapur transactions.
The Judgment of the Judicial Committee of the ljlas i khas on which the High Court has based its decision suffers from the infirmity that it ignores both the provisions of and principle underlying sections 40(2) and 42(1) of the Act and the proviso thereto relating to the liability of an agent under the Act and the law of Agency relating to employing of sub agents by agents.
If the Hapur firm rightly paid the tax on the profits, the respondent cannot be allowed to challenge the amount on the ground that his total world income was not taxable and he was entitled to his profits without deductions.
That is a question which ha,,; to be agitated by the non resident assessee at the time of his assessment.
Those persons who are bound under the Act to make deduction at the time of payment of any income, profits or gains are not concerned with the ultimate result of the assessment.
The scheme of the Act is that deductions are required to be made out of " salaries ", " interest on securities " and other heads of " income profits and gains " and adjustments are made finally at the time of assessment.
Whether in the ultimate result the amount of tax deducted or any lesser or bigger amount would be payable as income tax in accordance with the law in force would not affect the rights, liabilities and powers of a person under section 18 or of the agent under sections 40(2) and 42(1).
As to what would be the effect and result of the application of section 17 if and when any appropriate prceedings are taken is not a matter which arises in this appeal between the appellant and the respondent nor can that matter be adjudicated upon in these proceedings.
That is a matter which would be entirely between the respondent and the Income Tax authorities seized of the assessment.
Our attention was drawn to two cases (1) Commissioner of Income tax vs Currimbhoy Ebrahim & Sons(1) (1) 947 In that case the assessee company had been treated as an agent of the Nizam of Hyderabad who had lent to the assessee company a sum of Rs. 50 lakhs.
The assessee company had paid in the assessment year a, sum of Rs. 3 lakhs on account of interest and it was held that the interest earned by the Nizam did not accrue or arise to the Nizam through or from any business connection with the assessee company in British India or from any property within British India and there fore section 42 was not applicable.
No question of "business connection" was raised in the court below and the argument there proceeded on the basis that the respondent was not liable for this amount on account of income tax because the " entire income " was not assessable to income tax.
The argument of isolated transactions based on the Anglo French Textile Co. Ltd. vs Commissioner of Income tax, Madras(1) is not available to the respondent nor was the foundation for any such argument laid in the courts below or raised in the statement of the case filed by the respondent in this court.
Another case on which reliance was placed is Greenwood vs F. L. Smidth and Company(2 ).
That was a case of a Danish firm resident in Copenhagan.
It manufactured and dealt with cement making machinery which it exported to other countries.
It had an office in London in charge of a qualified engineer who received enquiries for machinery such as the firm could supply, sent to Denmark particulars of the work which the machinery was required to do and when the machinery was supplied he was avilable to give English purchaser the benefit of his experience in erecting it.
The contracts between the firm and their customers were made in Copenhagan and the goods were shipped F. 0.
B. Copenhagan.
It was held in that case that the firm did not exercise a trade within the United Kingdom within the meaning of Sch.
D of section 2 of the Income Tax Act 1853 and was therefore not assessable to income tax.
This decision is not relevant to the case now before us as the facts were different and the dicision was under a different statute.
(1) ; (2) 948 In our opinion the Judicial Committee of Ijlas i khas was in error in holding that before fixing the liability of a contributory to tax paid by an agent in British India for and on behalf of the non resident contributory, his liability to pay tax on his "entire income " really total world income had to be established.
Therefore the finding of the High Court that the Liquidator cannot claim from the respondent the amount of tax paid by the Hapur firm on transactions entered into by the appellant for and on behalf of the respondent unless it was shown that his total world income was taxable is unsustainable.
As between the parties the tax paid by the agent had to be taken into account irrespective of the ultimate result of the assessment on the non resident.
In the result this appeal is allowed and the judgment and order of the Division Bench of the Pepsu High Court set aside and the order of the learned Liquidation Judge restored but in the circumstances of this case the parties will bear their own costs in this court and in the courts below.
Appeal allowed.

dataset_name: IN-Abs

summary:
The appellant company and the respondent firm were carrying on business in the erstwhile patiala State, and were non residents in British India.
The appellant, acting as commission agent for the respondent, entered into several forward transactions with a Hapur firm of commission agents.
