Social Justice and Labour Jurisprudence
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Social Justice and Labour Jurisprudence
Social Justice and Labour Jurisprudence Justice V.R. Krishna Iyer’s Contributions
I. Sharath Babu and Rashmi Shetty
Copyright © National Law School of India University, 2007 All rights reserved. No part of this book may be reproduced or utilised in any form or by any means, electronic or mechanical, including photocopying, recording or by any information storage or retrieval system, without permission in writing from the publisher. First published in 2007 by Sage Publications India Pvt Ltd B1/I1, Mohan Cooperative Industrial Area Mathura Road New Delhi 110 044 www.sagepub.in Sage Publications Inc 2455 Teller Road Thousand Oaks, California 91320 Sage Publications Ltd 1 Oliver’s Yard, 55 City Road London EC1Y 1SP Sage Publications Asia-Pacific Pte Ltd 33 Pekin Street #02-01 Far East Square Singapore 048763 Published by Vivek Mehra for Sage Publications India Pvt Ltd, typeset in 10/12 Agaramond by Star Compugraphics Private Limited, Delhi and printed at Chaman Enterprises, New Delhi.
Library of Congress Cataloging-in-Publication Data Sharath Babu, I., 1960– Social justice and labour jurisprudence: Justice V.R. Krishna Iyer’s contributions/I. Sharath Babu and Rashmi Shetty. p. cm. 1. Labour laws and legislation—India. 2. Krishna Iyer, V.R., 1915– 3. Judicial power—India. 4. Judges—India. 5. Labour courts—India. I. Shetty, Rashmi. II. Title. KNS1220.S53 344.5401—dc22 2007 2007001007 ISBN: 978-0-7619-3523-0 (HB)
978-81-7829-678-4 (India-HB)
Commissioning Editor: Leela Kirloskar Sage Production Team: Gayatri E. Koshy and Rajib Chatterjee
Contents List of Cases Foreword by Justice V.R. Krishna Iyer Preface
8 36 39
1 Introduction • Labour Issues—Attitude of the Judiciary of Late
43 45
2 Industrial Jurisprudence • Introduction • Purpose of the Industrial Disputes Act, 1947 • The Constitution and Labour Philosophy • Interpretation of Labour Statutes: The Constitutional Values • The Binding Nature of Decisions of the Superior Courts • The Role of English Law as Precedent • Powers of the High Courts under Article 226 of the Constitution
50 50 52 53 55 57 58 58
3 Threshold Part Issues under the Industrial Disputes Act, 1947 • The Definition of ‘Industry’ • The Definition of ‘Workman’ • The Definition of ‘Industrial Dispute’ • The Definition of ‘Award’ and its Scope • The Meaning and Scope of ‘Undertaking’ under the Industrial Disputes Act, 1947
60 60 132 135 138 141
4 Collective Bargaining Agreement Issues • The Far-reaching Impact of Nullifying Settlements • Wages for Strike Period • The Legality of Strikes • The Scope and Coverage of Settlements under the Industrial Disputes Act, 1947 • The Force of a Settlement under the Industrial Disputes Act, 1947, as against the Provisions of the General Statute: The Rule • Termination of Settlements: The Legality
151 152 158 160 171 178 231
5 Maharashtra (Recognition of Trade Unions and Prevention of Unfair Labour Practices) Act, 1972 • The Recognition of Trade Unions: Procedural Requirements
240 240
6 The Government’s Power of Reference of Industrial Disputes • When is the Second Reference Valid?
244 244
6 Social Justice and Labour Jurisprudence
• • •
The Nature of Power Conferred on the Appropriate Government under Section 10(1) of the Act The Scope of the Power of Reference under Section 10(1) The Precise Scope of Section 10(3)
7 Industrial Adjudication: The Concept • The Concept of ‘Tribunal’ • Interference with the Tribunal’s Award • Powers of the Labour Court to Give Appropriate Relief to a Dismissed Workman under Schedule II, Item I of the Act • Powers of the Labour Court to Give Appropriate Relief to Laid-off Workmen where Chapters VA and VB of the Industrial Disputes Act, 1947, Have No Application • The Power of Tribunals to Scrutinise the Employer’s Action under Section 33(2) • The Discharge of a Workman during the Pendency of the Proceedings and the Powers of the Labour Court to Provide Appropriate Relief • Findings of the Labour Court with Respect to Relief for a Dismissed Workman • The Rigidity of the Tribunals in Extending Equal Benefits to the Same Class of Workmen: Validity • The Findings of the Labour Court: Validity • Awarding Benefits to Workmen who are not Parties to the Settlement: Validity • The Role of the Supreme Court in Interfering with Respect to an Appeal against the Award • Illegal Termination: The Remedy
250 254 260 263 263 263 265 271
277 283 284 290 291 292 294 301
8 Voluntary Arbitration as a Mechanism for Dispute Settlement • When Can an Arbitration Award be Set Aside? • Arbitrators’ Ruling over the Justifiability of Mass Termination by the Employer on Account of Illegal Strike: Interference when Justified
307 307 317
9 Industrial Employment (Standing Orders) Act, 1946 • Service Conditions: The Scope of the Standing Orders Act • Modification of Standing Orders: The Views of the Supreme Court
361 361 369
10 Change of Service Conditions: Restrictions on the Freedom of the Employer • Notice of Change Exclusively under Section 9A • Pendency of Proceedings before the Conciliation Officer: Duties under Section 33(1)(a) • Termination during Pendency of Proceedings: Validity • The Role of the Labour Court or Tribunal in Adjudicating Matters under Sections 33(2) and 33(3) • Application for Approval of an Act of Dismissal for Misconduct: The Scope for Interference • Action Amounting to Change of Conditions of Service during Pendency of the Proceedings: The Amount of Relief
372 372 378 379 384 388 402
Contents 7
11 Disciplinary Proceedings • Reopening of Disciplinary Proceedings: The Rule • Cases where the Act of Misconduct is Not So Serious: The Relief • Termination on Grounds of Loss of Confidence: Discharge Simpliciter or Discharge for Misconduct • Mass Termination without Enquiry: The Approach
409 410 411 412
12 Lay-off and Retrenchment • The Law Relating to Retrenchment • Closure and Retrenchment: The Distinction • The Definition of Retrenchment under Section 2(oo) • The Definition of Retrenchment under the Payment of Gratuity Act, 1972: Interpretation • The Scope of ‘Retrenchment’ that Includes All Kinds of Termination • The Procedure for Retrenchment: The Approach
458 458 464 468 472
13 Labour Employed through Middlemen—their Rights • The Entitlement of Contract Labour to be Absorbed as Regular Employees
486 486
14 Wages and Monetary Benefits • Payment of Tips to Hotel Staff: Whether a Part of the Dearness Allowance • Running Allowance: Whether Wages • Grant of Additional Dearness Allowances: Principles for Consideration • Interpretation of an Industrial Truce Agreement Relating to Wage Structure: The Approach • Computation of Dearness Allowance: Validity • Adjusting Payment of Customary Bonus under the Statute: The Guiding Principles • Effects of Agreements which are Inconsistent with the Payment of Bonus Act, 1965: The Interpretation • Constitutional Validity of Section 10 of the Payment of Bonus Act, 1965 • Applicability of the Payment of Bonus Act, 1965: The Scope of Section 32(5)(c) • Veracity of the Balance Sheet: Powers of the Tribunal
490 490 491 497 500
418
476 480
503 506 520 529 530 531
15 Social Security and Welfare • Employees’ State Insurance Act, 1948: Applicability • Computation of Maternity Benefit under the Maternity Benefit Act, 1961 • The Employees Provident Fund and Miscellaneous Provisions Act, 1952: Interpretation of Section 14B • The Payment of Gratuity Act, 1972: Applicability • Principles to be Followed in Framing a Scheme of Gratuity by the Industrial Tribunal under Schedule 3, Item 5 of the Industrial Disputes Act, 1947
536 536 541 547
About the Authors
574
561 565
List of Cases
Sl. No.
