judgement:
Civil Appeal No. 1440 of 1979.
Appeal by special leave from the judgment and order dated the 15th November, 1978 of the Allahabad High Court in Civil Misc.
Writ No. 8736 of 1978.
R.K. Garg, Manoj Swarup and Miss Lalita Kohli for the Appellant.
Yogeshwar Prasad, and Mrs Rani Chhabra, for the Respondent.
The Judgment of the Court was delivered by PATHAK, J.
The appeal by special leave is directed against a judgment of the Allahabad High Court dismissing a tenant 's writ petition arising out of proceedings consequential upon an order of ejectment.
The bungalow, 16 D, Beli Road, Allahabad, was owned by Raj Kumar Sinha, father of the third respondent, Kailash Shanker Sinha.
In February 1965, the bungalow was allotted to the appellant, Syed Asadullah Kazmi, and he was accordingly treated as the tenant of the premises.
At the time, Raj Kumar Sinha, with his family, including the third respondent, occupied another house at 14 D, Beli Road, Allahabad.
In October 1973, the third respondent applied for the release of the bungalow 16 D, Beli Road, Allahabad, now described as 26, B.K. Banerjee Road, Allahabad.
The attempt failed.
A fresh application was made in April, 1975.
It was allowed by the Prescribed Authority on 24th May, 1976 after overruling an objection filed by the appellant.
The appellant appealed and the appellate authority by its order dated 25th March, 1977 modified the order of the Prescribed Authority inasmuch as a portion only of the building was released in favour of the third respondent and the appellant was permitted to continue in the remaining portion, and the Prescribed Authority was directed to divide the bungalow accordingly.
The appellant filed a writ petition in the High Court against the order of the Appellate Authority, but the writ petition was dismissed.
Against its dismissal he applied in this Court for special leave to appeal and on 3rd January, 1978, that petition was also dismissed.
To give effect to the direction of the Appellate Authority, the Prescribed Authority meanwhile initiated proceedings for demar 79 cation of the premises and a partition scheme was prepared.
During the preparation of the partition scheme, Raj Kumar Sinha, the third respondent 's father, died.
On 22nd September, 1978, the appellant filed an application before the Prescribed Authority bringing the fact of this death to its notice and praying that the partition scheme should not be prepared.
The Prescribed Authority rejected the application.
Appeal by the appellant was dismissed by the Appellate Authority on the ground that the order dated 25th March, 1977 directing a division of the premises had become final and the controversy could not be re opened.
The appellant then filed a writ petition before the High Court, and the High Court has maintained the view taken by the Appellate Authority and dismissed the writ petition by its judgment dated 25th November, 1978.
We are of opinion that the High Court is right.
Plainly, the order dated 25th March, 1977 of the Appellate Authority releasing a portion of the premises in favour of the third respondent and leaving the remaining portion in the tenancy of the appellant acquired finality when the proceeding taken against it by the appellant failed.
The order having become final, the Prescribed Authority was bound to give effect to it.
In doing so, the Prescribed Authority was not acting outside its jurisdiction or contrary to law.
The application moved by the appellant before the Prescribed Authority requesting it to take into account the death of Raj Kumar Sinha was misconceived, because it did not lie with the Prescribed Authority to reopen proceedings which had been taken to the highest Court and had become final.
It is true that subsequent events must be taken into account by a statutory authority or court when considering proceedings arising out of landlord 's petition for ejectment of a tenant on the ground of the landlord 's personal need.
But in the present case, the order for release of a portion of the accommodation required finality before the death of Raj Kumar Sinha and the controversy concluded by it could not be reopened, The appellant has vehemently urged that being the highest court of the land it is open to us to reopen the proceeding for release initiated by the third respondent.
We do not think we can.
The present appeal is limited to the question which arose before the Prescribed Authority on the application of the appellant after the proceedings for release had acquired finality and we must be confined to the consideration of that question alone.
We cannot reopen that which has become final after this court dismissed the special leave petition of the appellant.
We may point out that we have been referred to section 24 of the U.P. Urban 80 Building Act, 1972 in support of the contention that the Prescribed Authority retains control over ejectment proceedings, but we are not impressed by that contention.
The appeal fails and is dismissed with costs.
section R. Appeal dismissed.

summary/full:
In February 1965, Bungalow No. 16 D, Beli Road (now 26 B.K. Banerjee Road), Allahabad was allotted to the appellant.
On an application made in April 1975 the prescribed authority allowed, on 24th May, 1976, the application directing the release of the bungalow to the landlord.
On appeal the appellate authority by its order dated 25th March, 1977 modified the order by releasing only a portion of the building and by permitting the appellant to continue in the remaining portion with a direction to the prescribed authority to divide the bungalow accordingly.
The said order dated 25th March, 1977 became final, since the writ petition challenging the said order was dismissed.
On the death of the landlord the appellant filed a fresh application before the prescribed authority not to proceed with the partition scheme.
Since the prescribed authority refused to take note of this subsequent event, the issue has come up before this Court by way of special leave.
Dismissing the appeal, the Court ^ HELD: 1.
The order dated 25th March, 1977 of the appellate authority releasing a portion of the premises in favour of the third respondent and leaving the remaining portion in the tenancy of the appellant acquired finality when the proceedings taken against it by the appellant failed.
The prescribed authority was bound to give effect to that final order and was not acting outside its jurisdiction or contrary to law.
[79 C D] 2.
It is true that subsequent events must be taken into account by a statutory authority or court when considering proceeding arising out of a landlord 's petition for ejectment of a tenant on the ground of the landlord 's personal need.
But in the present case the order for release of a portion of the accommodation acquired finality before the death of the landlord and the controversy concluded by it could not be reopened now.
[79 E F] 3.
The present appeal being limited to the question which arose before the prescribed authority on the application of the appellant after the proceedings for release had acquired finality, it is not open even to the Supreme Court, to reopen the proceeding for release.
[79 G H] 78


judgement:
ivil Appeal No. 1665 and 1666 of 1970.
From the order dated the 25th July, 1968 of the Punjab and Haryana High Court in LPA Nos.
230 & 240 of 1968.
M.S. Dhillon for the Appellant in both the appeals.
Tirath Singh Munjral, G.K. Arora, S.S. Munjral and Gautam Bannerjee for the Respondents in both the appeals.
The Judgment of the Court was delivered by KOSHAL J.
By this judgment we shall dispose of Civil Appeals Nos.
1665 and 1666 of 1970 in which common questions of law have arisen for determination by this Court.
The facts leading to the two appeals are undisputed and may be briefly stated thus.
Licences to run liquor vends in various parts of Punjab during the financial year 1965 66 were sold by public auction shortly before the 1st April, 1965.
Auctions were held at numerous places subject to identical conditions which were supplied to the bidders in writing.
Condition No. 8 which is material for our purposes is reproduced below: "That the licensee shall lift each month the proportionate quota for the month fixed for his vend (s) or deposit still head duty realisable thereon.
In the event of any deficiency in the amount of still head duty realisable from the lifting of the full proportionate quota due to the short lifting of the quota by the licensee or non deposit of the amount of the still head duty, the said deficiency may be realised from the amount of security deposited by 689 him at the time of grant of licence.
The resulting deficiency in the amount of security shall be made good by the licensee within 7 days of such adjustment.
In case the short lifting of proportionate quota or short deposit of still head duty continues for two consecutive months or the licensee fails to make up the deficiency in the amount of security within the prescribed period of 7 days, his licence may be cancelled in addition to the recovery of deficiency in still head duty.
" Ajudhia Nath who figures as respondent No. 1 in each of the two appeals and who carries on business of selling country liquor either in his own name or in the name and style of M/s. Ajudhia Nath Bal Mukand (a business concern arrayed as respondent No. 2 in Civil Appeal No. 1665 of 1970) was the highest bidder for the auctions pertaining to 5 villages situated in the district of Amritsar and a couple of villages in Ferozepur district.
Accordingly the auctions were sanctioned in his favour and he was granted the necessary licences under the relevant provisions of the Punjab Excise Act (hereinafter referred to as the Act) and the rules framed thereunder.
The licensee started his liquour selling business in the said seven villages on the 1st April, 1965.
By the close of the financial year 1965 66, however, he was unable to lift the minimum quota of country liquor and also failed to deposit the still head duty which became payable by him under condition No. 8 above extracted.
He made applications claiming relief in the matter of payment of sums which had fallen due and such relief was granted to him in part by the Excise & Taxation Commissioner, Punjab, on the ground that sales of country liquor had been adversely affected by reason of the movement of population in the border areas of Punjab on account of the hostilities which broke out between India and Pakistan in the month of September 1965.
Not satisfied with the relief so granted Ajudhianath filed two petitions under article 226 of the Constitution of India before the High Court of Punjab and Haryana claiming, inter alia, that still head duty was an excise duty which could be levied only on manufacture of goods and which he was not liable to pay by reason of the admitted fact that he was not a manufacturer of liquor.
