judgement:
Appeals Nos. 167 and 168 of 1968.
Appeals from the judgment and orders dated December 20, 1966 of the Madhya Pradesh High Court in Misc.
Petition Nos.
139 and 182 of 1966.
I. N. Shroff, for the appellants (in both the appeals).
section V. Gupte, Suresh A. Shroff, R. K. Thakur, Bhuvanesh Kumari, K. section Cooper, M. K. Cooper, J. B. Dadachanji, O. C. 611 Mathur and Ravinder Narain, for respondent No. 1 (in C.A. No. 167 of 1968).
B. P. Maheshwari, for, respondent No. 1 (in C.A. No. 168 of 1968).
section P. Nayar, for respondent No. 2 (in both the appeals).
The Judgment of the Court was delivered by Shelat, J.
By an Indenture of Lease, dated January 12, 1944, made between the then Ruler of Korea State of the one part, referred to as the lessor therein, and Sir Mukherji B. Dadabhoy, referred to as the lessee, of the other part, the lessor granted to the lessee for a term of 30 years, in consideration of payment of rents and royalties therein mentioned, a mining lease of an area measuring 5.25 sq.
miles delineated on the plan annexed thereto, with liberties, powers and privileges and on terms and conditions therein set out.
By cl.
(2) of that Indenture, the lessee agreed to pay during the subsistence of the lease royalties at the rates and on dates set out therein.
The rates of royalty varied from 5% to 25% according to the price of coal per ton extracted from the leased area, that is to say, from 4 ans.
per ton if the price was Rs. 51/ per ton to 25% of the price per ton at the pit 's head if that price was Rs. 20/ or more.
On the merger of the Korea State with Madhya Pradesh, into the events of which it is not necessary for the purposes of this appeal to go, the leased area became subject to the provisions of the Mines and Minerals (Regulation and Development) Act, 53 of 1948 and the Mineral Concession Rules made thereunder on October 25, 1949.
In 1952, Sir Maneckji agreed to assign the said lease and the benefits, powers and privileges thereunder provided to the respondent company.
Since, under that lease, such assignment could not be made without the previous consent of the lessor and since, by that time, owing to the merger of the Korea State with Madhya Pradesh, the State of Madhya Pradesh had acquired the said area and the rights in respect of it under the said lease, an agreement was made between the State of Madhya Pradesh and the respondent company on November 6, 1952 under which the State of Madhya Pradesh granted its consent to the said assignment for the unexpired period of the said lease in consideration of the respondent company agreeing to comply with the terms and conditions of the said lease including I payment of royalties to the State Government as provided therein.
That meant that the respondent company had to pay henceforth royalty to the State of Madhya Pradesh as the lessor at the rates provided in the original lease.
612 An unexpected development in the meantime took place.
Under an industrial award, called the Mazumdar Award, published on May 25, 1956, increased wages were awarded to colliery workers.
To meet the consequent increased expenditure which the collieries had to incur, the Government of India proportionately increased the controlled coal price.
A representation made by the respondent company to the Government of India, dated October 5, 1956 shows that the increase in respect of the coal extracted by the respondent company was from 14.6.0 and Rs. 15.6.0 to Rs. 17.6.0 and Rs. 18.6.0 per ton.
That increase, however, resulted in the respondent company having to pay royalty at an increased rate since the rate of royalty payable by the company was on graded slabs varying according to the price of coal at the pit 's head.
The company 's representation, therefore, was that the royalty payable by it should be modified so as to bring it in consonance with that payable under the 1948 Act read with the Mineral Concession Rules, 1949 and the First Schedule thereto, namely, at a fixed rate of 5% of the f.o.r.
price subject to the minimum of 8 ans.
per ton.
(rule 41 (1) (a)).
The Government of India referred the respondent company to the State Government and advised it to make a similar representation to that Government.
Thereafter correspondence went on between the Government of Madhya Pradesh and the respondent company for a considerable time.
The State, Government, however, was not agreeable to modify the terms of the said lease and to bring the royalty payable thereunder in consonance with r. 41 of 1949 Rules and the First Schedule thereto.
On December 28, 1957, Parliament passed the Mines and Minerals (Regulation and Development) Act, 67 of 1957 under its power under Entry 54 of List I of the Seventh Schedule to the Constitution.
Before the Act was brought into force by a notification as provided by section 1(3) thereof, an amending Act, being Act 15 of 1958, was passed on May 15, 1958, By a notification dated May 29, 1958, the Central Government brought into force the Act with effect from June 1, 1958.
As its long title recites, the Act was passed to provide for the regulation of mines and the development of minerals under the control of the Union.
2 declared that it was in the public interest that the Union should take under its control the regulation of mines and the development of minerals.
6 and 8 provided for the period and the area in respect of which mining leases henceforth could be granted.
9(1) provided that a lessee under a mining lease granted before the commencement of the Act shall pay royalty at the rate for the time being specified in the Second Schedule.
Its sub sec.
2 provided that a lessee under a lease granted on or after the commencement of the Act 613 shall likewise pay royalty in respect of any mineral removed by him from the area leased to him at the rate for the time being.
specified in the Second Schedule in respect of that mineral.
Sub sec.
(3) authorised the Central Government to amend the rates of royalty specified in the Second Schedule, but not so as to exceed twenty per cent.
of the sale price at the pit 's head.
Under item (1) of the Second Schedule, royalty payable in respect of coal was the same as under r. 41 of the Mineral Concession Rules, 1949, that is, 5% of the f.o.r. price, subject to a minimum of fifty naye paise per ton.
The effect of sec.
9 was that the rate of royalty was enhanced in the case of those lessees, who, under the leases obtained by them before the commencement of the Act, were paying at a rate lesser than 5%, while the royalty payable by lessees similarly placed was reduced if they were paying royalty at a higher rate.
Under sec.
9(1) read with the Second Schedule, the respondent company would have been required to pay royalty at the reduced, rate of 5 % instead of at the rates varying from 5 % to 25 % according as the price fluctuated from time to time.
Sec. 1 6 provided that all mining leases granted before October 25, 1949 should, as soon as may be, after the commencement of the Act, be brought into conformity with the provisions of the Act and the Rules made under sees.
13 and 18.
The Amending Act, 15 of 1958, by its sec.
2, inserted into the Act sec.
30A with retrospective effect.
That section reads as under "Notwithstanding anything contained in this Act, the provisions of sub section (1) of section 9 and of sub section (1) of section 16, shall not apply to or in relation to mining leases granted before the 25th day of October, 1949, in respect of coal, but the Central Government, if it is satisfied that it is expedient so to do, may, by notification in the Official Gazette, direct that all or any of the said provisions (including any rules made under sections 13 and 18) shall apply to or in relation to such leases subject to such exceptions and modifications, if any, as may be specified in that or in any subsequent notification.
" The section falls into two parts.
Under the first part, the operation of sections 9(1) and 16(1) was suspended as far as pre 1949 mining leases for coal were concerned.
The second part, however, empowered the Central Government, on its satisfaction that it was expedient to do so, to direct that all or any of those provisions, including rules made under sees.
13 and 18, should apply to such leases subject to such exceptions and modi 614 fications, if any, as might be specified in that or any subsequent notification.
The "exceptions and modifications" which might be so specified in the notification would obviously be in regard to the application, when such application was decided upon, of sees.
9(1) and 16(1) and the relevant rules.
As a result of the suspension of the operation of sec.
9(1), and consequently of the Second Schedule, the respondent company remained liable to pay under its lease royalty at the graded rates provided therein which, in consequence of the increase in the controlled price of coal, came to more than 5% prescribed by the Second Schedule.
On December 29, 1961, the Central Government issued a notification in exercise of its power under the second part of sec.
30A, by which it directed application of sec.