The profits accruing on these transactions amounted to Rs. 29,275 2 6 on which the Hapur firm paid a sum Of Rs. 9,314 13 4 as income.
In 1943 the appellant was ordered to be wound up and the respondent was placed on the list of contributories.
The Official Liquidator applied to the Liquidation judge for a payment order for a sum which included the amount of income tax paid by the Hapur firm for and on behalf of the respondent.
The main contention raised on behalf of the respondent was that it had no taxable income in the year in dispute and was not liable to pay any income tax and that, consequently, it was not liable for the income tax paid by the Hapur firm.
Held, that the Liquidator was entitled to claim from the respondent the amount of income tax paid by the Hapur firm irrespective of the consideration whether its world income was taxable or not.
Under the law the Hapur firm was an agent of the respondent for the business of the agency which was entrusted to it, and was as such liable under ss 40(2) and 42(1) Income tax Act, as an assessee for income tax on the profits made on the respondent 's transactions at Hapur and was entitled to retain the estimated amount of income tax payable on the amount of the respondent 's profits.
As the Hapur firm had rightly paid the tax on the profits, the respondent could not be allowed to challenge the liability on the ground that his total world income was not taxable and he was entitled to his profits without deductions.
That was a question which must be agitated by the non resident assessee at the time of his assessment.
As between the parties the tax paid by the agent had to be taken into account irrespective of the result of the assessment on the non resident.


judgement:
Special Leave Petition (Civil) Nos.
6887 88 of 1987.
From the Judgment and Order dated 5.2.
1987 of the Andhra Pradesh High Court in Writ Appeal Nos. 892 and 893 of 1983.
P.R. Ramachandra Rao, Dr. D.Y. Chandrachud, P.H. Parekh and M.K.S. Menon for the Petitioner.
V.J. Rao and Y. Prabhakara Rao for the Respondents.
The Order of the Court was delivered by VENKATARAMIAH, J.
The question arising for decision in this case is whether an employer whose establishment is governed by the Andhra Pradesh Shops & Establishments Act, 1966 (hereinafter referred to as 'the State Act ') is re quired, while retrenching any worker, to comply with the provisions of section 25F of the (hereinafter referred to as ' the central act ') or with section 40 of the State Act.
The petitioner in this case is a co operative society carry ing on 732 business at Vijayawada in the State of Andhra Pradesh.
It retrenched nine of its clerks Respondents 1 to 9 herein.
Respondents 1 to 4 Were retrenched on 1.10.1978 and Respond ents 5 to 9 were retrenched on 22.9.
1978 on the ground that the business of the management did not warrant the continu ance of its heavy establishment.
All the respondents chal lenged the orders terminating their services in an appeal filed under section 41(1) of the State Act before the appel late authority.
The appellate authority set aside the orders of retrenchment by nine separate judgments delivered on August 1, 1979 and directed the reinstatement of the re spondents with full back wages.
Aggrieved by the decision of the appellate authority the management, the petitioner herein, filed nine appeals before the Labour Court, Guntur under section 41(3) of the State Act.
The Labour Court allowed the appeals filed against Respondents 5 to 9 and set aside the orders which had been passed by the first appel late authority.
It, however, dismissed the appeals filed against Respondents 1 to 4 holding that the orders of re trenchment were bad in law since employees junior to these respondents had been retained in service.
It, however, directed that any amount paid to Respondents 1 to 4 as notice pay and gratuity etc.
under section 40 of the State Act on account of the termination of their services may be deducted from the back wages payable to them.
Aggrieved by the decision of the Labour Court Respondents 5 to 9 filed Writ Petition No. 163 of 1981 on the file of the High Court of Andhra Pradesh and the management, the petitioner herein, filed Writ Petition No. 6151 of 1980 before the High Court against Respondents 1 to 4.
The learned Single Judge who heard the said two writ petitions dismissed Writ Petition No. 163 of 1981 filed by Respondents 5 to 9 and allowed Writ Petition No. 6151 of 1980 filed by the management against Respondents 1 to 4.
The learned Single Judge took the view that Respondents 5 to 9 could not claim the benefit of section 25F of the Central Act in a proceeding initiated under section 41 of the State Act and dismissed their writ petition.