A grouse was also made by him of the fact that the applications claiming relief had been decided without affording to him an opportunity of being heard.
One of those petitions (Civil Writ Petition No. 2034 of 1966) related to 690 vends functioning in the two villages of Ferozepur District, while the other (Civil Writ Petition Nos 2035 of 1966) covered the 5 vends located in the 5 villages of Amritsar District.
The petitions were allowed by a single order dated the 9th May, 1967 passed by D.K. Mahajan, J., on the sole ground that a similar petition (Civil Writ Petition No. 2021 of 1966) had been allowed by Gurdev Singh, J., on the 27th March, 1966.
The proceedings for the recovery of the short fall in the deposit of still head duty by Ajudhia Nath which had been initiated by the State of Punjab and its concerned officers (appellants Nos. 1 to 4 in each of the appeals before us) were quashed and the Excise and Taxation Commissioner, Punjab (appellant No. 2 in both the appeals) was directed to dispose of the "cases" of the respondents "in accordance with law after hearing the petitioners".
D.K. Mahajan, J., adopted all the reasons on which Gurdev Singh, J., had based his order above mentioned.
Letters Patent Appeals preferred by the 4 appellants to the Division Bench of the High Court were summarily dismissed by Mehar Singh and Tuli, JJ., for the reason that a Letters Patent Appeal against the judgment of Gurdev Singh, J., above mentioned had met the same fate.
It is against the judgment of the Division Bench (which is dated the 29th August, 1969) that each of the appeals before us has been filed.
Mr. Dhillon, learned counsel for the appellants had drawn our attention to The State of Punjab vs Balbir Singh and Others, which reversed the judgment of Gurdev Singh, J., mentioned above and has contended that the very basis of the impugned judgment has consequently fallen to the ground.
The contention is correct.
As pointed out in Balbir Singh 's case (supra) the judgment of Gurdev Singh, J., in Civil Writ Petition No. 2021 of 1966 had proceeded merely on the ground that the petitioner firm therein had not been given an opportunity of being heard in relation to the demand notice issued to it for payment of the still head duty on the entire minimum quantity of liquor which that firm was required to lift under the licence.
In differing with the view 691 expressed by Gurdev Singh, J., this Court made a reference to the following observations of Chandrachud, J., (as he then was) in Har Shanker and Others vs The Dy.
Excise & Taxation Commissioner and Others which was followed in Shyam Lal vs State of Punjab "The announcement of conditions governing the auctions was in the nature of an invitation to an offer to those who were interested in the sale of country liquor.
The bids given in the auctions were offers made by prospective vendors to the Government.
The Government 's acceptance of those bids was the acceptance of willing offers made to it.
On such acceptance, the contract between the bidders and the Government became concluded and a binding agreement came into existence between them.
The successful bidders were then granted licences evidencing the terms of contract between them and the Government, under which they became entitled to sell liquor.
The licensees exploited the respective licences for a portion of the period of their currency, presumably in expectation of a profit.
Commercial considerations may have revealed an error of judgment in the initial assessment of profitability of the adventure but that is a normal incident of the trading transactions.
Those who contract with open eyes must accept the burdens of the contract along with its benefits.
The powers of the Financial Commissioner to grant liquor licences by auction and to collect licence fees through the medium of auctions cannot by writ petitions be questioned by those who, had their venture succeeded, would have relied upon those very powers to found a legal claim.
Reciprocal rights and obligations arising out of contract do not depend for their enforceability upon whether a contracting party finds it prudent to abide by the terms of the contract.
By such a test no contract could ever have a binding force." and concluded that the demand for the short fall in still head duty was based on the term of a binding contract and that it sought to enforce the liabilities arising out of mutually agreed conditions of auction.
Such a demand, in the opinion of this 692 Court, could not be equated with a notice requiring the liquor vendor to show cause why his licence should not be cancelled.
In making this distinction this Court further relied upon State of Punjab vs Mulkh Raj and Co. wherein it was observed: "It was also held there that a cancellation of the licence under section 36 of the Punjab Excise Act, 1914, had to take place quasi judicially after due service of the notice on the licensee to show cause why it should not be cancelled.
Although, the merits of the last mentioned proposition need not be examined by us as it rests on a sound footing, yet, we find it difficult to uphold the order that the demand for a sum of Rs. 36,636.
On account of short fall should also be quashed on account of non compliance with rules of natural justice in cancelling the licence in proceedings under section 36 of the Act.
We think that the two liabilities were erroneously considered by the High Court to be inextricably linked up. . . . . . .
We do not think that, even if the respondent ought to have been given a hearing before cancelling the licence, this would dispense with his liability to deposit the amount of balance of the licence fee or invalidate the notice of demand for it." Thus, the proposition is by now well settled that although an opportunity of being heard has to be given to a liquor vendor when his licence is sought to be cancelled, the same principle of natural justice does not come into play when the demand is merely for payment of a sum becoming due under the conditions subject to which the licence was granted, and this proposition fully covers these appeals.
The demands for payment of the amount of the still head duty which had become due under the contracts accepted by the respondents and had remained unpaid were demands arising under condition No. 8 above extracted and had, therefore, resulted from the terms of those contracts.
No question of affording to the respondents any opportunity of being heard thus arises and the impugned judgment, is, therefore, liable to be reversed.
693 4.
Faced with the above situation, Shri Munjral, learned counsel for the respondents, raised the following two contentions: (a) Still head duty is a duty of excise which could only be levied on a manufacturer and not on a mere vendor of goods manufactured by others.
(b) If the still head duty mentioned in condition No. 8 above extracted cannot be regarded as a duty of excise, it nevertheless amounts to a tax of some other kind for levying which the State lacks authority.
Reliance in connection with contention (a) is placed on Entry 51 of List II forming part of Schedule VII to the Constitution of India and on section 31 of the Punjab Excise Act.
The relevant portions of these provisions state: Entry 51 "Duties of Excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India : (a) alcoholic liquors for human consumption;. .
Section 31 "An excise duty or a countervailing duty, as the case may be, at such rate or rates as the State Government shall direct, may be imposed, either generally or for any specified local area, on any excisable article (a) imported, exported or transported in accordance with the provisions of section 16; or (b) manufactured or cultivated under any licence granted under section 20; or (c) manufactured in any distillery established, or any distillery or brewery licenced under section 21;. 694 These provisions leave no room for doubt that a duty of excise on alcoholic liquors meant for human consumption cannot be recovered from the respondents because none of the 3 clauses of section 31 covers their business activities.
But then the first part of contention (a) that still head duty is a duty of excise cannot be accepted in view of the dicta in Har Shankar and others vs The Dy.
Excise & Taxation Commissioner and others (supra) and The State of Punjab vs Balbir Singh and others (supra) to the effect that the short fall in still head duty represents nothing but sums recoverable by the appellants under the terms of a contract which was entered into by the respondents with their eyes open and that the latter cannot be allowed to have the best of both the worlds by exploiting the contract so long as it suits them and by repudiating it if and when it does not work to their advantage.
Shri Munjral has vehemently contended that still head duty is only another name for excise duty inasmuch as it is nothing more or less than a duty leviable on the manufacture of alcoholic liquor.
For this proposition he places reliance on a Division Bench judgment of the High Court of Punjab & Haryana in M/s. Bhajan Lal Saran Singh & Co. vs The State of Punjab and others the approval of that judgment by this Court in Civil Appeals Nos.
1042 and 1043 of 1968 decided on 21st August, 1972, State of Madhya Pradesh vs Firm Gappulal etc.
and Excise Commissioner, U.P., Allahabad and others vs Ram Kumar and others.
These authorities, however, are of no help to him because, in every one of them, the still head duty which was mentioned in the condition corresponding to condition No. 8 in the present case was either expressly stated to be an excise duty or was assumed to be a duty of that character.
In fact, in the case of M/s. Bhajan Lal Saran Singh it was conceded on behalf of the State before the High Court that still head duty was an excise duty and that is why the nature of the charge as excise duty was taken for granted before the High Court as well as in this Court.
No question was either raised or decided as to whether it could at all be regarded as an excise duty.
However, in later cases, namely, Har Shankar and others vs The Dy.
Excise & Taxation Commissioner and others, (supra) and The State of Punjab vs Balbir Singh and others (supra) the demand for still head duty recoverable under condition No. 8 above extracted was specifically 695 held to be a demand for money which had become due under an obligation created by terms of the contract.
It is too late in the day, therefore, for Shri Munjral to contend that such a demand should be considered as one covering excise duty.
He, however, relies on the following passage in Har Shankar and others vs The Dy.
Excise & Taxation Commissioner and others (supra): "The second decision on which the appellants laid stress was rendered by the High Court of Punjab and Haryana in Jage Ram vs State of Haryana (C.W. No. 1376 of 1961 decided on March 12, 1968).