9(1) with immediate effect to or in relation to the pre 1949 coal mining leases " subject to the modification that the lessee shall pay royalty at the rate specified in any agreement between the lessee and lessor or at 2 1/2% of f.o.r.
price, whichever is higher, in lieu of the rate of royalty specified in respect of coal in the Second Schedule to the said Act.
" The respondent company would have been, under this notification, liable to pay royalty at the rate of 5% under the Second Schedule.
The question is whether the said modification made any difference.
It appears that the respondent company continued to press the Central Government to modify and reduce the royalty pay able by it under its lease.
This is seen from the Central Government 's letter, dated July 4, 1962, by which it informed the company in reply to the company 's letter of May 21, 1962 that the question of the rate of royalty payable, by the colliery was, in consultation with the State Government, under consideration and that action in that connection would shortly be taken.
It would seem that as a result of the company 's representations and consultation by the Central Government with the State Government, the latter issued an order, dated September 23, 1963 to the Collector, Surguja, directing him to recover from the respondent ,company royalty at the rate of 5% with effect from July 1, 1958 subject to the condition that the royalty amount should not be less than Rs. 2,47,000/ per year.
The Government, however, directed the Collector to recover the outstanding royalty due for the period prior to July 1, 1958 at the old rates, that is, as provided by the lease.
The State Government, however, changed its mind later on, for, by its order dated October 1, 1965 it partially suspended its order of September 23, 1963 and directed the Collector to recover royalty as from December 29, 1961 at the rates prescribed under the lease "in accordance with the Government of 615 India 's notification No. S.O. 30, dated 29th December, 1961".
Representations by the respondent company to the State Government to charge royalty at 5% proved futile.
However, on January 1, 1966, the Central Government issued a notification under which it directed the lessees of pre 1949 leases to pay royalty at 5% of the f.o.r. price.
Thereupon, by its order, dated February 11, 1966, the State Government issued instructions to the Collector to charge royalty at that rate with effect from 1st of January, 1966.
The controversy between the parties, therefore, is confined to the rate of royalty at which the company was liable to pay royalty for the period between December 29, 1961 and December 31, 1965.
On January 25, 1966, the Collector served upon the respon dent company demand notices to pay the arrears of royalty for the aforesaid period at the rates provided in the lease.
The company thereupon filed a revision before the Central Government under the Mineral Concession Rules, 1960.
That revision was pending when the company filed a writ petition in March 1966 in the High Court of Madhya Pradesh for quashing the said order, dated October 1, 1965, the rejection of its representation by the State Government, dated November 19, 1965 and the said demand notices.
The respondent company urged that the purpose of suspending operation of section 9(1), till a notification applying it was issued by the Central Government, was not to burden lessees under pre 1949 leases with royalty at the rate of 5% of the f.o.r. price for the time being prescribed in the Second Schedule, and that even when a notification applying sec.
9 was to be issued, the Central Government was empowered to direct that that section, the Second Schedule and the Rules made under sees.
13 and 18 would apply with such exceptions and modifications as may be specified in such or any subsequent notification.
Such exceptions and modifications had to be and were intended to cushion or soften the burden which would otherwise fall on the lessees under sec.
9(1) and the Second Schedule, and therefore, any modification or exception which would be specified in such notification was intended to reduce rather than increase the rate of royalty payable under sec.
The contention, therefore, was that the notification, dated December 29, 1961 could not be read to mean that lessees, such as the respondent company, whose leases provided for royalty at a rate higher than 5% were to pay royalty at a rate higher than the one provided under sec.
The State Government, on the other hand, urged that the language of the notification was clear and provided treat such lessees were to pay royalty either at the rate provided in their leases or if the rate provided therein was less than 2 1/2% at that rate, whichever was 616 higher.
Therefore, oil a plain construction of the words of the notification, the respondent company was bound to pay royalty at the rates provided in its lease, that being higher than the minimum of 2 1/2% provided in the notification.
The High Court rejected the contention raised by the State as being inconsistent with the purpose for which sec.
30A was introduced.
The High Court observed : "In our view, the true construction and effect of the notification dated 29th December 1961 is that in regard to coal mining leases granted before 25th October 1949 if the rate of royalty stipulated in the lease was higher than 5% of f.o.r. price per ton, then the royalty payable from 29th December 1961 in respect of coal removed from the leased area after that date would be the one specified on that date in the Second Schedule, namely, 5 per cent of f.o.r. price per ton; in relation to leases where the rate of royalty stipulated in less than 5 per cent but more than 2 1/2 per cent of f.o.r. price per ton, the rate of royalty would be the one specified in the lease agreement; and in respect of leases where the rate of royalty specified was less than 2 1/2 per cent of f.o.r. price per ton, the rate would be 2 1/2 per cent of f.o.r. price per ton from 29th December 1961.
It follows from this that the petitioner company which was, under the terms of its lease liable to pay royalty at a rate higher than 5 per cent of f.o.r. price per ton for the period from 29th December .1961, is rightly entitled to claim that under the notification dated 29th December 1961, it cannot be called upon to pay royalty from 29th September 1961 at the rate stipulated in the lease granted to it but only at the rate of 5 per cent of f.o.r.
price per ton specified in the Second Schedule.
" The High Court also rejected the State 's contention as regards its order dated September 23, 1963 that once the said notification was issued, the State Government could not charge royalty at a rate lower than the one prescribed in the said notification, and that therefore, the State acted properly in rescinding its said order.
The High Court held that order amounted to a modification of the terms of the lease in consideration of the lessee guaranteeing payment of the minimum amount of Rs. 2.47,000/ a year, which the State Government was competent to make, and that therefore, it had no right to rescind it unilaterally.
On this view, it held that the company 's liability for royalty as from December 29, 1961 would be at the reduced rate of 5% of the f.o.r. price and not as provided by the original lease deed.
617 As against these conclusions, counsel for the State took us through the terms of the lease and the provisions of the Act, and in particular sees.
9 and 30A, and formulated three contentions for consideration.
These were, (1) that the High Court erred in construing the relevant provisions of the Act and particularly sec.
30A, (2) that it also erred in construing the said notification, and (3) that the order of the State Government of September 23, 1963 was erroneous having regard to the said notification which fixed the rate of royalty payable by the lessees under the pre 1949 1eases, and that order being inconsistent with the notification had to be rescinded.
by its subsequent order of November 19, 1965.
Counsel urged that upon precision of its order dated September 23, 1963, the State Government was entitled to recover royalty as from the date of the said notification at the rate agreed to in the lease or at 2 1/2%, whichever was higher.
Therefore, the said demand notices were valid and had to be complied with.
It is well known that prior to the enactment of the 1948 Act, ' leases of mining areas had been granted by diverse authorities on different terms and conditions.
The rate of royalty under those leases were inevitably divergent and were often fixed at very low rates.
The purpose of enacting the 1948 Act was to bring about uniformity in such leases and with that lend that Act had made provisions for power to modify the terms and conditions both in regard to the area and the period under such leases.
The object of such provisions was to regulate in a systematic and scientific manner development of mining and minerals.
Though under the Constitution that subject was left to the States, a power was carved out by entry 54 in List I for the exclusive exercise of it by the Centre.
The consequence was 'the enactment of Act 67 of 1957 which was brought into operation from June 1, 1958.
The purpose of passing that Act is clearly seen from the declaration required under entry 54, List I, in sec. 2, namely, that it was necessary for the Union to take under its control regulation of mines and the development of minerals.
In pursuance of that object the Act made provisions with regard to the persons to whom prospecting licences and mining leases should be granted (sections 4 and 5), the maximum area for which such licences and leases should be granted (section 6), and the period for which a mining lease should be granted (section 8).
In order that uniformity in leases granted before and after the commencement of the Act could be attained, power was also conferred to bring all mining leases granted before October 25, 1949 into conformity with the provisions of the Act and the Rules made thereunder.
(sections 16, 17 and 18).
As regards royalty payable by the lessees under diverse kinds of leases for different minerals granted before October 25, 1949 uniformity was sought to be brought about sec.