Name of the Case
Citation
Page Number in Book
1.
A.K. Kraipak vs U.O.I
(1970) 1 SCR 457: AIR 1970 SC 150
156, 157
2.
A.K. Roy vs U.O.I
(1982) 1 SCC 271: (1982) SCC (cri) 152
126
3.
A.M. Allison vs B.L. Sen
1957 SCR 359: AIR 1957 SC 227
294
4.
Aeltemesh Rein vs U.O.I
(1988) 4 SCC 54: 1988 SCC (cri) 900
118, 126
5.
Ahmedabad Mill Owners Association vs The Textile Labour Association
(1965) (11) FLR 337: (1950–67) 1. SCLJ 253: (1966) 1. S.C.R. 382
507
6.
Air India Corporation, Bombay vs V.A. Rebello
(1972) 3 SCR 605: AIR 1972 SC 1343
282
7.
Air India Statutory Corporation vs United Labour Unon.
(1997) 9 SCC 377
48
8.
Alembic Chemical Works Co. Ltd. vs Workmen
AIR 1961 SC 647
370
9.
Alien vs Flood
1898 A.C. 1
166, 313
10.
Allen vs Flood
(1898) AC 1
445
11.
Alloy Steel Project vs The Workmen
1971 (22) FLR 181: 1971 (3) SCR 529
533 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
12.
M/s. Ameteep Machine Tools vs Labour Court
AIR 1980 SC 2135
291–92
13.
Anandji Haridas and Co. Pvt. Ltd. vs Engineering Mazdoor Sangh
1975 (30) F.L.R. 133 (1975) 3 S.C.R. 542
229
14.
Assam Oil Co. vs Its Workmen
(1960) 3 SCR 457: AIR 1960 SC 1264
334, 338, 433, 445
15.
Associated Cement Co. Ltd. vs P.D. Vyas
AIR 1960 SC 665
366
16.
Associated Cement Companies Ltd.
AIR 1972 SC 1552
296
17.
Avinder Singh vs State of Punjab
(1979) 1 SCC 137
551
18.
M/s. Avon Services Production Agencies (P) Ltd. vs Industrial Tribunal
AIR 1979 SC 170
47, 141, 142–45, 250–54
19.
B. Shah vs Presiding Officer
AIR 1978 SC 12
57, 542–47
20.
B.S. Vadera vs U.O.I
1968 2 S.C.R 575
217
21.
Babu Manmohan Das Shah vs Bishun Das
1967 1 S.C.R. 856
227
22.
Babu Ram
C.A. No. 107 of 1966 decided on Nov. 27, 1968 (S.C)
165, 212, 313
23.
Bangalore Water Supply and Sewerage Board vs A. Rajappa
(1978) 2 SCC 213: AIR 1978 SC 548
47, 48, 49, 61–116, 185, 198 217, 218, 238, 467
24.
Bar Council of Maharashtra vs M.V. Dabholkar
(1976) 1 SCR 306
508 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
25.
Baroda Borough Municipality
1957 SCR 33, AIR 1957 SC 110
76
26.
Barraclough vs Brown and Others
1897 A.C. 615
169, 316
27.
Barsi Light Railways Co. Ltd. vs K.N. Joglekar
AIR 1957 SC 121: (1957) 1 LLJ 243; (1956–57) 11 FJR 317
474, 563
28.
Basti Sugar Mills Co. Ltd. vs State of U.P. and Another
AIR 1979 SC 262
520–29
29.
Bata Shoe Co. (P) Ltd. vs D.N. Ganguly
1961 (2) F.L.R. 183
176, 349, 446, 447
30.
Beetham vs Trinidad Cement Ltd.
(1960) 1 AII ER 274
136
31.
Bengal Bhatdee Coal Co. vs Ram Prabesh Singh.
(1964) 1 SCR 709: AIR 1964 SC 486
288
32.
Bengal Chemical and Pharmaceutical Works Ltd, Calcutta
(1959) Suppl. 2 S.C.R. 136 AIR 1959 SC 633
296, 570
33.
Bengal Chemical and Pharmaceutical Works Ltd. vs Its Workmen
(1969) 2 SCR 113: AIR 1969 SC 360
498, 505
34.
Bharat Bank Ltd. vs Employees of Bharat Bank Ltd.
AIR 1950 SC 188
399
35.
Bharat Barrel and Drum Manufacturing Co.
AIR 1967 SC 361
165, 311
36.