The argument is that this decision is based on the earlier decision of the High Court in Bhajan Lal vs State of Punjab (C.W. No. 538 of 1966 decided on February 6, 1967), that the decision in Bhajan Lal 's case was confirmed in appeal by this Court (C.A. Nos. 1042 and 1043 of 1968 decided on August 21, 1972), that there is no material difference between the rules and the procedure adopted in the instant cases and those which were struck down in Bhajan Lal 's case and therefore, the rules and the procedure followed herein must also be struck down for the same reasons.
This argument overlooks the significant difference between the rules struck down in Bhajan Lal 's case and in Jage Ram 's case and the amended Rules now in force.
Under the old Rule 36 (23 A) still head duty which was admittedly in the nature of excise duty was payable by the licencee even on quota not lifted by him.
The Rule and Condition No. 8 founded on it were therefore struck down in Bhajan Lal 's case as being beyond the scope of entry 51 of List II, the taxable event under the impugned Rule being the sale and not the manufacturer of liquor.
Rule 36 was amended on March 31, 1967 in order to meet the Judgment in Bhajan Lal 's case but the High Court found in Jage Ram 's case that even under the amended Rule, still head duty which was in the nature of excise duty was payable on unlifted quota of liquor.
The position obtaining under the Rules as amended on March 22, 1968 which are relevant for our purposes is in principle different as the still head duty is now only 0. 64 paise as against Rs. 17.60 per litre which was in force under the old Rules and excise duty as such is no longer payable on unlifted quota.
The principle governing the decisions in Bhajan Lal 's 696 case and Jage Ram 's case cannot, therefore, apply any longer".
(Emphasis supplied) Special stress has been laid by Shri Munjral on the underlined portion of the passage above extracted and it is contended by him that the judgments in the cases of Jage Ram and Bhajan Lal were neither disapproved nor dissented from but were merely distinguished in Har Shankar 's case, that while pointing out the distinction this Court took it for granted that in those earlier cases the charge of still head duty amounted to an excise duty and that condition No. 8 as obtaining in the present case being identical with the corresponding condition in those cases, it must be held that Har Shankar 's case is an authority for the proposition that the said condition No. 8 seeks to levy nothing but excise duty in the form of still head duty.
A careful perusal of the passage cited (which appears at first sight to lend colour to the contention) leaves no room for doubt, however, that in deciding Har Shankar 's case this Court was not called upon to adjudicate on the Constitutional propriety of condition No. 8 above extracted, nor with the question as to the nature of the levy covered by that condition.
All that the Court said was that the corresponding condition in Har Shankar 's case was a very different condition which could in no manner be construed to levy an excise duty.
Besides, it was pointed out in the passage above quoted that the still head duty mentioned in the relevant condition in the earlier cases (which was indentical with condition No. 8) was admittedly a duty of excise a fact to which we have already adverted while holding that condition No. 8 does not involve the imposition of a duty of exercise but makes provision only for recovery of sums becoming due under a contract.
We may also point out that the respondents are not connected in any manner whatsoever with the manufacture of alcoholic liquor and there was, therefore, no question at all of levying a duty of excise on their operations which were confined merely to the sale of liquor manufactured by others and which, therefore, commenced only after the process of manufacture was completely over.
For all these reasons, we repel the contention under examination.
Contention (b) is also without substance and need not detain us long.
For one thing, it was never raised at any earlier stage and its consideration is bound to work prejudice to the cause of the appellants.
Secondly, as already pointed out above, there 697 is no impediment in the way of the demand being regarded as the enforcement of an obligation arising under the contracts which the respondents had entered into and exploited so long as the same worked to their advantage and which were fully permissible under sub section (3) of section 34 of the Punjab Excise Act.
That sub section states : "(3) Every licence, permit or pass granted under this Act shall be granted (a) on payment of such fees, if any, (b) subject to such restrictions and on such conditions, (c) in such form and containing such particulars, (d) for such period, as the Financial Commissioner may direct".
According to Shri Munjral the payment of licence fees is provided for in the conditions of auction apart from condition No. 8 and, therefore, the latter cannot be regarded as providing for anything but the levy of a duty of excise or of some other kind.
The argument is fallacious in view of the language of clause (b) of the sub section just above reproduced.
That clause allows the imposition of conditions on the grant of a licence, in addition to the payment of the licence fees which is a matter covered by clause (a).
Condition No. 8 is, therefore, fully enforceable and there is no reason why still head duty should be regarded as a tax of any kind whatsoever.
For the reasons stated, both the appeals are accepted and the impugned judgment.
which cannot be sustained, is reversed so that both the petitions under article 226 of the Constitution of India filed by the respondents before the High Court and accepted by it are dismissed.
However, we leave the parties to bear their own costs.
V.D.K. Appeals allowed.

dataset_name: IN-Abs

summary/full:
Condition 8 of the licence to run liquor vends in various parts of Punjab during the financial year 1965 66 laid down: (i) the licensee shall lift each month the proportionate quota for the month fixed for his vends or deposit still head duty realisable thereof (ii) Any deficiency in the amount of still head duty realisable from the lifting of the full proportionate quota due to the short lifting of the quota by the licensee or non deposit of the still head duty may be realised from the amount of security deposited by the licensee at the time of grant of licence; (iii) the resultant deficiency in the amount of security shall be made good by the licensee within seven days of such adjustment and (iv) if there is short lifting of proportionate quota or short deposit of still head duty continues for two consecutive months or the licensee fails to make up the deficiency in the amount of security within the prescribed period of seven days, his licence may be cancelled in addition to the recovery of still head duty.
Respondent Ajudhia Nath who was granted the necessary licences under the relevant provisions of the Punjab Excise Act and the Rules framed thereunder, was unable to lift the minimum quota of country liquor and also failed to deposit the still head duty which became payable by him under condition No. 8.
On an application made by him claiming relief in the matter of payment of sums which had fallen due, such relief was granted to him in part by the Excise and Taxation Commissioner, Punjab, on the ground that the liquor trade was badly affected by reason of the movement of population in the border area of Punjab on account of the hostilities which broke out between India and Pakistan in the month of September 1965.
Not satisfied with the relief so granted Ajudhia Nath filed two petitions under Article 226 of the Constitution before the High Court of Punjab and Haryana claiming, inter alia, that still head duty was an excise duty which could be levied only on manufacture of goods and which he was not liable to pay by reason of the admitted fact he was not a manufacturer of Liquor and that he was not given the opportunity of being heard in the matter covered by the applications claiming relief.
The petitions were allowed and the Letters Patent Appeals preferred by the State were dismissed.
Hence the appeals by special leave.
687 Allowing the appeals, the Court ^ HELD: 1.
The demand for the short fall in still head duty was based on the terms of a binding contract and it sought to enforce the liabilities arising out of mutually agreed conditions of auction.
Such a demand could not be equated with a notice requiring the liquor vendor to show cause why his licence should not be cancelled.
Although an opportunity of being heard has to be given to a liquor vendor when his licence is sought to be cancelled, the same principle of natural justice does not come into play when the demand is merely for payment of a sum becoming due under the conditions subject to which the licence was granted.
[691 G H, 692A, E F] Har Shankar and others vs The Dy.
Excise & Taxation Commissioner and others ; Shyam Lal vs State of Punjab, AIR 1976 SC 2045; State of Punjab vs Mulkh Raj and Co., AIR 1977 SC 1550 and The State of Punjab vs Balbir Singh and others, AIR 1977 SC 1717, followed.
A combined reading of Entry 51 of List II of Schedule VII to the Constitution of India and section 31 of the Punjab Excise Act no doubt makes it clear that a duty of excise on alcoholic liquors meant for human consumption cannot be recovered from a person unless any one of the three clauses of section 31 covers his business activities.
[693 C D, 694A] 2: 2.
Still head duty is not a duty of excise in view of the dicta laid down by the Supreme Court to the effect that the short fall in still head duty represents nothing but sums recoverable from the licensees under a contract which was entered into by them with their eyes open and that they cannot be allowed to have the best of both the words by exploiting the contract so long as it suits them and by repudiating it if and when it does not work to their advantage.
[694 B C] Har Shankar and others vs The Dy.
Excise & Taxation Commissioner and others, ; State of Punjab vs Balbir Singh and others, AIR 1977 SC 1717, applied.
Condition No. 8 of the licence does not involve the imposition of a duty of excise but makes provision only for recovery of sums becoming due under a contract.
The licensees are not connected in any manner whatsoever with the manufacture of alcoholic liquor and there was, therefore, no question at all of levying a duty of excise on their operations which were confined merely to the sale of liquor manufactured by others and which, therefore, commenced only after the process of manufacture was completely over.
[696 E G] M/s.
