JUDICIAL CONSTRUCTION OF

APPLICATION OF CHAPTER
VA OF THE INDUSTRIAL
DISPUTES ACT, 1947
Labour Law

JAGRITI SINGH

Electronic copy available at: http://ssrn.com/abstract=2525500

 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947

TABLE OF CONTENTS

Contents
Table of Contents ............................................................................................................................ 1
Table of Cases ................................................................................................................................. 2
Introduction ..................................................................................................................................... 4
A. Industrial Establishments Covered under Section 25A ....................................................... 5
B. Exceptions Created by Section 25A .................................................................................... 7
C. Continuous Service under Section 25B ............................................................................... 9
D. Chapter VA: A Complete Code ? ...................................................................................... 11
Retrenchment ............................................................................................................................ 11
Lay-Off ..................................................................................................................................... 12
Overriding Effect of Chapter VA ............................................................................................. 14
Chapter VA: A Complete Code ................................................................................................ 16
Conclusion .................................................................................................................................... 16
Bibliography ................................................................................................................................. 18
Books ........................................................................................................................................ 18

1
Jagriti Singh

Electronic copy available at: http://ssrn.com/abstract=2525500

 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947

TABLE OF CASES

1. Aspinwall & Co., Kulshekar, Mangalore v. Lalitha Padugady and others etc. etc.,
AIR1996SC580
2. Balakrishna Pillai and Ors. v. Anant Engineering Works Private Limited and Anr.,
(1974)76BOMLR575
3. Castophene Manufacturing Company v. Miss Janaki Gillumal and Others, 1972 Indlaw
MUM 2879
4. Central Bank of India v. S. Satyam and others, (1996)5SCC419.
5. Central Provinces Transport Service Ltd. v. Raghunath Gopal, MANU/SC/0067/1956
6. Dewan Tea Estate v. Their Management, 1964 (1) LLJ 358
7. Director, Fisheries Terminal Division v. Bhikubhai Meghajibhai Chavda, 2009INDLAW
SC 1520
8. Donald L. Nordling v. Ford Motor Company (1950) 28 A.L.R. 272.
9. Empire Industries Limited v. State of Maharashtra and others, 2010 Indlaw SC 446
10. Engineering Kamgar Union v. Electro Steels Castings Ltd. and Anr., AIR2004SC2401
11. Essen Deinki v. Rajiv Kumar, AIR2003SC38
12. Harmohinder Singh v. Kharga Canteen, Ambala Cantt., AIR2001SC2681
13. Haryana Urban Development Authority v. Om Pal, AIR2008SC475
14. In Messrs Burn and Co., Ltd., Calcutta v. Their Workmen [Civil Appeal No. 325 of 1955,
decided on October 11, 1956.]
15. K. T. Rolling Mills v. Meher, 64 Bom.L.R. 645
16. Kohinoor Saw Mill Company v. State of Madras 1957 (2) LLJ 210
17. Krishna District Co-operative Marketing Society Limited, Vijayawada v. N.V.
Purnachandra Rao and Ors., AIR1987SC1960
18. Lal Mohammad & Ors. v. Indian Railway Construction Co. Ltd. & Ors.,
1998(6)SCALE424
19. M.A. Veriya v. C.P. Fernandez, [1956] I L.L.J. 547 (Bom.) (D.B.).
20. Muir Mills Company's Ltd. v. Suti Mills Mazdoor Union 1955 (1) LLJ 1 at 6
21. Nalinkumar A. Thakar and Others v. Gujarat State Civil Supplies Corporation Limited
and Others, 2002 Indlaw GUJ 306
22. Nandkishore Ganesh Joshi v. Commr. Municipal Corporation Kalyan, AIR 2005 SC 34
23. P. Virudhachalam and Ors. v. Management of Lotus Mills and Anr., AIR1998SC554
24. Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills Mazdoor Union, AIR1957SC95
25. Punjab Land Development and Reclamation Corporation Ltd., Chandigarh Etc. Etc.
v. Presiding Officer, Labour Court, Chandigarh and Ors. Etc. Etc.
MANU/SC/0479/1990 .
26. Sawatram Ramprasad Mills Company, Limited, Akola v. Baliram, 1962 INDLAW MUM
85
27. South India Corporation and Others v. All Kerala Cashewnut Factory Workers’
Federation and Another, 1959 INDLAW KER 17
28. South India Mill owners’ Association and Ors v. Coimbatore District Textile Workers’
Union and Ors., MANU/SC/0285/1962.
29. State of Karnataka v. K. Gopalkrishna Shenoy, (1987)3SCC655

