judgement:
Appeal No. 620 of 1960.
Appeal by special leave from the judgement and decree dated February 11, 1954, of the former Hyderabad High Court in Second Appeal Suit No. 476/4 of 1954 Fasli.
Gopal Singh and B. section Narula, for the appellant.
A. Banganatham Chetty, A. V. Rangam, A. Vedavali and P. C. Agarwala, for respondent No. 1. 1962.
May 4.
The Judgment of the Court was delivered by VENKATARAMA AIYAR, J.
This is an appeal by special leave against the judgment of the High Court of Hyderabad whereby it affirmed the judgment of the Court of the Additional District Judge of Adilabad dismissing the suit of the appellant.
The facts are that there was a joint family consisting of one Chakkayya and his, younger brother Rajanna.
Chakkayya died in year 1923 leaving 231 behind the appellant his son who it is said was at that time a minor a few months old.
On December 21, 1923, Rama Rao second defendant, sold the lands which are the subject matter of the suit to Rajanna.
It appears that as there was some difficulty in Rajanna getting possession of the pro perties which were stated to have been 'usufructuarily mortgaged to the first defendant, the transaction of sale was cancelled and the same was endorsed on the sale deed.
Thereafter the second defendant executed a fresh sale deed in favour of the first defendant and the latter has ever since continued in possession.
The appellant filed the present suit on February 14, 1943, for recovery of possession of these properties from the first defendant on allegation that the first defendant was in management of the properties belonging to the joint family of Chakkayya and Rajanna and himself, that the sale deed in favour of Rajanna dated December 21, 1923, vested title to the suit properties in the joint family, that the first defendant had entered on the management of these properties also as manager on behalf of the joint family, that Rajanna died in 1930 as a minor, that the first defendant was discharged from the management in 1933, that he had not surrendered possession of the suit properties to the family, but was setting up a title to them in himself on the basis of a sale deed executed by the second defendant subsequent to the sale deed dated December 21, 1923 in favour of Rajanna, but that the said sale deed could confer no title on him, as the second defendant had sold the lands previously to Rajanna, and had no title which he could thereafter convey.
It was further alleged that the plaintiff became a major some time in June 1940 and that the suit for possession was within three years of his attaining majority and not barred by limitation.
The first defendant contested the suit.
He pleaded that he was merely a jawan or servant 232 in the service of the family, that he was not in management of the joint family properties, that the suit lands had been usufructuarily mortgaged to him in 1916 for Rs. 800/ long before they were sold to Rajanna in 1923, that the sale in favour of Rajanna had been cancelled with his consent he having been paid back the consideration, that it was thereafter that the second defendant sold the properties to him, and that he had therefore acquired a good title to them, and that further as he had been in possession of the properties thereafter for over the statutory period in assertion of a title as owner, be had acquired title to them by prescription and that the suit was barred by limitation.
He denied that Rajanna was a minor at the relevant dates as stated in the plain.
On these pleadings the District Munsiff framed the following issues (1) Whether according to the suit (plaint), the suit lands have been sold by defendant No. 2 in favour of Padma Rajanna through registered sale deed dated 17th Bahman 1334 F (corresponding to 21st Dec. 1923) ? (2) Whether as stated by the plaintiff in his suit.
, the family of the plaintiff and Padma Rajanna was joint ? And whether on account of the death of the said Rajanna, the plaintiff is entitled to the suit lands ? (3) Whether the defendant No. 2 has executed the sale deed dated 3 Farwardi 1334 F (corresponding to 4th February 1925 AD) and what is its legal effect on the sale deed dated 17th Bahman 1334 F. (corresponding to 21st December 1923) ? (4) Whether at the time of the execution of the sale deed dated 3rd Farwardi 1334 F (21. 12. 1923) the plaintiff was minor? And whether this suit is within limitation ? 233 To what relief are the parties entitled to ? The learned District Munsiff, Nirmal, who tried the suit held that as the endorsement of tHE cancellation of the sale deed in favour of Rajanna was unregistered, no title passed to the second defendant by reason of that endorsement and that accordingly the sale by him in favour of the first defendant conferred no title on him and further that the suit had been instituted within three years of the plaintiff 's attaining majority and that it was in time and so he decreed the suit.
Against this Judgment and decree there was an appeal by the respondents to the Additional District Court of Adilabad, which held that the plaintiff had not established that he had attained majority within three years of the suit and on the finding the appeal was allowed.
The appellant took the matter in second appeal to the High Court of Hyderabad which agreeing with the District Judge, held that the suit was instituted more than three years after the plaintiff had attained majority and dismissed the appeal.
It is against this Judgment that the present appeal by special leave has been filed.
The first contention that is urged on behalf of the appellant is that the finding that the plaintiff had attained majority more than three years prior to the suit was erroneous.
But there are concurrent findings on what is a question of fact. and we see no sufficient reason to differ from them.
