The Fine Knitting Co., Ltd. v. The Industrial Court, Bombay and Others

Gajtndr 'l.cadkar .J. industritd activity of the appellant coIJ.Sidered as a.

whole; it can no longer be regarded as subsidiary to hosiery.

It is common ground that by the notification issued under the Cotton Textile (Control) Order, l!J48, the appellant is called upon to supply to the Governm1·nt the prescribed quantity of yarn pro-duced by the spinning depa.rtment. It is unnece-ssary to refer to th!' details of the order or to tho extent of the yarn required to be sup.plied by the appellant under it. 'Vhat is significant is the fact that by the application of the ord!lr issued in that behalf, the Govcmmcnt has treated the appellant as a producer who has a spinning plant and in that sense, the existence of the spinning activity of the appellant bas bocn treated as an independent activity liable to be controlled by the notification issued under the Cotton Textile (Control) Order, 1948.

Then as t-0 the argument that the spinning and the hosiery am functionally integrated, it is clear that hosiery can exist without spinning, pro-vided the industry engaged in hosiery purchases yarn required f'or the purpose of hosiery. That is one aspect of the ma.ttor. But the more important aspect on which reliance bas been placed against the appellant is tha.t the appellant's spinning dep· artmcnt produces yarn of all counts some of which would admittedly not be useful for boHiery work. When the appellant was asked whether t,he allega-tion mado by respondents Nos. 3 and 4 in that be-half wa.s true or not, the ma.na.gement of the app· ellant hositatingly donicd the said 111lcgation. But an advertisement published in the local daily "Sandesh" wa.s produced by respondent.a Nos. 3 and 4 and it clearly showed that yarn of all counts 1962 was offered by the appellant for sale in the general The Fine Knitting market. Therefore, it would be idle to contend Co., Ltd. that the spinning work carried on in the spinning v. The Industrfol department is meant exclusively or solely for tbe Court, Rombay hosiery department. If the spinning department G ajendragadkar J, produces yarn which is not useful or necessary for, and which cannot be used by, the hosiery section.

the only inferei:ice is that the spinning department is working on its own and is producing yarn to be sold in the market. ·That being so, the argument of functional inter-dependence or integrality cannot be treated as valid.

Besides, it is not disputed that when the knitting department was closed in 1948, the spinn-ing department was not. If the two departments are functionally inter-dependent, the closure of the one without the closure of the other may need an explanation. The explanation which has appealed to the first and the second res-pondents Hpparently is that though the spinning work carried on by the appellant may, to some extent, be useful for the hosiery work, the major part of its work is carried on independently with an eye on the market and so the closure of the hosiery cannot and did not affect the continuance of the spinning department.

There is yet another circumstance on which considerable reliance bas been placed by the first and second respondents in rejecting the appellant's contention that the two departments constitute one unit. This circumstance refers to the conduct of the appellant itself in dealing with the employees engaged in spinning and in knitting departments.

It is admitted that the minimum wages paid to the employees in knitting differed from the minimum wages paid to the employees in spinning and so does the amount of dearness allowance paid to the respective employees differ. It is difficult to under-stand how an employer can make a distinction ui 1962 the payment of minimum wa.ges between one class Tht Fint Knittin.~ of employees a.ad another if bfJth the classes of

Co., LJr/. employees are engaged in diffllrent departments

v.

Tht Industrial Ccurt, of the samo esta bli~bmcnt or concern. If there is

Bombay unity of rmployment ancl unity of purpose and OojtndrogadJ:or J. design as suggested by ;\fr. Mehta., it is inconcei-