Bharat Heavy Electricals Ltd. vs State of U.P. and Others
(2003) 6 SCC 528
488
37.
Bharat Sugar Mills Ltd. vs Shri Jai Singh
(1976) 1 SCR 361: AIR 1975 SC 1441
391, 392, 393
38.
Bhiwani Textile Mills vs Their Workmen
(1969) 2 LLJ 739 SC
375 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
39.
Bihar State Road Transport Corporation Case
(1970) 3 SCR 708
268, 415
40.
Binny Ltd vs Their Workmen
AIR 1972 SC 1975
253
41.
Bolton Corporation
1943 AC 166
71
42.
Bombay Gas Co. Ltd. vs Jagannath Pandurang
(1975) II LLJ 345 (SC)
519
43.
Bombay Panjarapole
(1972) 1 SCR 202: AIR 1971 SC 2422
98, 107
44.
British India Corporation
(1965) 10 Fac LR 244 (SC)
570
45.
British Paints
AIR 1966 SC 732
570
46.
Buckingham and Carnatic Co. Ltd. vs Workers of the Company
1952 LAC 490
268, 330, 414, 430
47.
Buckingham and Carnatic Co. vs Venkatiah
AIR 1964 SC 1272
404
48.
Budge Budge Municipality.
1953 SCR 302: AIR 1953 SC 58
112
49.
Bungo Steel Furniture
AIR 1967 SC 378: (1967) 1 SCR 633
165, 311, 343, 441
50.
Burn and Co. Ltd. vs Their Workmen
AIR 1959 SC 259
349, 446
51.
C. Sankaranarayanam vs State of Kerala
AIR 1971 SC 1997
212
52.
C.S.T. vs Radhakrishan
(1979) 2 SCC 249
551
53.
Calcutta Insurance Co. Ltd.
AIR 1967 SC 1286
570
54.
Cape Brandy Sydicat vs IRC
(1921) 2 KB 403: 90 LJKB 461 (CA)
125 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
55.
Central Bank of India Ltd. New Delhi vs Shri Prakash Chand Jain
AIR 1969 SC 983
288
56.
Central Board of Dawoodi Bohra community vs State of Maharashtra
(2005) 2 SCC 673: 2005 SCC (L and S) 246 2005 SCC (cri) 546
125
57.
Central Press
(1977) 3 SCR 35: (1977) LIC 884 AIR 1977 SC 1351
541
58.
Champsey Bhara and Co.
50. I.A. 324
165, 311
59.
Chanan Singh vs Registrar, Co-op. Societies, Punjab and Others
AIR 1976 SC 1821
410–11
60.
Chartered Accountants (Rabindranath Sen) vs First Industrial Tribunal, West Bengal
(1963) 1 Lab.LJ 567 (cal)
107
61.
Chief Conservator of Forests vs Jaganath Maruthi Kondhare
(1996) 2 SCC 293: 1996 SCC (L and S) 500
117
62.
Chief Conservator of Forests vs Jagannath Maruti Kondhare
(1996) 2 SCC 293
46
63.
Chinta Lingam vs G.O.I.
(1971) 2 SCR 871
558
64.
Coir Board vs Indira Devai P.S.
(1998) 3 SCC 259
49, 124, 128
65.
Commissioner of Coal Mines Provident Fund Dhanbad vs J.P. Lalla
(1976) 3 SCR 365
558
66.
Conway vs Wade.
1909 AC 506
78 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
67.
Cooper Engineering Ltd. vs P.P. Mundha
1976 1 SCR 361: 1975 LIC 1441
389, 391, 396, 397, 398, 399, 401, 408
68.
Cooper vs Wilson
(1937) 2 KB 309
399
69.
Corporation of the City of Nagpur vs Its Employees
AIR 1960 SC 675
74, 75, 76, 77, 78, 80, 81, 83, 93, 107, 109, 110, 120,
70.
M/s. Cox and Kings (Agents) Ltd. vs Their workmen and others
AIR 1977 SC 1966
138–41, 244–49
71.
Cricket Club of India
AIR 1969 SC 276
101, 103, 105, 107
72.
Crompton Greaves vs The Workmen
AIR 1978 SC 1489
159–60, 348, 445
73.
D.C. Roy vs Presiding Officer, M.P. Industrial Court Indore
(1976) 3 SCR 801: AIR 1976 SC 1760.
354, 451, 452
74.
D.N. Banerji vs P.R. Mukherjee
1953 SCR 302:
61, 64, 65, 66, 68, 69, 72, 73, 74, 75, 76, 107, 108, 110, 112, 118, 119
AIR 1953 SC 58
61, 64, 65, 66, 68, 69, 72, 73, 74, 75, 76, 107, 108, 110, 118, 119, 198
75.
D.P. Maheshwari vs Delhi Administration
1983 (47) FLR 477: 1983 (2) LLJ 424
145
76.
Dabholkar
AIR 1976 SC 242
88
77.
M/s. Dalmia Dadri Cement Ltd. vs Its Workmen
1970 LIC 350 (Punj)
400
78.
Dawkins vs Rokeby
(1873) 8 QB 255
339, 436 (List of Cases continued )
(List of Cases continued ) Sl. No. 79.
Name of the Case Delhi Administration, Delhi vs Workmen of Edward Keventers and Another
Citation
Page Number in Book
AIR 1978 SC 976
260–62
80.
Delhi Cloth and General Mills Co. vs Ludh Budh Singh
1972 LIC 573
395, 397, 398, 399, 401
81.
Delhi Cloth and General Mills Co. vs Workmen
AIR 1970 SC 919
569
82.
Delhi Cloth and General Mills Ltd. vs Shambu Nath Mukerjee
(1976) 1 SCR 591: AIR 1978 SC 8.
480
83.
Delhi Transport Undertaking vs Goel
(1970) 2 LLJ 20: (1970) 11 LLJ 20
269, 270, 416
84.
Devendra Pratap Narain Raj Sharma vs State of U.P.
1962 Supp (1) SCR 315: AIR 1962 SC 1334
495
85.
Dhanrajgirji Hospital vs Workmen
AIR 1975 SC 2032
99, 107, 109, 120
86.