He, however, allowed the writ petition filed by the management and remanded the case to the Labour Court to reheat the case after permitting Respondents 1 to 4 to implead four other employees, namely, Seetharamaiah, Rajago pal Rao, Krishna Murthy and Khader Hussain, who were alleged to be seniors to Respondents 1 to 4 and hearing them on the question of inter se seniority between them and the said four other employees.
The learned Judge, however, observed that if section 25F of the Central Act was applicable to the cases 'I have no doubt that these orders of termination would have to be set aside, because section 25F denies the rights of the employer to terminate the service of an em ployee without payment of retrenchment compensation ' and that compensation had 733 not been paid in accordance with section 25F.
But he found that section 25F of the Central Act was not applicable to proceedings under the State Act.
Aggrieved by the decision of the learned Single Judge Respondents 1 to 4 and Respond ents 5 to 9 filed Writ Appeal Nos.
892 Of 1983 and 893 of 1983 respectively before the Division Bench of the High Court.
The common contention urged by both the groups of employees, who were appellants in these two appeals, was that the question of their retrenchment, was governed by section 25F of the Central Act and since the orders of retrenchment had not been passed in conformity with the provisions of section 25F of the Central Act the said orders were liable to be Set aside and they were entitled to be reinstated.
The Division Bench accepted the above contention of Respondents 1 to 9 and allowed both the appeals holding that the orders of termination were unsustainable.
Aggrieved by the decision of the Division Bench of the High Court the petitioner has filed these Special Leave Petitions under Article 136 of the Constitution.
The only question which arises for decision in this case, as mentioned above, is whether the retrenchment of an employee in an establishment governed by the State Act is governed by the provisions of section 40 of the State Act or by the provisions of Chapter V A of the Central Act which deals with lay off and retrenchment.
For purposes of conven ience section 40 of the State Act is set out below: "40.
Conditions for terminating the services of an employee and payment of gratuity: (1) No employer shall without a reasonable cause and except for misconduct terminate the serv ice of an employee who has been in his employ ment continuously for a period of not less than six months without giving such employee, at least one month 's notice in writing or wages in lieu thereof and in respect of an employee who has been in his employment con tinuously for a period of not less than five years, a gratuity amounting to fifteen days ' average wages for each year of continuous employment.
Explanation: For the purpose of this sub section, (a) the expression 'wages ' does not include overtime wages; (b) the expression 'average wages ' means the daily average of wages for the days an employee actually worked during the thirty days immediately preceding the date of termi nation of service; 734 (c) an employee in an establishment shall be deemed to have been in continuous employment for a period of not less than six months, if he has worked for not less than one hundred and twenty days in that establishment within a period of six months immediately preceding the date of termination of the service of that employee; (d) where the total continuous employment is for a fraction of a year or extends over a fraction of a year in addition to one or more completed years of continuous employment, such fraction, if it is not less than a half year shall be counted as a year of continuous employment in calculating the total number of years for which the gratuity is to be given.
(2) Where a gratuity is payable under sub section (1) to an employee, he shall be entitled to receive his wages from the date of termination of his service until the date on which the gratuity so payable is actually paid subject to a maximum of wages for two months.
An employee, who has completed the age of sixty years or who is physically or mentally unfit having been so declared by a medical certificate, or who wants to retire on medical grounds or to resign his service, may give up his employment after giving to his employer notice of at least one month in the case of an employee of sixty years of age, and fifteen days in any other case; and every such employee and the dependant of an employee who dies while in service shall be entitled to receive a gratuity as provided in sub section (1).
He shall be entitled to receive the wages from the date of giving up the employment until the date on which the gratuity so pay able is actually paid, subject to a maximum of wages for two months.
(4) The services of an employee shall not be terminated for misconduct except, for such act or omissions and in such manner, as may be prescribed.
" Sub section (1) of section 40 of the State Act imposes a restriction on the right of the employer of an establishment governed by the State Act to terminate the services of an employee.
It says that an employer shall not without a reasonable causes (except for miscon 735 duct) terminate the service of an employee who has been in his employment continuously for a period of not less than six months without giving such employee, at least one month 's notice in writing or wages in lieu thereof and in respect of on employee who has been in his employment con tinuously for a period of not less than five years, a gratu ity amounting to fifteen days ' average wages for each year of continuous employment.