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Jagriti Singh
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947

30. Suresh Gokuldas and Another v. Employees’ State Insurance Corporation, 1964
INDLAW MAD 29333.
31. The Associated Cement Companies Limited, Chaibassa Cement Works, Jhinkpani v.
Their Workmen, AIR1960SC56
32. The Central Bank of India v. P. S. Rajagopalan etc., AIR1964SC743
33. The Workmen of Firestone Tyre & Rubber Co. of India (P) Ltd. v. The Firestone Tyre &
Rubber Co. and Thiru J. N. George and Ors. v. The Management of Firestone Tyre &
Rubber Co. India (P) Ltd. and Ors., AIR1976SC1775
34. Tinkori Oil Mill Mazdoor Congress v. Tinkori Sadhu Khan & Sons, 11 FJR 197 (LAT)

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Jagriti Singh
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INTRODUCTION
The Industrial Disputes Act, 1947 (XIV of
1947) (hereinafter referred to as “IDA”) was
passed by the Dominion Legislature of India
came into force in the whole of India on 1
1
April, 1947. As the preamble to the Act
shows, was enacted to make provisions for
the investigation and settlement of industrial
disputes.2 Since then the Act has undergone
various modifications. The IDA is based on
the principle of collective bargaining for
resolving industrial disputes
maintaining industrial peace. Thus, principle
of industrial democracy is the bed-rock of
the Act.3
The Act as it stood in 1947 had no provision
for payment of ‘lay-off’ and ‘retrenchment’
compensation in case workmen were laid off
or retrenched in case of
contingencies. Though some progressive
employers used to voluntarily pay and
Industrial Tribunals and courts used to
award such compensation at times, the
situation was far from satisfactory. 4 This
1
Sawatram Ramprasad Mills Company, Limited,
Akola v. Baliram, 1962 INDLAW MUM 85
2
The Central Bank of India v. P. S. Rajagopalan etc.,
AIR1964SC743
3
P. Virudhachalam and Ors. v. Management of
Lotus Mills and Anr., AIR1998SC554
4
The Workmen of Firestone Tyre & Rubber Co. of
India (P) Ltd. v. The Firestone Tyre & Rubber Co.
Jagriti Singh
INDUSTRIAL DISPUTES ACT, 1947
situation was addressed in 1953 when as a
consequence of accumulated stocks in
textile industry, textile mills were threatened
with the effect of closure of one or more
shifts entailing lay-off or retrenchment of a
large number of workers employed in the
industry.5 Thus, to avoid industrial unrest in
the country, the President of India
promulgated the Industrial Disputes
(Amendment) Ordinance, 1953 with effect
from October 24, 1953, to make provision
for compensation of lay-off or retrenchment,
and for
hence settling common standards for all
6
employers. As a result, Chapter VA
containing Sections 25A to 25J was inserted
by Act No. 43 of 1953 with effect from This
Chapter relates to ‘Lay-off and
Retrenchment’.7 This amendment act has no
retrospective amendment.8
certain The researcher believes that this chapter is
extremely important to the working of any
industry because it is the workmen who
and Thiru J. N. George and Ors. v. The Management
of Firestone Tyre & Rubber Co. India (P) Ltd. and
Ors., AIR1976SC1775
5
O.P. Malhotra, The Law of Industrial Disputes
(vol.2, 5th edn., Delhi: Universal Law Publishing Co.
Pvt. Ltd., 1998) at 1516.
6
See Gazette of India, Extraordinary, dated 24
October, 1963, Part II, Section 1 at 365.
7
Central Bank of India v. S. Satyam and others,
(1996)5SCC419
8
Messrs Burn and Co., Ltd., Calcutta v. Their
Workmen [Civil Appeal No. 325 of 1955, decided on
October 11, 1956.]
4
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947
make the industry function and if they are
dissatisfied or removed then it will hamper
the working of the industry. The researcher
in this research paper will be dealing with
the issues regarding the applicability of this
chapter VA as interpreted by courts.
A. INDUSTRIAL
ESTABLISHMENTS COVERED
UNDER SECTION 25A
At first it is important to understand the
applicability of Chapter VA in a broader
sense before we move to the narrower
contentious issues regarding the same. The
basic issue which can be raised is regarding
the jurisprudential understanding of the
meaning of ‘industrial establishment’ under
section 25A. This would cover narrower
issues as to first, whether the chapter VA
covers dead industries within its ambit.
Second, if the industry is an existing one
that what elements are needed to constitute
an industrial establishment.
After analysis of a series of judgments the
researcher on the first issue would take a
stand that chapter VA only applies to an
existing industry and not a dead one. The
reasoning of the court in various decisions is
important to understand the judicial
construction given to the word industry.
Jagriti Singh
The above principle can be derived based on
the reasoning which can be based on the
object of any labour legislation, which is
firstly to ensure fair terms to the workmen,
and secondly to prevent disputes between
the 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.9
The second argument which can be used to
justify this stance is that the entire scheme of
IDA assumes the existence of an existence
an industry, and then proceeds on the
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.10
Moving on, the second issue is a contentious
one, regarding the determination of scope of
9
In Messrs Burn and Co., Ltd., Calcutta v. Their
Workmen [Civil Appeal No. 325 of 1955, decided on
October 11, 1956.]
10
Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills
Mazdoor Union, AIR1957SC95
5
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947
“industrial establishment” as covered under
Explanation to section 25A of the IDA. The
courts have laid down various tests to
determine what constitutes an industrial
establishment. This shall be examined by the
researcher in greater detail. The Explanation
to section 25A according to the researcher
only gives the meaning of the expression
“industrial establishment” for certain
sections of the Act; it does not purport to lay
down any test as to what constitutes one
‘establishment’.
However, the stand of the researcher can be
questioned on the premise that
section 25E does not contain the expression
“industrial establishment”. It uses the word
“establishment” only. Though it can be
agreed that if section 25E is read with
section 25C and the definition of lay-off in
section 2(kkk) of the IDA, as it must be
read, the word “establishment” in section
25E would mean an industrial establishment.
This logic according to the researcher would
negate the effect of the Explanation
provided in section 25A to the word
“industrial establishment”. This
interpretation in the view of the researcher if
given effect to would be going against the
rules of statutory interpretation since statute
must be read as whole and in such a way
Jagriti Singh
that every provision is given effect to
without rendering any provision otiose.11
Hence, the Supreme Court in The Associated
Cement Companies Limited case 12 rejected
the argument of the counsel that a factory
and a mine, a mine which supplies the raw
material to the factory, can never be one
establishment on the ground that argument
proceeds on the assumption that the
Explanation while stating what undertakings
or enterprises come within the expression
“industrial establishment” necessarily lays
down the test of ‘one establishment’ also.13
Hence, the court viewed this assumption to
be a mere fallacy. The court stated that the
true meaning and effect of the Explanation
was to categorize factory, mine or
plantation, which could come within the
meaning of the expression “industrial
establishment”.
The court in The Associated Cement
Companies Limited case then went a step
further to lay down the test for ‘one
establishment’ as covered under the ambit of
11
Justice G.P. Singh, Principles of Statutory
Interpretation (10th edn., Nagpur: Wadhwa and
Company Law Publishers, 2006) at 31.
12
The Associated Cement Companies Limited,
Chaibassa Cement Works, Jhinkpani v. Their
Workmen, AIR1960SC56
13
The Associated Cement Companies Limited,
Chaibassa Cement Works, Jhinkpani v. Their
Workmen, AIR1960SC56
6
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947