The contention strongly urged by Mr. Gopal Singh in support of the appeal is that the first defendant bad been put in management of all the properties belonging to the plaintiff 's family and that having entered into the possession of the suit lands as manager on behalf of the family, it was not open to him 'to set up a title by adverse possession, unless he first surrendered possession of 234 the properties.
On this point the learned Judges of the High Court held that there was no satisfactory proof that the first defendant had been in management of the properties as agent of the plaintiff and his family.
The contention of the appellant is that there is a large body of evidence in support of the allegations in the plaint that the first defendant was not a mere servant but manager of the properties, that he had not gone into the box and denied them and that under the circumstances it must be held that he entered into possession of the properties as manager and it was not competent for him to set up a claim by adverse possession.
The respondent argues that he was merely a jawan in the service of the family of appellant and that he had nothing to do with the management of the properties and that as there was no evidence worth the name in support of the allegations in the plaint, there was no need for him to enter into the box and give evidence that he was not in management of the land%.
If the fact of this appeal turned on a determination of this question, we should.
on the materials before us, feel considerable difficulty in agreeing with the decision of the learned Judges.
The failure of the first defendant to go into the box would have been sufficient to shift the burden of proving that he was not the manager on to him, Vide Murugesam Pillai vs Manickavasaka Pandara(1) and Guruswami Nadar vs Gopalaswami Odayar (2).
But then it is pointed out by the respondent that the suit lands had come into his possession under a usufructuary mortagage executed by the second defendant in 1916, that there was no allegation that this mortagage was obtained by him while he was the manager of the family properties or on (1) [1917] L.R. 44 I.A. 98.
(2) Mad.
235 behalf of the family, and that when once his possession has been traced to the usufructuary mortgage of 1916, there could be no question thereafter of his having entered into possession of the properties as manager on behalf of the family.
Before us the appellant did not dispute the truth of the usufructuary mortgage in favour of the first respondent nor did he contend that in taking that mortgage the first defendant acted on behalf of the family.
Such a contention would be untenable as at that time Chakkayya the father of the plaintiff and the manager of the joint family was alive.
That being so the question whether the first defendant is precluded as manager from acquiring title by adverse possession does not arise for decision because he entered into possession of the properties in his own right as usufructuary mortgagee.
On the finding reached above that the first defendant entered into possession of the properties as usufructuary mortgagee in 1916, the question is what are the rights of the appellant.
On the basis of the sale deed by the second defendant in favour of Rajanna he would be entitled to redeem the mortgage.
But the present suit is not one for redemption of the mortgage but for ejectment.
and that by itself would be a ground for dismissal of the suit.
But in view of the fact that this litigation had long been pending, we consider it desirable to decide the rights of the parties on the footing that it is a suit to redeem the usufructuary mortgage, without driving the parties to a separate action.
We have now to consider the defence of the first defendant to the suit, treating it as one for redemption.
Now the contention of Mr. Ranganathan Chetty for the respondent Is that he had been in possession of the properties as owner ever since 1923 when the second defendant sold them to him, that he bad thereby acquired a prescriptive title to them, and that the right of the appellant to 236 redeem was thereby extinguished.
It is not disputed that when a person gets into possession of properties as mortgagee, he cannot by any unilateral act declaration of his prescribe for a title by adverse possession against the mortgagor, because in law his possession is that of the mortgagor.
But what is contended is that if the mortgagor and mortgagee subsequently enter into a transaction under which the mortgagee is to hold the properties thereafter not as a mortgagee but as owner that would be sufficient to start adverse possession against the mortgagor if the transaction is for any reason inoperative under the law.
This contention, in our opinion, is well founded.
Though there was at one time a body of judicial opinion that when a person enters into possession as a mortgagee he cannot under any circumstances acquire a title by prescription against the owner, the law is now fairly well settled that he can do so where there is a change in the character of his possession under an agreement with the owner, vide Kanda Sami Pillai vs Chinnabba (1).
Now the question is was there such an arrangement ? The contention of the respondent is that the agreement between Rajanna and the two defendants under which Rajanna received back the sale consideration and made an endorsement cancelling the Bale followed, as part of the transaction, by the sale of the properties by the second defendant to the first defendant would be sufficient to start adverse possession.
The endorsement of cancellation on the back of the sale deed in favour of Rajanna dated December 21, 1923, has been held, as already stated, to be inadmissible in evidence as it is not registered.
The result of it is only that there was no retransfer of title by Rajanna to the second defendent, and the family would in consequence continue to be the owner, and that is why the appellant is (1) Mad.
253. 237 entitled to redeem.
But the endorsement taken along with the sale deed by the second defendant in favour of the first defendant is admissible in evidence to show the character of possession of the latter.
Vide Varatha Pillai vs Jeevanathammal (1).
And that was clearly adverse to the owners.
