judgement:
Civil Appeal No. 2481 of 1978.
Appeal by Special Leave from the Judgment and order dated 10 10 67 of the Jammu and Kashmir High Court in Civil First Appeal No 18 of 1966 Lal Narain Sinha, E. C. Agarwala, M. M. L. Srivastava, R. Satish and Altaf Ahmed for the Appellant.
section N. Andley, B. P. Maheshwari and Suresh Sethi for the Respondent The Judgment of the Court was delivered by FAZAL ALI, J.
This is a plaintiffs ' appeal by special leave against a judgment dated 10th October, 1966 of the Jammu & Kashmir High Court dismissing the plaintiff 's suit.
4 The facts of the case lie within a very narrow compass and after hearing counsel for the parties we propose to decide only one point, viz., the question as to whether or not the plaintiffs were entitled to a decree of ejectment against the defendants in respect of the house in question on the ground of personal necessity, and, therefore, we shall narrate only those facts which are germane for this purpose.
The property in suit was a four storeyed building situated at Maisuma Lal Chowk, Srinagar and belonged to one Peer Ali Mohammad, the ancestor of the plaintiffs.
This building was leased out to the defendants by a registered lease deed dated 1st December 1947 for a period of 10 years.
Under the lease the lessor had provided some furniture and crockery to the lessees.
Furthermore, it was clearly stipulated that the building was leased out for the purpose of running a hotel by the lessees, and for this purpose the lessees were given the right to make suitable alterations in the same, but were prohibited from making any alteration which may affect the durability or damage the building.
On the expiry of the period of the lease, the appellants demanded possession of the building from the respondents and despite certain notices given by the appellants the respondents failed to give possession of the building.
Hence the plaintiff 's suit.
The plaintiffs had taken three main grounds in support of their contention for ejectment of the defendants from the suit premises.
In the first place, the appellants alleged that they required the building in order to extend their business by running a hotel there themselves; secondly, as the lease had expired by efflux of time, the respondents were legally bound to surrender possession.
Thirdly, it was averred by the plaintiffs that the Jammu & Kashmir Houses and Shops Rent Control Act, 1966 (hereinafter referred to as the Act) was wholly inapplicable to the premises in dispute, because the yearly income of the defendants far exceeded Rs. 20,000 and that running a hotel did not fall within the purview of section 2(3) of the Act.
The suit was resisted by the respondents who took, inter alia, a number of objections to the grant of the relief to the appellants.
In the first place, it was pleaded that tho income of the respondents being less than Rs. 20,000/ per year the suit was clearly covered by the Act.
Secondly, it was averred that the definition of the word 'house ' in section 2(3) of the Act was wide enough to include a hotel.
It was next averred that the plaintiffs had no personal necessity and had filed the suit merely for the purpose of getting a higher rent.
Lastly, it was contended that as the plaintiffs required the house for running a hotel, such a purpose did not fall within the ambit of section ll(h) of the Act which applied only to such a case where the landlord required the house for his occupation and, at any 5 rate, having regard to the comparative advantages or disadvantages of the landlord and the tenant, there was no equity on the side of the plaintiffs.
The case was tried by the City Judge, Srinagar who accepted the case of the defendants (respondents) and dismissed the plaintiffs ' suit.
The plaintiffs thereupon filed an appeal before the High Court of Jammu & Kashmir which held that the plaintiffs had not proved their personal plaintiffs filed an application for leave to appeal to this Court and the same having been refused, they obtained special leave of this Court and hence the appeal before us.
In support of the appeal Mr. Lal Narayan Sinha, counsel for the appellants submitted three points.
In the first place, he contended that there was sufficient evidence to indicate that the income of the defendants respondents was more than Rs. 20,000/ a year, and, therefore, the provisions of the Act were not applicable and as the leave has expired due to efflux of time, the plaintiffs were entitled to a decree for ejectment straightway.
Secondly, it was argued that the word 'house ' used in section 2(3) of the Act cannot include a hotel, and, therefore, the Act was not applicable.
Lastly, it was submitted that the High Court committed a grave error of law in holding that the plaintiffs hold not been able to prove personal necessity" although the High Court gave a clear finding that the plaintiffs had undoubtedly proved that they had a strong desire to occupy the building for running a hotel.
It was argued that the finding of the High Court was not based on a discussion of the evidence and circumstances of the case and the High Court has taken an erroneous view of law on the nature of the need of the appellants as also on the question of the comparative advantages or disadvantages of the landlord and the tenant if a decree for eviction followed.
After having heard counsel for the parties we are clearly of the opinion that the appeal must succeed on the third point raised by learned counsel for the appellants, i.e., the question of personal necessity and in this view of the matter we refrain from expressing any opinion on the applicability of the Act to the suit premises as averred by the respondents.
Learned counsel for the appellants contended that there was sufficient material before the Court to show that the plaintiffs did not merely have a desire to occupy the building, but they actually needed the same and their need is both genuine and reasonable.
In this connection, reliance was placed on the evidence of the witnesses for the plaintiffs which does not appear to have been considered by the High Court.
We find that the plaintiffs had clearly mentioned in their plaint 6 that they required the house for the purpose of running the hotel business.
On behalf of the plaintiffs P.W. Mohd. Yusuf had made it absolutely clear that they required the lease property for their personal need as they wanted to run the hotel themselves.
The witness had further explained that this was necessary, because the plaintiffs could not maintain themselves from the income of the leased property.
It is true that the plaintiffs were doing a small business, but the witness had made it clear that their income was very low so much so that they paid income tax of only Rs. 70 to Rs. 80/ per annum.
These facts have not been demolished either in the cross examination of the witness or in the evidence of rebuttal given by the defendants.
The above evidence of the plaintiffs is corroborated by the other witnesses examined by them.
P.W. Girdhari Lal has clearly stated that the plaintiffs want to extend their business and want to have the hotel in their own possession to run the same.
He has further stated that the plaintiffs are running their business on a small scale, and he categorically stated that he had personally observed that there is very little work at the plaintiff 's shop now a days.
That is why they want to run a hotel.
The witness is a neighbour of the plaintiffs.
shop and was, therefore, competent to depose to the facts mentioned above which have not been shaken in cross examination.
P.W. Peer Ahmad Ullah has also stated that now a days people give up other occupations and take up hotel business because hotel business is itself a profitable business.
The witness added that the plaintiff also want to extend their business and start a hotel in this building.
P.W. Ghulam Nabi Dar also says that although the plaintiffs had a l? Boot shop they also want to run the hotel themselves, because their business has become dull.
P W. Ghulam Mohd. whose shop is in front of the shop of the plain tiffs states as follows: "The plaintiffs require the suit property for their own use, as they have been telling me for the last two or four years Previously, the business at Boot shops was running well but now it has become dull.
The plaintiffs intend to run the hotel themselves. . .
As for plaintiffs I say that they are in need of the hotel.
The plaintiffs require the; hotel in order to extend their business".
Another neighbour of the plaintiffs P.W. Yash Paul states that the plaintiffs say that they will start a hotel in the suit property.
He fur 7 ther deposes that there is little work in the shop of the plaintiffs, and, therefore, they want to start a hotel, P.W. Ghulam Mohd. who is the brother in law of P.W. Pir Ali.
Mohd., father of the plaintiffs and was looking after his children on the death of P.W. Pir Ali Mohd. has also stated that the plaintiffs want to start business in the shape of a hotel in the house and they also want to run the shop.
It is, therefore, proved by the evidence discussed above ( 1 ) that the plaintiffs required the house for their personal necessity in order to augment their income, (2) that as their income from the Boot shop is very small and they are not able to maintain themselves.
so they want to run the hotel business in the suit premises.
The High Court has not at all discussed this part of the evidence of the plaintiffs, but at the some time being impressed by the fact that the need of the plaintiffs was genuine the High Court gave a finding to at the plaintiffs had a strong desire to occupy the house and use it for commercial purposes.
Thereafter the High Court appears to have lost itself in wilderness by entering into a hair splitting distinction between desire and need.
Here the High Court has misdirected itself.