the section 25A. The court was of the view it involves factory, mine or plantations in
that the real purpose of the tests was to find various permutations and combinations due
out the true relation between the parts, to the different jurisdictions governing them
branches, unity, etc. If in their true relation would be to import artificiality into the IDA
they constitute one integrated whole, then it for which there is no justification in the
could be called as an establishment under provision or case laws as have been
section 25A; if on the contrary they do not discussed above. Therefore there is no
constitute one integrated whole, each unit is necessity to treat them as separate
then a separate unit.14 The later decision of establishments when providing for
Supreme Court in South India Mill owners’ unemployment compensation under Chapter
Association15 case supplements the test laid VA of the IDA.
down by Associated Cement case the test as
B. EXCEPTIONS CREATED BY
it emphasizes on the nexus of integration in
the form of some essential dependence of SECTION 25A
the one on the other to determine the The scheme of Chapter VA envisages that
whether the units form an integrated the provisions of sections 25C to 25F
whole. The Indian courts have also referred
16
applies only to the establishments mentioned
to American decisions wherein the test of in Section 25A and not to every industry
unity of employment has been emphasized generally falling under Sec. 2(j) of the IDA.
upon.17 However, sections 25F, 25G and 25H are
not hit by section 25A. Therefore, the
Hence to conclude this segment the
provisions of sections 25B, 25G and 25H of
researcher believes that division of
the IDA are applicable to every
establishment into two separate parts in case
establishment to which the provisions of the
14
The Associated Cement Companies Limited, IDA apply.18
Chaibassa Cement Works, Jhinkpani v. Their
Workmen, AIR1960SC56
15
South India Mill owners’ Association and Ors It can be easily gauged from the plain
v. Coimbatore District Textile Workers’ Union and reading of the section 25A that the section
Ors., MANU/SC/0285/1962.
16
South India Mill owners’ Association and Ors
v. Coimbatore District Textile Workers’ Union and
18
Ors., MANU/SC/0285/1962. Nalinkumar A. Thakar and Others v. Gujarat State
17
American decision in Donald L. Nordling v. Ford Civil Supplies Corporation Limited and Others, 2002
Motor Company (1950) 28 A.L.R. 272. Indlaw GUJ 306