The answer of the appellant to this contention is that Rajanna himself was a minor at the time when this arrangement is stated to have taken place and that in consequence no title by adverse possession can be founded on it.
We agree that if Rajanna was a minor when he entered into this arrangement that would not operate to alter the character of possession of the first defendant as mortgagee.
The respondent contended that there could be adverse possession against a minor in certain circumstances, and relied on the decision in Sitharama Raju vs Subba Raju(2), in support of this position.
That is not questioned, but the point for decision is whether possession lawful at the inception can become adverse under an arrangement entered into by a minor.
Now a minor is in law incapable of giving consent, and there being no consent, there could be no change in the character of possession, which can only be by consent,.
and not by any unilateral act.
Therefore the crucial point for determination is whether at the time of the cancellation of the sale deed dated December 21, 1923, Rajanna was minor or major.
According to the respondent he was a major and there is evidence also on record in support of this contention.
According to the appellant Rajanna was a minor at that time and he died a minor in 1930.
On this disputed question of fact there has been neither an issue framed nor evidence adduced.
Under the circumstances we think it desirable that the matter should be remanded to the Court of District Munsiff for a fresh inquiry on this question.
The plaintiff should (1) [1918] L.R. 46 I.A. 285.
(2) Mad.
361. 238 on remand be required to suitably amend the plaint so, as to convert the suit into one for redemption of the usufructuary mortgage of the year 1916.
The first defendant will then file his written statement in answer thereto.
An issue will be framed whether Rajanna was a major at the time when the sale deed was cancelled.
If it is held that he wag a major then the possession of the first defendant thereafter would be adverse and on the findings given by the Courts below the suit will have to be dismissed as barred by limitation.
But if it is held that Rajanna was then a minor, then there would be no question of adverse possession and the plaintiff would be the entitled to redeem the mortgage.
The decree of the lower court is accordingly set aside and the matter remanded to the Court of the District Munsiff for fresh disposal as stated above.
Costs incurred throughout in all the Courts will abide the result.
Case remanded.

summary:
In 1961 R executed a usufructuary mortgage of the suit lands in favour of M. Later, in 1923 he executed a sale deed of the same lands in favour of Rajanna, uncle of the appel lant.
The appellant and Rajanna formed a joint Hindu family.
As there was difficulty in obtaining possession by Rajanna, he R and M entered into an arrangement under which the sale deed was cancelled by making endorsements on the back of it and the lands were sold by R to M. Rajanna died in 1930 as a minor, and in 1943 the apppellant brought a suit against M for possession of the lands on the ground that the cancellation of sale deed of 1923 was ineffective as it was not registered and that accordingly the sale deed in favour of M passed no title to him.
M pleaded adverse possession on account of the invalid sale in his favour.
The suit for possession was dismissed on the ground that the appellant had filed the suit more than three years after attaining majority.
Held, that though the suit for possession was time barred the appellant could maintain a suit for redemption if M had not prescribed title by adverse possession.
M who had entered into possession as a mortgagee could acquire title by prescription if there was a change in the character of his possession under an agreement with the owner.
The endorsement of cancellation on the sale deed taken along with the sale deed 230 in, favour of M were admissible to show the character of possession of M.
This arrangement would clearly show that the possession of M was adverse provided Rajanna was not a minor and was capable of giving his consent.
Though, in certain circumstances there could be adverse possession against a minor, possession lawful at the inception could not become adverse under an arrangement with a minor.
A minor was in law, incapable of giving consent, and there being no consent, there could be no change in the character of possession which could only be by consent and not by unilateral action.
Kanda Sami Pillai vs Chinnabba Mad. 253 and Varatha Pillai vs Jeevarathnammal (1918) L R. 46 I.A. 285, relied on.
Sitharama Raju vs Subba Raju, Mad. 361, referred to.


judgement:
Appeal No. 315 of 1961.
Appeal by special leave from the award dated December 29, 1960, of the Industrial Trinal Bihar it Patna in Reference No. 4 of 1960.
C. K. Daphtary, Solicitor General of India.
and Sardar Bhadur, for the appellants.
B.P. Maheshwari, for the respondents.
March 9.
The Judgment of the Court was delivered by GAJENDRAGADKAR,J.
This appeal by special leave, is directed against the order passed by the Industrial Tribunal,Patna, directing the appellant, the Tatanagar Foundry Co., to pay to the respondents, its workmen, 75% of the consolidated wages as compensation for having laid them off for a period of 45 days commencing from December 1.5, 1959.
it is common around that the appellant laid off the respondents for the said period.
The appellant 's case was that it had paid the respondents the statutory compensation for the said lay off as prescribed by s.25C of the Industrial Disputes Act (No. 14 of 1947) (hereinafter called the Act).
The 797 respondents, however, contended that the lay off was not justified and so the statutory compensation paid by the appellant did not satisfy the ends of justice.