Bhajan Lal Saran Singh & Co. vs State of Punjab and others, 1967 Current Law Journal (Punjab and Haryana) 460; State of M.P. vs Firm Goppulal, ; ; Excise Commissioner, U.P., Allahabad and others vs Ram Kumar and others, , distinguished. 3: 1.
On the facts of this case still head duty cannot be regarded as a tax of some other kind nor can the question whether it does amount to such a tax 688 (for levying which the State lacks authority) be allowed to be raised since it was never raised at any earlier stage and its consideration is bound to work prejudice to the cause of the appellants.
Further there is no impediment in the way of the demand being regarded as the enforcement of an obligation arising under the contracts which the licensees had entered into and exploited so long as the same worked to their advantage and which were fully permissible under sub section (3) of section 34 of the Punjab Excise Act.
[696 H, 697 A B] 3: 2. Clause (b) of sub section (3) of section 34 of the Punjab Excise Act allows impositions of conditions on grant of the licences in addition to the payment of the licence fees which is a matter covered by clause (a).
Condition No. 8 is, therefore, fully enforceable and there is no reason why still head duty should be regarded as a tax of any kind whatsoever.
[697 D E]


judgement:
Appeal No. 247 of 1954.
Appeal from the judgment and decree dated July 21, 19 53 of the Labour Appellate Tribunal of India, Third Bench, Lucknow in Appeal.
No. Calcutta 44 of 1952.
G. G. Mathur, for the appellant.
H. J. Umrigar, amicus curiae for the respondent, 874 1956.
October 23.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The appellant is a limited Company, which had been carrying on business in crushing sugarcane at a place called Pipraich in Gorakhpur District from the year 1932.
In 1946 it decided to expand its business, and with that object, sold its old machinery which had a crushing capacity of 160 tons per day, and purchased a new one with 650 tons capacity.
The new plant was installed in 1947, and it actually started working in 1948 49.
During this period, the sugar industry was passing through a crisis owing to shortage of sugarcane, and in consequence, the Government assumed control of its production and supply.
The quota which was allotted to the appellant 's Mill proved too small to its being worked profitably, with the result that in 1948 49 and 1949 50 the Company sustained losses which according to the appellant came to Rs. 2,67 042 7 4.
After several unsuccessful attempts at setting a larger supply, the management wrote to the Government on May 11, 1950, either to increase their quota or to permit them to sell the Mills.
In October, 1950, the Government granted permission for the sale of the plant and machinery, and pursuant thereto, the management sold them to a Madras party.
As the crushing season was then on, the appellant obtained from the purchaser a lease of the Mills for the current season agreeing to deliver possession thereof on the termination of the lease.
It should be mentioned that the appellant was also carrying on negotiations with the purchaser, for itself dismantling the machinery and erecting it at Madras for a lump consideration, expecting to perform the contract through its own workmen.
When the workmen became aware of the agreement of sale, their reaction to it was thoroughly hostile, and acting through their union, the respondent herein, they decided to prevent the transaction going through, as otherwise they would be thrown out of employment.
With that object, they moved the 875 Government to cancel the permission granted to the appellant for the sale of the Mills, and they also passed a resolution on December 26, 1950, to go on strike from January 12, 1951, and communicated the same to the appellant.
This led to correspondence between the parties, and as that is the foundation of the claim for compensation put forward by the respondent and awarded by the Tribunal, it becomes necessary to set it out with sufficient fulness.
On January 3, 1951, the Managing Director offered through the Manager of the Mills, to allot 25 per cent.
of the profit on the sale transaction with the Madras party on certain terms and subject to the condition "that the notice of strike should be withdrawn at once and today, so that arrangement of work could be made".
To this, the reply of the Union on January 5, 1951, was as follows: "With reference to the assurance given by the Managing Director, communicated by your goodself to us under your No. 975 dated 4th January 1951, asking us to withdraw the notice of strike, we regret to inform you that our fight is with the Government, which is not solved with this only.
Our members are bent upon keeping the Sugar mills here at any cost, either by strike, satyagrah, etc., or through any other means guided by our federation, otherwise there is no assurance of employment of thousands of creatures".
Then the letter proceeded to take exception to some of the terms, and finally wound up by stating that the workmen were waiting for their President Kashinath Pandey to advise them in the matter.
Replying to the objections raised by the respondent to some of the terms, the management wrote on January 8,1951, that they were ready to reconsider them, but insisted on the withdrawal of notice of strike as "the chief point".
On January 9,1951, Kashinath Pandey came to Pipraich, and discussed the matter with the management, and following upon it, the General Manager wrote to the respondent on January 10, 1951, that "in case the strike notice was withdrawn at once he would accede to the following points raised by the Union", and then the points were set down.
The 876 letter concluded by stating that the amount of compensation "will not be less than a lac".
The respondent replied to this on the same day that the workers were waiting for the "final order" of Kashinath Pandey in the matter, and assured the management that "in the meantime the strike was not coming off from the 12th".
After this, the appellant did not hear from the respondent, the strike also did not take place, and the crushing went on till the end of January, 1951, when the season came to an end.
One of the points that arises for our determination in this appeal is whether on this correspondence there was a concluded.
and binding agreement that the appellant should pay 25 per cent.
of the profits on the sale transaction to the workmen.
To continue the narration, the lease having expired with the crushing season, the purchaser came over to Pipraich to take delivery of the Mills and to arrange for the machinery being dismantled and removed to Madras for being erected there.
The appellant who, as already stated, was negotiating to get the dismantling done for a lump consideration found that its workmen were as hostile to it as ever, and refused to help in the work.
To adopt the language of the respondent in its written statement "they declined out of sentiment to dig their own graves".
After fruitless attempts at getting them to co 'operate in dismantling the machinery, the management put up the following notice on February 28, 1951: "The workers of Pipraich.
Sagar Mills Ltd. should know that we have sold our Mill to Madras party under the permission of the Government.
The party has arrived for dismantling.
Under the terms of agreement, we are bound to help them in this work.
So the workers should know that we can do this favour that we can take contract of dismantling here and erection in Madras and keep the workers engaged and request the purchasers for providing them in their concern.
Hence it is notified that workers who are not ready to co operate they should consider themselves to be discharged from 1st March 1951.
Fifteen days ' notice is served on the workers.
Those who 877 create obstructions will be deprived of benefit,, promised to them".
But the Union could not reconcile itself to the prospect of the Mills being shifted, and on March 4, 1951 Kashinath Pandey wrote a letter to the Government threatening to go on hunger strike, if the Mills were to be shifted from Pipraich.
The workmen were thus in no mood to accept the terms contained in the notice dated February 28, 1951, and so, the management had to issue further notice on March 14, 1951 in the following terms: "Whereas the workers have already been notified that we have sold our entire plant to a Madras party who have arrived to take charge of the Machines and whereas we have to hand over the plant from 15 3 1951 to the purchasers and thus there will be no work for our workers and whereas the Mazdoor Union, has already refused our suggestion to engage the workers in the work of dismantling and erection at Madras.
Now in pursuance of our notice dated 28 2 1951, it is notified that the following workers have been discharged from the services since 1 3 1951 subject of course to the payment of 15 days wages.
The workers are hereby asked to take their wages of 15 days on the 15th and 16th instant".
It appears from a notice dated March 16, 1951, sent by the appellant to the respondent, that after the notice dated March 14, 1951, was issued, Kashinath Pandey had a discussion with the management, as a result of which the date of termination of service of, the workers was extended from the 15th to 21st March pending the decision of the Government on the "future programme of the Pipraich factory", the workmen agreeing on their part to "take up the dismantling of the Mill after the said date".
But the Government declined by its letter dated March 21, 1951, to interfere with the sale of the machinery, and in accordance with the understanding reached above, the workers should have co operated with the appellant in dismantling the machinery from March 21.
But they declined to do so, and thereupon, acting in accordance with its notices dated February 28, 1951, 114 878 and March 14, 1951, the management duly discharged them.
In view of the inability of the appellant to take up the contract, the purchaser entered into direct negotiations with the workmen, and on 1 4 1951 concluded an agreement with them for dismantling the machinery.
The net result was that the appellant lost a contract on which, as admitted by the respondent, it would have earned a profit of at least Rs. 2 lakhs.
The workers.
, having taken the benefit of a direct contract with the purchaser for dismantling the machinery, next turned their attention to the appellant, and on the basis of the letters dated January 3, 1951, and January 10, 1951, sent a notice to it on April 19, 1951, asking for distribution among the workers of the "25 per cent labour share of the profits on sale of machinery".
By its letter dated June 19, 1951, the appellant repudiated.
the claim, and stated: "Then we also refer you to our notice dated 27 2 1951 in which we appealed to the labour to cooperate.
with us so that we might take the contract of dismantling here at Pipraich and erection at Etikoppaka and said definitely that those who do not co operate should consider themselves discharged.
This would have given us a good saving to meet the demand of the labour, but as you in spite of our appeal and notice refused to co operate, we had to suffer a heavy loss, for which you are directly responsible".