Dhingra’s Case
1958 SCR 828: AIR 1958 SC 36
329, 332, 429, 432
87.
Dilbagh Rai Jerry vs Union of India
AIR 1974 SC 130
491–97
88.
Divisional Supt. Northern Rly. vs Pushkar Dutt Sharma
(1967) 14 Fac LR 204
495
89.
Doe vs Bridges
(1831) 1 B and AD 847 (2) 859 9 LJ 03 KB 113: 199 ER 1001
169, 316
90.
Eastern Electric and Trading Co. vs Baldev Lal
1975 LIC 1435: AIR 1975 SC 1892
288
91.
Employers in Relation to Digwadih Colliery vs Their Workmen
AIR 1966 SC 75
479 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
92.
Engineering Mazdoor Sabha vs Hind Cycles Ltd.
(1962) 2 LLJ 760 SC (1963) Supp. I.S.C.R. 625
163, 229, 234, 310, 337
93.
Express Newspapers (P) Ltd. vs Michael Marx
AIR 1963 SC 1141
404
94.
Fabricated Engine Drivers
1913 16 CLR 245 (Aus)
78
95.
Federated Municipal and Shire Employee’s Union of Australia vs Melbourne Corporation
26 C.L.R. 508 (Aus.)
73
96.
Federated School Teacher’s Association of Australia vs State of Victoria
(1929) 41 CLR 569
78
97.
Forbes Forbes Campbell and Co. Ltd. vs Engineering Mazdoor Sabha
AIR 1978 SC 340
240–43
98.
French Motor Car Company Ltd. vs Their Workmen
1963 (61 FLR 80: (1050–67) S.C.L.J. 4136: (1962) 2 LLJ 744
505
99.
G.T. Lad and Others vs Chemical and Fibres India Ltd.
(1979) 1 SCC 590: AIR 1979 SC 582
354, 402–7, 451
100.
Gaya Cotton and Jute Mills Ltd. vs Gaya Cotton and Jute Mills Labour Union
1952 2 Lab. LJ 37 (L.A.T 1-Cal)
272, 459
101.
M/s. Ghaziabad Engineering Co. Pvt. Ltd. vs The Certifying Officer and Another
AIR 1978 SC 769
370–71
102.
Gladstone vs Bower
(1960) 3 All ER 353
341, 439 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
103.
Graham Trading Co. (India) Ltd. vs Its Workmen
(1960) 1 SCR 107(111): AIR 1959 SC 1151 at 1153
511
104.
Gujarat Steel Tubes Ltd. vs Gujarat Steel Tubes Mazdoor Sabha and Others
AIR 1980 SC 1896
44, 55, 59, 318–57, 320–59, 418–55, 420–57
105.
Hamdard Dawakhana Wakf vs Its Workmen
(1962) 2 LLJ 772
289
106.
Haribhau Shinde vs F.H. Lala Industrial Tribunal
AIR 1970 Bom. 213
223
107.
Harinagar Cane Farm vs State of Bihar
AIR 1964 SC 903
131
108.
Hariprasad Shivshankar Shukla vs A.D. Divakar
1957 SCR 121
477, 478, 480
109.
Hariwadan K. Desai vs LIC of India
1977 Lab. IC 1072
228
110.
M/s. Hatisingh Mfg. Co. Ltd. vs U.O.I AIT
(1960) 3 SCR 528: AIR 1960 SC 923
144, 466
111.
Hem Raj vs State of Ajmer
(1954) SCR 1133: AIR 1954 SC 462
296
112.
Herbertsons Ltd. vs Their Workmen and Others
1977 LIC 162
172, 233
113.
Heydon’s Case
1584 (76) ER 634
77, 111
114.
Himangsu Chakraborty vs L.I.C of India
1977 Lab. IC 622 (Cal HC)
225
115.
Hind Construction and Engineering Co. Ltd. vs Their Workmen
(1965) 2 SCR 83: AIR 1965 SC 917
288
116.
Hindustan Antibiotics
AIR 1967 SC 948
570
117.
Hindustan Construction Co. Ltd. vs G.K. Patankar and Another
AIR 1976 SC 907
293–94 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
118.
Hindustan Lever Ltd. vs Rammohan Roy
AIR 1972 SC 1156
376
119.
M/s. Hindustan Steel Ltd. vs Their Workmen
1970 LIC 102
394
120.
Hindustan Steel Ltd. vs Workmen, Orissa
3 SCR 303: AIR 1973 SC 878
467
121.
Hindustan Tin Worker vs Its Employees
AIR 1979 SC 75
59, 448, 449, 450
122.
Hindustan Tin Works vs Its Employees
1978 LIC 1667: AIR 1979 SC 75
351, 353, 448, 449, 450
123.
Hookinsons vs Feraie
(1857) 3 C.B. (N.S) 189
165, 311
124.
Hotel and Catering Industry Training Board vs Automobile Proprietary Ltd.
(1968) 1 WLR 1526, 1530
66
125.
Howrah-Amta Light Railway Co. Ltd. vs Central Government Industrial Tribunal
(1966) 2 LLJ 294, 302 (Pat HC)
512
126.
Hukam Chand vs U.O.I
AIR 1972 SC 2427
217
127.
Hussain Bhai vs The Alath Factory Thezhilali Union, Kozhikode and Others
(1978) 4 SCC 257
47, 59, 486–89
128.
Hydro-Engineers
AIR 1969 SC 182
570
129.
I.M.H. Press, Delhi vs Addl. Industrial Tribunal Delhi
AIR 1961 SC 1168
349, 447
130.
I.S.I. Case
AIR 1976 SC 145
106–7
131.
I.T.O vs M.C. Ponnoose
(1970) 1 S.C.R 678
212
132.
Imperial Tobacco Company of India Ltd. vs Its Workmen
AIR 1962 SC 1348.
350, 447 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
133.
India General Navigation and Rly Co. Ltd. vs Their Workmen
AIR 1960 SC 219
348, 349, 350, 352, 353 445, 446, 447, 449, 450
134.
India Marine Service
(1963) 3 SCR 575: AIR 1963 SC 528
298
135.
Indian Hume Pipe Co. Ltd. vs Workmen
AIR 1960 SC 251: (1960) 2 SCR 32
478
136.