In the case of misconduct neither one month 's notice or wages in lieu thereof nor gratuity need be paid on the termination of his services.
There are no other restrictions on the right of the management to terminate the services of an employee in an establishment governed by the State Act which is enacted by the State legislature in exercise of the powers conferred on it under Entry No. 22 of List III of the Seventh Schedule to the Consititution.
The Central Act was enacted by the Central Legislature before the commencement of the Constitution and it is also traceable to an Entry in the Government of India Act, 1935 corresponding to Entry No. 22 of List III of the Seventh Schedule to the Constitution.
When the Central Act was originally enacted, it merely provided for investigation and settlement of industrial disputes by establishing a machinery for collective bargaining, mediation and concilia tion, investigation, arbitration, adjudication and other allied matters.
Chapter V A lay off and retrenchment, making provision for payment of compensation for lay off, retrenchment and closure and on transfer of undertakings was not there.
It was introduced by way of amendment in the year 1953.
Sections 25F, 25G, 25H and 25J of the Central Act which are relevant for purposes of this case read as fol lows: "25F. Conditions precedent to retrench ment workmen.
No workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until (a) the workman has been given one month 's notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid in lieu of such notice, wages for the period of the notice: Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date for the termination of service; (b) the workmen has been paid, at the time of retrenchment, compensation which shall be equivalent to fir 736 teen days ' average pay for every completed year of continuous service or any part thereof in excess of six months; and (c) notice in the prescribed manner is served on the appropriate Government or such authority as may he specified by appro priate Government by notification in the Official Gazette." "25G. Procedure for retrenchment.
Where any workman in an indus trial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that estab lishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category, unless for reasons to be recorded the employer retrenches any other workman." "25H. Re employment of retrenched workmen.
Where any workmen are retrenched, and the employer proposes to take into his employ any persons, he shall, in such manner as may be prescribed, give an opportunity to the retrenched workmen who are citizens of India to offer themselves for re employment, and such retrenched workmen who offer themselves for re employment shall have preference over other persons." "25J. Effect of laws inconsistent with this Chapter.(1) The provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law [including standing orders made under the ].
Provided that where under the provi sions of any other Act or rules, orders, notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise, a workman is entitled to benefits in respect of any matter which are more favourable to him than those to which he would be entitled under this Act, the workman shall continue to be entitled to the more favourable benefits in respect of that matter, no withstanding that he receives benefits in respect of other matter under this Act.
737 (2) For the removal of doubts, it is hereby declared that nothing contained in this Chapter shall be deemed to affect the provi sions of any other law for the time being in force in any State insofar as that law pro vides for the settlement of industrial dis putes, but the rights and liabilities of employers and workmen insorfar as they relate to lay off and retrenchment shall be deter mined in accordance with the provisions of this Chapter." Section 25F of the Central Act deals with the conditions precedent to retrenchment of workmen non compliance with which will be fatal to any order of retrenchment.
Section 25G of the Central Act prescribes the procedure for re trenchment and under it an employer shall ordinarily re trench a workman in accordance with the rule of 'last come, first go ' unless for reasons to be recorded the employer retrenches any other workman.
Section 25H of the Central Act requires the management to show preference to retrenched workmen over others, where any workman is retrenched and the management proposes to take into its employ any person again for work, where the retrenched workman offers himself for re employment.
This indeed is a substantial right.
Section 25J of the Central Act which is very material for our pur pose provides that provisions of Chapter V A of the Central Act shall have effect notwithstanding anything inconsistent therewith contained in any other law including standing orders made under the Industrial Employment (Standing Or ders) Act, 1946.
The proviso to sub section (1) of section 25J of the Central Act provides that where under the provi sions of any other Act or rules, orders, notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise, a workman is enti tled to benefits in respect of any matter which are more favourable to him than those to which he would be entitled under the Central Act, the workman shall continue to be entitled to the more favourable benefits in respect of that matter, notwithstanding that he receives benefits in respect of other matter under the Central Act.
Sub section (2) of section 25J of the Central Act is more categorical as re gards the effect of Chapter V A of the Central Act on any other law which may be in force in any State.
It provides that nothing contained in Chapter V A of the Central Act shall be deemed to affect the provisions of any other law for the time being in force in any State insofar as that law provides for the settlement of industrial disputes, but the rights and liabilities of employers and workmen insofar as they relate to lay off and retrenchment shall be determined in accordance with the provisions of Chapter V A of the Central Act.