Thereafter, the respondent moved the Government to take action in the matter, and the result was that on November 16,1951, the U. P. Government issued a notification under section 3 of the U. P. Industrial Disputes Act XXVIII of 1947, hereinafter referred to as the Act, referring the following dispute to the adjudication of the Industrial Tribunal: "Whether the services of workmen, if so how many, were terminated by the concern known as Pipraich Sugar Mills Ltd., Pipraich, District Gorakhpur, without settlement of their due claims and improperly; and if so, to what relief are the workmen concerned entitled?" By its award dated February 28,1952, the Indus 879 trial Tribunal held firstly that the closure of the business and the sale of the machinery by the appellant was bona fide, as it had been continuously incurring losses and the supply position of sugarcane held out no immediate prospects of improvement, that the conduct of the workmen had been throughout unfair and such as to disentitle them to compensation but that the promise contained in the letters dated January 3 and 10, 1951, to pay 25 per cent.
of the profits realised by the sale of the Mills, was binding on the management.
It further held, repelling the contention of the appellant, that the notification dated November 16, 1951, was competent, notwithstanding that at that date the business had been closed.
The Tribunal then proceeded to ascertain the profits made by the appellant on its sale of the Mills, and held that a sum of Rs. 45,000 representing the 25 per cent.
of the net profits was payable to the workmen.
The management appealed against this decision but the same was confirmed by the Labour Appellate Tribunal by its order dated July 21, 1953.
The matter now comes before us.
in appeal under article 136.
As the appeal raised questions of importance, and as the respondent was unrepresented we requested Mr. Umrigar to assist us, and we are indebted to him for his learned and comprehensive argument.
Two contentions have been urged in support of the appeal: (1) The notification dated November 16, 1951, referring the dispute to the adjudication of the Industrial Tribunal is ultra vires, and the reference and the award therein are in consequence void; and (2) there was no concluded or binding agreement by the appellant to pay the workmen any share of profits in the sale transaction and the award is therefore bad on the merits.
Taking the first contention, the provision of law under which the impugned notification dated November 16, 1951, was issued by the State is section 3 of the Act, which runs as follows: "If in the opinion of the State Government, it is necessary or expedient so to do for securing the public safety or convenience, or the maintenance of 880 public order or supplies and services essential to the, life of the community, or for maintaining employment, it may, by general or special order, make provision (d) for referring any industrial disputes for conciliation or adjudication in the manner provided in the order".
An "industrial dispute", as defined in section 2(k) of the Industrial Disputes Act XIV of 1947 and by force of section 2, that definition applies to the Act"means any dispute or difference between employers and employees, or between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person".
Now, the contention of the appellant is that it is a condition precedent to the exercise by the State of its power under section 3 of the Act that there should be an industrial dispute, that there could be no industrial dispute according to this definition, unless there is a relationship of employer and employee; that in the present case, as the appellant sold its Mills, closed its business and discharged the workmen on March 21, 1951, paying to them in full whatever was due in accordance with the standing orders.
there was thereafter no question of any relationship of employer and employees between them that accordingly there was no industrial dispute at the date of the notification on November 16, 1951, and that it was therefore incompetent.
Reliance was placed in support of this position on the observation in Indian Metal and Metallurgical Corporation vs Industrial Tribunal, Madras(1) that the definition of an "industrial dispute" presupposes the continued existence of the industry, and on the decision in K. N. Padmanabha Ayyar vs The State of Madras(2) that there could be no industrial dispute with regard to a business, which was not in existence.
It cannot be doubted that the entire scheme of the Act assumes that there is in existence an industry, (1) A.I.R. 1953 Mad. 98, 102.
(2) 881 and then proceeds on to provide for various steps being taken, when a dispute arises in that industry.
Thus, the provisions of the Act relating to lock out, strike, lay off, retrenchment, conciliation and adjudication proceedings, the period during which the awards are to be in force have meaning only if they refer to an industry which is running and not one which is closed.
In Messrs Burn and Co., Ltd., Calcutta vs Their Workmen(1), this Court observed that the object of all labour legislation was firstly to ensure fair terms to the workmen, and secondly to prevent disputes between employers and employees, so that production might not be adversely affected and the larger interests of the public, might not suffer.
Both these objects again can have their fulfillment only in an existing and not a dead industry.
The view therefore expressed in Indian Metal and Metallurgical Corporation vs Industrial Tribunal, Madras (supra) and K. N. Padmanabha Ayyar vs The State of Madras (supra) that the industrial dispute to which the provisions of the Act apply is only one which arises out of an existing industry is clearly correct.
Therefore, where the business has been closed and it is either admitted or found that the closure is real and bona fide, any dispute arising with reference thereto would, as held in K. N. Padmanabha Ayyar vs The State of Madras (supra), fall outside the purview of the Industrial Disputes Act.
And that will a fortiori be so, if a dispute arises if one such can be conceived after the closure of the business between the quondam employer and em ployees.
In the light of the principles stated above, we must examine the nature of the dispute which is the subject matter of the reference under the impugned notification.
The claim of the workmen is that the promise made by the management in its letters dated January 3, 1951, and January 10, 1951, is a binding agreement and that they are entitled to be paid in accordance therewith.
Now, if this contention is well founded, the dispute relates to a claim which arose (1) Civil Appeal No. 325 of 1955, decided on October 11, 1956.
882 while the industry was in existence and between persons who stood in the relationship of employer and employees, and that would clearly be an industrial dispute as defined in the Act.
But it is argued for the appellant that even so, the 'notification dated November 16, 1951, would be incompetent as the industry had been closed before that date, and there was therefore no relationship of employer and employee at that point of time.
In other words, the power of the State to make a reference under section 3 will depend, according to the appellant, not only on the dispute having arisen in an existing industry but further, on the continued existence of that industry on the date of the notification.
We do not find anything in the language of section 3 of the Act to warrant the imposition of this additional limitation on the power of the State to make a reference.
That section only requires, apart from other conditions, with which we are not concerned, that there should be an industrial dispute before there can be a ref erence, and we have held that it would be an industrial dispute if it arises out of an existing industry.
If that condition is satisfied, the competence of the State for taking action under that section is complete, and the fact that the industry has since been closed can have no effect on it.
Any other construction would, in our opinion, result in serious anomalies and grave injustice.
If a workman improperly dismissed raises an industrial dispute, and before action is taken by the Government the industry is closed, what happens to the right which the Act gives him for appropriate relief, if the Act vanishes into thin air as soon as the industry is closed? If the contention of the appellant is correct, what is there to prevent an employer who intends, for good and commercial reason, to close his business from indulging on a large scale in unfair labour practices, in victimisation and in wrongful dismissals, and escaping the consequences thereof by closing down the industry? We think that on a true construction of section 3, the power of the State to make a reference under that section must be determined with reference not to the date,on which 883 it is made but to the date on which the right which is the subject matter of the dispute arises, and that the machinery provided under the Act would be available for working out the rights which bad accrued prior to the dissolution of the business.
It was next argued that even on this view, the notification dated November 16, 1951, was incompetent inasmuch as the management had offered by its letter dated January 3, 1951, to pay the workmen 25 per cent.
of the profits on the sale transaction only on April 30, 1951, and the right to the amount thus accrued to the workmen only after the closure of the business on March 21, 1951.
But this argument proceeds on a misapprehension of the correct position on the facts.
The true scope of the promise contained in the letter dated January 3, 1951, is that the workmen acquired thereunder a right in praesenti to 25 per cent.
of the profits, but that the amount became payable only on April 30, 1951, the reason obviously being that it could be precisely determined only after the transaction was completed.
In this view, as the claim for share of profits arose on January 3, 1951, and January 10, 1951, when the industry was working, the reference dated November 16, 1951, would be valid, notwithstanding that the business was closed on March 21, 1951.
That brings us on to a consideration of the second question, as to whether there was a concluded agreement binding the appellant to pay 25 per cent.
of the profits in.
the sale transaction to the workmen.
The Tribunal has answered it in the affirmative, and its finding was accepted by the Appellate Tribunal as, being one of fact, it had to be, under section 7 of the Industrial Dispute (Appellate Tribunal) Act No. XLVIII of 1950.
It is argued by Mr. Umrigar that following the usual practice of this Court in special appeals not to disturb findings of fact by Tribunals unless there were exceptional grounds therefore we should not interfere with the finding of the Industrial Tribunal that there was a concluded and enforceable agreement.
But our difficulty is that the Tribunal has spoken in two voices, and has given inconsistent 884 and conflicting findings, and it has consequently become necessary for us to determine which of its findings should be accepted as supported by materials.
We start with the letter dated January 3, 1951, wherein the management made an offer to pay 25 per cent.
of the profits of the sale transaction to the workmen.
It was expressly subject to the condition that the strike should be called off "at once and today".