618 In the 1948 Act the Central Government had the power to make rules for, regulating the grant of mining leases, or for prohibiting the, grant of such leases in respect of any mineral including the power to make rules as regards the terms upon which and the conditions subject to which such leases would be granted.
(section 5) Under sec.
7 of that Act, the Central Government also could make rules for modifying or altering the terms and conditions of leases granted before the commencement of that Act, that is, before October 25, 1949.
In pursuance of the power under sec.
5, the Central Government framed the Mineral Concession Rules, 1949 and provided by r. 41 thereof read with the First Schedule thereto that the rate of royalty chargeable under a lease in respect of coal would be 5% of the f.o.r. price per ton.
No rules, however, were made under sec.
7, and therefore, the rate of royalty provided by r. 41 did not govern pre 1949 leases, with the result that the lessees thereunder continued to pay royalty provided in their respective leases.
Such diversity in the rates of royalty was sought to be done away with by prescribing uniform rates of royalty in respect of each mineral through sec.
Item 1 in the Second Schedule prescribed, in respect of coal, the rate of royalty at 5% of the f.o.r.
price subject to a minimum of fifty naye paise per ton.
The result of section 9 and item I in the Second Schedule was that all lessees whether their leases were granted before or after the commencement of the Act became liable to pay royalty at the uniform rate of 5% in respect of coal.
Since under the 1948 Act the lessees, whose leases were granted on and after the commencement of that Act, were liable to pay royalty at 5% under r. 41 of the 1949 Concession Rules, sec.
9 did not make any difference to them as it prescribed the same rate.
But so far as lessees under the pre1949 leases were concerned, the new rate affected them, inasmuch as those, who, under their leases were paying at a lesser rate became liable to pay royalty at 5%, while those who were paying at a higher rate had to pay at, the lower rate of 5% only.
Besides, the change in the rate of royalty under sec.
9, pre 1949 leases were liable to be modified in respect of the area and the period under sec.
16 and the rules made under secs.
13 and 18.
Even before the new Act was brought into force, consequences of enforcing such uniformity and the resultant automatic spurt in the rate of royalty, especially in respect of coal, had been realised.
The Central Government, therefore, itself sponsored the insertion of sec.
30A by sec.
2 of the Amendment Act, 15 of 1958, with retrospective effect.
The consequences flowing from the attempted uniformity were set out in the Statement of Objects and Reasons(1) for amending the Act.
The statement acknowledged (1) Gazette of India, Extra., Part , Jan. July, 1958, p. 507.
619 that coal, as the basic fuel, occupied a unique position in the country 's economy and had always, therefore, been treated differently from other minerals.
It also acknowledged that operation of secs.
9 and 16 would have "numerous desirable consequences" such as unsettling coal industry as a whole and retarding the programme of coal production estimated in the, Second Five Year Plan on account of the sudden and automatic rise in the royalty payable by lessees, who under their leases granted before October 25, 1949 generally had to pay royalty "much below the rate" prescribed under the Second Schedule.
A similar anxiety was also expressed during the passage of the Amendment Bill by the concerned Minister stating that if the automatic enhancement under sec.
9(1) in the rate of royalty at 5% were to be implemented, the results would be unfortunate.
For, besides affecting the rate of production of coal, it would also adversely affect the price structure in other industries, such as cement, steel and other similar industries, and that for that reason "by this Amending Bill that mistake is sought to be rectified". "Instead of giving those increases automatically power will not be taken to phase them in such a way that the upward revision is not pushed up to the maximum limit (i.e. five per cent.) with one jerk, but it is so phased that it does not cause any upset in the coal production programme and in the economy of the country as a whole".(1).
The mischief which the Amending Act, 1958 sought to avoid was thus to prevent enhancement of royalty at one stroke to 5%.
As aforesaid, sec.
30A suspended the application of secs.
9(1) and 16(1) in relation to pre 1949 leases and authorised the Central Government to direct that all or any of the said provisions (including rules made under secs.
13 and 18) shall apply to or in relation to such leases subject to such exceptions and modifications, if any, as may be specified in a notification.
As a result of the suspension of Sec.
9(1), lessees under pre 1949 leases were relegated to the original position under which they were liable to pay royalty at rates agreed to in those leases whether the rate was over or below 5% provided by sec.9(1).
As and when the Central Government issued the notification envisaged by the second part, such lessees would be obliged to pay royalty at the rate of 5% as prescribed for the time being in the Second Schedule, and even if the Government were, in the meantime, to enhance the rate as authorised by sec.
9(3) upto the maximum rate of 20% at such rate but never more than 20%.
The second part thus contemplated payment of royalty, on sec.
9(1) being made applicable, at the most, at the rate of 5% only, as no increase had till.
then been made under sec.
(1) Rajya Sabha Proceedings, dated November 620 On December 29, 1961, the Central Government "in exercise of the powers conferred by sec.
30A" issued the notification directing that the provisions of sub sec.
(1) of sec.
9 of the said Act shall apply with immediate effect to or in relation to pre 1949 coal mining leases, subject to the modification that such lessees shall pay royalty at the rate specified in the agreements between the lessees and the lessors or at 2 1/2% of f.o.r.
price, whichever was higher, "in lieu of the rate of royalty specified in respect of coal in the Second Schedule to the said Act".
The argument urged on behalf of the State both before the .High Court and before us was that the notification clearly envisaged payment of royalty at the rate agreed to between the lessor ,and the lessee or at 2 1/2% whichever was higher.
Since, the agreement in the present case provided for royalty at graded rates which were higher than 21%, the company had to pay royalty at such agreed rates.
The argument, in our opinion, is untenable :as it is not borne out by the language of the notification itself and of sec.
30A and was therefore rightly repelled by the High Court.
The notification was issued, as it recites, in exercise of the powers conferred by sec.
30A. That power was to apply, by issuing a notification thereunder, sees.
9(1) and 16(1) and the rules made under sees.
13 and 18.
The notification in terms directed the application of sec.
9(1) which meant that on and from December 29, 1961 the company would have to pay royalty as prescribed under that sub section read with the Second Schedule, that is, at 5%.
The notification, however, applied sec.
9(1) subject to one modification, namely, that lessees under the pre1949 leases were to pay royalty at, the rate provided in their leases or at 21% whichever was higher.
The modification was to the rate applicable under sec.
9(1) and the Second Schedule, that is, to the rate of 5%.
Considering the object with which sec.
30A was enacted, viz., to phase the rate of 5%, and not to impose it at one stroke, the modification could not mean recovery at a rate inconsistent with sec.
9(1) and the Second Schedule, that is, at ,the rate higher than 5% provided thereunder.
Such a modification, if it were to be construed as meaning payment at a rate higher than 5% would be in excess of the power under sec.
30A and also in contravention of the language of sec.
9(1) and the Second Schedule.
A modification, if any, would be for charging royalty at a rate lesser than the one provided under sec.
9 (1 ) and the Second Schedule, and not at a rate higher than such rate.
A construction to the contrary would mean exercise of power in excess of that conferred by the section and would affect the validity of the notification.
A literal meaning which the State canvassed for can, therefore, be accepted only at the cost of invalidating the notification.
621 The rule of construction that a court construing a provision of law must presume that the intention of the authority making it was not to exceed its power and to enact it validly is well settled.
Where, therefore, two constructions are possible, the one which sustains its validity must be preferred.
On a plain reading of the notification, however, it is clear that what it meant was that instead of the rate flowing from the application of sec.
9(1) and the Second Schedule, a modified rate should be applied, that is, "in lieu of the rate of royalty" specified in the Second Schedule, royalty at the agreed rate should be charged if it was lower than 5%, or at 2 1/2% minimum, whichever was higher.
The notification, thus, did not empower the State Government to recover royalty at a rate higher than 5% in lieu of the rate chargeable under sec.
9(1) and the Second Schedule which provided 5% only.