738 The learned Single Judge who decided the writ petitions formulated three points for his consideration, namely, (i) whether Respondents 1 to 9 were 'workmen ', (ii) whether the management could be treated as an 'industry ' and (iii) whether the three conditions laid down by section 25F of the Central Act would be applicable to the proceedings under the State Act.
He found that both the authority under section 41(1) of the State Act and the authority under section 41(3) of the State Act had proceeded on the assumption that the Central Act was applicable to proceedings under the State Act.
On a consideration of the submissions made on behalf of the management, the learned Single Judge felt that it was not possible to hold that Respondents 1 to 9 were not 'wor kmen ' and, the management was not an 'industry ' as defined in the Central Act.
Having said so the learned Single Judge proceeded to decide the third question namely whether sec tion 25F of the Central Act could be enforced under the provisions of the State Act.
The learned Single Judge held that 'there is no scope either in the language of section 40 or its implication making it obligatory to read the condi tion of section 25F as a part of section 40 of the Shops and Establishments Act. ' Then he proceeded to hold that since the conditions under section 40 of the State Act had been fulfilled in the case of the Respondents 5 to 9, the termi nation was legal.
But in the case of Respondents 1 to 4 since it had been alleged that their juniors had been al lowed to continue in service the learned Judge felt that the matter required further consideration and hence remanded the case because he was of the view that the above question had to be decided before recording a finding on the question whether the termination was for a reasonable cause.
The learned Single Judge was however of the view that if section 25F of the Central Act was applicable 'I have no doubt that these orders of termination would have to be set aside because section 25F denies the right of the employer to terminate the services of an employee without payment of retrenchment compensation. ' The learned Single Judge gave the following reasons for holding that section 25F was not applicable to proceedings under the State Act: (i) that the statutory authorities created under section 41(1) and sec tion 41(3) of the State Act being creatures of the statute had no right to apply the provisions of section 25F of the Central Act to proceedings before them, and (ii) that where as the rights under the Central Act could be agitated by a reference to a Labour Court, the right agitated under sec tion 41(1) and section 41(3) was a personal right.
We find it difficult to agree with the learned Single Judge on both these grounds.
It is already seen that the learned Single Judge has found that the Respondents were 'workmen ' and the management was an 'industry ' as defind in the Central Act.
We have explained earlier 739 the effect of section 25J of the Central Act.
Sub section (1) of section 25J of the Central Act lays down that Chapter V A shall have effect notwithstanding anything inconsistent therewith contained in any other law.
The proviso to that sub section however saves any higher benefit available to a workman under any law, agreement or settlement or award.
Sub section (2) of section 25J however makes a distinction between any machinery provided by any State law for settle ment of industrial disputes and the substantive rights and liabilities arising under Chapter V A of the Central Act where a lay off or retrenchment takes place.
It provides that while section 25J would not affect the provisions in a State law relating to settlement of industrial disputes, the rights and liabilities of employers and workmen insofar as they relate to lay off and retrenchment shall be determined in accordance with Chapter V A of the Central Act.
It is thus seen that section 41(1) and section 41(3) of the State Act prescribe alternative authorities to settle a dispute arising out of a retrenchment.
Those authorities may exer cise their jurisdiction under the State Act but they have to decide such dispute in accordance with the provisions of Chapter V A.
The learned Single Judge omitted to notice the effect of section 25J of the Central Act.
Sub section (2) of section 25J of the Central Act which makes the procedure for securing relief under section 41(1) and (3) of the State Act available to a workman emphasises that the rights and li abilities arising out of retrenchment shall be decided in accordance with Chapter V A of the Central Act.
The said rights can be enforced by a workman personally by himself filing an appeal under section 41(1) of the State Act.
It is not necessary that a reference should be sought under the Central Act by collective action of workers.
The effect of section 25J(2) of the Central Act has been considered by this Court in Sawattain Ramprasad Mills Co. Ltd. vs Baliram Ukandaji and Another, ; In that case the question for decision was whether the C.P. and Berar Indus trial Disputes (Settlement) Act, 1947 was applicable to the case involving the determination of the rights and liabili ties of the management and workmen in the case of lay off or whether the provisions of Chapter V A of the Central Act were applicable.