vn.ble that th" employees engaged in two depart-ments intt>grally connect<id with Pach other and con-stitut.ing onA unit would be paid different minimum wag<'s. Wha.t is true about the minimum wages and the cl Parness a.llowanco is also tru<' a bout tho bonus. It a.ppca.ra that even in years in which the appPllant made profits and actually paid bonus· to the work-trwn employed in the spinning dPpart.ment, no bonus was paid to the employ~es enga11Pd in the knitt-ing rlepartmcnt. That again can be explained and ju~tifiecl only 0n the basis that the appellant treated the two departments as distinct and separate and so the employees in the one got bonus and not the cmp-loype• in the other. It was suggested by Mr. :\Jet ha that the genesis of the present di8pute lies in the anxi<'t:V of the third respond('nt to take within its jurisdirt.inn the emplnyees Pngaged by the appellant in itR spinnin!! departm.-nt. x On a t.lw other hand, ~fr. Barnt for rt'Spond1·11ts OS. and 4 contends that the prt'Hcnt trouble aros<' b<'causc the appel-lant beiran to deny to its employers in the spinning d<'partmr>nt t.h<, berwfitR of 1'11 relevant conditions of sPrviee which were npplicnhle to the employees in the Textile fndnstrv in Ahm('dabad. What-Pv~r ma~' ho the baekgronncl of the dispute and its gPm»•is, it is clear beyond dc,ubt that. the way in whi0h ihe appellant has t.rrat<'<I irn employees in spinning ns clistiugui~hPd frnm itH cmp](l}"<'es in knit.ting leads very st.rci11gly to the infon'rW~ that t.he nppell•rnt treat•'•! the two departnwnts not aR one 11nit hut aR separate unitH each one function-ing on its own and inde.pc11dm1tly of the other. It is in tht' light of these cir~nmstances that. the first and the second respondents were not imp- ]962 ressed by the relevant factors on which the appel · The Fin6 Knitting !ant relied in support of its plea of the unity of the Co., Ltd. Vo two activities and came to the conclusion that the The /ndustrinl Court, two activities were separate and as such, as must be ·Bombay --, ,. separately recognised under s. 11. . We do not see Gajendragadkar J. how the appellant can successfully challenge the correctness of this conclusion.

There is one more point which yet remains to be considered. Mr. Metha argues that the impug-ned order recognising two different undertakings under s. 11(1) is not justified by the provisions of the statute. Section 11 provides that the Registrar may, after making su~h inquiry as he deems fit, recognise for the purposes of the Act-

( 1) any concern in a.n industry to be an

undertaking ;

(2) any section of an undertaking to be an

occupation. 1 The argument is that s. 11 ( 1) does not authorise the splitting up of a concern into two undertakings.

A concern, says ]\fr. Metha, is the whole of the concern or establiEhment run by the appellant and as ·such it has to be recognised as one undertaking in so far as the order under appeal treats the appel-lant's concern as two undertakings, it is contrary to s. 11 (l). We are not impressec! by this argu-ment. The appellant is undoubtedly engaged in the hosiery industry and that part of its business cannot.

be recognised as Cotton 'l'extile Industry because it is a concern engaged in spinning only which can be recognised under that category. If that is so, industrial activity of the appell~.nt in relation to hosiery industry must be recognised separately from the textile undertaking. If one concern or company carries on several businesses or under-takes different types of industrial works, these businesses or works would amount to separate enterprises or undertakings and would have to be

208 SUPREME OOURT REPORTS [1962] SUPP.

1961 recof!lliRerl as such. In fa.ct, if the a.ppel!a.nt it.qelf Tht Fint Knitting has heen treating the two kinds of work sepa.ra.tdy

Co., •. I.td. and ha.s thus split up its whole husiness into two The Indtutri12/ Court, indcIJ"mfont sections, it is not easy to understand

Flombay why the Registrar cn,nnot recognise the existence Gajt11drn:a'1k1r J, of two undcrtakingR carried on by th.e appell:rnt

and trPat the sairl undcrtakings as such. We see no jnstific•ition for the as.q•.1mption made by Mr. :'vfctha. that s. 11 (I) doPA not permit the recognition of several undertakings carried on bv the same com-pany Rf'parat<>ly. Jt all depends On whether the undertakings arc sepa.rato, distinct and indepen-dent. of oaf'h other or n,re functionally integral or intcr-dl'pcndent.. Tn the former case, th<i Registrar woul<l h<> justified in trPating the several under-takings separa.telv while in tho latter case, hA may recognise all of them as one undortaking.

There is one minor point to which reference may incidPntally be made. It. appears that before the firnt respondent, it was 'urgcd by the appellant that tlw present applications made by respondents !'\os. :J and 4 were barred by reA judicata. The ari.rnment wast.hat. sine" the Aeconrl respondent had on an Ni.rlier 'oncassinn c·>nsidcmd the merits of tho cas" :tnd ' refuRr<l to grant the request made by the third r<'Apondent for reeogni.qing the two und<•rtakings separately, t.he same question <'ot1ld not he !'('-agitated again before the same authority. In our opinion, there is no substance _in this argument. As we have alread.v pointed out, when the second re"'Pondent passed hiR earlier order, an appeal wag preferred againAt the said ordPr hv the fourth resprmd<mt hefore t.he first rPHponc10nt. That. appeal was, however, dismiHsed on the groun<l that. the fourth responclent w;Ls not partv to the proceedings hcforn th<> sccon<I res· pondt'nt and, thcrc•fore, he could not prefer an appeal. If t.he fourth reApondent had no right to m:i.ke an appeal because he wits not a party to the said proceedings, it is difficult to see how he can be precluded from making the present appli-cation on the ground of res judicata. At the The Fine IL nit tint highest, a plea ofres judicata may perhaps be raised Co., Ltd. against the third respondent but that would not v. The fndustrial Court, be effective in view of the fact that in the present Bombay case, an application has been made by the Gojentlr•zadk•r J. fourth respondent as well. That is why Mr.

