Lalit Mohan Sharma, J.
1. This writ application by the petitioner, Rajeshwar Prasad Jaiswal, who was the managing partner of a medical concern, which has since 1-1-1973 been closed down, is directed against the order passed under the provisions of the Bihar Shops and Establishments Act, 1953 (hereinafter referred to as 'the Act') by the Labour Court, Patna, respondent No. 5, as contained in Annexure 5 to the writ application affirmed on appeal by the respondent No. 6 by the order contained in Annexure 6 to the writ application.
2. The said concern was a co-partnership business functioning in the name of Popular Jain Pharmaceutical Distributors in the town of Patna and was the authorised distributor for the whole of the State of Bihar for some pharmaceutical concerns and was getting commission. The respondents 1 to 4, besides others, were employed by the petitioner on such rates of pay and with effect from the dates mentioned in paragraph 5 of the writ application. These are the admitted facts in the case. According to further case of the petitioner, the medical concerns which were supplying medicines for distribution to the petitioner cut down the supply of medicines practically and some of them cut the supply altogether resulting in the loss of business and volume of work and as a result the partnership firm closed down with effect from 1-1-1973. The respondents 1 to 4 as also other employees had full knowledge of the developments, but for abundant precaution, the situation was brought to their notice formally also. The respondents 1 to 4 filed an application under Section 28 of the Act on 5-2-1973 against the present petitioner making several claims including those on the basis of yearly increments and compensation for termination of service. The learned Counsel appearing for parties stated that as in this writ application the questions which the parties are raising before this court are only in respect of the aforesaid two items it is not necessary to state any facts relating to the other claims which have been dealt with by the respondents 5 and 6. They have, in their arguments, referred only to the questions whether the respondents 1 to 4 are entitled to any compensation by way of increments in their pay and to compensation for termination of their service. As a matter of fact, the appeal before the respondent No. 6 in respect of the other claims was not pressed.
3. The respondents 1 to 4 claimed that each of them was entitled to an yearly increment of Rs. 10/- which was not paid by the Management since 1969. The petitioner denied the claim. The respondent No. 5 gave its finding in favour of the employees which was affirmed on appeal. On the other point the respondent No. 5 held that the employees were entitled to compensation under the second proviso to the Section 26(1) of the Act. The respondent No. 6 on appeal confirmed this finding also.
4. Mr. Anirudh Prasad Verma, appearing for the petitioner, raised the following two points in support of this application:
(i) The claim on the basis of yearly increment so far it related to a period more than six months prior to the filing of the application under Section 28 of the Act was barred by limitation under Rule 22(1) of the Bihar Shops and Establishments Rules, 1955(hereinafter referred to as 'the Rules'), and
(ii) The respondents 1 to 4 were not entitled to compensation under Section 26(1) second proviso of the Act as it was a case of bona fide closure of the business.
5. The first argument addressed by Mr. Verma does not appear fit to be entertained. The proviso to Rule 22(1) of the Rules, which is in the following words, authorises the authority to condone the delay in filing the application, if the application can show that there was sufficient cause for the delay:
Provided that an application may be admitted after the period of six months if the applicant satisfies the authority that he had sufficient cause for not making the application within such period.
The question whether the delay was condoned by the authority concerned or not is one involving facts and there is no material before us to indicate the correct state of affairs. The orders (Annexures 5 and 6) are silent on this point and it is not asserted before us that the question of limitation was pressed before the authorities. During the course of argument, Mr. Verma offered to file a copy of the ordersheet of the respondent No. 5, but it does not appear proper in the facts and circumstances of the case to admit it in evidence. If the petitioner was serious about this point, he should have filed a proper affidavit making the ordersheet as an annexure, after serving a notice on the respondents' counsel or should have prayed for calling for the records sufficiently in advance of the hearing of this case. Besides, the petitioner should have argued the point before the appellate authority. In these circumstances, I am of the view that the petitioner should not be permitted to urge the point now. It is accordingly rejected.
6. The question whether the employees will be entitled to compensation under Section 26 of the Act on the bona fide closure of business has been argued by the learned Counsel for the parties with great seriousness. It may be useful to consider the language of the Sub-section (1) of Section 26 of the Act, which is quoted below:
Notice of dismissal or discharge'-
(1) No employer shall dismiss or discharge or otherwise terminate the employment of any employee who has been in his employment continuously for a period of not less than six months, except for a reasonable cause and after giving such employee at least one month's notice or one month's wages in lieu of such notice provided that such notice shall not be necessary where the services of such employee are dispensed with on a charge of such misconduct as may be prescribed by the State Government, supported by satisfactory evidence recorded at an enquiry held for the purpose:
Provided further that an employee who has been in continuous employment for a year or more and whose services are dispensed with otherwise than on a charge of misconduct shall also be paid compensation equivalent to fifteen days average wages for every completed year of service and any part thereof in excess of six months before his discharge in addition to the notice or pay in lieu of notice as prescribed above.
The claim by the respondents has been made under the second proviso.
7. At the very outset, it should be mentioned that in this order (Annexure 6) the respondent No. 6 has observed at one place that it is not known whether the closure of the business was real and bona fide. It has strenuously contended by Mr. Verma that this observation is entirely erroneous and illegal inasmuch as it has been the admitted case of the parties that the business in question has closed down for reasons beyond the control of the petitioner. The assertion has not been challenged before us by the learned Counsel for the respondents and both sides have advanced their arguments on the assumption that there was a bona fide closure of the business.