It appears that the State Government itself understood such a construction as proper, for, if it had understood otherwise, it would not have issued its order dated September 23, 1963 directing the Collector to recover royalty at 5% pursuant to the correspondence which had ensued between the company, the Central Government and the State Government.
If it had understood the notification in the manner now urged by its counsel, it would have at once pointed out both to the company and the Central Government in that correspondence that it was entitled to recover royalty at the rates agreed to in the lease instead of at 5 %.
It was only in 1965 that it changed its mind and cancelled its previous order.
On the construction placed by us on sec.
30A and the said notification, it was not entitled so to do.
The High Court, in our view, was right in quashing that order as also the demand notices issued in pursuance of that order.
In view of our decision on the question of construction of the notification and sec.
30A, it becomes unnecessary to consider the second contention raised by the company 's counsel that the order of 1963 amounted to a modification of the terms of the lease, and that therefore, the State Government could not unilaterally supersede such modification by issuing a subsequent order in 1965.
For the reasons aforesaid, we are in agreement with the High Court 's conclusions.
Civil Appeal No. 168 of 1968 involves the same question and our decision in that appeal, must, therefore, be governed by the decision in this appeal.
Both the appeals, therefore, fail and are dismissed with costs. 'Mere will, however, be one set of hearing costs as the arguments in both the appeals have been common.
G.C. Appeals dismissed.

summary:
In 1944 the Ruler of the erstwhile Indian State of Korea granted to D a mining lease in respect of an area of 5.25 sq. miles in the State.
According to the terms of the lease the rates of royalty varied from 5% 0 25% according to the price of the coal per tons extracted from the eased area, that is to say, from 4 as.
per ton if the price was Rs. 51 per .on to 25% of the price per ton at the pit 's head if that price was Rs. 20/or more.
On the merger of the Korea State with Madhya Pradesh the leased area became subject to the provisions of the Mines & Minerals (Regulation and Development) Act 53 of 1948 and the Mineral Concorde Rules, 1949.
, In 1952 D assigned the lease and its benefits to the respondent company.
The State of Madhya Pradesh granted its consent to the assignment for the unexpired period of the lease in consideration of the respondent company agreeing to comply with the terms and conditions of the lease including payment of royalties ' On December 28, 1967 Parliament passed the Mines & Minerals (Regulation and Development) Act 67 of 1957 under its power under Entry 54 of List I of the Seventh Schedule to the Constitution.
The Act as amended by Act 15 of 1958 was brought into force by a notification of the Central Government with effect from June 1, 1958.
Under section 9(1) of the Act a lessee under a mining lease granted before the commencement of the Act was liable to pay royalty at the rate for the time being specified in the Second Schedule.
Under item (1) of the Second Schedule royalty payable in respect of coal was the same as under r. 41 of the Mineral Concession Rules, 1949, that is, 5% of the f.o.r. price, subject to.
a minimum of fifty naye paise per ,on.
Under section 30A which had been inserted by Act 15 of 1958 with re trospective effect, the provisions of section 9(1) and section 16(1) were not applicable to mining leases granted before 25th October 1949 in respect of coal, but the Central Government bad power if satisfied that it was expedient to do so, to direct by notification in the Official Gazette, that all or any of the said provisions (including rules made under sections 13 and 18) shall apply to or in relation to such leases "subject to such exceptions and modifications, if any, as may be specified in that or in any subsequent notification".
On December 29.
1961 the Central Government issued a notification in exercise of its power under the second part of section 30A by which it directed application of section 9(1) with immediate effect to or in relation to the pre 1949 coal mining leases "subject to the modification that the lessee shall pay royalty at the rate specified in any agreement between the lessee and the lessor or at 2 1/2% of f.o.r. price, whichever is higher, in lieu of the rate of royalty specified in respect of coal in the Second Schedule to the said Act.
" The Collector served upon the respondent company demand notices to pay the arrears of royalty for the period December 29, 1961 to December 31, 1965 at the rates specified in the lease.
The com 610 pany in a writ petition before the High Court urged that the exception; and modifications under section 30A had to be and were intended to cushion of soften the burden which would otherwise fall on the lessees under section 9(1) and the Second Schedule and therefore any modification or exception which would be specified in such notification was intended to reduce rather than increase the rate of royalty payable under section 9(1).
The State Government contended that the respondent company was bound to pay royalty at the rates provided in its lease, that being higher than the minimum.or 2 1/2% provided in the notification.
The High Court rejected the contention raised by the State as being inconsistent with the purpose for which section 30A was introduced.
The State appealed.
HELD : The notification was issued in exercise of the powers con feared by section 30A.
That power was to apply by issuing a notification there% under, sections 9(1) and 16(1) and the rules made under sections 13 and 18.
The notification in terms directed the application of section 9(1) which meant that on and from December 29, 1961 the company would have to pay royalty as prescribed under that sub section read with the Second Schedule, that is, at 5%.
The notification however applied section 9(1) subject to one modification, namely.
that the lessees under the pre 1949 leases were to pay royalty at the rate provided in their leases or at 21% whichever was higher.
The modification was to the rate applicable under section, 9(1) and the Second Schedule, that is, to the rate of 5%.
Considering the object with which section 30A was enacted viz. to phase the rate of 5% and not to impose it at one stroke, the modification could not mean recovery at a rate inconsistent with section 9(1) and the Second Schedule.
that is, at the rate higher than 5% provided thereunder.
[620 D F] Such a modification, if it were to be construed as meaning payment at a rate higher than 5% would be in excess of the power under section 30A and also in contravention of the language of section 9(1) and the Second Schedule.
A lateral meaning which the State canvassed for could therefore be accepted only at the cost of invalidating the notification.
Where two constructions are possible the one which sustains the validity of the law must be preferred.
[620 G H; 621 A] On a plain reading of the notification it was clear that what it meant was that instead of the rate flowing from the application of section 9(1) and the Second Schedule, a modified rate should be applied, that is, 'in lieu of the rate of royalty ' specified in the Second Schedule, royalty at the agreed rate should be charged if it was lower than 5% or at 21% minimum, whichever was higher.
The notification thus did not empower the State Government to recover royalty at a rate higher than 5% in lieu of the rate chargeable under section 9(1) and the Second Schedule which provided 5% only.
[621 B C] The High Court was therefore justified in quashing the impugned orders also the demand notices issued in pursuance of that order.


judgement:
Appeals Nos. 2136 and 2295 of 1966.
Appeals from the judgment and order dated February 2, 1965 of the Bombay High Court, Nagpur Bench in Special Civil Applications Nos. 246 of 1964 and 84 of 1963 respectively.
G. B. Pai, P. C. Bhartari, J. B. Dadachanji, 0.
C. Mathur and Ravinder Narain, for the appellant (in C.A. No. 2136 of 1966).
section V. Gupte, C. N. Nagle and A. G. Ratnaparkhi, for the appellant (in C.A. No. 2295 of 1966).
M. C. Bhandare, F. P. Sathe, Praveen Pareek, Vineet Kumar and Indira Jai Singh, for respondents Nos.
131 to 142, 144 to 478, 480 to 488, 490 and 492 (in C.A. No. 2136 of 1966).
The Judgment of the Court was delivered by Mitter, J.
The main question in these two appeals by certi ficate is, whether the Labour Court bad jurisdiction to entertain the application for lay off compensation under section 33 C(2) of the Industrial Disputes Act.
The appellant in the first appeal is a 582 limited company which is now under liquidation while the appellant in the second is a partnership firm, the respondents in the two appeals being the Labour Court and different groups of workmen.
The facts are as follows.
In Hinganghat there was a textile mill known as R. B. Bansilal Abirchand Mills which used to employ about 1000 men.
The mill was owned by the firm, the appellant in the Second appeal.
A fire broke out in the mill on March 27, 1959 doing appreciable damage to some of the machines.