7
Jagriti Singh
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
creates an exemption in case of three types
of ‘industrial establishments’ from the
application of provisions section 25C to
section 25E. The three categories are: (a)
those to which Chapter VB applies; (b)
those in which less than fifty workmen on an
average per working day have been
employed in the preceding calendar
month;19 or (c) those which are of seasonal
character or in which work is performed
intermittently.20
The result being that the last two types of
industrial establishments are exempted from
the payment of “lay-off” compensation as
required under section 25C, maintaining the
muster rolls of workmen as required by
section 25D and compliance with the
requirements of section 25E. But to the
establishments of the first type which fall
within the ambit of Chapter VB, the
provisions of Section 25M and Section 25O
will apply.
The researcher will now be dealing with the
issues regarding the second type
industrial establishment. The courts
19
The Workmen of Firestone Tyre & Rubber Co. of
India (P) Ltd. v. The Firestone Tyre & Rubber Co.
and Thiru J. N. George and Ors. v. The Management
of Firestone Tyre & Rubber Co. India (P) Ltd. and
Ors., AIR1976SC1775
20
Section 25A of the IDA.
Jagriti Singh
INDUSTRIAL DISPUTES ACT, 1947
according to the researcher seem to have
given strict interpretation to this provision
section 25A(1)(a) allowing no exceptions.21
Hence, even when more than fifty workmen
had been employed on certain days, if the
average number of persons employed per
working day during the preceding month
was less than fifty then no lay-off could be
claimed.22
However, there have been cases wherein the
employers have been required to pay
compensation to the workmen even if they
are less than fifty in an establishment on the
basis of law of contract wherein the
employer in the contract gives up his right of
suspending services of an employee. 23 In
cases where such contract exists the
employer cannot hide under the cloak of
section 25J(2) and argue that the awarding
of compensation is respect of lay-off periods
must be only in accordance of section 25C,
the applicability of which is governed by
section 25A under Chapter VA because in
such cases it is a suspension of service and
of
not lay-off as defined in section 2(kkk) of
21
Balakrishna Pillai and Ors. v. Anant Engineering
Works Private Limited and Anr.,
(1974)76BOMLR575
22
Tinkori Oil Mill Mazdoor Congress v. Tinkori
Sadhu Khan & Sons, 11 FJR 197 (LAT)
23
Dewan Tea Estate v. Their Management, 1964 (1)
LLJ 358
8
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947

the IDA. Hence, the employer is to pay the state the difference between the two. The
employees for breach of contract and not on example being that a sugar mill in a given
the grounds of lay-off since the condition for area, where most of the sugar mills work or
applicability of section 25C is not satisfied. are compelled by circumstances to work
only during given seasons may work all
Moving further, the issue which comes up
through the year. Such a mill would be a
when we deal with third type of industrial
seasonal factory but it would not be an
establishments is the problem in laying
industrial establishment of a seasonal
down a threshold to determine what amounts
character within the meaning of section
to “seasonal character”. There is no
25A(2) of the IDA.26 Hence, it may not be
definition in the IDA as to what is meant by
difficult to visualize an industrial
seasonal character of an industrial
establishment engaged in an industry,
establishment. But if a dispute arises as to
predominantly seasonal even in a given
whether an industrial establishment is of a
region, working normally all through the
seasonal character or not, the matter is
year. The industry will be seasonal, but
usually referred to the Government by the
nonetheless the industrial establishment will
court and the decision of the appropriate
not be seasonal within the meaning of
Government is final.24 However, in cases of
section 25A(2). This analogy is based on the
failure or absence of government order the
view that the meaning of industry is wider
courts usually refuse to consider it as a
than an industrial establishment.
seasonal industry.25