That was not done.
On the other hand, the respondent made certain counter proposals in its letter dated January 5, 1951, and the management replied on January 8, 1951, that it would reconsider its terms provided the strike notice was withdrawn.
Thus, the offer contained in the letter dated January 3, 1951, was not accepted and lapsed.
Then on January 10, 1951, the management renewed its offer subject again to the condition that the strike notice was withdrawn at once.
The respondent passed no resolution withdrawing the notice, and in its reply dated January 10, 1951, it made it clear that it was waiting for Kashinath Pandey for it to come to a final decision '.
There was no further communication from the Union.
We do not see bow on this correspondence it could be held that there was a concluded agreement between the parties, and that is the view which the Tribunal itself took of it when it observed that "no final agreement could be arrived at. . and consequently the management served a notice on 28th February 1951".
But then, it went on to observe that, in fact, the workmen did not go on strike on January 12, 1951, and continued in service till they were served with notice of discharge on February 28, 1951, that that was consideration for the promise made by the agreement, which must therefore be taken to have become a term of service, and that in consequence "the promise of the management as contained in the letters of 3rd and 10th January 1951, is a binding agreement under which the workmen are entitled to compensation for termination of their services on the closure of the Mills".
This argument rests on a confusion of thought.
The question whether there was consideration.
for the promise made by the 885 management in its letters dated January 3, and January 10, 1951 arises only if the offer contained in the letters had been accepted by the respondent, so as to ripen into an agreement.
And if there was no concluded agreement between the parties, as the Tribunal itself had held, then the further question as to whether it was supported by consideration would not arise, nor would there be any question of its becoming one of the terms of the service.
It was argued that though a formal resolution withdrawing the strike was not passed, in fact there was no strike, and that must be taken to be acceptance of the offer by conduct.
That would not be acceptance as required by the 'appellant, and that alone would be sufficient to reject the contention of the respondent.
But this contention must fail even on the merits.
In its letter dated January 10, 1951, the respondent, while stating that the strike was not taking place on the 12th, made it clear that this was pending the final decision of the Union.
That clearly is not an acceptance of the offer.
The matter does not rest there.
, The object of the strike was, it should be remembered, not anything directly connected with the terms of employment but something collateral to it.
It was to prevent the Mills from being removed from Pipraich to Madras.
When the management offered to part with 25 per cent.
of the profits of the sale transaction, its object was clearly to disarm the opposition of the workmen and to get the machinery dismantled and delivered to the purchaser peacefully.
Did the workmen ever agree to it? As late as March 5, 1951, Kashinath Pandey wrote to the Government that if the Mills were to be shifted from Pipraich, he would go on hunger strike.
Even after the Government had informed him that the sale could not be interfered with, the workmen did not co operate with the management in the dismantling of the machinery with the result that the appellant had to give up the contract with reference thereto and to lose Rs. 2 lakhs profits.
To crown all, the workmen having successfully prevented the appellant from getting the contract for dismantling, themselves 886 entered into it directly with the purchaser and undoubtedly intercepted a part, if not the whole, of the profits which the appellant would have earned.
It is impossible to hold on these facts that there was a concluded agreement between the parties binding the appellant to give the workmen a share of the profits of the sale transaction.
It was next contended by Mr. Umrigar that even if there was no concluded agreement by the management to pay the workmen a share of profits on the sale transaction, it would have been open to the Tribunal to have awarded compensation for the termination of their services, treating it as retrench ment, and that the 'award of compensation of Rs. 45,000 which was what the management itself had suggested, might be sustained on that footing.
This contention assumes that the termination of the services of workmen, on the closure of a business, is retrenchment.
But retrenchment connotes in its ordinary acceptation that the business itself is being continued but that a portion of the staff or the labour force is discharged as surplusage and the termination of services of all the workmen as a result of the closure of the business cannot therefore be properly described as retrenchment.
It is 'however contended by Mr. Umrigar that the definition of retrenchment in section 2(oo) of the Industrial Disputes Act XIV of 1947 is wide enough to include discharge consequent on the, closure of business, and that under section 25 F, compensation could be awarded therefore Our attention has been invited on behalf of the appellant to the decision in J. K. Hosiery Factory vs Labour Appellate Tribunal(1), where it was held that retrenchment as defined in section 2(oo) does not comprehend discharge on the closure of business, but Mr. Umrigar contends that it is erroneous.
We do not consider it necessary to decide this question, as the definition of "retrenchment" in section 2(oo) of Act XIV 1947 and section 25 F therein were inserted by the Industrial Disputes (Amendment) Act No. XLIII of 1953, and we have held in Messrs Burn and Co., Ltd., Calcutta vs (1) A I.R. 1956 All. 498.
887 Their Workmen (supra) that this Act has no retrospective operation.
The rights of the parties to the present appeal must therefore be decided in accordance with the law as it stood on March 21, 1951, when the workmen were discharged.
It was next contended, on the strength of the decisions in Employees of Messrs India Reconstruction Corporation Limited, Calcutta vs Messrs India Reconstruction Corporation Limited, Calcutta(1) and Messrs Benett Coleman & Company Ltd vs Their Employees(2) that even prior to the enactment of Act XLIII of 1953, the Tribunals had acted on the view that retrenchment included discharge on closure of business, and had awarded compensation on that footing and that the award of the Tribunal in the present case could be supported in that view and should not be disturbed.
In Employees of Messrs India Reconstruction Corporation Limited, Calcutta vs Messrs India Reconstruction Corporation Limited, Calcutta (supra), the Tribunal observed at P. 576 as follows: "Ordinarily retrenchment means discharge from service of only the surplus part of the labour force but in the case of closure the whole labour force is dispensed with.
In substance the difference between closure and normal retrenchment is one of degree only.
As in the case of retrenchment so in the case of closure the workmen are not responsible for closing their jobs.
In both the cases, what is called compensation by way of retrenchment relief should be admissible".
We are unable to agree with these observations.
Though there is discharge of workmen both when there is retrenchment and closure of business, the compensation is to be awarded under the law, not for discharge as such but for discharge on retrenchment, and if, as is conceded, retrenchment means in ordinary parlance, discharge of the surplus, it cannot include discharge on ' closure of business.
Moreover, there was no question of closing of business in Employees of Messrs India Reconstruction Corporation Limited, Calcutta vs Messrs India Reconstruction Corporation (1) (1953] L.A.C. 563.
(2) 888 Limited, Calcutta (supra), as what happened there was that one of the units of the company, that at Calcutta, was closed and that would be a case of retrenchment, and the observations quoted above were purely obiter.
They were, however, quoted and followed without discussion by the Appellate Tribunal in Messrs Benett Coleman & Company Ltd. vs Their Employees (supra), which further remarked at p. 27: "Thus whether the closure was justified or not, the workmen who have lost their jobs would in any event get compensation.
If it was not bona fide or not justified, it may be that the measure of compensation would be larger than if it was otherwise".
For the reasons given above, we cannot assent to these observations.
It, should be mentioned that in Messrs Benett Coleman and Company Ltd. vs Their Employee (supra), there was no closure of business, but winding up of the Calcutta unit by a newspaper publishing company which had its headquarters at Bombay.
We must accordingly overrule this contention also.
We should add that the Tribunal was of the opinion that, apart from agreement, the workmen should not, in view of their conduct, be awarded compensation, and we entirely agree with it.
And as we have found against the agreement, we must allow this appeal, and set aside the award of compensation to the workmen made by the Tribunal.
In the circumstances, the parties will bear their own costs throughout.
Appeal allowed.

summary/full:
The appellant company could not work its Mills to full capa city owing to short supply of sugar cane and got the permission of the Government to sell its machinery but continued crushing cane under a lease from the purchaser.
The workmen 's Union in order to frustrate the transaction resolved to go on strike and communicated its resolution to the company.
There wag correspondence between the parties in course of which the company offered to pay to the workmen 25 per cent.
of the profits of the sale on condition that the strike notice must immediately be withdrawn.
The workmen did not fulfill the condition and made certain counter proposals.
The company insisted that the condition must first be fulfilled before the counter proposals could be considered and renewed its offer.
Although the workmen did not actually go on strike, they did not withdraw the strike notice, and did not co operate with the management in the dismantling and delivery of the machinery to the pur chaser, with the result that the company lost heavily.
On the expiry of the lease and closure of the industry, the services of the workmen were duty terminated by the company on March 21, 1951.
The workmen thereafter, claimed the share of profits on the basis of the offer made by the company in the correspondence and the dispute was referred to the Industrial Tribunal for adjudication by the U.P. Government by a notification under section 3 of the U.P. Industrial Disputes Act of 1947.
The Tribunal held that the company was bound by the offer it had made and awarded a sum of Rs. 45,000 to the workmen as representing their share of the profits.
On appeal the award of the Industrial Tribunal was affirmed by the Labour Appellate Tribunal.