It was this dispute between the parties which was referred for adjudication by the Government of Bihar to the Industrial Tribunal on February 9, 1960.
On this reference, the Tribunal has held "that the lay off could not be held to be altogether justified.
" That is why it has awarded compensation to the respondents in excess of the amount statutorily fixed in that behalf.
The appellant contends that the award thus made by the Tribunal is contrary to law Before dealing with the merits of the contentions raised by the appellant, it would be necessary to state some relevant facts which led to the lay off.
The appellant is a Public Limited Company and has its factory in Jamshedpur.
It manufactures cast iron sleepers, pipes, general engineering casting and non ferrous castings in the said factory.
The raw materials mainly required for the manufacture of sleepers are pig iron, coke, limestone and moulding sand.
The Railway Board is the only buyer of sleepers and the sleepers are, therefore, manufactured only on receipt of orders upon tenders from the said Board, and not otherwise.
The normal procedure for procuring raw material was that after an order was received from the Railway Board, the appellant submitted its requirement of pig iron to ,the Iron & Steel Controller of the Government of India who allocates the quantity for the said commodity to the various manufactures, such as Tata Iron & Steel Co. Ltd. and Indian Iron & Steel Co. Ltd. Formerly, supply of pig iron used to come from the said two concerns to the appellant and the appellant used to ' pay cash to Tata Iron & Steel Co. Ltd. for the pig iron supplied by it and by a Letter of credit to the Indian Iron & Steel Co. Ltd. on which the said Company used to supply the raw material made by it.
In 1959, both the companies 798 stopped supply of pig iron in spite of the order issued in that behalf by the Controller, and they wrote to the appellant suggesting that the appellant should request the Controller to cancel his order and place the same with some other suppliers.
Correspondence followed between the said companies and the appellant and finally in November, 1959, the appellant was informed by the said companies that they could not supply its requirements of raw material.
In June, 1959, the Bhilai Steel Works made their first shipment of pig iron addressed to, the appellant.
In August, 1959, the said Works despatched some wagons of pig iron to the appellant, but out of 20 wagons of the consignment, 14 were lost completely, and the rest misdelivered and were subsequently found somewhere in Gomoh and some in Tatanagar and they never reached the appellant in time.
In May, 1959, the appellant arranged for Letter of Credit for a sum of Rs. 1,00,000/ for the Bhilai Steel Works.
In August, there was a supply of 440 tons and in September, followed a supply of 36 wagons Containing pig iron to the extent of 20 to 21 tons each roughly.
In all, this latter supply came to about 760 tons.
In the two subsequent months, no supply was received from Bhilai.
The Letter of Credit which the appellant had opened for Bhilai Steel Works was revolving, with the result that as soon as one transaction was completed, the said letter was ready for the subsequent transaction.
The effect of this revolving letter was that the value of credit of Rs.1,00,000/ continued to be outstanding all the time.
In spite of this revolving letter, the Bhilai Steel Works failed to supply pig iron in the two months October and November.
The appellant reminded the Works that no supply of pig iron was received from them and yet no advice of any despatch of pig iron was received from the 799 Works after July 27, 1959.
Even the 20 wagons which had been sent in August and September did not arrive at the factory.
These wagons, it was later learnt, had been delivered to K. P. Docks and some other destinations.
In regard to the supply of pig iron from Rourkela, the appellant arranged for finance on cash basis.
In fact, between August and December a total advance of Rs. 1,75,000/ was made to the Rourkela Steel Works.
A supply of pig iron worth about Rs. 1,64,000/ was received by the appellant, but the balance of Rs. 11,000/ was still outstanding.
,In addition to the cash advances, the appellant also opened a Letter of Credit for Rs. 1,00,000/ in November, 1959, for financing the purchase of steel from the said Works.
As early as 1959, TISCO informed the appellant that it regretted that it would not be possible for it to supply the requirements of the company regularly, while in regard to the supply from IISCO, the position was still worse.
The appellant kept its employees and the Assistant Labour Commissioner fully informed of these unfortunate developments from time to time.
Both the Assistant Labour Commissioner and Mr. John, President of the respondents ' Union, did what they could by moving the Government to assist the appellant in securing the raw material.
Even so, when the situation did not show any signs of improvement and the appellant found that no raw material was available with which its foundry could carry on the manufacture of sleepers, it issued a notice on December 15, 1959, and laid off the ' workers of the Sleeper Factory.
This lay off con tinued until September, 11, 1960 and from September 12, 1960, the appellant closed the Sleeper Foundry department and issued notice of retrenchment.
Subsequently, retrenchment compensation was duly paid to the workmen who had been retrenched.
800 That, in short, is the background of the lay off, the validity of which formed the subject matter of the present reference.