Moving a step deeper, Rajagopalan J. in the

case of Kohinoor Saw Mill Company has
distinguished between a seasonal industry
and seasonal industrial establishment under
section 25A(2). He gives a fine example to
24
Suresh Gokuldas and Another v. Employees’ State
Insurance Corporation, 1964 INDLAW MAD
29333. See also, South India Corporation and Others
v. All Kerala Cashewnut Factory Workers’
Federation and Another, 1959 INDLAW KER 17
25
Director, Fisheries Terminal Division v. Bhikubhai
Meghajibhai Chavda, 2009INDLAW SC 1520
C. CONTINUOUS SERVICE UNDER
SECTION 25B
This section has been substituted for the old
section 25B and section 2(ee) by the
Industrial Disputes (Amendment) Act, 1964.
The definition of “continuous service” as
given in this provision is prefaced with
26
Kohinoor Saw Mill Company v. State of Madras
1957 (2) LLJ 210

9
Jagriti Singh
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947
words “for the purposes of this chapter”,
hence limiting its meaning only for the
working of Chapter VA.
It is also clear from the plain reading of
section 25B that it creates a deeming fiction
on account of certain circumstances. These
circumstances according the researcher are
exhaustive in nature because a legal fiction
created in the statue cannot be used beyond
the purpose for which it was created. 27
Further, the legal fiction needs to be
interpreted narrowly in order to make the
statute workable. 28 Hence in the case of
section 25B the legal fiction is restricted to
only Chapter VA and not the entire IDA.29
In the application of section 25B firstly, the
Supreme Court has observed that continuous
service has to be reckoned from date of
joining employment and should not be
confused with that of a calendar year. Since
it has reference to individual workmen and
cannot universally relate to calendar year as
27
Justice G.P. Singh, Principles of Statutory
Interpretation (10th edn., Nagpur: Wadhwa and
Company Law Publishers, 2006) at 352.
28
Nandkishore Ganesh Joshi v. Commr. Municipal
Corporation Kalyan, AIR 2005 SC 34
29
State of Karnataka v. K. Gopalkrishna Shenoy,
(1987)3SCC655
Jagriti Singh
that would be wrongfully to conferring
benefit30
Secondly, applying general principles and
on examining various judgments, the
researcher is of the belief that Court, has
repeatedly taken the view that the burden of
proof is on the employee or workman to
show that he had worked for 240 days in a
given year.31 This burden is discharged only
upon the workman stepping up in the
witness box. This burden is discharged upon
the workman adducing cogent evidence,
both oral and documentary. 32 This shift of
burden of proof in the view of researcher by
itself ends most controversies which may
arise because beyond that point of
presentation of evidence it is the law of
evidence which will govern the issue and
decision of the court.
Third is the issue concerning establishments,
for the purpose of reckoning continuity of
service within the meaning of section 25B.
The jurisprudence evolved on the basis of
facts of each case. Hence, the test laid down
in such cases is based on the type of link
between two establishments. The courts
30
Aspinwall & Co., Kulshekar, Mangalore v. Lalitha
Padugady and others etc. etc., AIR1996SC580
31
Essen Deinki v. Rajiv Kumar, AIR2003SC38
32
Director, Fisheries Terminal Division v. Bhikubhai
Meghajibhai Chavda, 2009INDLAW SC 1520
10
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947
have been of the view that, in the event of
absence of knowledge by one establishment
regarding the workman who had worked in
another establishment the authority
retrenching the workman concerned would
not be able to comply with the statutory
provisions contained in section 25F of the
IDA. 33 Thus, once two establishments are
held to be separate and distinct having
different cadre strength of the workmen, if
any, then that the period during which the
workman was working in one establishment
would not ensure to his benefit when he was
recruited separately in another
establishment, particularly when he was not
transferred from one sub-division to the
other.
Hence, the analysis of the section is crucial
to the application of various provisions
which are covered under Chapter VA which
use the phrase “continuous service”.
D. CHAPTER VA: A COMPLETE
CODE ?
After an analysis on the judicial construction
of conditions preceding the application of
Chapter VA using the two fundamental
provisions section 25A and section 25B
33
Haryana Urban Development Authority v. Om Pal,
AIR2008SC475
Jagriti Singh
contained therein the researcher finally
moves on to the most crucial question
concerning the status of Chapter VA. In this
final and most crucial segment of the paper
the researcher will examine first, the concept
of lay-off and retrenchment as envisaged by
this chapter; second, the overriding effect of
this chapter in the bigger picture; and last,
whether chapter VA is a complete code in
itself when it comes to lay-off and
retrenchment.
In 1953, additional rights were provided to
the workmen by adding Chapter VA to the
IDA, by passing the Amending Act No. 43
of 1953. Chapter VA deals with the
workmen’s claims and employers liability of
payment of compensation in case of lay-off
and retrenchment.34 It also deals with wider
rights and liabilities regarding the same. 35
Hence, it is now important to understand the
jurisprudence on “lay-off” and
“retrenchment” in brief.
Retrenchment
Retrenchment being termination of service
for no fault on the part of the workman is
likely to visit the concerned workers and
his/their families with disastrous
34
The Central Bank of India v. P. S. Rajagopalan
etc., AIR1964SC743
35
M.A. Veriya v. C.P. Fernandez, [1956] I L.L.J. 547
(Bom.) (D.B.), per Chagla C.J.
11
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947
consequences. Retrenchment is an important
and serious issue in industrial law since its
wanton and improper use can become a
major source of industrial unrest and
disharmony.36 The issue of retrenchment is,
therefore, not left uncontrolled but is
regulated in great detail by the law.
Retrenchment as defined in IDA has been
given a wider meaning than its ordinary
meaning, which is to terminate the service of
a workman by the employer for any reason
whatsoever, otherwise than as punishment
for any misconduct and further subject to the
four exceptions enumerated in clauses (a),
(b), (bb) and (c) of section 2(oo) of the
IDA.37 In addition, Section section 25F does
not restrict the meaning of retrenchment but
qualifies the category of retrenched
workmen covered therein by use of the
further words “workman…who has been in
continuous service for not less than one
year”.38 However regarding the applicability