If the plaintiffs had proved that their necessity was both genuine and reasonable, that the present premises which belonged to them were required for augmenting their income as the income so far received by them was not sufficient for them to make the two ends meet, there could be no question of a mere desire, but it is a case of real requirement or genuine need.
In fact the irresistible inference which could be drawn from the facts is that the plaintiffs had a pressing necessity of occupying the premises for the purposes of conducting hotel business so as to supplement their income and maintain themselves property.
The Act is a piece of social legislation and aimed at easing the problem of accommodation, protecting the tenants from evictions inspired by profit hunting motives and providing certain safeguards for the tenants and saving them from great expense, inconvenience and trouble.
But the Act does not completely overlook the interest of the landlord and has under certain conditions granted a clear right to the landlord to seek eviction on proof of the grounds mentioned in section 11 of the Act.
Thus, the Act appears to have struck a just balance between the genuine need of the landlord on the one hand and great inconvenience and trouble of the tenant on the other.
It was also not disputed that the defendants had taken the property on lease only for a period of 10 years and now they have been in possession of the same for over 30 years.
If the plaintiffs found that their present business had become dull and was not yielding sufficient income to maintain themselves and, therefore, it was necessary to occupy the house so as to run a hotel business, it cannot by any stretch of imagination be said that the plaintiffs had merely a desire rather than 8 a bonafide need for evicting the tenants.
We therefore, disagree with the finding of he High Court that the plaintiffs had not proved that they had a bonafide need for occupation of the building in dispute.
Moreover section 11(h) of the Act uses the words 'reasonable requirement ' which undoubtedly postulate that there must be an element of need as opposed to a mere desire or wish.
The distinction between desire and need should doubtless be kept in mind but not so as to make even the genuine need as nothing but a desire as the High Court has done in this case.
It seems to us that the connotation of the term 'need ' or 'requirement should not be artificially extended nor its language so unduly stretched or strained as to make it impossible or extremely difficult for one landlord to get a decree for eviction.
Such a course would defeat the very purpose of the Act which affords the facility of eviction of the tenant to the landlord on certain specified grounds.
This appears to us to be the general scheme of all the Rent Control Acts, prevalent in other State in the country.
This Court has considered the import of the word requirement and pointed out that it merely connotes that there should be an element of need.
In the case of Phiroze Ramanji Desai vs Chandrakant N. Patel & Ors.
(1) Justice Bhagwati speaking for the Court observed as follows: The District Judge did not misdirect himself in regard to the true meaning of the word 'requires ' in section 13(1) (g) and interpreted it correctly to mean that there must be an element of need before a landlord can be said to 'require ' premises for his own use and occupation.
It is not enough that the landlord should merely desire to use and occupy the premises.
What is necessary is that he should need them for his own use and occupation.
" Thus, this Court has held that in such cases the main test should be whether it was necessary for the landlords to need the premises for their use or occupation.
In the case of B. Balaiah vs Chandoor Lachaiah(2) a Division Bench of the High Court observed as follows: "As long as such requirement is bona fide, the petitioner can certainly claim for a direction for eviction of the tenant".
It had become necessary for us to enter into the evidence led by the plaintiffs, because the High Court has in a general way made a sweeping obvervation that although the plaintiffs had a strong desire, they (1) [1974] I S.C.C. 661 (2) A.I.R 1965 A.P 435. 9 were not able to prove reasonable requirement and the High Court came to this finding without at all considering the evidence of competent and important witnesses examined by the plaintiffs on this point which has been discussed above.
For these reasons, therefore, we are clearly of the opinion that in the instant case the plaintiffs had proved that the requirement for the house for starting a hotel business was both genuine and reasonable and even imperative, because the scanty income of the plaintiffs was not sufficient to maintain them or to afford them a decent or comfortable living.
This brings us to the next limb of the argument of the learned counsel for the respondents regarding the interpretation of section 11 ( 1 ) (h) of the Act.
Section ll(l)(h) of the Act runs thus: 11(1)(h) . . . . where the house or shop is reasonably required by the landlord either for purposes of building or re building, or for his own occupation or for the occupation of any person for whose benefit the house or shop is held; Explanation: The Court in determining the reasonableness of requirement for purposes of building or rebuilding shall have regard to the comparative public benefit or disadvantage by extending or diminishing accommodation, and in determining reasonableness of requirement for occupation shall have regard to the comparative advantage or disadvantage of the landlord or the person for whose benefit the house or shop is held and of the tenant".
It was submitted by Mr. Andley learned counsel for the respondents that the words used in section ll(l)(h) are "that the house should be required by the landlord for his own occupation or for the occupation of and person for whose benefit the house or shop is held.
" It was argued that the words `own occupation ' clearly postulate that the landlord must require it for his personal residence and not for starting any business in the house.
We are, however, unable to agree with this argument.
The provision is meant for the benefit of the landlord and, therefore, it must be so construed as to advance the object of the Act.
The word 'occupation ' does not exclude the possibility of the landlord starting a business or running a hotel in the shop which also would amount to personal occupation by the landlord.
In our opinion, the section contemplates the actual possession of the landlord, whether for his own residence or for his business.
It is manifest that even if the landlord is running a hotel in the house, he is undoubtedly in possession or occupation of the house in the legal sense of the term.
2 817SCI/78 10 Furthermore, the section is wide enough to include the necessity of not only the landlord but also of the persons who are living with him as members or the same family.
In the instant case there can be no manner of doubt that the house was required for the personal residence or occupation of all the three plaintiffs who admittedly were the owners of the house.
The fact that the plaintiffs wanted to occupy the property for running hotel would not take their case out of the ambit of personal necessity as already indicated above, occupation of a house may be required by the owner for personal purposes.
He may choose to reside himself in the house or run a business in the house or use it as a paying guest house and derive income therefrom.
In all these cases even though the owner may not physically reside in the house, the house in law would nevertheless be deemed to be in actual occupation of the owner.
Having regard, therefore, to the circumstances mentioned above, we are unable to subscribe to the view that the words 'own occupation 'must be so narrowly interpreted so as to indicate actual physical possession of the landlord personally and nothing short of that.
We, therefore, overrule the argument of the respondents on this point.
The last argument that was advanced before us by Mr. Andley for the respondents was that taking an overall picture of the various aspects of the present case, it cannot be said that the balance of comparative advantages and disadvantages was in favour of the landlord.
In this connection, our attention was drawn to the evidence led by the defendants that the main source of their income is the hotel business carried on by them in the premises and if they are thrown out they are not likely to get any alternative accommodation.
The High Court has accepted the case of the defendants on this point, but does not appear to have considered the natural consequences which flow from a comparative assessment of the advantages and disadvantages of a landlord and the tenant if a decree for eviction follows.
It is no doubt true that the tenant will have to be ousted from the house if a decree for eviction ii passed, but such an event would happen whenever a decree for eviction is passed and was fully in contemplation of the legislature when section ll(l)(h) of the Act was introduced in the Act.
This by itself would not be a valid ground for refusing the plaintiffs a decree for eviction.
Let us now probe into the extent of the hardship that may be caused to one party or the other, in case a decree for eviction is passed or is refused.
It seems to us that in deciding this aspect of the matter each party has to prove its relative advantages or disadvantages and the entire 11 Onus cannot be thrown on the plaintiffs to prove that lesser disadvantages will be suffered by the defendants and that they were remediable.
This matter was considered by this Court in an unreported decision in the case of M/s Central Tobacco Co. vs Chandra Prakash(l) where this Court observed as follows: "We do not find ourselves able to accept the broad pro position that as soon as the landlord establishes his need for additional accommodation he is relieved of all further obligation under section 21 sub section
(4) and that once the landlord 's need is accepted by the court all further evidence must be adduced by the tenant if he claims protection under the Act.
Each party must adduce evidence to show what hardship would be caused to him by the granting or refusal of the decree and it will be for the court to determine wether the suffering of the tenant, in case a decree was made, would be more than that of the landlord by its refusal.
The whole object of the Act is to provide for the control of rents and evictions, for the leasing of buildings etc.
and section 21 specifically enumerates the grounds which alone will entitle a landlord to evict his tenant.
The onus of proof of this is certainly on the landlord.