It was contended on behalf of the appellant company that the notification was ultra vires, and the reference and the award void in consequence and that there having been no concluded agreement between the parties, it was not bound to pay.
Held, that the definition of an industrial dispute contained in section 2(k) of the Industrial Disputes Act XIV of 1947 and adopted by the U.P. Industrial Disputes Act XXVIII of 1947 contemplated the 873 existence of an industry and a subsisting relationship of employer and employee between the parties and, therefore, there could be no industrial dispute within the meaning of those Acts where the industry had been closed, and the closure was real and bona fide, if the dispute arose on such closure, or thereafter, if that could be conceived.
Section 3 of the U.P. Industrial Disputes Act of 1947 only required that there must be an industrial dispute before the Government could make a reference under that section arid, consequently, in the instant ease where the claim in dispute had arisen, if at all, prior to the closing of the industry, the Government was fully competent to issue the notification.
Indian Metal and Metallurgical Corporation vs Industrial Tribunal, Madras (A.I.R. and E. N. Padmanabha Ayyar vs The State of Madras ([1954] , approved.
Messrs Burn and Co. Ltd., Calcutta vs Their Workmen, (Civil Appeal No. 325 of 1955, decided on October 11, 1956), referred to.
In the instant case, however, as the findings of the Tribunal were inconsistent and conflicting, the court examined the correspondence and held that it did not establish that there was a concluded agreement between the parties whereby the workmen could be entitled to any share of the profits and, consequently, the award made by the Labour Appellate Tribunal must be sot aside.
Nor was the award sustainable as one for compensation for termination of the services of workmen on closure of the industry as such discharge was different from discharge on retrenchment, which implied the continuance of the industry and discharge only of the surplusage, and the workmen were not entitled either under the law as it stood on the day of their discharge or even on merits to any compensation.
Employees of Messrs India Reconstruction Corporation Limited, Calcutta vs Messrs India Reconstruction Corporation Limited, Calcutta ([1953] L.A.C. 563) and Messrs Benett Coleman & Company Ltd. vs Their Employees, ([1954] L.A.C. 24), distinguished and disapproved.


judgement:
Civil Appeal No. 1794 (NL) of 1977.
22 From the award dated 23.3.1977 of the Industrial Tribunal, Maharashtra, Bombay in Reference (I.D.) No. 307 of 1968.
K.K. Venugopal, Rameshwar Nath and Ravinder Nath, for the Appellant.
M.K. Ramamurthi, A.D. Sastri and Mrs. Urmia Sirur, for the Respondent.
Shardul section Shroff and H.S. Parihar for the interveners.
The Judgment of the Court was delivered by GUPTA J.
This is an appeal by special leave from an award made by the Industrial Tribunal, Bombay, on December 9, 1976 in Reference No. 307 of 1968 directing reinstatement of 12 workmen dismissed by the appellant, Firestone Tyre and Rubber Company of India Private Limited.
The appellant company carries on the business of manufacturing tyres, tubes and several other products in Bombay.
Disputes arose between the management and the workmen employed in the company 's tyre curing department leading to a strike by these workmen from March 3, 1967.
This strike was called off on May 15, 1967, according to workmen on certain assurances given by the Commissioner of Labour.
The case of the management is that even after the workmen resumed work, they adopted a deliberate 'go slow ' policy resulting in fall in production.
On September 14, 1967 the management put up a notice asking the workmen to desist from continuing with the go slow tactics.
The notice however had no effect and from October 4, 1967 the workmen working in the tyre curing department again went on a strike.
Between October 27 and 31, 1967 the management issued chargesheets to 102 workmen alleging that they had resorted to wilful go slow.
The chargesheets issued were in identical language and they read as follows: "You are charged with the following act of misconduct under the Company 's certified standing order No. 24 (C), viz. 'Wilful slowing down in performance of work or abetment, or instigation thereof. ' 23 You have wilfully slowed down in performance of work as per particulars given below: " The particulars were then mentioned.
Three inquiry officers were appointed to inquire into the charges.
Almost all the workmen refrained from participating in the inquiries; the 12 workmen concerned in this appeal also remained absent.
The inquiry officers found the workmen guilty of adopting wilful go slow tactics.
The management accepted the findings of the inquiry officers and dismissed the workmen other than those who were 'protected workmen ' as defined in the explanation to section 33 (3) (b) of the .
The management also decided to dismiss the protected workmen.
As a reference concerning an earlier dispute (Reference No. 406 of 1967) was pending before the Tribunal, applications were made section 33 (2) (b) of the for approval of the action of the management in dismissing the workmen and under section 33 (3) (b) for permission to dismiss the protected workmen.
It appears that subsequently, on April 17, 1968 the parties reached a settlement.
The more important terms of the settlement were: (1) The Firestone Tyre Employees Union agreed to withdraw the strike.
(2) The dispute relating to the dismissal of 101 workmen (one of the workmen concerned having died in the meantime) was to be referred for adjudication by a joint application made by the parties under section 10 (2) of the .
(3) 77 of the dismissed workmen were to be re employed on temporary basis till the disposal of the adjudication by the Industrial Tribunal.
(4) The remaining 25 workmen, including the 12 we are concerned within this appeal, were not to be taken back but the management would pay to them 50 per cent of their basic wages and dearness allowance from the date of the retirement till the disposal of the adjudication by the Tribunal.
24 As agreed a joint application by the parties was made on which the Deputy Commissioner of Labour, Bombay, under section 10(2) of the (Reference No. 307 of 1968) referred to the Industrial Tribunal, Bombay, the disputes between the parties relating to the demands detailed in the schedule to the order of reference.
Two distinct matters are mentioned in paragraphs 1 and 2 of the schedule.
The second matter mentioned in paragraph 2 does not survive for consideration.
The first paragraph which is divided into two parts, (A) and (B) reads as follows: "SCHEDULE 1(A): The workmen listed at Serial Nos. 1 to 25 of 'Schedule I ' [which contains names of the 12 workmen concerned in this case] hereto should be reinstated in their former employment with continuity of service and other benefits and should be paid full wages, dearness allowance and other allowances from the date of dismissal of each of the workmen till each is so reinstated without any condition attached to such payment.
(B): The workmen listed at Serial Nos. 26 to 101 of 'Schedule I ' hereto who are at present re employed on a temporary basis should be granted reinstatement in their employment from the date of dismissal of each and should be granted continuity of service and other benefits and also should be paid full wages, dearness allowance and other allowances from the date of dismissal of each till each was reemployed, without any condition being attached to such payment." During the pendency of the reference all the 76 workmen covered by paragraph 1 (B) of the Schedule who had been taken back on temporary basis were made permanent as a result of settlements reached between these workmen and the management.
On behalf of 33 out of 76 of these workmen, the union entered into a settlement with the management, the remaining workmen of this group individually entered into settlements with the management.
The period during which the workmen were absent from duty was treated as leave without pay and continuity of their service was maintained.
25 The Union representing the aforesaid 33 workmen, and the remaining workmen out of this group of 76 individually, withdrew demand No. 1 (B) in view of the settlements entered into by and between these workmen and the management.
By an award dated January 10, 1973 the Tribunal disposed of demand No. 1 (B) as not pressed.
In the meantime 13 out of the 25 workmen covered by demand 1 (A) also reached a settlement with the management and withdrew the dispute relating to them; the terms of settlement were that these workmen would submit their resignations and be paid one month 's basic wages and dearness allowance for each year of service along with gratuity, leave wages, provident fund and the balance bonus due to them.
They were also to retain the wages for one month paid to them when they were dismissed.
The dispute on which the impugned award was made was thus restricted to demand No. 1 (A) concerning 12 workmen only out of 25.
The Tribunal by its award dated December 9, 1976 directed the appellant company to reinstate the 12 workmen named against serial Nos. 2, 3, 5, 7, 8, 10, 11, 13, 18, 22, 23, 25 of Schedule I to the order of reference with continuity of service and full wages, dearness and other allowances.
On the question of back wages, the matter was left to be decided later on evidence.
The dismissal of these workmen was set aside on the following findings: 1.
The inquiry held by the management was vitiated because, (a) chargesheets had not been served and notice of inquiry not given to 2 out of 12 workmen; (b) 2 out of the 3 inquiry officers were biased; (c) some of the workmen were not furnished with copies of certain documents relied on by the inquiry officers; and, (d) the chargesheets served on the workmen did not contain necessary particulars regarding the go slow tactics adopted by each of them.
All the 101 workmen had been found guilty of go slow but 76 of them were reinstated on a permanent basis and the remaining 25 workmen were denied the same 26 treatment for no good reason.
The management was thus guilty of discrimination and unfair labour practice.
We will take the finding of discrimination first as this is the ground on which the 12 workmen were straightaway ordered to be reinstated.