The employers put up a notice under their Standing Order No. 19 on March 28, 1959 to the effect that the fire of the previous night had caused heavy loss and extensive damage to the departments rendering the mill 's working impracticable until necessary repairs and adjustments were carried out.
The employees were however to note that the folding and workshop departments would continue to work as usual and notice of resumption of mill 's working would be posted after necessary adjustment and repairs were carried out.
This was followed by a second notice issued on April 2, 1959 to the effect that the pre liminary survey of the fire have in conjunction with the insurance companies had shown that over 60 per cent of the machines in the carding.
fly frame and Ring frame departments had been damaged and that the damage to the bulk of these machines was such that they might require complete replacement.
It was further announced that in the circumstances the Management had no alternative but to declare stoppage of work of all the productive departments of the mills.
Although it is not possible to be precise as to the extent of the damage caused, a fair idea of it can be had from a letter of Hukumchand Insurance Company Ltd. dated August 28, 1959 stating that the loss to buildings, machinery and accessories had been determined at Rs. 22,624/ by the surveyors.
It appears that on 27th April 1960 the representatives of the insurance companies had agreed to re assessment increasing the figure for repairs to Rs. 37,420/ .
The third notice put up by the firm on April 29, 1960 gave no indication of the date of completion of the repairs.
On September 13, 1960 the firm notified that the departments of the mills which had remained unproductive since 28th March, 1959 were expected to commence working on or about 30th September, 1960.
The firm did not however work the mills in terms of the last notice but transferred the same to the company which had been incorporated on 8th December, 1959.
It appears that the consideration for the transfer was Rs. 34,75,000/ made up of 583 Rs. 11,50,000/ being the value of the immovable properties and Rs. 23,25,000/ being the value of movable properties.
Compared to the second figure, the damage to the machinery as assessed by the insurance companies is insignificant.
The first notice of 28th March, 1959 brings out the fact that the work in the mill as a whole was not.
brought to a stand still and that it was to continue as usual in the folding and workshop departments.
According to the second notice, the preliminary survey had shown that over 60 per cent of the machines in only three departments, namely, carding, fly frame and ring frame, had been damaged and that complete replacement of some of the above might be necessary.
The notices do )not make out the case that the damage was such that it was not possible to run the mills it all.
Towards the end of 1961 and the be inning of 1962, respon dents 2 to 346 in Civil Appeal No. 2295 of 1966 presented applications under section 33 C(2) of the Industrial Disputes Act to the Labour Court at Nagpur claiming to have been laid off from 28th March 1959 to 30th September, 1960.
The appellants in the second appeal filed a written statement before the Labour Court contending inter alia that the Labour Court had no jurisdiction under section 33 C(2) and that the parties had to work out their rights within the four corners of the State Act i.e. the C.P. and Berar Industrial Disputes Settlement Act, 1947.
By order dated 30th November, 1962 the preliminary objection as to jurisdiction of the employers was rejected by the Labour Court.
On this, the appellants preferred an application under article 226 of the Constitution of India before, the Bombay High Court.
By a common judgment rendered on 25th August, 1962 the High Court rejected the contentions of the appellants that the claim under the Industrial Disputes Act was not maintainable because of the operation of the State Act and further held that the Labour Court was competent to adjudicate on the merits of the claim of the workers even where the employer disputed not only the jurisdiction of the said court but also disputed that there was any lay off as claimed and that the applicants were not workmen within the meaning of the Act.
The appellants who were petitioners before the High, Court did not proceed further in the matter by applying for a certificate that the case was fit for appeal to this Court.
By order dated November 30, 1962 the Labour Court dismissed as barred by the principles of res judicata 125 applications of some of the workers who had previously applied to the Labour Court at Bombay and whose applications had been subsequently dismissed by the Labour Judge, Bombay on the ground of lack of jurisdiction under section 33 C of the Industrial Disputes Act.
The claim dismissed related to the period between March 28, 1959 and May 584 2, 1960.
The Labour Court allowed the claims relating to the period from May 3, 1960 to September 30, 1960 and ordered the issue of certificates of recovery under section 33 C of the Act.
Respondents 2 to 493 in Appeal No. 2136/1966 filed appli cations under section 33 C in the Labour Court at Nagpur claiming lay off compensation for the period 28th March, 1959 to September 30, 1960.
The Labour Court held by order dated February 29, 1964 that there had been a lay off within the meaning of section 2(kkk) of the Industrial Disputes Act and that the employees were entitled to compensation for the full period of 18 months but workers who were "badli" workers were not entitled to such compensation.
The appellants in both the appeals preferred writ petitions before the High Court of Bombay for quashing the order of the Labour Court.
The two writ petitions were disposed of by the High Court by a common judgment on February 2, 1965.
Before the High Court four main points were raised, namely 1.
Whether having regard to the circumstances and the established facts there had been a lay off within the meaning of the expression in section 2(kkk) ? 2.
If there had been a lay off, whether compensation under section 25 C read with section 25 E of the Act was payable to the workers, also whether the workers were not entitled to compensation because of non fulfilment of conditions prescribed in section 25 E ? 3.
Whether badli workers were entitled to lay oil ' compen sation? and 4.
Whether the quantum of compensation would be governed by the first proviso to section 25 C or whether section 25 C(ii) would be applicable entitling the workers to compensation for the full period of the lay off i.e. 28 3 59 to 30 9 1960 ? On the first question the High Court held that "by every indication and circumstance and by express declaration of its management it was a running industry", meaning thereby that there was no closure.
On the second question, the High Court held that the Labour Court should have considered whether the workmen had proved that they had presented themselves for work or not in terms of section 25 E to be able to claim compensation under section 25 C, excepting with regard to three workmen who cave clear evidence on the point.
It also held that badli labour were not entitled to lay off compensation.
It turned down the contention that compensation was claimable only in terms of the Standing Orders of the Mill.
In the result the High Court remanded the 585 matters 'back to the Labour Court for recording fresh evidence on behalf of both the parties on the following issue : Do the applicants prove that they presented themselves for work at the appointed time at least once a day within the meaning of section 25 E(ii)? On the applications of the appellants, the High Court granted certificates under article 133(1) (a) of the Constitution.
Before us learned counsel for the respondents Mr. Bhandare sought to resist the main contention of the appellants by urging that the decision of the High Court in 1962 operated as res judicata in the present appeals.
He said that it was open to the appellants to challenge the conclusion of the High Court arrived at in 1962 by moving the High Court by an application for the issue of a certificate of fitness for appeal to this Court and in the event of refusal thereof, to ask for special leave of this Court.
In the absence of such applications the determination of the High Court in 1962 had become final and the question as to jurisdiction could not be canvassed again.
We do not think it necessary to go into this question as the matter can be disposed of even on the basis that it is open to the appellants to raise the question of jurisdiction before this Court although the point was not expressly taken in the grounds for leave to appeal to this Court before the High Court.
The substantial point of Mr. Gupte appearing for one set of appellants was that it being the case of the employers that there had been a closure of the mills the dispute could not be adjudicated upon by a Labour Court and was entertainable only by an Industrial Tribunal under the provisions of section 10(1) (d) of the Act.
Mr. Gupte drew our attention to various sections of the Act in support of his contention that an "industrial dispute meant primarily a dispute or difference between employers on the one hand and employees on the other connected with the employment or non employment or the terms of employment etc.
of any person.
He urged that the basic underlying idea was that to be an industrial dispute the dispute had to be one which affected the employee,; , is a class as pitted against their employers.
He argued that individual workman could only approach the Labour Court for lay off compensation when prima facie there was no question of closure of the industry by the employers and drew our attention to the definition of 'lay off ' ins.2(kkk).
According to him in a situation like the present where the inability on the part of the employer to give employment was not limited to a handful of persons but extended to the employees wholesale arising out of a calamity it could not be said that there had been a lay off of the employees.