We see no Sufficient reason for holding that once that onus is discharged by the landlord it shifts to the tenants making it obligatory on him to show that greater hardship would be caused to him by passing the decree than be refusing to pass it.
In our opinion both sides must adduce all relevant evidence before the court; the landlord must show that other reasonable accommodation was not available to him and the tenant must also adduce evidence to that effect.
It is only after shifting such evidence that the court must form its conclusion on consideration of all the circumstances of the case as to whether greater hardship would be caused by passing the decree than by refusing to pass it".
This case was followed in Phiroze Ramanji Desai vs Chandrakant N. Patel & Ors (supra).
In the case of Kelley vs Goodwin(2) Lynskey, J. Observed as follows: "The next matter one has to consider is whether there was evidence on which the county court judge could come to the conclusion that there would be greater hardship in mak (1) C.A. 1175 of 1969 decided on 23 4 1969.
(2) 12 ing the order than not making the order.
He has taken into account, in relation to that question, first, the position of the landlord, and, secondly, the position of the tenant.
He has taken into account the financial means of the tenant.
It is argued before us that he was wrong in doing that.
In my view, he was quite entitled, in considering hardship, to have regard to the financial means of the tenant in considering whether he could obtain other accommodation because, by reason of his means, he was in a position, not merely to rent, but to buy a house.
It seems to me also that, on this question cf hardship, the judge was entitled to take into account the fact that the tenant had taken no real steps to try and find other accommodation or no real steps to buy a house".
To the same effect is the decision in the case of K. Parasuramaiah vs Pokuri Lakshmamma(1) where a Division Bench of the High Court narrated the mode and circumstances in which the comparative advantages and disadvantages of the landlord and the tenant could be weighed.
In this connection, the Court observed as follows: "Thus the hardship of the tenant was first to be found out in case eviction is to be directed.
That hardship then has to be placed against the relative advantages which the land lord would stand to gain if an order of eviction is passed .
What is however required is a careful consideration of all the relevant factors in weighing the relative hardship which is likely to be caused to the tenant with the likely ad vantage of the landlord on the basis of the available material on record. '.
The proviso however should not be read as if it confers a practical immunity on the tenant from being evicted.
That would destroy the very purpose of Sec. 10(3)(c).
Likewise the requirement of the land lord in accordance with that provision alone cannot be given absolute value, because that would mean to underestimate the value of the proviso to that section.
Keeping in view therefore the purpose of the provision and the necessity of balancing the various factors each individual case has to be decided in the light of the facts and circumstances of that case ' '.
In view of our findings it has been established that the landlords have not only a genuine requirement to possess the house, but it is necessary for them to do so in order to augment their income and maintain themselves properly.
Being the owners of the house they (1) A.I.R. 1965 A.P.220 13 cannot be denied eviction and be compelled to live below the poverty line merely to enable the respondents to carry on their flourishing hotel business, at the cost of the appellants.
This shows the great prejudice that will be caused to the plaintiffs if their suit is dismissed.
The plaintiffs have already produced material before the court to show that their income does not exceed more than Rs. 8000 to Rs. 9000/ per year as the yearly income tax paid by them is Rs. 70 to Rs. 80 only.
There is no other means for them to augment their income except to get their own house vacated by the defendants so as to run a hotel business.
It was vehemently contended by Mr. Andley that there is nothing to show that the plaintiff Mohd. Yusuf or his mother had any experience of running the hotel, and, therefore, it is fruitless to allow them to run the hotel by evicting the respondents.
Mohd. Yusuf is admittedly doing shoe business, and has got sufficient experience of business.
Nothing has been brought on the record to show that he is incapable of running a hotel in the premises.
The building belongs to him and there is Do reason for us to think that he cannot establish a hotel business.
On the other hand the defendants have been running the hotel for the last 30 years and must have made sufficient profits.
To begin with, the defendants had taken the lease only for 10 years which now by virtue of the statute has been extended to 30 years which is a sufficiently long period for which the plaintiffs have been deprived the possession of the house.
There is thus no equity in favour of the respondents for continuing in possession any further.
It was then submitted by Mr. Andley, counsel for the respondents that if the respondents are evicted they will be thrown out on the road; that hotel is the only source of their sustenance and they are not likely to get any alternative accommodation on being evicted.
If the defendants had proved that they will not be able to get any accommodation any where in the city where they could set up a hotel, this might have been a weighty consideration, but the evidence of all the witnesses examined by the defendants only shows that the defendants may not get alternative accommodation in that very locality where the house in dispute is situated.
There is no satisfactory evidence to prove that even in other business localities there is no possibility of the defendants getting a house.
To insist on getting an alternative accommodation of a similar nature in the same locality will be asking for the impossible.
The defendants are tenants and had taken the lease only for 10 years but had overstayed for 20 years and they cannot be allowed to dictate to the landlord that they cannot be evicted unless they get a similar accommodation in the very same locality.
14 G. M. Khan the defendant himself has stated that if he is evicted from the house, he cannot get such a place any where.
Great stress is laid that he must get a house of the size of the house in dispute.
It was suggested to him that if one of the houses of the plaintiffs is given to him that will be sufficient for him, to which he said that the said house situated in Hari Singh High Street is not suitable because he can not run his hotel business there.
The witness has further stated towards the end that the defendants cannot get any place for the purpose of running a hotel in this Ilaqa (locality).
D.W. Ghani Hajam also says that the defendants cannot get any other building for the purpose of the hotel at this place like the one under dispute.
Similarly, D. W. Ghulam Mohd. Khan, another witness for the defendants says that the defendants will not get such a building in this Ilaqa for running a hotel.
D.W. Haji Noor Mohd. also endorses the fact that if the defendants are ejected, it is difficult for them to get such a building in this place.
D.W. Mohd, Ramzan deposes that if the defendants are ejected from the building, they will not get such a building in this locality for running a hotel.
To the same effect is the evidence of D. W. Rasool Dar who says that it is impossible for the defendants to get a house like the suit house for the purposes of running a hotel at the site or nearabout where the suit house is situated.
D. W. Ghulam Mohd. has made a similar statement in his deposition when he says that the defendants will not get such a building nor is there any such building vacant in the locality.
It is true that there are some witnesses like D. W. Aslam Khan, Ghulam Hassan, Mohd. Abdullah Pandey who has said that the defendants might not get any other place for running a hotel but the evidence is extremely vague and nebulous.
D. W. Abdul Kabir however merely says that he had no knowledge that the defendants could get any other house.
Thus, what is established from the evidence of the defendants is that if they are ejected, they might not get a house as big as the house in dispute in the very locality where the disputed house is situated.
There is no clear evidence in the first place to show that there is no other business locality in the city at all or that if there is any other business locality attempts were made by the defendants but they Were unable to get any house.
Furthermore, as indicated above, the plaintiff necessity is imperative and their requirement is undoubtedly reasonable, because the income which they are receiving including the rent of the house which is in the region of Rs. 5000/ per year, is not sufficient to maintain them.
Thus, on a careful comparison and assessment of the relative advantages and disadvantages of the landlord and the tenant it seems to us that the scale is tilted in favour of the plaintiffs.
15 The inconvenience, loss and trouble resulting from denial of a decree for eviction in favour of the plaintiffs far outweigh the prejudice or the inconvenience which will be caused to the defendants.
The High Court has unfortunately not weighed the evidence from this point of view.
Before closing the judgment we would like to observe that normally this Court does not interfere with concurrent findings of facts but as the High Court as also the Trial Court have made a legally wrong approach to this case and have committed a substantial and patent error of law in interpreting the scope and ambit of the words "reasonable requirement" and "own possession" appearing in section 11 (1) (h) of the Act and have thus misapplied the law and overlooked some of the essential features of the evidence as discussed by us, we had to enter into the merits of the case in order to prevent grave and substantial injustice being done to the appellants.
For the reasons given above, the appeal is allowed.
The judgment and decree of the High Court are set aside, and a decree for ejectment of the defendants from the house in dispute is hereby passed against the defendants.
In the peculiar circumstances of this case, there will be no order as to costs.
S.R. Appeal allowed.