Mehta did not seriously press the point of res judicata before us.

In the result, fails the appeal and is dismissed with costs.

Appeal dismissw.

KRISHAN LAL DHAWAN AND ·ANOTHER 196S

v.

DELHI ADMINISTRATION

(J. L. KAPUR, K. C. DAS GUPTA and RAGHUBAR

DAYAL, JJ.)

Criminal Trial-Trial by Special Judge-Another •pecial Judge conducts further proceedings-Conviction-Valid-ity-Code of Criminal Procedure, 1898 (Act 5 of 18.98), s. 350-Criminal Law Amendment Act, 1952 (46 of 1952). s. 8, sub's. 3.

The appellants were charged under ss. 120B and 420 Indian Penal Code ands. 5 (I) (d) read withs. 5 (2) of the prevention of Corruption Act. The trial of the appellants was commenced before a 15pecial Judge who heard the prosecution evidence. 'fhereafter the trial was taken up by another special Judge who examined the defence witnesses. and finally convicted the appellants. The appellants appealed to the

sentence. The appellants thereupon appealed to the Supreme Court by special leave.

The sole question which was raised by the appellants was that in view of the fact the trial commenced before one Special Judge and another Special Judge took up the proceedings are incompetent. . . The respondent · relying on s. 8, sub-s. (3), of the Cnmmal Law Amendment

CIVIL APPE'ILATE JURISDICTION: Civil Appeal No. 306 of 1961.

198 SUPRE:.\IE COURT REPORTS [1962] SUPP.

19'S Appeal Ly Bpecial leave from tho Judgment Tht /•1nt Kniltint and order dntt·d !\lay 16, !Oii9, of thn Industrial

Co., •• 1.14. Court, Bombay, in Appeal (J.C.) Ku. HO of 1959 .

f"ft lndtHtrilll C1urt, .J.P. lHtlttii and l.N. Shroff, for the appellant.

lJ1mb•y · N. !IL Harot, Secretary, Labour Association, for the respoudeut Nu. 3.

I!lfi2. Februar·y l 5. The Judgment of the Court was delivered by GAJE~IJHAGADK.All, J .. The appellant, tho :Fine Knittiug Co. Ltd., was iuoorpomted in 1908 and its priucipal acti~·itv then was to man11facture hosiery. Ju HJ24, wht'.n the app<'llant shifted its factory from Barejadi tu Ahmedabad, it in-stalled spinning machinery with nooo spindles with a vil'w to ensure suitable and .,,·en rnpply of yarn for its hosiery manufacture. On :\lay 30, 1939, the Government of Romhav i"sued a notification under t.he Bombay Industr 0ial Disputes Ac:t, l!):J8 (No. XXV of Hiili;), whereb.v hosiery concerns were included in tht' definition of ·Cot ton Textile Indus-try'. Subsequently on .July 17, Hl45, another notification was issued as a re8ult of which the hosiery manufacture was excluded from the Cotton Textile Industry and it was covered by a separate notifi~-ation issued under the said Act. This latter notification which was made applicable to the Hosiery Industry specified that the said notification i'.?lkr aliu, lo all concerns using power and employiug twe11ty or moro persons which are engaged in . the manufacture of hosiery or other knitted ar.tio:lcs made of cotton and all processes incidental or supplementary thereto. Aft.or this notification was issued, the appellant ceased to be covered by the extended and inclusive definition of the 'Cotton Textile Industry' and was recognised as a HusiH,Y concern being engaged in the manu-facture of hosiery. Later, in J!l46, the Bombay Industrial Relations Act, 1946 (No. XI of 194i) (hereinafter called the Act.), wa.s applied to the industries to which the Bombay Industrial Disputes 1962 Act had been applied, as a result of s.2(3) of the Thi Fim Knitting former Act. In consequence, for the purposes of Co., Ltd. the Act, the appellant concern was recognis<"d as an v. Thi lndustri•l Court undertaking of the Hosiery Industry under s. ll. This Bombay was the result of notification No. 10 of 1948, issued J. by the Registrar under the Act. This position was Uoj1ndragadk•r recognised by the Industrial Tribunal in indus-trial adjudications concerning disputes between the appellant and its workmen.