Indian Iron and Steel Co. Ltd. vs Their Workmen
1958 SCR 667: AIR 1958 SC 130.
349, 393, 447
137.
Indian Link Chain Manufacturers Ltd. vs Workmen
(1972) (24) F.L.R 321
212, 223
138.
Indian Standards Institution (Workmen) vs Indian Standards Institution
1976 (2) SCR 138: AIR 1976 SC 145
61, 106
139.
Inland Revenue Commrs. vs Ayrshire Employers Mutual Insurance Association
(1946) 1 All ER 637
339, 437
140.
M/s. Ispahani Ltd. vs Employees Union
(1960) 1 SCR 24: AIR 1959 SC 1147
511
141.
J.K. Cotton Spinning and Weaving Mills Co. Ltd. vs State of U.P.
1961 (2) F.L.R. 529
198, 206, 366
142.
Jai Chand Sawhney vs Union of India
(1969) 3 SCC 642
493, 494
143.
Jalan Trading Co. (P) Ltd. vs D.M. Aney and Another
AIR 1979 SC 233
530
144.
Jalan Trading Co. Pvt. Ltd. vs Mill Mazdoor Union
AIR 1967 SC 691
514, 530
145.
James Clark
(1944) 1 K.B. 566
165, 312 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
146.
Jardine Henderson Ltd. vs Workmen
1962 Supp (3) SCR 382: AIR 1963 SC 474
512
147.
Judhisthir Chandra vs Mukherjee
AIR 1950 Cal. 577
190
148.
K. Savanth vs The Mysore State Road Transport Corporation and Another
AIR 1978 SC 1133
500–502
149.
K.C.P. Employees Association, Madras vs Management of K.C.P. Ltd., Madras and Others
1978 I LLJ 322: AIR 1978 SC 474
531–33
150.
K.L. Gupta vs Bombay Municipal Corporation
(1968) I SCR 674
558
151.
K.S. Ramaswamy vs U.O.I
1977 1 LLJ 211: 1978 Lab IC 46 (Mad HC)
226
152.
K.T. Rolling Mills Pvt. Ltd. vs M.R. Meher
AIR 1963 Bom. 146
276, 463
153.
Kajori Lal Agarwal vs U.O.I
(1966) 3 SCR 141: AIR 1966 SC 1538
125
154.
Kalyanmal Bhandari vs State of Rajasthan
1975 Lab. IC 790 (Raj HC)
212
155.
Kamalaranjan vs Secy. of State
AIR 1938 PC 281
342, 439
156.
Kanhaiya Lal Gupta vs Ajeet Kumar Dey
(1967) 2 LLJ 761 (All)
276, 463
157.
Keshavananda Bharati vs State of Kerala
AIR 1973 SC 1461: (1973) 4 SC 228
46, 114, 120
158.
Keventers Karmachari Sangh vs Lt. Governor Delhi
(1971) 2 LLJ 375 (Delhi) (DB)
260, 261 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
159.
Killick Nixon Limited vs Killick and Allied Companies Employees Union
(1975) Supp SCR 453: (AIR 1975 SC 1778)
499
160.
Komalprasad vs The Central India Spinning Weaving and Mfg Co. Ltd. and Another
AIR 1978 SC 473
411
161.
L. Michael and Another vs M/s. Johnson Pumps Ltd.
AIR 1975 SC 661
44, 51, 265–71, 412–17
162.
L. Robert D’Souza vs Executive Engineer, Southern Rly.
(1979) ILLJ 211 (Ker)
480
163.
L.I.C. of India vs D.J. Bahadur
AIR 1980 SC 2181
51, 52, 53, 54, 56
164.
L.I.C. of India vs Sunil Kumar Mukherjee
1964 (8) F.L.R. 158
206, 215
165.
Lalla Ram vs Management of D.C.M Chemical Works Ltd.
AIR 1978 SC 1004
284–89
166.
London and Blackwall Railway vs Limehouse District Board of Works
26 LJ Ch 164: 69 ER 1048
366
167.
M. Pontish vs Veeramallappa
AIR 1961 SC 1107
110
168.
M. Tilak and Co. vs Third Industrial Tribunal
AIR 1959 Cal. 797
512
169.
Madan Mohan Pathak vs U.O.I.
(1978) 3 S.C.R. 334
183, 210, 212, 218, 220
170.
Madhya Pradesh State Road Transport Corporation vs Industrial Court, M.P.
1970 LIC 510
394
171.
Madras State vs C.P. Sarathy
AIR 1953 SC 53
137, 252 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
172.
Magor and St. Mellons Rural District Council vs Newport Corporation
1952 AC 189
342, 439
173.
M/s. Mahabir Jute Mills Ltd. Gorakhpur vs Shibban Lal Saxena and Others
AIR 1975 SC 2057
152–58
174.
Mahalaxmi Cotton Mills Ltd. Calcutta vs Mahalaxmi Cotton Mills Workers Union
1952 LAC 370
511
175.
Mahendra Singh Dhantwal vs Hindustan Motors Ltd.
AIR SC 2062
277–83, 379–84
176.
Malayalam Plantations Ltd. Cochin vs Inspector of Plantations, Mundakayam
1975 LIC 848: AIR 1975 (Ker) 86
543, 547
177.
Management of Bangalore, Woollen, Cotton and Silk Mills Co. Ltd. vs The Workmen
AIR 1968 SC 585
139, 246
178.
Management of Bombay Co. Ltd. vs Workmen
(1964) 7 SCR 277: AIR (1964) SCR 1770
512
179.
Management of Borpukhurie Tea Estate vs The Presiding Officer, Industrial Tribunal, Assam and Another
AIR 1978 SC 992
385–87
180.
Management of Churakulam Tea Estate vs Workman
(1969) 1 SCR 931: AIR 1969 SC 998
511
181.
Management of Hindustan Steel Ltd. vs The Workmen
3 SCR 303: AIR 1973 SC 878
467
182.
Management of Hotel Imperial, New Delhi vs Hotel Workers Union
AIR 1959 SC 1342
274, 462 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
183.
Management of Ritz Theatre (P) Ltd. vs Its Workmen
AIR 1963 SC 295
392, 398, 399
184.