36
Empire Industries Limited v. State of Maharashtra
and others, 2010 Indlaw SC 446
37
The wide meaning of “retrenchment” given in its
definition contained in Section 2(oo) of the Act
covers all kinds of terminations for any reason
whatsoever. This wide meaning is settled by the
decision of this Court in Punjab Land Development
and Reclamation Corporation Ltd., Chandigarh Etc.
Etc. v. Presiding Officer, Labour Court, Chandigarh
and Ors. Etc. Etc. MANU/SC/0479/1990 .
38
Central Bank of India v. S. Satyam and others,
(1996)5SCC419. See generally, Lal Mohammad &
Jagriti Singh
of retrenchment provision courts have held
that Chapter VA providing for retrenchment
is not enacted only for the benefit of the
workmen to whom Section 25F applies but
for all cases of retrenchment and, therefore,
there is no reason to restrict application of
Section 25H therein only to one category of
retrenched workmen.39
The concept of retrenchment is different
from closure because 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. 40
Further, retrenchment
presupposes the continuance of the
industry.41
Lay-Off
Moving on to the meaning of “lay-off”, it
has been defined in section 2(kkk) of the
IDA. The power to lay-off for the failure
or inability to give employment is not
inherent in the definition of lay off under
Ors. v. Indian Railway Construction Co. Ltd. & Ors.,
1998(6)SCALE424
39
Central Bank of India v. S. Satyam and others,
(1996)5SCC419
40
Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills
Mazdoor Union, AIR1957SC95
41
Muir Mills Company's Ltd. v. Suti Mills Mazdoor
Union 1955 (1) LLJ 1 at 6
12
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947
section 2(kkk). 42 The issue which has
arisen in various cases is whether it can be
contended that section 25C recognizes a
common law right of industrial employer
to lay off his workmen. The court has
43
answered this question in negative.
Further section 25A lays down the laws
applicable to let off, which has been
crystallized in section 25C.44
The right of workmen to lay-off
compensation is obviously designed to
relieve the hardship caused by
unemployment due to no fault of the
employee; involuntary unemployment also
cause dislocation of trade and may result
in general economic insecurity. Therefore,
the right is based on grounds of humane
public policy and the statute which gives
such right should be liberally construed,
and when there was disqualifying
provisions, the latter should be construed
strictly with reference to the words used
42
The Workmen of Firestone Tyre & Rubber Co. of
India (P) Ltd. v. The Firestone Tyre & Rubber Co.
and Thiru J. N. George and Ors. v. The Management
of Firestone Tyre & Rubber Co. India (P) Ltd. and
Ors., AIR1976SC1775
43
Castophene Manufacturing Company v. Miss
Janaki Gillumal and Others, 1972 Indlaw MUM
2879
44
Castophene Manufacturing Company v. Miss
Janaki Gillumal and Others, 1972 Indlaw MUM
2879
Jagriti Singh
therein.45 Section 25C gives the right, and
there are three disqualifying clauses in
section 25E. They show that the basis of
the right to unemployment compensation
is that the unemployment is involuntary;
in other words, due to no fault of the
employees themselves; that is why no
unemployment compensation is payable
when suitable alternative employment is
offered and the workman refuses to accept
it.46
The other issue which can be raised with
regard to lay-off is whether an individual
workman can claim lay off compensation
under section 25C. Section 25C deals with
statutory right of the workmen laid-off for
compensation. 47
In 1956, Venkatarama
Ayyar J. has pointed out after considering
numerous decisions in this matter that the
preponderance of judicial opinion was
clearly in favour of the view that a dispute
between an employer and a single employee
cannot per se be an industrial dispute but it
may become one if it is taken up by a Union
45
The Associated Cement Companies Limited,
Chaibassa Cement Works, Jhinkpani v. Their
Workmen, AIR1960SC56
46
The Associated Cement Companies Limited,
Chaibassa Cement Works, Jhinkpani v. Their
Workmen, AIR1960SC56
47
P. Virudhachalam and Ors. v. Management of
Lotus Mills and Anr., 1997(7)SCALE520
13
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947
or a number of workmen. 48 The Mumbai
High Court in 1962 was of the view that the
rights created by chapter VA have to be
worked out according to the provisions of
that chapter and those rights are the rights of
49
each and every individual workman.
Hence laying the proposition that industrial
dispute contemplated under the IDA has to
be a collective dispute is an impediment in a
workman enforcing his individual rights
created under chapter VA by the machinery
provided by the Act.
The Supreme Court in 1997 decision of P.
Virudhachalam and Ors., went step further
to draw boundaries to these given to every
individual workman wherein the individual
workmen could raise his grievance under
section 25C only if his statutory right of lay-
off under section 25C was not hedged in by
any binding effect of an agreement entered
into by its own union with the management,
whether in or outside conciliation
proceedings or even by other unions that
may arrive such settlement during the course
50
of conciliation proceedings. Then only
individual workman can have full play under
48
Central Provinces Transport Service Ltd.
v. Raghunath Gopal, MANU/SC/0067/1956
49
Sawatram Ramprasad Mills Company, Limited,
Akola v. Baliram, 1962 INDLAW MUM 85
50
P. Virudhachalam and Ors. v. Management of
Lotus Mills and Anr., 1997(7)SCALE520
Jagriti Singh
section 25C for vindicating his right of lay-
off compensation.
Overriding Effect of Chapter
VA
The issue which needs to be addressed in
this segment of the paper is regarding the
overriding effect of chapter VA of the IDA
over other legislations. A close examination
of section 2J is needed for the same.
Section 25J overrides any inconsistent
provision of any other law or otherwise
binding rule of conduct and makes the
provisions of chapter VA operative of their
own. Section nowhere provides that the
provisions of chapter VA shall have effect
notwithstanding anything inconsistent
contained in any other chapter of the
Industrial Disputes Act as well as in any
other law. Such a provision is conspicuously
51
absent in section 25J(1). However, it
provides that section 25(J) will have
overriding effect irrespective of any other
law including Standing Orders made under
the Industrial Employment (Standing
Orders) Rules 1956.52
51
P. Virudhachalam and Ors. v. Management of
Lotus Mills and Anr., 1997(7)SCALE520
52
Harmohinder Singh v. Kharga Canteen, Ambala
Cantt., AIR2001SC2681
14
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947