Even so, respondent No. 3, the Textile Labour Association, Ahmedabad, sought to reopen the issue by applying by to the Registrar on October 16, 1953, that the appellant's factory should be recognised as an undertaking both in the Cotton Tex-tile Industry and the Hosiery Industry. The Registrar who is the second respondent in the present appeal held an enquiry and ultimately came to tJ:i.e conclu-sion that there was no justification for splitting up the concern into two units-and recognising them as suggested by the third respondent. The third respondent did not prefer an appeal against the said decision of the second respondent; but respon-dent No. 4 who are the five elected representatives of the employees of the appellant sought to chal-lenge the said decision of the second respondent by preferring an appeal to the Industrial Court, res-pondent No. 1. The appellant · contended that respondent No. 4 were not entitled to prefer an appeal because they were not parties to the pro-ceedings in the original application before the second respondent. This preliminary objection was upheld and the appeal preferred by respondent No. 4 was dismissed. The result was that the orde·r passed by the Registrar rejecting the appli-cation made by respondent No. 3 concluded the dispute.

Even while the said appeal was pending be-fore the first respondent, respondents Nos. 3 and 4

200 SUPREME COCRT REPORTS [1962) SL'PP.

initiated the present proceedings by means of two Tht Fir1~ Knit1ifll applications made before the second respondent in

Co., Ltd. which the same relief was claimed that the appel-

Y, lant concern should be recognised as an undertaking The lndu 1lrid/ Court,

Bombay both in the Cotton Textile Industry and in thr

Hosiery Industry. The second respond~nt, howenor. rejected these applications on the ground that since he gave his earlier decision, there had been rio chango of circumstances and so there was no justi-fication for roconsidering the matter over again. The third and the fourth respondents then went in appeal before the first respondent and their appeals were allowed by the first respondent and a direction was issued that the appellant company should be recognised as two undert&kings-one in the Cotton Textile Industry and the othPr in the Hosiery Industry. Thu appellant then moved the High Court of Bombay undH Articles 2~!i and 227 of tho Constitution and challenged the validity of the order passed by the first respondent. In the High Court the parties took an order by consent on August 20, l!J58. As a result of this consent order, the direction issued by the first respondent was set aside and the matter was remanded to the second respondent to enable him to hold a fresh enquiry and to dispose of the dispute betwcC'n the parties in accordance with law.

On February 14, 1959, the second respondent pronounced his decision. Ho came to the conclu-sion that in the cir< umstances disclosed on evidencu, tho best courts wo~ Id be to recognise the spinning and hosiery sectior • of the appellant company as two separate unrl artaking and treat them as two separate enterpriseR. That is why under s.11(1) he decided to recognise the Fine Knitting Co: Ltd. (Hosiery Section) and the Fine Knitting Co. Ltd. (excluding Hosiery Section) as undertakings in the Hosiery Industry and the Cotton Text.He Jndustr,v respectively. The appellant was aggneved by th!B order and so is preferred a.ppe&ls before the first respondent. The respondents Nos. 3 and' 4 also 1962 challenged the decision of the second respondent The _Fine Kni.rting and contended that the entire concern of the appel-Co., Lld . lant should be treated as Cotton Textile Undertak- •• The lnd1Jdrial Court, ing. All the . three appeals failed and the first Born.hay respondent confirmed the order passed by the Gajendragadkar J. second respondent. The result is that the appellant concern is recognised as consisting of two undertak-ings, the Hosiery Section and the rest excluding the Hosiery Section. It is against this order of the first . respondent. that the appellant has come to this Comt by special leave.

The first point which Mr. Mehta has strenuously urged before us on behalf of the appellant i8 that on a proper application of the tests laid down by this Court, it should be held that the spinning and the Hosiery Sections in the appellant's establish-ment are one concern and in support of this argu-ment he h<ts referred us to the decisions in the Associated Cement Companies Ltd. v. Their Worlc-men ( '), Pratap Press v. Their W (ll'lcmen (2) and Palcshiraja Studios v. Its Workmen ('). This question has been recently considered by this Court in the case of the Honorary Secretary, The South India MiUowners' Association v. The Secretary, Coimbatore District :Textile Workers' Union, Coimba-tore (') in which judgment has been pronounced on February 1, 1962. In the last mentioned case, this Court has examined the relevant earlier decisions and ha.s come to the conclusion that though the question about the unity of two industrial establishments has to be considered in the light of the refevant tests laid down from time to time, it would be unreasonable to treat any one of the said tests as decisive. As has been observed in that case, in dealing with the problem, several factors are relevant, but it must be remem-bered that the significance of the several factors

(1) (1960] 1 S.C.R. 703. (2) (1960] I L.L.J. 497.