It appears that before the Tribunal it was urged by the respondents that the appellant had deliberately brought about a situation which led to the lay off in order to divert the relevant orders for sleepers to its Belur factory.
The argument was that at Belur, the appellant gets its work done at cheaper cost with the help of contract labour.
Now, if this contention had been established then it would clearly have been a case of malafides on the part of the appellant and a claim for additional compensation may have been justified.
But the Tribunal has rejected this contention and has hold that no evidence had been adduced to prove such a malafide intention on the part of the appellant.
It was also urged by the respondents that even in the absence of pig iron, the manufacture of sleepers could have been carried on by utilising a substitute, and in support of this case, four witnesses were examined by the respondents.
The Tribunal has rejected this case also.
It has found that the evidence given by the four witnesses was unreliable and unsatisfactory and the statement made by the General Manager in cross examination on this point was sufficient to show that in the absence of pig iron, castings with scrap iron and tin could not have been made.
In fact, the General Manager categorically stated that the appellant ' had not casted any sleeper without pig iron at any time.
Thus, the alternative plea raised by the respondents to suggest that if the appellant had so desired, it could have avoided to lay off its workmen, has also been rejected by the Tribunal.
The Tribunal, however, was inclined to take the view that if the management had been more foresighted, it could have avoided the unfortunate 801 position which it had to face at the relevant time and because the Tribunal thought that the situation which faced the appellant at the relevant time was partly due to its negligence, it reached the final conclusion that the lay off was not altogether justified.
The Tribunal 's view appears to be that if reasonable care had been exercised by the appellant, the situation could have been avoided.
It is this part, of its finding that is seriously disputed before us by the appellant.
Under a. 2 (kkk), "lay off" means, inter alia, the failure, or inability of an employer on account of shortage of raw materials to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.
As we have already seen, there is no doubt that raw materials wore not available to the appellant at the relevant time and so, the lay off which is the subject matter of the present dispute satisfies the test prescribed by the definition.
Section 25C provides for the right of workmen laid off for compensation, and it is common ground that compensation, equal to 50% of the total of the basic wages and dearness allowance, as therein prescribed has been paid by the appellant to the respondents.
The issue referred to the Tribunal was whether the action of the management in laying off the workmen was justified.
If not, to what relief were, the respondents entitled ? In other words, the reference shows that it was only if the Tribunal came to the conclusion that the lay off wag not justified that the question of considering what additional compensation should be paid to the respondents could arise.
If the lay off is justified and it satisfies the requirements of the definition under section 2(kkk), the only relief to which the workmen laid off are entitled is the statutory relief prescribed by a. 25C.
There is no doubt or dispute about this position.
802 It is also not in dispute that if the lay off is malafide in the sense that the employer has deliberately and maliciously brought about a situation where lay off became necessary, then it would not be a lay off which is justified under section 2(kkk) and the relief provided to the laid off workmen under a. 25C would not be the only relief to which they are entitled.
Malafides of the employer in declaring a lay off really mean that no lay off, as contemplated by the definition, has in law taken place and so, a finding as to malafides of the employer in declaring a lay off naturally takes the lay off out of the definition of section 2(kkk) and as such a. 25C cannot be held to be applicable to it so as to confine the workmen 's right to the compensation therein prescribed.
If the lay off has been declared in order to victimise the workmen or for some other ulterior purpose, the position would be the same.
It would Dot be a lay off as contemplated by a. 2(kkk).
But when dealing with a lay off like the one with which we are concerned in the present appeal it would not be open to the Tribunal to enquire whether the appellant could have avoided the lay off if he had been more diligent, more careful or more far sighted.
That is a matter relating to the management of the undertaking and unless malafides are alleged or proved, it would be difficult to assume that the Industrial Tribunal has jurisdiction to sit in judgment over the acts of management of the employer and investigate whether a more prudent management could have avoided the situation which led to lay off.
The danger involved in permitting such jurisdiction to the Tribunal is illustrated by the present award itself.
The Tribunal has found that the appellant was in financial difficulties at the relevant time ; it has found that the appellant was not actuated by any malafide intention, it has come to the conclusion that the lay off was not the result of any uleriort 803 motive, and yet it has finally come to the conclusion that if the affairs of the appellant it had been better managed and more foresight had been shown by the appellant prior to the time when the crisis was reached, pig iron could have been secured and lay off could have been avoided.
Apart from, the fact that this conclusion does not appear to be borne out by any evidence on record, it seems to us that the Tribunal exceeded its jurisdiction in trying to decide whether better.
management could have avoided the crisis.
The appellant is, no doubt, expected to manage its affairs prudently, but it would, we think, not be reasonable or fair to hold that if the employer is faced with a situation under which for lack of raw materials he has to lay off his workmen, it is necessary that he must submit to an enquiry by the Industrial Tribunal about the prudence of the management and the forethought displayed by it in anticipating and avoiding the difficulties.