summary:
The appellants plaintiffs sought the eviction of the respondents defendants from the suit premises which was leased to the latter for a period of ten years only and for running a hotel, on the grounds (a) of personal requirement to run a hotel business themselves and (b) of the failure of the respondents to deliver possession after the expiry of the period of lease despite notices issued.
The Trial Court and the High Court in appeal having dismissed the suit, the appellants obtained special leave of this Court.
Allowing the appeal, the Court ^ HELD : 1.
The Jammu and Kashmir Houses and Shops Rent Control Act, 1966 is a piece of social legislation aimed at easing the problem of accommodation, protecting the tenants from evictions inspired by profit hunting motives and providing certain safeguards for the tenants and saving them from great expense, inconvenience and trouble.
But the Act does not completely overlook the interest of the landlord and has under certain conditions granted a clear right to the landlord to seek eviction on proof of the grounds mentioned in section 1.
Of the Act.
Thus, the Act appears to have struck a just balance between the genuine need of the landlord on the one 'land and great inconvenience and trouble which may be caused to the tenants on the other.
In the instant case.
the defendants had taken the property on lease only for a period of I O years and now they have been in prossession of the same for over 30 years.
If the plaintiffs found that their present business had become dull and was not yielding sufficient income to maintain themselves and therefore, it was necessary to occupy the house so as to run a hotel business, it cannot by any stretch of imagination be said that the plaintiffs had merely a desire rather than a bonafide need for evicting the tenants.
The findings of the High court that the plaintiffs had not proved that they had a bonafide need for occupation of the building in dispute is incorrect.
[7E H, 8A] 2.
Section 11(h) of the Act uses the words 'reasonable requirement ' which undoubtedly postulate that there must be an element of need as opposed to a mere desire or wish.
The distinction between desire and need should doubtless be kept in mind but not so as to make even the genuine need as nothing but a desire as the High Court has done in this case.
The connotation of the term 'need ' or 'requirement ' should not be artificially extended nor its language so unduly stretched or strained as to make it impossible or extremely difficult for the landlord lo get a decree for eviction.
Such a course would defeat the very pur 2 pose of the Act which affords The facility of eviction of the tenant to the landlord on certain specified grounds. 'This is the general scheme of all the Rent Control Acts, prevalent in other States in the country.
The word "requirement" merely connotes that there should be an element of need.
In such cases the main test should be whether it was necessary for the landlords t() need the premises for their own use or occupation.
[8A D, F] In the instant case, the plaintiffs had proved that The requirement for the house for starting a hotel business was both genuine and reasonable and even imperative, because the scanty income of the plaintiffs was not sufficient to maintain them or to afford them a decent or comfortable living.
[9A B] Phiroze Ramanji Desai vs Chandrakant N. Patel and Ors ; ; applied.
B. Baliah v Chandoor Lachaiah, A.I.R. 1965 A.P. 435 (D.B.) approved.
The words "own occupation" in section ll(h) cannot be so narrowly interpreted as to indicate actual physical possession of the landlord personally and nothing short of that.
The provision in section ll(h) of the Act is meant for the benefit of the landlord and, therefore, it must be so construed as to advance the object of the Act.
The word 'occupation ' does not exclude the possibility of the landlord starting a business or running a hotel in the shop which also would amount to personal occupation by the landlord.
The section contemplates the actual possession of the landlord, whether for his own residence or for his business.
It is manifest that even, if the landlord is running a hotel in the house, he is undoubtedly in possession or occupation of the house in the legal sense of the term.
Furthermore, the section is wide enough/to include the necessity of not only the landlord but also of the persons who are living with him as members of the same family.
[9G H, 10A and D] In the instant case there can be no manner of doubt that the house was required for the personal residence or occupation of all the three plaintiffs who admittedly were the owners of the house.
The fact that the plaintiffs wanted to occupy the property for running hotel would not take their case out of the ambit of personal necessity and the occupation of a house may be required by the owner for personal purposes.
He may choose to reside himself in the house or run a business in the house or use it as a paying guest house and derive income therefrom.
In all these cases even though the owner may not physically reside in the house, the house in law would nevertheless be deemed to be in actual occupation of the owners.
[10A C] 4.
(a) In deciding the aspect of balance of convenience of the parties in an eviction suit each party has to prove its relative advantages or disadvantages and the entire onus cannot be thrown on the plaintiffs to prove that lesser disadvantages will be suffered by the defendants and that they were remediable.
[10H, 11A] (b) It is no doubt true that the tenant will have to be ousted from the house if a decree for eviction is passed, but such an event would happen when ever a decree for eviction is passed and was fully in contemplation of the legislature when section ll(l)(h) of the Act was introduced in the Act.
This by itself would not be a valid ground for refusing the plaintiffs a decree for eviction.
[10F G] 3 M/s. Central Tobacco Co. vs Chandra Prakash, Civil Appeal No. 1175/69 [SC] dated 23 4 1969 and Phiroze Ramanji Desai vs Chandrakant N. Patel and Ors.
[1974] I S.C.C. 661; referred to.
Kelley vs Goodwin, [1947] All E.R. P. 810; quoted with approval; K Parasuramaiah v Pokuri Lakshmamma AIR 1965 A.P. 220 approved.
(c) Being the owners of the house they cannot be denied eviction and be compelled to live below the poverty line merely to enable the respondents to carry on their flourishing hotel business, at the cost of the appellants.
This shows the great prejudice that will be caused to the plaintiffs if their suit is dismissed.
The plaintiffs have already produced material before the court to show that their income does not exceed more than Rs. 8000 to Rs. 9000/ per year as the yearly income tax paid by them is Rs. 70 to Rs. 80 only.
There is no other means for them to augment their income except to get their own house vacated by the defendants so as to run a hotel business.
[12H, 13A B] (d ) on a careful comparison and assessment of the relative advantages and disadvantages of the landlord and the tenant, it is clear that the scale is tilted in favour of the plaintiffs in the instant case.
The inconvenience, loss and trouble resulting from denial of a decree for eviction in favour of the plaintiffs far outweigh the prejudice or the inconvenience which will be caused to the defendants.
The High Court has unfortunately not weighed the evidence from the point of view.
[14H, 15A] Observation: Normally Supreme Court does not interfere with concurrent findings of facts but as the High Court as also the Trial Court have made a legally wrong approach to this ease and have committed a substantial and patent error of law in interpreting the scope and ambit of the words "reasonable requirement" and "own possession" appearing in section ll(I)(h) of the Act and have thus misapplied the law and overlooked some of the essential features of the evidence, the merits of the case had to be looked into in order to prevent grave and substantial injustice being done to the appellant.
[15B C]


judgement:
Civil Appeal No. 634 or 1975.
Appeal by Special Leave from the Judgment and order dated 1 10 1974 of the Punjab and Haryana High Court in Civil Writ No. 5126 of 1974.
O. P. Malhotra, N. section Das Behl and Sat Pal Arora for the Appellant.
Madan Mohan for Respondents 3 4.
The Judgment of the Court was delivered by DESAI, J.
Socio economic justice, the corner stone of industrial jurisprudence to be achieved by the process of give and take, concessions and adjustments of conflicting claims would hardly advance if the industrial dispute involved in this appeal by special leave brought by the appellant M/s. Avon Services (Production Agencies) Pvt. Ltd. convassing some technical legal nicety rendering the two employees jobless for more than seven years is encouraged.
A brief recital of few facts touching upon the controversy would reveal the arena of dispute.
The appellant is a Private Limited Company incorporated under the , and is engaged in the business of manufacturing Fire Fighters Foam Compound.
It has set up two factories, one at Bombay and the other at Ballabhgarh.
The industrial dispute which is the subject matter of appeal relates to Ballabhgarh factory.
According to the appellant this factory, when commissioned in 1962, was divided into two sections, now styled as two separate undertakings: (i) manufacturing section; and (ii) packing material making section.
The manufacturing section comprised two sub sections, viz., the chemical section, i.e. Foam Compound manufacturing section, and the boiler section.
The packing material section was again composed of two sub sections, one manufacturing containers, and the other painting of the containers.
Respondents 3 and 4 according to the appellant were employed in the painting section.
Around 1964 the appellant decided to buy containers from the market and consequently closed down its packing material 49 making section but continued the painting sub section.