The Tribunal having found that the inquiries held against the workmen had not been proper noted that it was well settled that in such a situation the employer should be given an opportunity to adduce evidence before the Tribunal in support of the action taken by them, but proceeded to hold that in view of the other finding that the 12 workmen had been unfairly discriminated against, they were entitled to reinstatement and therefore no useful purpose would be served by permitting the management to adduce evidence seeking to justify the dismissal of the workmen on the ground of misconduct.
It was contended on behalf of the appellant that the Tribunal had no jurisdiction to address itself to the question of discrimination.
Section 10 (4) of the lays down: "Where in an order referring an industrial dispute to a Labour Court, Tribunal or National Tribunal under this section or in a subsequent order, the appropriate Government has specified the points of dispute for adjudication, the Labour Court or Tribunal or National Tribunal as the case may be, shall confine its adjudication to those points and matters incidental thereto".
In this case the points of dispute were specified in the schedule to the order of reference, and the Tribunal was therefore required to confine its adjudication to those points and matters that were incidental to them.
From a reading of demands 1(A) and 1(B) as a whole it is clear that the demand for reinstatement in respect of both groups of workmen as made arises on the alleged invalidity of the action taken by the management in dismissing these workmen.
The issue of unfair labour practice or discrimination by reason of subsequent reinstatement on a permanent basis of some and not all the 25 workmen was not a matter referred to the Tribunal for adjudication, nor it can be said to be in any way connected with or incidental to the right of reinstatement claimed by the 101 workmen from the date of their dismissal.
The fairness of subsequent absorption of some workmen is a matter quite irrelevant for judging the validity of the earlier dismissal of these workmen along with others; it is an entirely separate and independent question.
The Tribunal 27 also did not frame an issue on the alleged discrimination.
That being so, we think the Tribunal travelled outside its jurisdiction in recording a finding of unfair labour practice and discrimination.
We find no reason to disturb the finding that the inquiry held was not proper.
The Tribunal has found that the chargesheets issued were vague as they did not disclose the relevant material on which the charges were based.
It was contended on behalf of the Union on the basis of this finding that no useful purpose would be served by remitting the case to the Tribunal.
It is settled law now that when no inquiry has been held or the inquiry held has not been proper, the Tribunal has jurisdiction to allow the management to lead evidence to justify the action taken.
The contention is that the charge sheets being vague, the Tribunal would not be in a position to decide what evidence to let in, and, therefore, sending the matter back to the Tribunal would only be an idle formality.
It is not possible to accept this contention.
Normally an inquiry by the management starts by issuing a charge sheet to the workmen proposed to be discharged or dismissed.
In a case where the chargesheet is vague, it must be held that there has been no proper inquiry.
In M/s. Bharat Sugar Mills Ltd. vs Shri Jai Singh and others,(1) this Court held: "But the mere fact that no inquiry has been held or that the inquiry has not been properly conducted cannot absolve the Tribunal of its duty to decide whether the case that the workman has been guilty of the alleged misconduct has been made out.
The proper way for performing this duty where there has not been a proper inquiry by the management is for the Tribunal to take evidence of both sides in respect of the alleged misconduct".
Whether in a case, as the one before us, where it is found that proper charge sheets had not been served on the workmen, the Tribunal can ask the parties to lead evidence to enable the Tribunal to decide the dispute between them is directly covered by an authority of this Court.
In Management of Ritz Theatre (P) Ltd. vs Its Workmen, (2) Gajendragadkar J. (as he then was) speaking for the Court said: ". . if it appears that the departmental enquiry held by the employer is not fair in the sense that proper charge 28 had not been served on the employee or proper or full opportunity had not been given to the employee to meet the charge, or the enquiry has been affected by other grave irregularities vitiating it, then the position would be that the Tribunal would be entitled to deal with the merits of the dispute as to the dismissal of the employee for itself.
The same result follows if no enquiry has been held at all.
In other words, where the Tribunal is dealing with a dispute relating to the dismissal of an industrial employee, if it is satisfied that no enquiry has been held or the enquiry which has been held is not proper or fair or that the findings recorded by the Enquiry Officer are perverse, the whole issue is at large before the Tribunal.
This position also is well settled".
In view of the well settled legal position, the order directing reinstatement of the 12 workmen without a consideration of the merits of the case cannot be sustained.
We therefore remit the case to the Industrial Tribunal to decide the dispute concerning the demand specified in paragraph 1(A) of the Schedule to the order of Reference after giving the parties concerned an opportunity to lead evidence in support of their respective cases.
The appeal is allowed to the extent indicated above, this Court by order dated August 2, 1977 had directed the appellant to pay the costs of the appeal to the respondents in any event.
The respondents will be also entitled to retain the sums of money paid to them by the appellant under orders of this Court.
V.D.K. Appeal allowed.

summary/full:
The appellant company carries on the business of manufacturing tyres, tubes and several other products in Bombay.
The workmen in the company 's tyre curing department adopted a deliberate "go slow" policy resulting in fall in production.
On September 14, 1967 the management put up a notice asking the workmen to desist from continuing with the go slow tactics.
The notice, however, had no effect and from October 4, 1967 the workmen in the tyre curing department went on a strike.
Between October 27 and 31, 1967 the management issued chargesheets to 102 workmen alleging that they had resorted to wilful go slow.
The workmen refrained from participating in the inquiries conducted by three inquiry officers and the inquiry reports went against the workmen.
The management accepted the findings of the inquiry officers and dismissed the workmen other than those who were "protected workmen" as defined in the explanation to section 33 (3) (b) of the ; an application was made under the said provision for permission to dismiss the "protected workmen".
As a reference concerning an earlier dispute was pending before the Tribunal, an application was also made under section 33 (2) (b) of the Act for approval of the action of the management in dismissing the workmen.
Subsequently, on April 17, 1968 the parties reached a settlement.
Under the settlement the strike was withdrawn, the dispute concerning the dismissal of the workmen was referred for adjudication by a joint application made by the parties under section 10 (2) of the Act, and 76 of the dismissed workmen were re employed till the disposal of the adjudication by the Industrial Tribunal.
The demand set out in para 1 (A) of the Schedule to the order of reference relates to 25 workmen who were not reinstated and demand in para 1 (B) of the Schedule relates to the 76 workmen who were temporarily reinstated.
Following a further settlement all the 76 workmen mentioned in para 1 (B) were taken back and made permanent and the demand set out in Para 1 (B) was allowed to be withdrawn as not pressed by the award dated January 10, 1973.
In the meantime, 21 13 out of the 25 workmen covered by demand 1 (A) also reached a settlement with the management and withdrew the dispute relating to them.
The dispute on which the impugned award was made was thus restricted to demand in para 1 (A) concerning 12 workmen only out of 25.
The Tribunal by its award dated December 9, 1976 directed the company to reinstate these 12 workmen on the ground, inter alia, that they were denied for no valid reason the same treatment meted out to 76 other workmen and that the management was thus guilty of discrimination and unfair labour practice.
Hence the appeal by special leave.
Allowing the appeal in part and remitting the case to the Industrial Tribunal, the Court ^ HELD: 1.
The Tribunal travelled outside its jurisdiction in recording a finding of unfair labour practice and discrimination.
In this case, the points of dispute were specified in the Schedule to the order of reference, and the Tribunal was, therefore, required to confine its adjudication to those points and matters that were incidental to them.
From a reading of demands 1 (A) and 1 (B) as a whole it is clear that the demand for reinstatement in respect of both groups of workmen as made arises on the alleged invalidity of the action taken by the management in dismissing these workmen.
The issue of unfair labour practice or discrimination by reason of subsequent reinstatement on a permanent basis of some and not all the 25 workmen was not a matter referred to the Tribunal for adjudication, nor it can be said to be in any way connected with or incidental to the right of reinstatement claimed by the 101 workmen from the date of their dismissal.
The fairness of subsequent absorption of some workmen is a matter quite irrelevant for judging the validity of the earlier dismissal of these workmen along with others; it is an entirely separate and independent question.
The Tribunal also did not frame an issue on the alleged discrimination.
[26 H 27 A; 26 F G] 2.
It is settled law now that when no inquiry has been held or the inquiry held has not been proper, the Tribunal has jurisdiction to allow the management to lead evidence to justify the action taken.
Normally the inquiry by the management starts by issuing the charge sheet to the workmen proposed to be discharged or dismissed.
In a case where the charge sheet is vague it must be held that there has been no proper inquiry.
[27 B D] In the instant case, having found that proper charge sheet has not been served on the workmen, the Tribunal was entitled to ask the parties to lead evidence to enable the Tribunal to decide the merits of the dispute.
The order directing reinstatement of the 12 workmen without a consideration of the merits of the case cannot be sustained.
D] M/s. Bharat Suger Mills Ltd. vs Shri Jai Singh and others, at 690 and Management of Ritz Theatre (P) Ltd. vs Its Workmen, ; at 468, followed.