That is why we think in embarking upon an enquiry as to whether the appellant had shown sufficient foresight in managing its affairs, the Tribunal has exceeded its jurisdiction.
Besides, as we have just indicated, its finding on the question of negligence is not supported by any evidence on record nor by probabilities in the case.
In that connection, it is significant that subsequently the section in question has been closed and the retrenched workmen have been paid retrenchment compensation due to them.
The result is, the appeal succeeds and the order passed by the Tribunal for the payment of compensation of 75% of the consolidated wages is set aside.
There would be no order as to costs.
Appeal allowed.

dataset_name: IN-Abs

summary:
The appellant has its factory at jamshedpur.
It manu factures cast iron sleepers, pipes, etc., in the said factory.
The raw materials mainly required for the manufacture of sleepers are pig iron, coke, limestone and moulding sand.
The Railway Board is the only buyer of sleepers, and the sleepers are manufactured only on receipt of orders from the said Board and not otherwise.
Inspite of its best efforts to secure the raw materials in 1959, the appellant failed to secure the same.
As the appellant found that the manufacture of sleepers could not be carried on, it issued a notice and laid off the workers of the sleeper factory.
The lay off continued from December 15, 1959 to September 11, 1960.
On September 12, 1960, the appellant closed the Sleeper Foundry Department and issued notice of retrenchment.
Retrenchment compensation was also paid to the workmen retrenched.
The appellant paid the respondents the, statutory compensation for the lay off period as prescribed by section 25C of the .
However, the respondents contended that the lay off was not justified, The dispute between the parties was referred for adjudication by the Government of Bihar to the Industrial Tribunal.
The Tribunal found that the appellant was in financial difficulties at the relevant time, the appellant was not actuated by any malafide intentions and the lay off was not the result of any ulterior motive.
However, it held that if the affairs of the appellant had been better managed and more foresight had been shown by the appellant prior to the time when the crisis was reached, pig iron could have been secured and lay off could have been avoided.
Under the circumstances, the Tribunal held that the lay off could not be held to be altogether justified, and awarded compensation to the respondents in excess of the amount fixed by the statute 796 Held, that the lay off was justified as raw materials were not available to the appellant at the relevant time.
The only relief to which the workmen were entitled was the statutory relief prescribed by section 25C.
If the lay off is malafide in the sense that the employer has deliberately and malaciously brought about a situation where lay off becomes necessary, it is not a lay off which in justified tinder section 2(kkk) and the relief provided under section 25C is not the only relief to which the workmen are en titled.
The malafides of the employer in declaring lay off really means that no lay off has in law taken place and a finding as to the malafide of the employer in declaring a layoff takes the lay off out of the definition of section 2(kkk).If lay off is declared in order to victimise workmen or for some, ulterior purpose, the position in the same.


judgement:
Appeal No. 432 of 1961.
Appeal by special leave form the judgment and order dated May 15 1959 of the Madhya Pradesh High Court in Miscellaneous Petition Nos.
301 of 1958 and 83 of 1959.
B. Sen and section N. Mukerji for the Appellant.
B. R. L. Iyengar and A. G. Ratnaparkhi for Respondent No. 1.
I. N. Shroff, for Respondents Nos. 2 and 4. 1962.
July 27.
The Judgment of the Court was delivererd by DAS GUPTA, J.
When under the Standing Orders of a Company the Company is empowered to take disciplinary action against an employee by proceeding in the prescribed manner can that power be legally delegated by the Company to any of its officers ? That is the principal question raised in this appeal.
The appellant is Company incorporated under the Indian Companies Act having its registered office at 12, Mission Row, Calcutta.
It is ' engaged in the generation and distribution of electricity at Jabalpur.
The Company 's office at Jabalpur is in charge of a Resident Engineer.
By a power of attorney given by the appellant company on June 26, 1957, Mr. Leonard Shell Macleod, the Company 's Resident Engineer at Jabalpur, was appointed "the company 's true and lawful attorney for and in the name of the Company to do exercise and perform all or any of the acts, matters, 455 discretions and things" set out in 11 clauses.
The 10 th clause provided that "subject to the Standing Orders from time to time given by the Company to appoint, dismiss, suspend or terminate the services of any of the employees of the Company at Jabalpur.
" On November 12, 1957, the respon dent Sambhu Prasad Srivastava was served with a charge sheet under the signature of Mr. Macleod in which it was alleged that he had substituted 13 coils of V.I.R. cable in the stores of the Company for the same quantity of cable of various makes from the local market, Sambhu Srivastava 's reply to this charge was that when the shortage of 13 coils came to his notice on the eve of the audit he remonstrated with his subordinates who actually handled these articles and that what he did was done in the best interests of the Company and that he never acted with any dishonest intention.