On 13th July 1971 the appellant purported to serve a notice on respondents 3 and 4 and one Mr. Ramni intimating to them that the management has decided to close the painting section effective 13th July 1971 due to unavoidable circumstances and hence the services of the three workmen would no longer be required and, therefore, they are retrenched.
Even though it is alleged that the notice was served upon the three workmen, the Tribunal found that the notice never reached respondents 3 and 4.
By the notice the workmen concerned were also informed that they should collect their dues under section 25FFF of the , from the office of the Company.
Since 13th July 1971 respondents 3 and 4 have been denied employment by the appellant.
A Trade Union of the employees of the appellant affiliated to Bharatiya Mazdoor Sangh served a notice of demand, Annexure P l dated 16th July 1971 inter alia calling upon the appellant to reinstate respondents 3 and 4 and the third workman and also to pay the full back wages.
On 19th February 1972 as per Annexure P 2, the Secretary to the Government of Haryana, Labour and Employment Department, intimated to the President of the Union that from amongst the demands contained in Annexure P l, Demands 2 to 9 have been referred to Industrial Tribunal for adjudication.
In respect of demand No. l relating to the reinstatement of the three workmen in the painting section, the reference was refused on the ground that there was no work for painting in the factory where these two workmen were working.
This refusal to refer the demand concerning respondents 3 and 4 has been the subject matter of a very serious submission on behalf of the Company that the reference subsequently made by the Government was invalid.
To proceed further with the narrative.
subsequently the Government of Haryana by its order dated 23rd November, 1972 referred the following dispute to the Industrial Tribunal for adjudication: "Whether the retrenchment of Sarvashri Mohammed Yamin and Mohammad Yasin was justified and in order ? If not, to what relief they are entitled ?" The Tribunal registered the reference at No. 81/72 and proceeded to adjudicate upon the dispute.
Three issues were raised before the Tribunal and it is necessary to set down the three issues here in order to point out that one of the contentions raised at the hearing of this appeal was never put forth before the Tribunal.
The issues framed by the Tribunal are: "1.
Whether the present reference is bad in law for the reasons given in para No. 1 of the preliminary objection in the written statement ? (On management).
Whether the statement of claim filed on behalf of the workmen is not in order ? (On management).
Whether the retrenchment of Sarvashri Mohammed Yamin and Mohammad Yasin was justified and in order ? If not, to what relief they are entitled?" The management, in support of its contention covered by issue No. 1, urged before the Tribunal that once the Government declined to make a reference in respect of termination of service of respondents 3 and 4, the Government was not competent to refer the dispute for adjudication at a later date.
The Tribunal negatived the contention observing that there is abundant authority in support of the proposition that the Government having once declined to make a reference, is not rendered incompetent from making a reference of the same dispute at a later date.
Issue No. 2 was also answered against the appellant but as that contention was not raised before us, we need not go into the details of it.
On issue No. 3, the Tribunal held that respondents 3 and 4 were retrenched and the case would squarely fall under section 25F of the (for short 'the Act ') and as the appellant employer has not complied with the pre condition laid down in section 25F (a) and (b) of the Act to wit, serving of one month 's notice or wages in lieu of such notice and payment of retrenchment compensation, the retrenchment was invalid.
The Tribunal was further of the opinion that as both the workmen have been in service for 15 years or so, they could have been conveniently absorbed in some other department and, therefore, the retrenchment was unjustified.
the Tribunal accordingly directed reinstatement of respondents 3 and 4 with full back wages.
The appellant moved the High Court of Punjab & Haryana for a writ of certiorari but the writ petition was dismissed in limine.
Mr. O. P. Malhotra, learned counsel for the appellant canvassed two contentions before US.
He submitted that the Government having declined to make a reference under section 10(l) of the Act in respect of termination of service of respondents 3 and 4 as per its order dated 19th February 1972 Annexure P 2, the Government was not competent or had no power or authority to make a reference in respect of the same dispute unless the Government must have come up with some fresh or additional material which, when the validity of the reference was challenged, must be disclosed or it must appear on the face of the reference itself.
Alternatively it was contended that after having declined to make a reference in respect of termination of service of respondents 3 and 4, the Government was not competent to make a reference of an entirely different dispute touching the question of reinstatement 51 of respondents 3 and 4 which was a materially different dispute, from A the one raised by the Union as per its charter of demands Annexure P 1, dated 16th July 1971 because the demand as is now referred to the Tribunal was never raised before the management and, therefore, no such demand existed which the Government could have referred to the Tribunal under section 10(1) of the Act.
The second contention was that the termination of service of respondents 3 and 4 was consequent upon the closure of painting undertaking which was a separate and independent undertaking of the appellant and the case would, therefore, be governed by section 25FFF and not by section 25F as held by the Tribunal and even if wages in lieu of notice and retrenchment compensation were not paid at the time or retrenchment the termination would not be invalid because the conditions for payment of wages in lieu of notice and retrenchment compensation are not conditions precedent when termination of service is brought about on account of closure of the undertaking.
Section 10(1) of the Act confers power on the appropriate Government to refer at any time any industrial dispute which exists or is apprehended to the authorities mentioned in the section for adjudication.
The opinion which the appropriate Government is required to form before referring the dispute to the appropriate authority is about the existence of a dispute or even if the dispute has not arisen, it is apprehended as imminent and requires resolution in the interest of industrial peace and harmony.
Section 10(1 ) confers a discretionary power and this discretionary power can be exercised on being satisfied that an industrial dispute exists or is apprehended.
There must be some material before the Government on the basis of which it forms an opinion that an industrial dispute exists or is apprehended.
The power conferred on the appropriate Government is an administrative power and the action of the Government in making the reference is an administrative act.
The formation of an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character.
Thus the jurisdictional facts on which the appropriate Government may act are the formation of an opinion that an industrial dispute exists or is apprehended which undoubtedly is a subjective one, the next step of making reference is an administrative act.
The adequacy or sufficiency of the material on which the opinion was formed is beyond the pale of judicial scrutiny.
If the action of the Government in making the reference is impugned by a party it would be open to such a party to show that what was referred was not an industrial dispute and that the Tribunal had no jurisdiction to make the Award but if the dispute 52 was an industrial dispute, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before Government on which it could have come to an affirmative conclusion on those matters (see State of Madras vs C. P. Sarathy) (1).
The contention, however, is that once the appropriate Government applies its mind to the question of referring an industrial dispute to the appropriate authority and declines to make a reference, it cannot subsequently change its mind and make the reference of the dispute unless there is some fresh or additional material before it.
It was said that once an industrial dispute is raised and the Government declines to make a reference, the opposite party is entitled to act on the supposition that the dispute in question was not worth referring and such a dispute would no more be in existence between the employee 1) and the concerned employer and that the Government cannot spring a surprise by subsequently unilaterally making the reference without any fresh or additional material being brought to its notice.
Section 10(l) enables the appropriate Government to make reference of all industrial dispute which exists or is apprehended at any time to one of the authorities mentioned in the section.
How and in what manner or through what machinery the Government is apprised of the dispute is hardly relevant.
Section 12 casts a duty upon the Conciliation officer to hold conciliation proceedings in respect of the industrial dispute that exists or is apprehended.
It is mandatory for the Conciliation officer to so hold the conciliation proceedings where dispute relates to a public utility service and a strike notice has been served under 6. 22.
The conciliation officer must try to promote a settlement between the parties and either he succeeds in bringing the parties to a settlement or fails in his attempt, he must submit a report to the appropriate Government, but this procedure for promoting settlement cannot come in the way of the appropriate Government making a reference even before such a report is received.
The only requirement for taking action under section 10(1) is that there must be some material before the Government which will enable the appropriate Government to form an opinion that an industrial dispute exists or is apprehended.
This is an administrative function of the Government as the expression is understood in contradistinction to judicial or quasi judicial function.
Merely because the Government rejects a request for a reference or declines to make a reference.
it cannot be said that the industrial dis (1) , 53 pute has ceased to exist, nor could it be said to be a renew of any A judicial or quasi judicial order or determination.