Although the word 'closure ' is not defined in the Act, counsel 586 argued that the expression would aptly describe the condition prevailing in the mills as a result of the fire on March 27, 1959.
We find ourselves unable to accept Mr. Gupte 's contention.
We may in this connection refer to the relevant provisions in the Act.
The authorities under the Act are specified in different sections of Chapter II containing sections 3 to 9.
Under section 7 it is open to the appropriate Government by notification in the Official Gazette constitute one or more Labour Courts for the adjudication of industrial disputes relating to any matters specified in the Second Schedule and for performing such other functions as may be assigned to them under the Act.
Under section 7 A the appropriate Government may, by notification, constitute one or more Industrial Tribunals for the adjudication of industrial disputes relating to any matter, whether specified in the Second Schedule or the Third Schedule.
In the Second Schedule are set forth certain matters in items 1 to 5 which are within the jurisdiction of a Labour Court and item 6 gives the Labour Court jurisdiction to deal with "all matters other than those specified in the Third Schedule".
The Third Schedule contains 11 items of which item 10 reads : "Retrenchment of workmen and closure of establishment".
Lay off is not expressly covered by either of the two Schedules.
It would therefore be a matter covered by the Second Schedule tinder item 6 thereof.
section 10 (1) (c) enables the appropriate Government when it is of opinion that an industrial dispute exists or is apprehended inter alia, to refer the dispute or any matter appearing to be connected with, or relevant to, the dispute, if it relates to any matter specified in the Second Schedule to a Labour Court for adjudication.
So far as an Industrial Tribunal is concerned,, the appropriate Government may under section 10(1)(d) make reference to it not only in cases covered by the Second Schedule but also those included in the Third Schedule except that when the dispute relates to any matter in the Third Schedule and is not likely to affect more than one hundred workmen, the appropriate Government may, if it thinks fit, make a reference to a Labour Court tinder cl.
According to Mr. Gupte, Chapter V A of the Act introduced in the year 1953 providing for claims being preferred by individual workmen to compensation could only be resorted to when the dispute was such as would not call for a reference under section 10 (1) (d).
He urged further that it being open to the Central Government to amend the Second and the Third Schedules by issue of notification under section 40 of the Act, so long as the said Schedules stood unaltered, it should be presumed that the legislature did not intend a Labour Court to exercise its jurisdiction in cases where there was 587 a serious question of closure of an establishment put forward by the employers.
All this, argued counsel, went to show that if the essential nature of the dispute was a difference between the employer on the one hand and a very large body of workmen on the other, the employer making an assertion involving a matter covered by the Third Schedule to the Act, it would not be open to the workmen to prefer claims individually under section 33 C.
The ambit of section 33 C has been examined by this Court on a number of occasions and reference may usefully be made to some of the authorities in this connection to find out whether the Labour Court was within its jurisdiction to entertain the applications which were followed by the writ petitions to the Bombay High Court.
in Central Bank of India Ltd. vs P. section Rajagopalan(1) the legislative history of section 33 C was gone into at length and the conclusion of this Court on the scope thereof was as follows (see p. 150) "The legislative history to which we have just referred clearly indicates that having provided broadly for the investigation and settlement of industrial disputes on the basis of collective bargaining, the legislature recognised that individual workmen should be given a speedy remedy to enforce their existing individual rights, and so inserted section 33 A in the Act in 1950 and added section 33 C in 1956.
These two provisions illustrate the cases in which individual workmen can enforce their rights without having to take recourse to section 10(1) of the Act, or without having to depend upon their Union to espouse their cause.
Therefore, in construing section 33 C we have to bear in mind two relevant considerations.
The construction should not be so broad as to bring within the scope of section 33 C cases which would fall under section 10(1).
Where industrial disputes arise between employees acting collectively and their employers, they must be adjudicated upon in the manner prescribed by the Act, as for instance, by reference under section 10(1).
These disputes cannot be brought within the purview of section 33 C. Similarly, having regard to the fact that the policy of the Legislature in enacting section 33 C is to provide a speedy remedy to the individual workmen to enforce or execute their existing rights, it would not be reasonable to exclude from the scope of this section cases of existing rights which are sought to be implemented by individual workmen.
" Turning down the contention put forward on behalf of the em ployers there that computation under section 33 C(2) would only be (1) ; 588 possible where the right of the workman to receive the benefit was not disputed, it was said : "The claim under section 33 C(2) clearly postulates that the determination of the question about computing the benefit in terms of money may, in some cases, have to be preceded by an enquiry into the existence of the right and such an enquiry might be held to 'be incidental to the main determination which has been assigned to the Labour Court by sub section
As Maxwell has observed " where an Act confers jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its executions" Accordingly it was held that section 33 C(2) took "within the purview cases of workmen who claimed that the benefit to which they are entitled should be computed in terms of money, even though the right to the benefit on which their claim is based is disputed by their employers".
Following the above decision, it was held in Mining Engineer vs Rameshwar(1) that sub section
(2) of section 33 C was not confined to cases arising under an award, settlement or even under the provisions of Chapter V A of the Act and the benefit provided in the bonus scheme under the Coal Mines Provident Fund and Bonus Schemes Act, 1948 would be covered by sub section
Section 25 C provides for the measures of compensation to be awarded in cases of lay off of workers.
section 25 F of the Act however provides inter alia that no compensation shall be paid to a workman who has been laid off if he does not present himself for work at the establishment at the appointed time during the normal working hours at least once a day.
The claim to compensation of every workman who is laid off is one which arises under the statute itself and section 25 C provides for a benefit to the workman which is capable of being computed in terms of money under section 33 C(2) of the Act.
The scheme of the Act being to enable a workman to approach a Labour Court (oil computation of the compensation claimed by him in terms of section 25 C of the Act he is not concerned to see whether other co workers will or will not adopt the same course.
The fact that a number of workers make claims of identical nature i.e. to compensation for lay off, arising out of the same set of facts and circumstances cannot make any difference to the individual workman who prefers the claim.
The mere fact that a large number of persons makes a claim of the same nature against the employer, does not change (1) [1968] 1 S.C.R. 140.
589 the nature of the dispute, so as to take it out of the pale of section 7 of the Act and render the dispute one which can only be dealt with by an Industrial Tribunal to which reference can be made by the appropriate, Government.
Reference was however made to the decision of U.P. Electric Supply Co. vs R. K. Shukla(1) in aid of the contention for the appellants that if the dispute touches a matter in the Third Schedule the Labour Court will not have jurisdiction to.
deal with it.
In this case the State Electricity Board, U.P. took over the undertaking of the company from September 16, 1964 in exercise of power under sec.
6 of the and under the provisions of the appellants ' licences.
As a result thereof, the company ceased to carry on the business of generation and distri bution of electricity thereafter.
On September 16, 1964 the Board issued letters of appointment to the employees of the appellant in the posts and positions which they had previously held.
According to the respondents they were not given credit for their past services with the company.
All the workmen of the two undertakings were taken over in the employment of the Board with effect from September 17, 1964.
443 workmen employed in the Allahabad undertaking filed applications before the Labour Court under section 6 H(2) of the U.P. for payment of retrenchment compensation and salary in lieu of notice.
The orders for payment of retrenchment compensation were resisted by the company inter alia on the ground that the workmen were )not in fact retrenched and in any event since they were admitted to the service of the Board on terms not less favorable than those enjoyed before, the company was under no liability to pay retrenchment compensation and the Labour Court was incompetent to entertain and decide the applications for awarding such compensation.
On the above facts the Court in the appeal by special leave observed "the Company had expressly raised a contention that they had not retrenched the workmen and that the workmen had voluntarily abandoned the Company 's service by seeking employment with the Board even before the Company closed its working.
" Reliance was however placed on certain passages in the judgment at p. 513 and at p. 517 which according to counsel for the appellants went to show that when the factum of retrenchment is questioned, there is a dispute which is 'exclusively within the competence of the Industrial Tribunal.