Management of Safdarjung Hospital, New Delhi vs Kuldip Singh Sethi
(1971) 1 SCR 177: AIR 1970 SC 1407
62, 64, 65, 68, 95, 99, 104–9, 114, 120, 130
185.
Management of U.B. Dutt and Co. vs Workmen of U.B. Dutt and Co.
1962 3 (SCR) 822: AIR 1963 SC 411
268, 330, 414, 430
186.
Management of Willcox Buckwell India Ltd. vs Jagannath
AIR 1964 SC 1166: (1965) 3 SCR 448:
479
187.
Management of Wenger and Co. vs Workmen
AIR 1964 SC 864
490
188.
Managing Director National Garage vs J. Gonsalves Goodlass Nerolac Paints (P) Ltd. vs Chief Commissioner
(1967) ILLJ 545 (Pun)
480
189.
Maneka Gandhi (Mrs) vs UOI
1978 2 SCR 621
549
190.
Mangaldas Narandas vs Payment of Wages Authority
(1957) 2 LLJ 256
190
191.
Maruti Mahipati Mullick vs Polson Ltd.
1970 Lab. IC 308, 310, 71 Bom. LR 655 (Bom. HC)
194
192.
Mary Sewards vs Owner of the ‘Vera Curz’
(1884) 10 AC 59, 68
196, 198, 206, 366
193.
May and Baker
(1961) 2 ILJ 94
570 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
194.
Mazagaon Dock Ltd. vs Commissioner of Income Tax and Excess Profit Tax
1951 S.C.R. 848
226
195.
Md. Qasim Larry, Factory Manager, Sasamusa Sugar Works vs Md. Samsuddin and Another
1964 (9) FLR 115
193, 204
196.
Mersey Docks and Harbour Board vs Coggins and Griffith Ltd.
1947 AC 1
133
197.
Model Mills
AIR 1958 SC 311
349, 447
198.
Moghul Steam Ship Co.
1892 A.C. 25
166, 313
199.
Mohinder Singh Gill vs Chief Election Commissioner, New Delhi
(1978) 2 SCR 272
549
200.
Mohmedalli vs UOI
(1963) Supp. I SCR 993
558
201.
Municipal Corporation of Delhi vs Rasal Singh, etc.
AIR 1976 SC 2454
283–84
202.
Municipal Corporation of Greater Bombay vs P.S. Malvenkar
(1978) 3 SCR 1000: AIR 1978 SC 1380
334, 434
203.
N.M. Desai vs Testeels Ltd.
CA. No. 245 of 1970: D/-17-12-1975 (SC)
550
204.
N.M. Desai vs Testeels Ltd. and Another
AIR 1980 SC 2124
379
205.
Nagendra Nath Bora vs Commr. of Hills Division and Appeals, Assam
1958 SCR 1240: AIR 1958 SC 398
337 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
206.
Narayanaswamy vs Presiding Officer
(1971) 1 LLJ 310 (Mad)
192
207.
Navinchandra vs Manager, Ahmedabad Co-op Department Stores Ltd.
(1978) 19 Guj LR 108
337
208.
Newabbganj Sugar Mills Co. Ltd. vs Union of India
(1976) 1 SCR 120
508
209.
Oil and Natural Gas Commission vs Workmen
AIR 1973 SC 968
376
210.
Om Oil and Oilseeds Exchange Ltd., Delhi vs Their Workmen
(1966) Supp. SCR 74: AIR 1966 SC 1657
482
211.
Organo Chemicals Industries and Another vs UOI and Others
AIR 1979 SC 1803
547–65
212.
Oriental Textile Finishing Mills, Amritsar vs Labour Court Jullunder
(1972) 1 SCR 490: AIR 1972 SC 277.
350, 447
213.
P.H. Kalyani vs M/s. Air France, Calcutta
(1963) 1 LLJ 697: AIR 1963 SC 1756
287, 337, 354, 451, 452
214.
P.N. Kaushal vs UOI
(1978) 3 SCC 558
551
215.
P.P. Abubacker vs Union of India
AIR 1972 Ker 103, 107 para 5
496
216.
Panitole Tea Estates
(1971) 3 SCR 774: AIR 1971 SC 2171
354, 451
217.
Pannalal Binjraj vs UOI
1957 SCR 223
558
218.
Patna Electric Supply Co. Ltd. Patna vs Bali Rai
AIR 1958 SC 204
387
219.
Pellas vs Neptune Marine Insurance Co.
(1980) 5 CPD 34, 40
214 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
220.
Phulbari Tea Estate vs Its Workmen
1960 1 SCR 32: AIR 1959 SC 1111
393
221.
Precision Bearings India vs Baroda Mazdoor Sabha
AIR 1978 SC 419
497–500
222.
Prem Nath Motors Workshop Pvt. Ltd. vs Industrial Tribunal Delhi
(1971) 22 Fac. LR 370
394
223.
Premier Automobiles
AIR 1975 SC 2238.
169, 212, 315, 316
224
Pritam Singh vs State of Madras
(1950) SCR 453: AIR 1950 SC 169
296
225.
Province of Bombay vs Bombay Municipal Corporation
AIR 1947 PC 34
551
226.
Provincial Transport Service vs State Industrial Court
(1968) 3 SCR 650: AIR 1963 SC 114
350, 447
227.
Punjab National Bank vs Its Workmen
AIR 1960 SC 160
353, 393, 450
228.
Quinn vs Leathem
1901 A.C. 495
166, 313, 348, 445
229.
R.B.H.N. Jute Mills vs Provident Fund Commissioner
1958 I LLJ 598 (Pat)
552
230.
R.S. Joshi STO vs Ajit Mills
(1977) 4 SCC 98
552
231.
R.V. Secretary of State
1973 2 All ER 103
471
232.
R.V. Secretary of State for the Home Department ex p Fire Brigades Union
(1975) 2 WLR 1 (1995): 1 All ER 888: (1995) 2 AC 513 (CA)
126
233.
Rajasthan Electricity Board vs Mohan Lal
AIR 1967 SC 1857
363, 366 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
234.
Rajasthan State Electricity Board vs Mohan Lal
1976 (2) SCR 377: AIR 1967 SC 1857
115
235.