An enquiry was then held by the Resident Engineer and ultimately on January 16, 1958, the Resident Engineer issued a letter to him in these terms : "With reference to charge sheet dated 12th November, 1957, and the subsequent investigations in the case against you,, please note that the matter has been very carefully considered, and in accordance with the interview which you had with our Chief Engineer, Mr. J. W. Fawcett, on the morning of the 15 th January, 1958, we ;hereby notify you that the Company does not find it possible to. retain yo ur services.
Therefore, you are hereby discharged from the service of the Company, with immediate effect.
Please call at the Company 's office on the 17th instant,to receive final settlement of your dues from the Company.
" 456 Srivastava then applied to the Assistant Labour Commissioner, Jabalpur, alleging that this order was in contravention of the provision of the C. P. & Berar Industrial Tribunal Settlement Act and of the Standing Orders as the powers of the Company under the Standing Orders to hold the enquiry can be exercised only the Managing Director.
It was also alleged that the order though in from an order for discharge was really an order of dismissal and that cls.
14, 18 19 and 20 of the Standing Orders had been violated.
The Company pleaded in its reply that under the 'power of attorney the Resident Engineer had the power to hold an enquiry and take disciplinary action against an employee and the action by him should be considered in law to amount to an action by the Company.
It was pleaded that the provisions of the Standing Orders had not been violated.
The Assistant Labour Commissioner made an order on September 10, 1958, ordering reinstatement of the respondent without break in his service but without payment of back wages.
The State Industrial Court which was moved both by the Company and by the employee held that the order of discharge was in substance an order of dismissal, and that misconduct alleged was not proved, and that in any case the Resident Engineer was not empowered to hold an enquiry and to issue an order of discharge.
It refused to interfere with the order passed by the Assistant Labour Commissioner and rejected both the revisional applications.
Both parties then moved the Madhya Pradesh High Court for relief under article 226 of the Constitution.
The High Court held that the powers.
under cl.19 of the Standing Orders could not be delegated to the Resident Engineer and also that th 457 general right reserved to the Company under cl. 20 of the Standing Orders was meant to be exercised by it and was not covered by the delegation under cl. 10 of the power of attorney.
The High Court seems to have thought also that the order made by the Resident Engineer was not Under el. 20 of the Standing Orders.
Accordingly, the High Court refused to interfere with the order of reinstatement and dismissed the Company 's application under article 226.
It allowed the employee 's application under article 226, being of opinion that the Assistant Labour Commissioner had no discretion in the matter of back wages and was bound to order payment of back wages as soon an order of reinstatement was made.
Before considering the question whether the Company could delegate its power to take disciplinary action against its employees it will be proper to clear the ground on the question whether the order was made under cl.19 or cl. 20 of the Standing Orders.
Clause 18 of the Standing Orders mentions inter as that theft, fraud, or dishonesty in connection with the Company 's business or property will be treated as misconduct.
Clause 19 provides various penalties for misconduct.
The substance of these provisions is: that an employee who is adjudged by the Company on examination of the employee and of facts to be guilty of misconduct is liable to be summarily dismissed without notice or compensation in lieu of notice or alternatively to be suspended for a period not exceeding fourteen days; that the order of dismissal or suspension shall be in writing over the signature of an officer duly authorised for this pur pose, and shall also briefly mention the reason on.
which it is based, and that no order for dismissal or suspension under this Standing Order shall be made unless the employee is informed in writing of 458 the misconduct alleged against him and that he shall be given an opportunity to produce evidence in his defence.
Clause 20 does not deal with dismissal or suspension but provides that "the Company has at all times a general right to discharge an employee from service not only for proved misconduct but also when the employer has lost confidence in the employee.
" Clause 21 provides for notice of censure to be given for certain acts or omissions.
An examination of these provisions shows that for an order of dismissal under cl. 19 to be made a special procedure is to be followed and when it is made the employee is not entitled to any compensation.
Examining now the order made on January 16, 1958, we find that while cl. 20 has not been mentioned it does not say that the employee has been found guilty of misconduct but merely states that " 'the Company does not find it possible to retain (this employee 's) services" and reference is made to the investigations in the case against him and to an interview he had with the chief Engineer, Mr. J. W. Fawcett, on the morning of the 15th January, 1958.
The only reasonable view to take of this order, in our opinion, is that this order was being made under cl. 20 on the ground that the employer had lost con fidence in the employee and was in fact and in law an order of discharge as distinct from an order of dismissal or suspension.
It appears to us that while the Resident Engineer who held the enquiry may, have been satisfied that an act of misconduct 'for which the employee was liable to dismissal had been proved he took a merciful view of has conduct in view of his previous clean record, and proceeded accordingly to act under cl. 20 of the Standing Orders instead of proceeding under cl. 19.
This is a case in which the employer has acted, fairly and even generously in terminating the cases of the employee under el.