These observation cannot be considered binding on us as all the aspects were not placed before the Court then.
Reference was also made to the case of Ramakrishna Ramanath vs Presiding Officer, Nagpur(2).
In that case the appellant bad (1) [1970] 1 S C.R. 507.
7 L643 Sup.
CI/72 (2) 590 issued a notice in writing on the 1st July 1958 following the issue of a notification by the Government of Bombay under section 5 (2) read with section 5(1) of the to the effect that it had been forced to close its factory as from the 1st of July 1958 by the action of the Bombay Government in issuing the said notification inasmuch as minimum rates of wages made payable as from 1st July, 1958 were so excessive and unworkable that it was impossible for any employer to give effect to them and the notification had made the working of the business a financial impossibility.
The workers were also informed that the closure of the business would continue as long as the notification dated 11th June, 1958 continued in force.
The Government of Bombay withdrew the notification after some time and the appellants started to work the factory from 10th August, 1958 taking in all employees who were there before 1st July.
The respondent No. 2 put in an application before the Presiding, Officer, Labour Court Nagpur on 5th November, 1963 claiming Rs. 334.80 on account of retrenchment compensation and one month 's pay in lieu of notice.
The appellant put in its written statement, inter alia, contending that the said respondent was not an employee but an independent contractor and that there had been no closure of the business to attract section 25 FFF of the Act and that in any event the dispute could not be referred to a Labour Court.
In the appeal by special leave to this Court it was contended, inter alia, (a) that the dispute did not fall within the jurisdiction of the Labour Court but within that of an Industrial Tribunal, (b) that there was really, no closure of the appellant 's business but only a lock out or a temporary stoppage of work not attracting the operation of section 25 FFF and (c) that in order that the respondent could claim.
the benefit of 25 F it was obligatory on her to show that she had worked for 240 days in each year of service for which the claim was made.
This Court found that the appellant had not taken the plea in its written statement and that there had been a lay off or a lock out and that it had only submitted that the closure in accordance with the notice did not fall within the scope of section 25 FFF of the Act.
By issues 6 and 7 the appellant raised questions as to whether the closure had resulted in the retrenchment of the applicant and whether the closure was beyond the control of the employer.
No dispute was raised about the factum of closure.
Strangely enough it was urged before this Court that "there could be no closure because the appellant was ,merely protesting against irresponsible action of the Government action and had no intention to close the business permanently.
" The Court found that the question of lock out was not mooted when the issues were settled nor had any plea been taken that there had been a temporary cessation of work under Standing Order No. 11.
In our view, the observations in this case do not help the appellants before us.
591 In Sawatram Mills vs Baliram(1) the claim of the workmen for lay off during a certain period before the Second Labour Court Bombay was resisted inter alia on the ground that the said court had no jurisdiction as the dispute fell to be tried under the C.P. and Berar Industrial Disputes (Settlement) Act, 1947, and, secondly, the application under section 33 C was incompetent because it was not a claim for money due and calculations had to be made for ascertaining the sum due.
On a construction of the sections of the industrial Disputes Act this Court held that : "Compensation for lay off could only be determined under Chapter V A of the and the workmen were entitled under section 3 3 C (1) to go before the Second Labour Court to realise moneys due from their employers under Chapter V A." The Court also negatived the contention that the did not apply but the C.P. and Berar Industrial Disputes (Settlement) Act did as the State Act made no mention of lay ,off or compensation for lay off.
The other argument was rejected following the judgment in Kays Construction Co. (P) Ltd. vs State of U.P. & ors.
In substance the point urged by the appellants was that if a claim is made on the basis of a lay off and the employer contends that there was no lay off but closure, it is not open to a labour court to entertain an application under section 33 C(2).
The more so it was stated, when the dispute was not between a solitary workman on the one hand and the employer on the other but a whole body of workmen ranged against their employer who was faced with numerous application , before the Labour Court for computation of benefit in terms of money.
As has been said already, the Labour Court must go into the matter and come to a decision as to whether there was really a closure or a lay off.
If it took the view that there was a lay off without any closure of the business it would be acting within its jurisdiction ' if it awarded compensation in terms of the provisions of Chapter V A.
In our opinion the High Court 's conclusion that "In fact the business of this Company was continuing.
They in fact continued to employ several employees.
their notices say that some portions of the mills would continue to work" was unexceptionable.
The notices which we have referred to can only lead to the above conclusion.
The Labour Court 's jurisdiction could not be ousted by a mere plea denying the workman 's claim to the computation of ,lie benefit in terms of money: the (1) [1966] I S.C.R, 764.
(2) ; 592 Labour Court had to go into the question and determine whether, on the facts, it had jurisdiction to make the computation.
It could not however give itself jurisdiction by a wrong decision on the jurisdiction plea.
Appearing for the appellant in Civil Appeal No. 2136/66 Mr. Pai contended that his clients ' liability would only commence after the 1st October, 1960 when it started to run the mill.
This point had not been canvassed before the High Court and consequently we cannot entertain it.
In the second case Mr. Gupte argued that although his client did not raise the question of liability before, there was no question of any concession and he should be allowed to contest his liability on the basis of the application preferred for urging additional grounds before this Court.
As this point was not urged in the court below this application must be refused.
The last point urged was that in view of Standing Orders 19 and 21 the quantum of compensation had to be scaled down or measured in terms of the Standing Order 19 the employer could, in the event of fire, breakdown of machinery etc.
stop any machine or machines or department or departments wholly or partially or the whole or a part of the establishment for any period, without notice and without compensation in lieu of notice.
Under Standing Order 21, any operative played off under Standing Order 19 was not to be considered as dismissed from service but as temporarily unemployed and was not to be entitled to wages ' during such unemployment except to the extent mentioned in Standing Order No. 19.
The High Court rightly turned down the contention in view of section 25 J of the Act under which the provisions of Chapter V A are to have effect notwithstanding anything inconsistent therewith contained in any other law including Standing Orders made under the .
These appeals were originally heard by a Bench of five, Judges including section C. Roy, J. who expired a few days back.
The above judgment was concurred in by our late colleague.
We however gave a further hearing to the parties at which nothing was addressed to us to make us change our opinion already formed.
In the result, the appeals fail and are dismissed with costs.
One set of hearing fee.
S.C. Appeals dismissed.

dataset_name: IN-Abs

summary:
A textile mill in Madhya Pradesh employed about a thousand workers.
The mill was owned by a firm, the appellant in the Second Appeal.
A fire broke out in the Mill doing appreciable damage to some of the machines.
From a letter of the Insurance company, the extent of the damage caused, was ascertained to be about Rs. 37,420/ .
In terms of the last notice given by the employers the mills did not commence work but instead, the management transferred the mills to the company which had been incorporated on 8th December 1959.
From the facts it was clear, that the damage to the machinery was insignificant as against the total assets transferred to the company and the damage was not such that it was not possible to run the mills at all.
Respondents 2 to 346 in the Second Appeal applied under section 33C(2) of the Industrial Disputes Act to the Labour Court claiming lay off compensation for the period they remained idle.
The Labour Court held that there had been a lay off within the meaning of section 2(K KK) of Industrial Disputes Act and except 'badli ' workers the employees were entitled to compensation for the full period of 18 months.
The appellants in both the appeals, filed writ petitions before the High Court for quashing the order of the Labour Court and the High Court raised several issues and ultimately remanded the matters back to the Labour Court for recording fresh evidence as to whether the applicants presented themselves for work at the appointed time at least once a day within the meaning of section 25E(ii).
On the application of the appellants the High Court granted certificates under article 133 (1) (a) of the Constitution.
The point urged by the appellants was that if a claim is made on the basis of a lay off and the employer contends that there was no lay off but closure it is open to a labour court to entertain an application under section 33C(2).