Ram Kishore Sharma vs Addl. District Judge Saranpur
1969 All LJ 225: (1970 Lab JC 582)
495
236.
Raman Nambissan vs State Electricity Board
(1967) 1 LLJ 252
368
237.
Ramnagar Cane and Sugar Co. Ltd vs Jatin Chakravorty
1960 (1) F.L.R. 411
176
(1950–67)S.C.L.J. 2369: (1960) 3 S.C.R. 968 238.
Rohtak Hissar District Electricity Supply Co. Ltd. vs State of U.P.
(1966) 2 SCR 863
365
239.
Rohtas Industries vs Its Union
AIR 1976 SC 425
44, 52, 58, 307–17, 336
240.
Rookes vs Barnard
(1964) 1 All ER 367
168, 315, 348, 445
241.
Roshan Lal vs Union
1968 1 S.C.R 185
212
242.
Royal Acquarium vs Parkinson
(1892) 1 QB 431
339, 436
243.
Royal Talkies, Hyderabad and Others vs Employees State Insurance Corporation
AIR 1978 SC 1478
536–41
244.
Russell vs Russell
1987 AC 395
196
245.
S. Narayanaswami vs G. Panneerselvam
AIR 1972 SC 2284
342, 439 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
246.
Sadhu Singh vs State of Pepsu
AIR 1954 SC 271
296
247.
Samsher Singh vs State of Punjab
(1975) I SCR 814: AIR 1974 SC 2192
329, 331, 332, 429, 431, 432
248.
Sanghi Jeevaraj Ghewar Chand vs Secretary, Madras Chillies Grain Kirana Merchants Workers Union
AIR 1969 SC 530: (1969) 1 SCR 366
275, 463, 514, 516, 517
249.
Santosh Gupta vs State Bank of Patiala
AIR 1980 SC 1219
476–80
250.
Sasa Musa Sugar Works (P) Ltd. vs Shobrati Khan MA
AIR 1959 SC 923
354, 452
251.
Satya Studios vs Labour Court
(1961) 1 LLJ 105
192
252.
Seaford Court Estates Ltd. vs Asher
(1949) 2 All ER 155
110, 342, 440
253.
Secretary Madras Gymkhana Club Employee’s Union vs Gymkhana Club
1968 (1) SCR 742: AIR 1968 SC 554
86, 87, 101, 102, 103, 105, 106, 107, 109, 120, 131
254.
Secretary, Haryana State Electricity Board vs Suresh and Others
AIR 1999 SC 116
488
255.
Shambu Nath Goyal vs Bank of Baroda
AIR 1978 SC 1088
136–38
256.
Shankar Chakravarti vs Britannia Biscuit Co. Ltd. and Another
AIR 1979 SC 1652
388–401
257.
Shaw. vs D.P.P.
1962 AC 220
341, 438
258.
Sheo Prasad vs Addl. District Judge, Moradabad
AIR 1962 All 144
494 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
259.
Shivnandan Sharma vs The Punjab National Bank Ltd.
AIR 1955 SC 404
133
260.
Shri Ram Swarath Sinha vs Belund Sugar Co.
(1954) Lab AC 697
393
261.
Shukla Manseta Industries Pvt. Ltd. vs Workmen
1977 (55) FLR 246
223
262.
Shyamala Studios vs Kannu Devar
(1966) II LLJ 428 (Mad)
281, 383
263.
Siemens Engineering and Manufacturing Co. of India Ltd. vs UOI
1976 Supp. SCR 489
549, 550
264.
Sindhu Settlement Corporation Ltd. vs Industrial Tribunal
AIR 1968 SC 529
137
265.
Solicitor’s Case
1962 Supp (3) SCR 157: AIR 1962 SC 1080
85, 86, 88, 90, 107, 109, 120
266.
Sorrel vs Smith
1925 A.C. 700
166, 168, 313, 314
267.
South Indian Bank Ltd. vs A.R. Chacko
1964 (8) FLR 118
194, 204, 212, 220, 221, 223
268.
Sri Rama Machinery Corporation (P) Ltd. Madras vs N.R. Murthi
(1966) II LLJ 899 (Mad)
281, 383
269.
State Bank of India vs R.K. Jain
(1972) 1 SCR 755: 1972 LIC 13
393, 394, 395, 398, 399
270.
State of Andhra Pradesh vs S. Sree Rama Rao
(1964) 3 SCR 25: AIR 1963 SC 1723
337
271.
State of Bihar vs Dr Asis Kumar Mukherjee
(1975) 2 SCR 894: AIR 1975 SC 192
342, 440 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
272.
State of Bihar vs S.K. Roy
1966 Supp. SCR 259: AIR 1966 SC 1995
125
273.
State of Bombay vs The Hospital Mazdoor Sabha
(1960) 2 SCR 866: AIR 1960 SC 610
74, 75, 80, 83, 106, 107, 109, 110, 113, 120, 121, 131, 144, 466, 470
274.
State of Gujarat vs Pratamsingh Narsinh Parmar
(2001) 9 SCC 713: 2002 SCC (L and S) 269
46, 117
275.
State of Orissa vs Dr (Miss) Binapani Dei
AIR 1967 SC 1269
157
276.
State of Punjab vs Jai Bir Singh
(2005) 5 SCC 1
46
277.
State of Punjab vs Labour Court Jullundur and Others
AIR 1970 SC 1981
472–76, 561–65
278.
State of Rajasthan vs Mst. Vidhyawati
1962 Supp. (2) SCR 989: AIR 1962 SC 933
115
279.
State of U.P. vs Jai Bir Singh
(2005) 5 SCCI
45, 116–32
280.
State of U.P. vs Babu Ram Upadhya
(1961) 2 S.C.R 679
165, 212
281.
State of U.P. vs Basti Sugar Mills Co. Ltd.
AIR 1961 SC 420 at p. 426
528
282.
Steel and General Mills Co. Ltd. vs Additional District Judge, Rohtak
(1972) 1 LLJ 284: (1971) 1 LIC 1356
276, 463
283.
Steel Authority of India Ltd. vs National Union Water Front Workers
(2001) 7 SCC 1
46 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
284.
Straw Board Manufacturing Co. vs Its Workmen
AIR 1977 SC 941
43, 50, 565–71
285.