The Court found that the C.P. and Berar Industrial Disputes (Settlement) Act, 1947 contained no provisions either for recovery of money or for compensation for lay off and held that if a workman had a claim arising in a lay off it could only be dealt with under the Central Act.
In that case no question similar to the one involved here was however in issue.
In Pest Control India Pvt. Ltd. vs The Labour Court, Guntur and Another, [1984] 1 Andhra Weekly Reporter 277 the Andhra Pradesh 740 High Court has very recently laid down that in considering whether the termination of service of an employee by way of retrenchment is legal or justified, it is open to the au thority under section 41 of the State Act to determine whether section 25F and section 25G of the Central Act were complied with or not and to set aside the orders of termina tion and to grant appropriate relief if it is found that there was no compliance with sections 25F and 25G of the Central Act.
The Division Bench of the High Court while reversing the decision of the learned Single Judge has relied on the above decision.
We shall now proceed to consider the merits of the contention that the State Act which is a later Act and which has received the assent of the President should prevail over the provisions of Chapter V A of the Central Act.
The above contention is based on Article 254(2) of the Constitution and the argument is that the provisions of section 40 which deal with termination of service, in a shop or an establish ment contained in the State Act which is enacted by the State Legislature in exercise of its powers under Entry 22 of List III of the Seventh Schedule to the Constitution being repugnant to the provisions contained in Chapter V A of the Central Act which is an earlier law also traceable to Entry 22 of the List II1 of the Seventh Schedule to the Constitution should prevail as the assent of the President has been given to the State Act.
It is true that the State Act is a later Act and it has received the assent of the President but the question is whether there is any such repugnancy between the two laws as to make the provisions of the Central Act relating to retrenchment ineffective in the State of Andhra Pradesh.
It is seen that the State Act does not contain any express provision making the provisions relating to retrenchment in the Central Act ineffective insofar as Andhra Pradesh is concerned.
We shall then have to consider whether there is any implied repugnancy between the two laws.
Chapter V A of the Central Act which is the earlier law deals with cases arising out of lay off and retrenchment.
Section 25J of the Central Act deals with the effect of the provisions of Chapter V A on other laws incon sistent with that Chapter.
Sub section (2) of section 25J is quite emphatic about the supremacy of the provisions relat ing to the rights and liabilities arising out of lay off and retrenchment.
These are special provisions and they do not apply to all kinds of termination of services.
Section 40 of the State Act deals generally with termination of service which may be the result of misconduct, closure, transfer of establishment etc.
If there is a conflict between the spe cial provisions contained in an earlier law dealing with retrenchment and the general provisions contained in a later law generally dealing with terminations of service, the existence 741 of repugnancy between the two laws cannot be easily pre sumed.
In Maxwell on the Interpretation of Statutes, (12th Edn. ) at page 196 it is observed thus: "Now if anything be certain it is this, "said the Earl of Selborne L.C. in The Vera Cruz, at p. 68 "that where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular inten tion to do so.
" In a later case, Viscount Haldane said: "We are bound . . to apply a rule of construction which has been repeat edly laid down and is firmly established.
It is that wherever Parliament in an earlier statute has directed its attention to an individual case and has made provision for it unambiguously, there arises a presumption that if in a subsequent statute the Legislature lays down a general principle, that general principle is not to be taken as meant to rip up what the Legislature had before provided for individually, unless an intention to do so is specially declared.
A merely general rule is not enough even though by its terms it is stated so widely that it would, taken by itself, cover special cases of the kind I have referred to.
" We respectfully agree with the rule of construction expounded in the above passage.
By enacting section 25J(2) Parliament, perhaps, intended that the rights and liabili ties arising out of lay off and retrenchment should be uniform throughout India where the Central Act was in force and did not wish that the State should have their own laws inconsistent with the Central law.
If really the State Legislature intended that it should have a law of its own regarding the rights and liabilities arising out of re trenchment it would have expressly provided for it and submitted the Bill for the assent of the President.
The State Legislature has not done so in this case.
Section 40 of the State Act deals with terminations of service general ly.
In the above situation we cannot agree with the conten tion based on Article 254(2) of the Constitution since it is not made out that there is any implied repugnancy between the Central law and the State law.