It is more so when the dispute was not between a solitary workman on the one hand and the employer on the other but a whole body of workmen ranged against their employer who was faced with numerous applications before the labour court for computation of benefit in terms of money.
Dismissing the appeals, HELD : (i) From the facts and circumstances of the Case, it was clear that the business of the company was continuing.
They, in fact, continued to employ several employees and their notices say that some portion of the mills would continue to work.
The Labour Court 's jurisdiction could not be ousted by a mere plea denying the workmen 's claim to the computation of benefit in terms of money.
The Labour Court must go into the matter and come to a decision as to whether there was really a closure or a lay off.
If it took the view that there was a lay off, it would be acting within its jurisdiction if it awarded compensation in terms of the provisions in Ch.
The High Court is right in upholding the decision of the Court.
[591 E H] 581 (ii) Section 33C(2) takes within the purview, rases of workmen who claim that the benefits to which they were entitled should be computed in terms of money, even though the right to the benefit on which their claim is based, is disputed by their employers.
In other words, the Labour Court may enquire into all such acts or disputes which are incidental to the main dispute, [588 C D] (iii) Section 25C provides for the measure of compensation to be awarded in cases of lay off of workers.
The claim to compensation of every workman who is laid off is one which arises under the statute itself and section 25C, provides for a benefit to the workman which is capable of being computed in terms of money under section 33C(2), of the Act.
The scheme of the Act is that an individual workman can approach a labour court for computation of compensation in terms of section 25C of the Act and he is not concerned to see whether other co workers will adopt the same course or not.
The fact that a number of workers make claims of identical nature cannot make any difference to the individual workman who prefers the claim, The mere fact that a large number of persons makes a claim, of the same nature against the employer does not change the nature of the dispute so as to take it out of the pale of section 7 of the Act and render the dispute one which can only be dealt with by an industrial tribunal.
[588 E H] Central Bank of India Ltd. vs P. section Rajagopalan, ; , followed.
, Mining Engineer vs Rameshwar, [1968] 1 S.C.R. 140, U.P. Electric Supply Co. vs R. K. Shukla, ; , Ramkrishna Ramnath vs Presiding Officer, Nagpur, and Sawatram Mills vs Baliram, [1966] 1 S.C.R. 764, referred to and distinguished.


judgement:
peal No. 291 of 1968.
Appeal by special leave from the judgment and order dated March 28, 1968 of the Calcutta High Court in Criminal Revision No. 159 of 1968.
P. K. Chatterjee, for the appellant.
P. K. Chakravarty, for respondent No. 1.
The Judgment of the Court was delivered by Ray, J.
This is an appeal by special leave from the judgment dated 28 March, 1968 of the High Court at Calcutta quashing the processes issued against the three accused persons.
The appellant on 8 March, 1966 filed a petition of complaint against the Block Development Officer Purulia, the Officer in Charge of the local Police Station and T. Ganguly, the Deputy Superintendent of Police, Purulia under section 395 of the Indian Penal Code on the allegation that during search of the appellant 's house they committed dacoity in the house.
The Magistrate dismissed the complaint under section 203 of the Code of Criminal 672 Procedure on the ground that the complaint was incompetent without sanction as the accused were Government servants.
The complainant thereafter moved the Sessions Judge, Purulia against the order of dismissal.
A reference was made to the Calcutta High Court.
The learned Single Judge of the Calcutta High Court accepted the reference, set aside the order of the Magistrate and sent the case back for proceeding in accordance with law.
On 27 March, 1967 the Magistrate Shri section K. Ganguly took cognizance of the case and fixed a date for holding judicial enquiry.
The Magistrate on 22 November, 1967 came to the conclusion that a prima facie case under section 395 of the Indian Penal Code had been made out against the three accused and submitted a report to the Sub Divisional Magistrate, Purulia.
The Sub Divisional Magistrate, Purulia on receipt of the report of the judicial enquiry passed an order on 6 December, 1.967 directing the issue of process against all the three accused.
This order forms the subject matter of the appeal.
One of the accused thereafter moved the High Court at Calcutta for quashing the process.
The High Court at Calcutta said that cognizance of the offence was taken by the Magistrate Shri section K. Ganguly but process was issued by the Magistrate Shri section Sarkar and held that Shri Sarkar not having taken cognizance of the offence had no right to issue process under section 204 of the Code of Criminal Procedure.
The High Court, therefore, quashed the process and observed that the learned Magistrate who had taken cognizance of the offence if he was so advised would be at liberty to issue processes against the other two accused persons.
The question for consideration is whether Shri Sarkar could have issued process in the present case.
Shri Ganguly was the Magistrate who took cognizance.
Shri Sarkar was not the Magistrate who took cognizance.
Therefore, under section 204 of the Code of Criminal Procedure the Magistrate who took cognizance of the case could issue process.
Sections 191 and 192 of the Code of Criminal Procedure con template transfer of cases by a Magistrate, who has taken cognizance, of an offence.
Section 191 of the Code of Criminal procedure of transfer of a case or commitment to the Court of sessions on the application of the accused.
Section 192 of the Code of Criminal Procedure speaks of transfer of a case by a Magistrate who has taken cognizance to any Magistrate subordinate to him for enquiry or trial.
673 In these cases where either the Magistrate has taken cogni zance and is in session of the case or where a case is transferred by a Magistrate who has taken Cognizance to another Magistrate subordinate to him the complainant is required to be examined under section 200 of the Code of Criminal Procedure.
There are certain exceptions with which we are not concerned in the the present appeal.
The relevant section which confers power on the Magistrate to whom the case has been transferred to issue process is section 202 of the Code of Criminal Procedure.
The language of section 202 of the Code of Criminal Procedure is that the Magistrate may, for reasons to be recorded in writing, postpone the issue of process for compelling the attendances of the person complained against.
Therefore the power of the Magistrate to issue process under section 202 of the Code, of Criminal Procedure is not limited by the terms of section,204 of.
the Code of Criminal Procedure to issue process.
Therefore, the two courses are : first, under section 204 of.
the Code of Criminal Procedure for the Magistrate taking cognizance to issue process Or secondly under section 202 of the Code of Criminal Procedure for a Magistrate to whom a case has, been transferred to issue process.
In the present case there was no order of transfer of the case, by Shri Ganguly to Shri Sarkar.
The issue of process is a matter for judicial determination.
Before issuing a process ' the Magistrate has to examine the complainant.
That is why the issue of process is by the Magistrate who has taken cognizance or the Magistrate to whom the case has been transferred.
The High Court therefore correctly quashed the issue of process.
It was contended on behalf of the appellant that the High Court should not have gone to the question as to whether a prima facie case was established or not.
The High Court under section 561 A of the Code of Criminal Procedure can go into the question as to whether there is any legal evidence.
When the High Court said that the evidence in the present case came from tainted sources and was not reliable the High Court meant what can be described as 'no case to go to the jury '.
The High Court correctly quashed the process against T. Ganguly.
The appeal therefore fails and is dismissed.
V.P.S. Appeal dismissed.

summary:
After taking cognizance of an offence against the respondent the Magistrate enquired into it and submitted a report to the Sub Divisional Magistrate that a prima facie case was made out against the respondents.
The Sub Divisional Magistrate directed the issue of process.
The High Court in a petition to quash the issue of process hold that under section 204, the Sub Divisional Magistrate had no right to issue process since he was not the Magistrate who had taken cognizance of the offence, and also observed that the evidence in the case came from tainted sources.
Dismissing the appeal to this Court, HELD: (1) Under section 204, Cr.
P.C. the Magistrate who takes cognizance could issue process and under section 202, Cr. P.C., a Magistrate to whom a case had been transferred could issue process.
Since, in the present case, the magistrate who issued process had not taken cognizance of the offence and there was no order transferring the case to him, the High Court was right in quashing the issue of process.
[673 C F] (2) Under section 561A, Cr.
P.C., the High Court could go into the question as to whether there was any legal evidence.
[673 F G]