(3) (1961] 2 L L.J. 380. (4) (1962] Supp. 2 s.c R. 92s

202 SUPRE:IIE COtJRT REPOR'i'S (1962] SUPP.

would not be tho same in each case nor their impor-ht Fi1ic 1\·11iUint; tance. It is in the light (Jf tht>se decisions that

Co Ltd. tho point raised by Mr. llkhla has to be consi·

v. dered.

11u Tndusl1ial Co11rt,

Bomb~J :llr. i\lchta contends that in the present caso Gajmdn']adkar J there is unity of ownership aml as a necessary

corollary, tlwre is unity of mauagement, supervi-sion and control; there is unity of purpose and design and he 11rgucs that there is complete func-tional integration. According to him, as no hosi-ery could be manufactured without ya.ru, there-is such a functiu1ml in tcr-dcpendcnco between the spinning and the hosiery sections that the latter cannot exist without the former. There is also unity of fornnce and in consequence, there is one capital aud depreciation fund account, one common account of expenditure and incomo, one balanct!· sheet and one profit and loss account. There is also unity of employment and the two concerns function UJ:der the same roof; so there is unity of habitation. It is on these grounds that lllr. Mehta contends that the first and the second respondents were in error in spl,itting up the appellent's establi-shment into two Hections and recognising them separately as such.

In dealing with the significance and the effect of the factors on which ;\Ir. i\lchta has rightly relied it is necessary to bear in mind certain other rele-vant foctorn on which the decision wider appeal is substantially baaed. It is true that in 1924, the spinning scct10n of the establishment may have begun as a subsidi111·y tu the hosiery section and in order to servo as its feeder. But tho evidence on tho record clearly shows that the position is now roversed and that the spinning section has now assumed major importance and hosiery takes a minor place in tho industrial activities of the app-ellant. The inspectiou notes made by the second respondent show that it was admitted by the management tha.t the spinning section has now 1962 developed to such an extent that it is like a spinn· ing mill by itself; it can no longer be regarded as a The Fine Knittjng Co., Ltd. minor section attached to the hosiery _works. It v. was conceded before the secowi respondent that The Industrial Court, Bombay only about 20'/'0 of the yarn manufactured in the spinning section is consumed for hosiery purposes Gajendragadkar J. while the rest is available to be sold in the market.

The production figures in the spinning section and 'the consumption of the yarn produced in that sec· tion unmistakably point to the fact that the spinn· ing section is no longer a minor department run by the appellant solely for the purpose of its hosi-ery section. In 1955 in the months of November and December, the production in the epinning department was worth Rs. 1,17,742 whereas what-ever was consumed in the knitting department was only Rs. 23,817 leaving a balance which was sold for Rs. 93,!l25. The corresponding figures for the year 1956 Mc Es. 6,70,854, Rs. 1,40,105 and Rs.5,30, 749. Similar figures for 1957 are Rs.8,17,153, Rs. 1,31, 725 and Rs. 7,04,018 and for 1958 are Rs. 6,68,095, !'ts. 1,26,252 and Rs. 5,40,873. The balance-sheet for the year 1954 shows that the total hosiery sale was worth Rs. 2,37,232-6-0 whereas the total yarn sale was worth Rs. 14,82,705-5-0.

Similarly, for the year 1955, the hosiery sale was Rs. 2,56,986 and the yarn sale was Rs. 14,44,929.

The strength of the employees engaged in the two respective sectors tells the same'story. The table prepared by the second respondent from the in-formation supplied by the · management shows that .for the year 1955, spinning employees were 174, hosiery employees 5ti and the common work, men 35. For the year 1956, the figures were 217, 54 and 38; for Hi57, the figures were 194, 65 and 38; and for 1958, the figures were 178, 60 and 32.

Mr. Mehta quarrels with some of these figures but does not dispute the broad conclusion which is drawn from the figures ,that the number of emplo-yees engaged in the spinning section is far more

204 SUPREME COVRT REPORTS [1962] SCPP.

1!16Z than that employed in the hosiery section. Thus, Tht Jr'ine },'n1tt{1,; there can be no doubt that the spinning activity

Co., •• Ltd. of the appellant which may have begun as subsi-1·1i, lnduJll'ial Court, diary to the hosiery activity has now grown in

Bombay importance and has taken a place of pride in the