The industrial dispute may nonetheless continue to remain in existence and if at a subsequent stage the appropriate Government is satisfied that in the interest of industrial peace and for promoting industrial harmony it is desirable to make a reference, the appropriate Government does not lack power to do so under section 10(1), nor is it precluded from making the reference o l the only ground that on an earlier occasion it had declined to make the reference.
The expression "at any time" is section 10(l) will clearly negative the contention that once the Government declines to make a reference the power to make a reference under section 10(1) in respect of the same dispute gets exhausted.
Such a construction would denude a very vital power conferred on the Government in the interest of industrial peace and harmony and it need not be whittled down by interpretative process.
In Western India Match Co. Ltd., vs Western India Match Co. Workers Union & Ors.,(1) an identical contention was raised in respect of a reference made under section 4(k) of the U.P. which is in pari materia with section 10(1) of the Act.
Negativing this contention this Court observed as under: "In the light of the nature of the function of the Government and the object for which the power is conferred on it, it would be difficult to hold that once the Government has refused to refer, it cannot change its mind on a reconsideration of the matter either because new facts have come to light or because it had misunderstood the existing facts or for any other relevant consideration and decide to make the reference.
But where it reconsiders its earlier decision it can make the reference only if the dispute is an industrial one and either exists at that stage or is apprehended and the reference it makes must be with regard to that and no other industrial dispute".
It follows that the Government does not lack the power to make the reference in respect of the same industrial dispute which it once declined to refer.
But it was urged that the ratio of the decision would show that the Government must have some fresh material made available to it, subsequent to its refusal to make a reference, for the formation of a fresh opinion, for making the reference.
It is not absolutely necessary that there ought to be some fresh material before the Government for reconsideration of its earlier decision.
The Government may reconsider its decision on account of some new facts brought to its notice or for any other relevant considera (1) ; 54 tion and such other relevant consideration may include the threat to industrial peace by the continued existence of the industrial dispute without any attempt at resolving it and that a reference would at least bring the parties to the talking table.
A refusal of the appropriate Government to make a reference is not indicative of an exercise of power under section 10(1), the exercise of the power would be a positive act of making a reference.
Therefore, when the Government declines to make a reference the source of power is neither dried up nor exhausted.
It only indicates that the Government for the time being refused to exercise the power but that does not denude the power.
The power to make the reference remains intact and can be exercised if the material and relevant considerations for exercise of power are available; they being the continued existence of the dispute and the wisdom of referring it, in the larger interest of industrial peace`and harmony.
Refusal to make the reference does not tantamount to saying that the dispute, if it at all existed, stands resolved.
On the contrary the refusal to make a reference not compelling the parties to come to a talking table or before a quasi judicial Tribunal would further accentuate the feelings and a threat to direct action may become imminent and the Government may as well reconsider the decision and make the reference.
It is, therefore, not possible to accept the submission that if the Government had on an earlier occasion declined to make a reference unless it be shown that there was some fresh or additional material before the Government the second reference would be incompetent.
It has not been shown that the dispute had ceased to exist and the very existence of the dispute enables the Government to exercise the power under section 10(l) and it has been rightly exercised.
The view which we are taking is in accord with the decision of this Court in Binny Ltd. vs Their Workmen & Anr.(1) wherein it was found that the Government had declined to make a reference of the dispute on two previous occasions on the basis of which it was contended that the reference was invalid.
The contention was negatived observing that the mere fact that on two previous occasions the Government had taken the view that no reference was called for does not entitle the Court to conclude that there could be no cause for a reference at a later date.
Alternatively it was contended that even if the appropriate Government has power to make a reference after having once declined to make the reference, it can only refer that industrial dispute which it had once declined to refer and no other dispute and that in this case the Government has referred an entirely different dispute than (1) 55 the one raised by the Union and that in respect of the referred dispute A the demand having not been made from the employer there was no such dispute in existence and, therefore, the reference was invalid.
The contention in the form in which it is now canvassed was not raised before the Industrial Tribunal and even before the High Court.
However, as we find substance in the contention we would not reject it on the technical ground that it was not raised before the Industrial Tribunal or the High Court.
The Avon Employees Union by its notice of demand Annexure P l dated 16th July 1971 requested the appellant company to consider the demands set out in the notice.
The relevant demand for the purpose of present discussion is demand No. 1 which reads as under: "That our three (?) companions Mohamed Yamin and Mohamed Yasin who had been working in the above mentioned factory for the last 15/15 years and 8 years, their termination of service and denying their gate passes are illegal and against the principle of justice, therefore, they be reinstated to their jobs and by giving back the full wages from the date of their termination, injustice be ended," The demand as hereinabove set out appears to be a translation of a demand originally served in Hindi.
The substance of the matter is that the Union complained about the termination of service of the two named workmen who are respondents 3 and 4 and one other whose services were terminated by the appellant and which termination was styled as illegal and the crucial industrial dispute was to reinstate them with full back wages and continuity of service.
There were seven other demands with which we are not concerned.
The appropriate Government while making the reference Annexure P 2, informed the Union that the demands 2 to 9 have been referred to Industrial Tribunal and in respect of demand No. 1, the Government, while declining to make the reference, stated its reasons as under: "There is no work for painting in the factory where these two workmen were working." Subsequently the appropriate Government by its order No. ID/FD 72/40688, dated 23rd November 1972, referred the following dispute to the Industrial Tribunal for adjudication: "Whether the retrenchment of Sarvashri Mohamad Yamin and Mohmad Yasin was justified and in order ? If not, to what relief they are entitled ?" 56 The submission is that the Union espoused the cause of the aforementioned two workmen respondents 3 and 4 complaining that the termination of their services is illegal and for reinstatement, and that demand made by the Union was not referred to the Industrial Tribunal by the Government and subsequent to the decision of the Government respondents 3 and 4 did not make any demand from the employer nor did they raise an industrial dispute with regard to termination of their services and, therefore, the Government could not have referred an entirely different demand in respect of respondents 3 and 4 and the reference is invalid.
A mere comparison of the demand raised by the Union and the demand subsequently referred to the Industrial Tribunal would clearly negative the contention.
The dispute arose from the termination of services of respondents 3 and 4 and one other workman.
Retrenchment comprehends termination of service.
Termination of service may be brought about by dismissal, discharge, removal from service or even retrenchment apart from resignation or voluntary retirement.
Retrenchment is defined in section 2(oo) of the Act to mean termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include termination in the manner stated therein.
The definition clearly indicates that retrenchment is a mode of termination of service.
The Union complained about the termination of service of respondents 3 and 4 and demanded reinstatement with full back wages and the Government referred the dispute, about termination of service brought about by way of retrenchment and for con sequential relief for adjudication to the Industrial Tribunal.
There fore, there is no substance in the contention that the original demand was someone other than the one which is now referred to the Industrial Tribunal.
The Union had espoused the cause of two specified workmen and one other and the reference is with regard to the termination of service by retrenchment in respect of the same two workmen.
The language or the format in which the demand is couched is hardly decisive of the matter The substance of the matter is as to what was the grievance of the workmen complained of by them or espoused by the Union and what the Industrial Tribunal is called upon to adjudicate.
Viewed from this angle the demand referred to the Industrial Tribunal for adjudication is the same which was espoused and raised by the Union.
Reference was made in this connection to the Sindhu Resettlement Corporation Ltd. vs The Industrial Tribunal of Gujarat & ors.
(I) The appellant employer in that case contended that the demand raised before the employer was about retrenchment compensation and not about reinstatement of the retrenched workmen and, therefore, the (1) ; 57 Government was not competent to make a reference as if the demand was one of reinstatement.
The demand which was referred to the Tribunal was whether Shri R. section Ambwaney should be reinstated in the service of Sindhu Resettlement Corporation Ltd. and he should be paid his wages from 21st February 1958 ? After examining the evidence this Court held that the retrenched workmen in their claim put forward before the management of the employer requested for payment of retrenchment compensation and did not raise any dispute for reinstatement.
In this background this Court held that the only reference which the Government could have made had to be related to the payment of retrenchment compensation which was the only subject matter of dispute between the appellant and the respondents and therefore, the reference to the extent of adjudication for reinstatement was held to be incompetent.
The decision turns purely on the facts of the case.