459 The question remains whether the Resident Engineer could take action under cl. 20.
The employee 's argument, which found favour with the High Court was that it was the Company alone which could take action under clause 20 and the Resident Engineer in his capacity as the Resident Engineer apart from anything else, was not competent to take action under el.
20 For, cl. 20 empowers the Company and not the Resident Engineer as such to discharge an employee on the ground that the employer had lost confidence in him, In the present case, however, it was not the Resident Engineer in his capacity as the Resident Engineer that made the order of discharge.
Clearly in making the order of discharge he was acting on the basis of the power of attorney executed in h0is favour on June 26, 1957.
Under cl. 10 of the power of attorney he had power "subject to the Standing Orders from time to time given by the Company to appoint, dismiss, suspend or terminate the services of any of the employees of the Company at Jabalpur.
" The power of the Company under el.
19 of the Standing Orders to dismiss or suspend and its power under el. 20 to discharge an employee are both covered by cl.10 of the power of attorney, If there be nothing in law to prevent these powers being delegated to the Resident Engineer there could be no escape from the conclusion that the exercise of the power cl. 20 in the present case by the Resident Engineer amounted in law to an exercise of the power by the Company itself, Is there anything in law which bars such delegation? We are unable to find any.
It is obvious.
and admitted that when a Company has to exercise its powers in connection with the management of its business it is not all the share holders of the Company that have to meet to exercise the power.
How the Company will regulate its business is prescribed in its Articles of Association.
It is nobody 's 460 case that in the Articles of Association of the Jabalpur Electric Supply Co., there is anything barring the delegation of the disciplinary powers of the Company to any of its officers.
In law therefore delegation of the functions of the Company may properly be made having regard to the exigencies.
of the business and the Articles of Association.
It cannot be reasonably disputed that where the Head Office of the Company is at Calcutta and the main business is to be carried on at Jabalpur the exigencies of the business do require delegation of the Company 's power to take disciplinary action against its employees to a responsible Official like the Resident Engineer, But whether or not the Company might have done without such delegation is a matter which it is unnecessary for us to enquire into.
The delegation was made and, neither on principle nor on authority is it possible to say that the delegation was against the provisions of law.
Nor can we see that the words 'subject to the Standing Orders from time to time given by the Company" with which cl. 10 of the power of attorney opens affects the delegation.
On a proper interpretation of these words their only effect is that in exercising the power to appoint, dismiss, suspend or terminate the services of the employees at Jabalpur the delegate cannot do anything beyond what the company itself can do under the Standing Orders.
On no reasonable construction of the words can they mean that the delegate cannot exercise these powers at all, because under the Standing Orders the Company itself is given these powers.
Whether it is the power to take action under cl.19 or under cl.20 of the Standing Orders the delegate can exercise these powers under cl. 10 of the power of attorney in the same way as if the delegate was the Company itself.
461 We therefore hold, disagreeing with the High Court, and the Courts below$ that the order of discharge made by the Resident Engineer was in exercise of the power validly delegated to him and that there, has been no breach of the Standing Orders by such action, We therefore allow the appeal, set aside the order passed by the High Court and direct that the appellant 's application under article 226 of the Constitution be allowed and the order made by the Assistant Labour Commissioner dated September 10, 1958, ordering, reinstatement of the respondent, Sambhu Prasad Srivastava be set aside.
There will be no order as to costs.
Appeal allowed.

summary:
The appellant company had its Head Office in Calcutta generated electricity for distribution at Jabalpur.
By cl. 10 of the power of attorney executed by it, it authorised its Resident Engineer at Jabalpur, "subject to the Standing Orders from, time to time, given by the Company to appoint, dismiss, suspend or terminate the services of any of the employees of the Company at jabalpur".
The respondent was charge sheeted and after enquiry discharged by the Resident Engineer.
He made an application to the Assistant Labour Commissioner who ordered his reinstatement without break in his service by without payment of back wages.
The State Industrial Court, on revision applications by both the parties held that the Resident Engineer was not empowered to hold the enquiry and to issue an order of discharge and refused to interfere.
Both the parties moved the High Court under article 226 of the Constitution.
The High Court took the view that the powers of dismissal and suspension under cl. 19 of the Standing Orders and the general right to discharge an employee under cl. 20 of the Standing Orders could not be, and latter powers had not actually been, delegated to the Resident Engineer and allowed the respondent 's application with back wages.
Held, that the delegation of power by the power of attorney was vailed in law and covered powers both under cl. 19 and cl. 20 of the Standing Orders.
There was nothing in law, or in the Articles of the Association of the Company that forbade such delegation and the.
company therefore, could, delegate the powers to meet the exigencies of its business .
The opening words of cl. 10 of the power of attorney did not mean that the delegate could not at all exercise the powers since under the Standing Orders the company alone 454 could do so.
Their effect is that in exercising these powers the delegate cannot do anything that the company could not do under the Standing orders.