8. The language of Section 26 of the Act clearly indicates that for attracting the section, it is necessary that the employer should have either dismissed or discharged or otherwise terminated the employment of the employee. Unless that has been done, the proviso cannot be pressed in service. Admittedly, it is not a case of either dismissal or discharge. The employment of the respondents 1 to 4 has come to an end as a result of the closure of the business which was running at a loss. The question is whether it is permissible, in the situation, to hold that the employment has been terminated within the meaning of the section. The section postulates a positive act on the part of the employer which directly results in the termination of the employment of the employee. In the case of a closure of the business, the termination of employment is the result of the closure itself. It is not the result of a positive step taken in this regard by the employer. The words in the second proviso which have been underlined by me above reinforce this conclusion.
9. Excepting the case of the Calcutta Chemical Ltd. v. D.K. Barman , our attention has not been drawn to any decision dealing with a case under the present Act. The problem in Calcutta Chemical Company's case was different but while discussing the language of Section 26 of the Act. Mr. Justice Untwalia (as he then was) observed in paragraph 11 of the judgment that a case involving termination of a contract of employment by an employer by virtue of and express or implied term of contract of service is outside the scope of the section. This observation lends support to the view I am taking. The case of a term thereof, is a result of the contract itself and similarly in the case before me the termination of employment is a result of the closure business.
10. The learned advocate have referred to the decisions of the Supreme Court in Hari Prasad and Anr. v. A.D. Divelkar A.I.R. 1957 S.C. 121, The State Bank of India v. N. Sundra Money , and
Hindustan Steel Ltd. v. Labour Court, Orissa , dealing with the cases under the Industrial Disputes Act. The Chapter V-A of the Act deals with Lay off and Retrenchment. The relevant portion of Section 25-F of the said Chapter, which is similar to some extent to Section 26 of the Act is in the following terms:
25-F. Conditions precedent to retrenchment of workmen-No workman employed in an industry, who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until-
(a) the workman has been given one month's notice in writing indicating the reasons for retrenchment and the period of notice has expired or the workman has been paid in lieu of such notice, wages for the period of the notice:
Provided that no such notice shall be necessary if the retrenchment is under an agreement which specifies a date for termination of service ;
(b) the workman has been paid, at the time of retrenchment, compensation which shall be equivalent of fifteen days' average pay for every completed year of continuous service or any part thereof in excess of six months.
11. The case of a retrenchment under an agreement has been directly dealt with in the proviso to Clause (a) of Section 25-F and, therefore, does not raise any difficulty. The provisions of Clause (b) are similar, although not identical, to the second proviso to Section 26(1) of the Act, with which we are concerned. In the case of Hari Prasad and Anr. v. A.D. Divelker A.I.R. 1957 S.C. 121 the Supreme Court had to interpret Section 25-F (b) in the following circumstances. The main appellant was a wollen mill employing a large number of workmen who attended their duties in shifts. Notices were put up declaring the intention of the management to close down the entire mill by three instalments. As a result of the closure, the services of the workmen were terminated. The mil] company claimed that the closure of the business was bona fide being due to heavy losses sustained by it. The question was whether the workmen were entitled to compensation under Section 25-F (b). The Supreme Court referred to the defintion of the term 'retrenchment' as meaning discharge of surplus labour by the employer for any reason whatsoever otherwise than a punishment inflicted by way of disciplinary action. It was held that the term had no application where the services of all the workmen were terminated on real and bona fide closure of the business. In the circumstances for providing the workmen with compensation on bona fide closure of the business, a specific provision was introduced in the Act by an amendment in 1957 under Section 25(FFF). The learned Counsel for the respondents referred to the definition of the word 'employee' in Section 2, sub-section(4) of the Act which includes in the term, a workman who has been retrenched; This part of the definition of the term 'employee' is not helpful to the respondents at all as is clear from the decision in Hari Prasad's case.
12. The decisions in the State Bank of India v. N. Sundra Monej and Hindustan Steel Ltd. v. Labour Court, Orissa
, were also cited at the bar. None of these decisions related to a case of closure of the business and they, therefore, do not appear to be helpful. Reliance was placed on behalf of the respondents on the observations made in paragraph 9 of the judgment in Sundara Money's, case. In the case of Hindustan Steel Ltd. v. Labour Court, Orissa, the court considered whether there was any inconsistency between the judgments in Han Prasad's case and that in Sundara Money's case. While so doing, the court specifically referred to that part of the judgment in Hari Prsad's case where it was held that Section 25-F did not apply to a case where the business itself ceased to exist. It was held that there was no inconsistency between the two cases. It is therefore, not permissible to urge that the Supreme Court in Sundara Money's case departed from the ratio laid down in Hari Prasad's case, specially as Sundara Money's case was not one involving closure of the business itself.
13. I must, however, point out that even the Supreme Court decision in the case of Hari Prasad and Anr. v. A.D. Divelkar A.I.R. 1957 S.C. 121 cannot be said to directly cover the point which arises in the present case. The language of Section 25F of the Industrial Disputes Act, although similar, is not identical to the language of Section 26 of the Shops and Establishments Act. But as far as it goes, the decision in Hari Prasad's case purports the view which I am taking. I accordingly hold that an employee is not entitled to any compensation under Section 26 of the Shops and Establishments Act on the bona fide closure of the business in which he is employed. The first point mentioned in paragraph 4 above is decided against the petitioner but the petitioner succeeds on the second point.
14. In the result, this writ application is allowed in part and the orders as contained in Annexures 5 and 6 to the writ application are modified to this extent that the claim of the respondents 1 to 4 by way of compensation for termination of their services on the closure of the business is rejected. The impugned orders subject to the aforesaid modification are confirmed. There will be no order as to costs.
K.B.N. Singh, C.J.
15. I agree.