Sub-section (2) of Section 25J however within its ambit the entire chapter VB. 55
makes a distinction between any machinery Hence, leading to an inevitable analogy that
provided by any State law for settlement of the non-obstante clause contained in
industrial disputes and the substantive rights section 25J does not apply to the entire
and liabilities arising under Chapter VA of chapter VB.
the Central Act where a lay off or
Applicability of chapter VA in relation to
retrenchment takes place. 53 It provides that
the industrial establishments covered by
while Section 25J would not affect the
Chapter VB in terms of section 25J vis-à-vis
provisions in a State law relating to
section 25S is permissible but the contention
settlement of industrial disputes, the rights
cannot be taken any further so as to make
and liabilities of employers and workmen
any other section of the IDA which is under
insofar as they relate to lay-off and
chapter VB prevail over the State Act by
retrenchment shall be determined in
taking recourse to the non-obstante clause.
accordance with Chapter VA of the Central
Non-obstante clause contained in
Act. Those authorities may exercise their
section 25J is, thus, required to be kept
jurisdiction under the State Act but they
confined to chapter VA only.56 In that view
have to decide such dispute in accordance
of the matter chapter VB does not have an
with the provisions of chapter VA.54
overriding effect over the State Act.
The courts have further gone into details in
The other instance where contentious issue
various case laws to examine the overriding
could crop up is in cases where there is a
effect of chapter VA vis-à-vis chapter VB
prior State Act dealing with the issues of
with respect to State laws. The courts have
lay-off and retrenchment before the insertion
delved into the legislative intent of the
of chapter VA. In such cases the courts have
phrase “so far as may be” under section
resorted to the application of doctrine of
25J. The court is of the view that the phrase
eclipse wherein it is presumed after the
is indicative of the fact that it does not cover
amendment in 1953 inserting chapter VA
53
Krishna District Co-operative Marketing Society
Limited, Vijayawada v. N.V. Purnachandra Rao and
55
Ors., AIR1987SC1960 Engineering Kamgar Union v. Electro Steels
54
Krishna District Co-operative Marketing Society Castings Ltd. and Anr., AIR2004SC2401
56
Limited, Vijayawada v. N.V. Purnachandra Rao and Engineering Kamgar Union v. Electro Steels
Ors., AIR1987SC1960 Castings Ltd. and Anr., AIR2004SC2401