In the case before us the Union complained about illegal termination of service and demanded reinstatement with back wages.
The Government subsequently made a reference about the validity of the retrenchment and the relief to which the workmen would be entitled.
It is thus crystal clear that there was a demand about reinstatement, complaining about the illegality of termination of service and the same has been referred to the Tribunal.
Therefor, it is not possible to accept the contention that on this account the reference is incompetent.
In this view of the matter it is not necessary to examine the contention raised on behalf of the respondents that the decision in Sindhu Resettlement Corporation Ltd. (Supra) ignores or omits to take note of the expression "difference" used in the definition of industrial dispute in section 2(k) as also the power of the Government not only to refer a dispute which exists but one which is apprehended in the sense which is imminent or is likely to arise in near future and which in order to arrest in advance threatened or likely disturbance to industrial peace and harmony and a threat to production has to be referred to the Industrial Tribunal for adjudication.
The last contention is that the Tribunal was in error in holding that respondents 3 and 4 were retrenched from service and, their case would be governed by section 25F while in fact the services of respondents 3 and 4 were terminated on account of closure of the painting undertaking of the appellant company and, therefore, the case would be governed by section 25FFF and failure to pay compensation and notice charges simultaneously with termination of service being not a pre requisite, the termination would neither be illegal nor invalid.
Section 25F prescribes conditions precedent to retrenchment of workmen.
The conditions precedent are: (a) giving of one month 's 5 817 SCI/78 58 notice in writing to the workman sought to be retrenched indicating the reasons for retrenchment and the retrenchment can be brought about on the expiry of the notice period or on payment of wages in lieu of such notice for the period of notice; (b) payment of retrenchment compensation as per the formula prescribed therein.
No notice to the workman would be necessary if the retrenchment is under an agreement which specifies a date for the termination of service.
Section 25FFF prescribes liability of an employer to pay compensation to workmen in case of closing down of undertaking.
The relevant portion of section 25FFF reads as under: "25FFF.
(1) Where an undertaking is closed down for any reason whatsoever, every workman who has been in continuous service for not less than one year in that under taking immediately before such closure shall, subject to the provisions of sub section (2), be entitled to notice and compensation in accordance with the provisions of section 25F, as if the workman had been retrenched: Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the work man under clause (b) of section 25F, shall not exceed his average pay for three months".
A comparison of the language employed in section 25F and section 25F (1) would bring about in bold relief the difference between the phraseology employed by the Legislature and its impact on the resultant rights of the workmen.
Under section 25F a workman employed in an industrial undertaking cannot be retrenched by the employer until the payment is made as provided in clauses (a) and (b).
Section 25FFF (1) provides that the workman shall be entitled to notice and compensation in accordance with the provisions of section 25F if the undertaking is closed for any reason, as if the workman has been retrenched.
Taking note of this difference in language, this Court in State of Bombay & Ors.
vs The Hospital Mazdoor Sabha & Ors.,(1) held that the failure to comply with the provision prescribing conditions precedent for valid retrenchment in c. 25F renders the order of retrenchment invalid and inoperative.
Expounding this position, a Constitution Bench of this Court in M/s. Hatisingh Mfg. Co. Ltd. & Anr.
vs Union of India & Ors.
,(2) held that the Legislature has not sought to place closure of an undertaking on the same footing as retrenchment under section 25F.
By section 25F a prohibition against retrench (1) ; at 871.
(2) ; 59 ment until the conditions prescribed by that section are fulfilled, is imposed; by section 25FFF ( 1 ) termination of employment on closure of the undertaking without payment of compensation and without either serving notice or paying wages in lieu of notice is not prohibited.
Payment of compensation and payment of wages for the period of notice are not, therefore, conditions precedent to closure.
Is this then a case of retrenchment or closure ? What constitutes retrenchment is no more res integra.
In State Bank of India vs N. Sundara Mortey,(1), one of us, Krishna Iyer, J. examined the definition of the expressioin "retrenchment" under section 2(oo) to ascertain the elements which constitute retrenchment.
It was observed as under: "A break down of section 2(oo) unmistakably expands the semantics of retrenchment. 'Termination. for any reason whatsoever ' are the key words.
Whatever the reason, every termination spells retrenchment.
So the sole question is has the employee 's service been terminated ? Verbal apparel apart, the substance is decisive.
A termination takes place where a term expires either by the active step of the master or the running out of the stipulated term.
To protect the weak against the strong this policy of comprehensive definition has been effectuated.
Termination em braces not merely the act of termination by the employer, but the fact of termination howsoever produced.
May be, the present may be a hard case, but we can visualise abuses by employers, by suitable verbal devices, circumventing the armour of section 25F and section 2(oo).
Without speculating on possibilities, we may agree that 'retrenchment ' is no longer terra incognita hut area covered by an expansive definition.
It means 'to end, conclude, cease '." As against this, reference was made to Management of Hindustan Steel Ltd. vs The Workmen & Ors.,(2) wherein the management contended that it is a case of closure and the workmen contended that the termination was on account of retrenchment.
The entire decision turns on the facts of the case.
Hindustan Steel Ltd. had set up what was described as Ranchi Housing Project and this Project was completed in 1966.
After completion of the residuary work, the services of certain employees were terminated.
This termination was questioned alleging that it was a case of retrenchment and (1) ; at 165.
(2) ; 60 as the condition precedent was not complied with, the retrenchment was invalid.
The employer contended that it is a case of closure and payment of compensation was not a condition precedent and did not invalidate the termination of service.
This Court held that the word 'undertaking ' as used in section 25FFF appears to have been used in its ordinary sense connoting thereby any work, enterprise, project or business undertaking.
It is not intended to cover the entire industry or business of the employer.
Even closure or stoppage of a part of the business or activities of the employer would seem in law to be covered by this sub section.
This question has to be decided on the facts of each case.
Examining the facts of the case, this Court came to the conclusion that it was a case of closure.
In the present case the appellant attempted to serve notice dated 13th July 1971 on respondents 3 and 4 and one Mr. Ramni.
Tn this notice it was stated that the management has decided to close the painting section with effect from Tuesday, 13th July 1971 due to unavoidable circumstances and the services of the workmen mentioned in the notice would no longer be required and hence they are retrenched.
The workmen were informed that they should collect their dues under section 25FFF from the office of the Company.
The tenor of the notice clearly indicates that workmen were rendered surplus and they were retrenched.
It is thus on the admission of appellant a case of retrenchment.
It was, however, urged that notice refers to section 25FFF and there fore employer intended it to be a notice of termination of service consequent upon closure of painting undertaking.
Now, even if a closure of an undertaking as contemplated by section 25FFF need not necessarily comprehend a closure of the entire undertaking and a closure of a distinct and separate unit of the Undertaking would also be covered by section 25FFF, the question is whether painting subsection was itself an undertaking ? The expression 'undertaking ' is not defined in the Act.
It also finds its place in the definition of the expression 'industry ' in section 2(j).
While ascertaining the amplitude of the expression 'undertaking ' in the definition of the expression 'industry ', noscitur a sociis cannon of construction was invoked and a restricted meaning was assigned to it in Bangalore Sewerage Board vs Rajappa.(1) While, thus reading down the expression, in the context of section 25FFF it must mean a separate and distinct business or commercial or trading or industrial activity.
It cannot comprehend an infinitismally small part of a manufacturing process.
(1) ; at 227.
61 The Tribunal found that the alleged retrenchment notice was not served upon workmen and that finding was not controverted by pointing out some evidence which may point to the contrary.
The notice expressly states that ' the workmen are retrenched though it simultaneously states that the action is taken under section 25FFF.
But if the Company had a container making section which was closed way back in 1964 and yet these three workmen who used to paint the containers were retained, it cannot be said that painting section was a recognised sub section eligible for being styled as a part of the undertaking.
If such mini classification is permitted it would enable the employed to flout section 25 with impunity.
These workmen appear not to have been employed initially as painters.
They were doing some other work from which they were brought to painting section.
They could have as well been absorbed in some other work from which they were capable of doing as observed by the Tribunal.
If painting was no more undertaken as one of the separate jobs, the workmen would become surplus and they could be retrenched after paying compensation as required by section 25.