The result of the above discussion is that if the employees are 742 'workmen ' and the management is an 'industry ' as defined in the Central Act and the action taken by the management amounts to 'retrenchment ' then the rights and liabilities of the parties are governed by the provisions of Chapter V A of the Central Act and the said rights and liabilities may be adjudicated upon and enforced in proceedings before the authorities under section 41(1) and section 41(3) of the State Act.
We may incidentally observe that the Central Act itself should be suitably amended making it possible to an individ ual workman to seek redress in an appropriate forum regard ing illegal termination of service which may take the form of dismissal, discharge, retrenchment etc.
or modification of punishment imposed in a domestic enquiry.
An amendment of the Central Act introducing such provisions will make the law simpler and also will reduce the delay in the adjudica tion of industrial disputes.
Many learned authors of books on industrial law have also been urging for such an amend ment.
The State Act in the instant case has to some extent met the above demand by enacting section 41 providing for a machinery for settling disputes arising out of termination of service which can be resorted to by an individual work man.
In this connection we have one more suggestion to make.
The nation remembers with gratitude the services rendered by the former Labour Appellate Tribunal which was manned by some of our eminent Judges by evolving great legal princi ples in the field of labour law, in particular with regard to domestic enquiry, bonus, gratuity, fair wages, industrial adjudication etc.
The Industrial Disputes (Appellate Tribu nal) Act, 1950 which provided for an all India appellate body with powers to hear appeals against the orders and awards of Industrial Tribunals and Labour Courts in India was repealed in haste.
If it had continued by now the labour jurisprudence would have developed perhaps on much more satisfactory lines than what it is today.
There is a great need today to revive and to bring into existence an all India Labour Appellate Tribunal with powers to hear appeals against the decisions of all Labour Courts, Industrial Tribunals and even of authorities constituted under several labour laws enacted by the States so that a body of uniform and sound principles of Labour law may be evolved for the benefit of both industry and labour throughout India.
Such an appellate authority can become a very efficient body on account of specialisation.
There is a demand for the revival of such an appellate body even from some workers ' organisa tions.
This suggestion is worth considering.
All this we are saying because we sincerely feel that the Central Act passed forty years ago needs a second look and requires a compre hensive amendment.
743 It is not disputed that section 25F of the Central Act has not been complied with in this case and hence the Divi sion Bench of the High Court was right in holding that all the terminations were illegal.
All the respondents are, therefore, entitled to be reinstated in service with furl back wages as held by the authority under section 41(1) of the State Act.
These petitions are dismissed.
P.S.S Petitions dismissed.

summary:
Sub section (1) of section 40 of the Andhra Pradesh Shops and Establishments Act, 1966 interdicts the employer governed by the Act from terminating the services of an employee without complying with the conditions laid therein.
Section 25F of the lays down conditions precedent to retrenchment of workmen noncompliance with which will be fatal to any order of retrenchment.
The petitioner society retrenched the respondents on the ground that the business of the management did not warrant the continuance of its heavy establishment.
In an appeal under section 41(1) of the Act the appellate authority set aside the orders and directed reinstatement of the respondents.
The Labour Court set aside the orders of the appellate authority in respect of some of the respondents.
A Single Judge of the High Court found that the respond ents were 'workmen ' and the management was an 'industry ' as defined in the but dismissed the writ petition holding that they could not claim the benefit of section 25F of the in a proceeding under section 41 of the State Act, being of the view that there was no scope either in the language of section 40 of the State Act or its implication making it obligatory to read the condition of section 25F of the Central Act as 729 part of section 40 of the State Act, that the statutory authori ties, created under section 41(1) and section 41(3) of the State Act being creatures of the statute, had no right to apply the provisions of section 25F of the Central Act to proceedings before them and that whereas the rights under the Central Act could be agitated by a reference to a Labour Court the right agitated under section 41(1) and section 41(3) was a personal right.
The Division Bench on appeal by the respondents held that the orders of termination were unsustainable.
It took the view that the question of their retrenchment was gov erned by section 25F.
In the special leave petition it was contended on behalf of the management that the provisions of section 40, which deal with termination of service in a shop or establishment contained in the State Act, which is a later Act, being repugnant to the provisions contained in Chapter V A of the Central Act, which is an earlier law, should prevail as the assent of the President has been given to the State Act.