15
Jagriti Singh
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947
the IDA which was dormant on the issue
becomes alive and fully efficacious. It is
presumed to revive the IDA, making it
wholly applicable and put the State Act in
shadow with respect to the subject matter
covering lay-off and retrenchment.57
On the other hand, a converse situation
could arise wherein a question raised is
whether a State Act which is a later Act and
which has received the assent of the
President can prevail over the provisions of
Chapter VA of the Central Act. The courts
have contemplated such a situation and have
taken the view that in such cases repugnancy
should not be presumed but they have not
yet taken any concrete stand on the issue
irrespective of whether the later hypothetical
State legislation contemplated is specific or
general in nature. 58 This according to the
researcher shows their emphatic approach
towards section 25J(2) which guards the
supremacy of chapter VA of the IDA on the
issue concerning lay-off and retrenchment.
Hence to conclude, the law-maker has taken
care in insert section 25J and the conclusion
seems to me inescapable that the rights and
57
Sawatram Ramprasad Mills Company, Limited,
Akola v. Baliram, 1962 INDLAW MUM 85
58
Krishna District Co-operative Marketing Society
Limited, Vijayawada v. N.V. Purnachandra Rao and
Ors., AIR1987SC1960
Jagriti Singh
liabilities of employers and workmen in the
matter of lay off are now crystallized and to
be gathered only from chapter VA and it is
not open to a workman to claim any right
relating to lay off de hors the provisions of
that chapter on the grounds of social justice
and equity.59
Chapter VA: A Complete Code
The researcher in conclusion of this section
after a close scrutiny of jurisprudence on
chapter VA of the IDA is of the view that it
is a complete code in itself when it comes to
payment of compensation to workmen in
cases of lay-off and retrenchment. But this is
only limited to the industrial establishments
envisaged and laid down under section
25A.60
CONCLUSION
After an in depth analysis of the
applicability of chapter VA, the researcher is
of the view that the judiciary has great faith
in it. They have applied it to any situation
which deals with lay-off and retrenchment
irrespective of the existence of any state
legislation. Hence, to conclude chapter VA
59
K. T. Rolling Mills v. Meher, 64 Bom.L.R. 645
60
The Workmen of Firestone Tyre & Rubber Co. of
India (P) Ltd. v. The Firestone Tyre & Rubber Co.
and Thiru J. N. George and Ors. v. The Management
of Firestone Tyre & Rubber Co. India (P) Ltd. and
Ors., AIR1976SC1775
16
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947

seems substantive and at some level

exhaustive in dealing with issues relating to
lay-off and retrenchment.

The researcher in this paper has not been

able to look at all the provisions and
controversies in detail but limited herself to
provisions and issues pertaining to issue of
applicability of chapter VA, more in terms
of determining the true beneficiaries of this
chapter. This is due to the constraint of time
and space.

Further to conclude finally the jurisprudence

on applicability of chapter VA has not been
something which is out of the box. The
courts have been more or less strict in
application provisions under this chapter and
also in determining the qualifying criteria
under this chapter.

17
Jagriti Singh
 JUDICIAL CONSTRUCTION OF APPLICATION OF CHAPTER VA OF THE
INDUSTRIAL DISPUTES ACT, 1947

BIBLIOGRAPHY

Books
 Justice G.P. Singh, Principles of Statutory Interpretation (10th edn., Nagpur: Wadhwa
and Company Law Publishers, 2006).
 O.P. Malhotra, The Law of Industrial Disputes (vol.2, 5th edn., Delhi: Universal Law
Publishing Co. Pvt. Ltd., 1998).

18
Jagriti Singh