To style a job of a particular worker doing a specific work in the process of manufacture as in itself an undertaking is to give meaning to the expression 'undertaking ' which it hardly connotes.
An employer may stop a certain work which was part of an undertaking but which could not be classified as an independent undertaking, the stoppage of work in this context would not amount to closure of the undertaking.
The three workmen were doing work of painting the containers.
No records were shown that there was a separate establishment, that it was a separate sub section of that it had some separate supervisory arrangement.
In fact, once the container making section was closed down, the three painters became part and parcel of the manufacturing process and if the painting work was not available for them they could have been assigned some other work and even if they had to be retrenched as surplus, the case would squarely fall in section 25F and not be covered by section 25FFF, on a specious plea of closure of an undertaking.
The Tribunal in our opinion was right in holding that this was a case of retrenchment and as conditions precedent were not complied with, the retrenchment was invalid and the relief of reinstatement with full back wages was amply deserved.
Accordingly this appeal fails and is dismissed with costs quantified at Rs. 2,000/ .
N.V.K. Appeal dismissed.

dataset_name: IN-Abs

summary:
The appellant 's factory was divided into two sections; manufacturing section and packing material making section.
The packing material making section comprised two sub sections: manufacturing containers and painting containers.
The appellant decided to buy containers from the market and consequently closed down its packing material making section but continued the painting section.
After a lapse of years, the employer served a notice of retrenchment on the two workmen (respondents nos.
3 and 4) and another employee all of whom at that time were working in the painting section alleging that the undertaking is closed.
They were asked to collect their dues under section 25FFF of the .
The Trade Union of the employees submitted a number of demands one of which related to the reinstatement of the two retrenchment workmen with full back wages.
The Government referred all their demands to the Industrial Tribunal but declined to refer the demand relating to reinstatement of the two retrenched workmen.
A few months later, however, the Government referred this demand as well for adjudication.
The Tribunal held ( 1 ) that though in the first instance the Government l? refused to refer the dispute it was competent to make a reference at a later date and (2) that the retrenchment of the workmen was invalid because the appellant did not comply with the provision of section 25F. The appellant 's writ petition was dismissed in limine.
In appeal to this Court it was contended that (1) the Government having once declined to make a reference, had no power to make a reference in respect of the same dispute at a later date unless it had some fresh or additional material before it; and (2) since the painting undertaking was a separate and independent undertaking, the case was governed by section 25FFF and not by section 25F. Dismissing the appeal.
^ HELD: 1.
(i) The Government does not lack the power to make reference in respect of the same industrial dispute which it once declined to refer.
[53G] 46 (ii) The opinion which the appropriate Government is required to form before referring a dispute to the appropriate authority under section 10(1) is about the existence of a dispute or even if the dispute has not arisen it is apprehended as imminent and requires resolution in the interest of industrial peace and harmony.
The power under this section, which is discretionary, can be exercised when the Government is satisfied that an industrial dispute exists or is apprehended.
There must be some material before the Government forms an opinion in respect of the two relevant considerations.
Moreover, the power conferred being administrative in nature the action of the Government in making the reference is an administrative act.
The jurisdictional facts on which the appropriate Government may act are the formation of opinion that an industrial dispute exists or is apprehended, which is a subjective one.
That being so the adequacy or sufficiency of the material on which the opinion was formed is beyond the pale of judicial scrutiny.
If the Governments action is impugned by a party it would be open to such a party to show that what was referred was not an industrial dispute and that the tribunal had no jurisdiction to make the award.
If the dispute was an industrial dispute its factual existence and the expediency of making a reference being matters entirely for the Government to decide, it will not be competent for the court to hold the reference bad merely because there was, in its opinion, no material before the Government on which it could have come to an affirmative conclusion on those matters.
[51E 52B] State of Madras vs C. P. Sarathy, referred to.
(iii) The Government does not lack the power to make the reference in respect of the same industrial dispute which it once declined to refer.
The only requirement for taking action under section 10(l) is that there must be some material before the Government enabling it to form, an opinion that an industrial dispute exists or is apprehended.
How and in what manner or through what machinery the Government is apprised of the dispute is hardly relevant.
Merely because ' the Government rejects a request for a reference or declines to make a reference, it cannot be said that the dispute has ceased to exist.
An industrial dispute may nonetheless continue to remain in existence and if at a subsequent stage.
the appropriate Government is satisfied that it is desirable to make a reference the Government does not lack the power to do so nor is it precluded from making the reference on the only ground that on an earlier occasion it had declined to make the reference.
The expression "at any time" clearly negatives that contention.
[53G, 52G, E, H, 53A B] Western India Match Co. Ltd. vs Western India Match Co. Workers Union & Ors., ; followed.
(iv) Nor again is it necessary that there should be some fresh material before the Government for reconsideration of its earlier decision.
It may re consider its decision on some new facts brought to its notice or for any relevant consideration.
Such relevant consideration may include threat to industrial peace by the continued existence of the industrial dispute and that a reference would at least bring the parties to the talking table.
When the Government declined to make the reference the source of power is neither dried up nor exhausted.
It only indicates that the Government for the time being refused to exercise the power but that does not denude the power.
The power to make a reference remains intact.
Similarly refusal 47 to make the reference does not tantamount to saying that the dispute stands resolved.
On the contrary, refusal to make a reference would further accentuate the feelings and a threat to direct action may become imminent and the Government may as well consider the decision to make the reference.
[53H 54A, 54R D] In the instant case it has not been shown that the dispute had ceased to exists and the very existence of the dispute enables the Government to exercise the power under section 10(i).
[54F] Binny Ltd. vs Their Workmen & Anr.
[19721 3 SCR 518 referred to.
(2) There is no substance in the appellant 's contention that The original demand was some one other than the one which was referred to the Industrial Tribunal later.
The Union had espoused the cause.
Of two workmen and the reference was with regard to the termination of services by retrenchment in respect of the same two workmen.
The language or the format in which the demand is couched is hardly decisive of the matter.
The substance of the matter, is as to what is the grievance of the workmen, complained of by them, or espoused by the Union and what the Industrial Tribunal is called upon to adjudicate.
In this case the demand referred to the Tribunal was the same which was espoused by the Union earlier.
[56F G] Sindhu Resettlement Corporation Ltd. vs The Industrial Tribunal of Gujarat & Ors., [1968] 1 scr 515 held inapplicable.
(3) The tenor of the notice served on the workmen clearly indicated that workmen were rendered surplus and they were retrenched.
On the admission of the appellant it was a case of retrenchment.
[60E] State Bank of India vs N. Sundara Money, ; at 165; Management of Hindustan Steel Ltd. vs The Workmen & Ors., ; referred to.
(4) (i) The notice expressly stated that the workmen were retrenched though it simultaneously stated that the action was taken under section 25FFF However on the facts found by Industrial Tribunal, case of closure of undertaking is not made out.
[60D, F] (ii) The expression "undertaking" cannot comprehend an infinitismally small part of a manufacturing process.
While ascertaining the amplitude of the expression 'undertaking.
in the definition of the expression 'industry this Court gave a restricted meaning to it.
While thus reading down the expression, in the context of section 25FFF, it must mean a separate and distinct business or commercial or trading or industrial activity.
[60G H] Bangalore Sewerage Board .
Rajappa; , 227 referred to.
(iii) The case would squarely fall in section 25F and not be covered by section 25FFF, on a specious plea of closure of an undertaking.
As the company had a container making section which was closed a long time back and yet 48 these three workmen were retained, it cannot be said that the painting section was a recognised sub section eligible for being styled as a part of the undertaking.
If such mini classification is permitted it would enable the employer to flout section 25F with impunity.
These workmen appear not to have been employed initially as painters.
They were doing some other work from which they were brought to the painting section.
They could have as well been absorbed in some.
Other work which they were capable of doing.
If painting was no more undertaken as one of the separate jobs, the workmen would become surplus and they could be retrenched after paying compensation as required by section 25F.
To style a job of a particular worker doing a specific work in the process of manufacture as in itself an undertaking is to give meaning to the expression `undertaking which it hardly connotes.
[61F, B D]