Dismissing the special leave petition, HELD: 1.1 The High Court was right in holding that section 25F of the having not been complied with, all the terminations were illegal.
The respondents were, therefore.
entitled to be reinstated in service with full back wages.
[743A] 1.2 If the employees are 'workmen ' and the management is an 'industry ' as defined in the and the action taken by the management amounts to 'retrench ment ', then the rights and liabilities of the parties are governed by provisions of Chapter V A of that Act and the said rights and liabilities may be adjudicated upon and enforced in proceedings before the authorities under section 41(1) and section 41(3) of the Andhra Pradesh Shops and Estab lishments Act.
In the instant case the Single Judge of the High Court had found that the respondents were 'workmen ' and the management was an 'industry ' as defined in the Central Act.
[741H 742A, 738C] 1.3 Sub section (1) of section 25J of the lays down that Chapter V A shall have effect notwith standing anything inconsistent therewith contained in any other law.
The proviso to that sub section, however, saves any higher benefit available to a workman under any law, agreement or settlement or award.
Sub section (2) of section 25J, which makes a distinction between any machinery provided by any State law for settlement of industrial disputes and the substantive 730 rights and liabilities arising under Chapter V A of the Central Act, provides that while that section would not effect the provisions in a State law relating to settlement of industrial disputes, the rights and liabilities of em ployers and workmen insofar as they relate to lay off and retrenchment shall be determined in accordance with Chapter V A of the Central Act.
It is thus apparent that section 41(1) and section 41(3) of the State Act prescribe alternative authori ties to settle a dispute arising out of a retrenchment.
Those authorities may exercise their jurisdiction under the State Act but they have to decide the rights and liabilities arising out of retrenchment in accordance with the provi sions of Chapter V A.
The said rights can be enforced by a workman personally by himself filing an appeal under section 41(1) of the State Act.
It is not necessary that a reference should be sought under the Central Act by collective action of workers.
[739A E] Sawatram Ramprasad Mills Co. Ltd. vs Baliram Ukandaji and Another, ; and Pest Control India Pvt. Ltd. vs The Labour Court, Guntur and Another, [1984] 1 Andhra Weekly Reporter 277, referred to.
2.1 There is no repugnancy between the two Acts.
The State Act, which is a later law, does not contain any ex press provision making the provisions relating to retrench ment in the Central Act ineffective insofar as Andhra Pra desh is concerned.
[740E] 2.2 Where there is a conflict between the special provi sions contained in an earlier law dealing with retrenchment and the general provisions contained in a later law general ly dealing with terminations of service, the existence of repugnancy between the two laws cannot easily be presumed.
[740H] Chapter V A of the Central Act, which is the earlier law, deals with rights and liabilities arising out of lay off and retrenchment.
Section 25J of that Act deals with the effect of the provisions of Chapter V A on other laws incon sistent with that Chapter.
Sub section (2) of section 25J is quite emphatic about the provisions relating to the rights and liabilities arising out of lay off and retrenchment.
By enacting that provision Parliament intended that such rights and liabilities should be uniform throughout India where the Central Act was in force and did not wish that the States should have their own laws inconsistent with the Central law.
These are special provisions and they do not apply to all kinds of termination of services.
If the State Legisla ture intended that it should have a law of its own regarding the rights and liabilities arising 731 out of retrenchment it would have expressly provided for It.
The State Legislature had not done so in the instant case.
Section 40 of the State Act deals with termination of serv ice generally.
In such a situation it cannot be said that there was any implied repugnancy between the Central law and the State law.
[740F, 741F, 740G, 741FG] Maxwell on the Interpretation of Statutes, 12th Edn.
p. 196 referred to.
[The Act should be suitably amended making it possible to an individual workman to seek redress in an appropriate forum regarding illegal termination of service which may take the form of dismissal, discharge, retrenchment etc.
or modification of punishment imposed in a domestic enquiry.
There is also a great need to review and to bring into existence an all India Labour Appellate Tribunal with powers to hear appeals against the decisions of all Labour Courts, industrial Tribunals and even of authorities constituted under several labour laws enacted by the States so that a body of uniform and sound principles of labour law may be evolved for the benefit of both industry and labour through out India.] [742B G]