Sukhdev Singh vs Bhagatram
1975 (30) F.L.R 283 (SC)
206, 212, 223, 363, 366, 367
286.
Swadeshi Industries Ltd. vs Its Workmen
AIR 1960 SC 1258.
447, 450
287.
Tata Chemicals Ltd. vs Its Workmen
AIR 1978 SC 828
172–78, 503–6
288.
Tata Engineering and Locomotive Co. Ltd. vs S.C. Prasad
(1969) 2 LLJ 799
289, 334, 434
289.
M/s. Tata Iron and Steel Co. Ltd. vs Workmen
AIR 1972 SC 1917
377
290.
Tata Oil Mills Co. Ltd. vs Its Workmen
1964 7 SCR 555: AIR 1965 SC 155
287, 334, 434
291.
Technological Institute of Textiles vs Its Workmen
1965 II LLJ 149 (SC)
141, 246, 248
292.
The Ahmedabad Textile Industries Research Association
1961 (2) SCR 480: AIR 1961 SC 484
98, 99, 107
293.
The Chartered Bank, Bombay vs The Chartered Bank
(1960) 11 LLJ 222: AIR 1960 SC 919
267, 268, 330, 331, 334, 414,
294.
The Employers in Relation to Punjab National Bank vs Ghulam Dastagir
AIR 1978 SC 481
132–35, 264
295.
The Indian Express Newspapers (Bombay) Pvt. Ltd. and Another vs The Indian Express Newspapers (Bombay) Employees Union and Others
AIR 1978 SC 1137
50, 254–60, 263
Employee’s Union
415, 430, 431, 434
(List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
296.
The Jhagrakhan Collieries (P) Ltd. vs Shri. G.C. Agrawal, Presiding Officer, Central Govt. Industrial Tribunal-cumLabour Court, Jabalpur
1975 (30) F.L.R./175 (S.C.)
177
297.
The Lord Krishna Textile Mills vs Its Workmen
(1961) 3 SCR 204: AIR 1961 SC 860
287
298.
The Management of Indian Oil Corporation vs Its Workmen
AIR 1975 SC 1856
50, 54, 193, 194, 373–78
299.
The Management of Murugan Mills Ltd. vs Industrial Tribunal Madras
AIR 1965 SC 1496: (1965) 2 SCR 148
267, 270, 281, 282, 330, 334, 414 416, 430, 434
300.
The Mumbai Kamgar Sabha Mumbai vs
AIR 1976 SC 1455
44, 52, 55, 57, 506–20
M/s. Abdulbhai Faizallabhai and Others 301.
The Queen vs Marshall Ex Parte Federated Clerks Union of Australia
1975 (132) CLR 595
103
302.
The Rambagh Palace Hotel, Jaipur vs
AIR 1976 SC 2503
490–91
The Rajasthan Hotel Workers Union, Jaipur 303.
The Senior Electric Inspector vs Laxmi Narayan Chopra
1962 SCR 146: AIR 1962 SC 159
111
304.
The State Bank of India vs Shri N. Sundara Money
AIR 1976 SC 1111
55, 466, 469–72, 479, 480
305.
The Statesman Ltd. vs Their Workmen
AIR 1976 SC 758
294–301 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
306.
The Workmen of M/s. Firestone Tyre and Rubber Co. of India (P) Ltd. vs The Firestone Tyre and Rubber Co.
AIR 1976 SC 1775
271–77, 280, 396, 397, 399, 459–64
307.
The Workmen Shift Incharge Substation vs The Presiding Officer
AIR 1980 SC 511
53, 290–91
308.
Thiru Manickam and Co. vs State of T.N.
(1977) 1 SCC 199: 1977 SCC (tax)
125
309.
Thiruvenkataswami vs Coimbatore Municipality
(1968) 1 LLJ 361
368
310.
Thorpe vs Adam
(1871) LR 6 CP 125
366
311.
Tin Printers (Pvt.) Ltd. vs Industrial Tribunal
(1967) 2 LLJ 677
400
312.
Titaghur Paper Mills Co. Ltd. vs Ram Naresh Kumar
1961 1 LLJ 551
288
313.
Trustee of Port of Bombay vs Premier Automobiles Ltd.
(1974) 4 SCC 710: AIR 1974 SC 923
472
165 AIR 1977 SC 518
314.
Tulsidas Khimji vs Workmen
(1962) 11 LLJ 435: AIR 1963 SC 1007
512
315.
U.P. State Electricity Board and Another vs Hari Shankar Jain
AIR 1979 SC 65
55, 199, 206, 217, 361–69
316.
Union of India vs Bungo Steel Furniture Pvt. Ltd.
(1967) 1 SCR 324: AIR 1967 SC 1032
313, 343, 441
317.
Union of India vs J.N. Sinha
AIR 1971 SC 40
157
318.
Union of India vs Hafiz Mohd
IIR (1973) 2 Delhi 673 at 676: APR 1975 Delhi 75 at 76
469 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
319.
United States vs American Trucking Association
(1940) 310 U.S. 534
57, 340, 437
320.
University of Delhi
1964 (2) SCR 703: AIR 1963 SC 1873
91, 92, 93, 94, 107, 109, 119
321.
V.P. Gindroniya vs State of Madhya Pradesh
AIR 1970 SC 1494
275, 462
322.
Vasantlal Maganbhai Sanjanwala vs State of Bombay
1961 1 S.C.R. 341
227
323.
Veiyra (M.A) vs Fernandez
AIR 1957 Bom. 100: (1956) I LLJ 547
275, 462
324.
W.M. Agnani vs Badri Das
(1963) 1 LLJ 684
287
325.
Watney Combe Reid and Co. vs Berners
1915 AC 885
199
326.
Western India Automobile Association
170, 317, 333, 433
327.
Western India Match Co. Ltd. vs The Third Industrial
(1949) 1 LLJ 245 1949 FCR 321: AIR 1949 FC III AIR 1978 SC 311
301–2
Tribunal West Bengal and Others 328.
Western India Match Co. Ltd. vs Their Workmen
(1963) 2 LLJ 459
387
329.
Western India Match Co. Ltd. vs Western India Match Co. Workers Union
AIR 1970 SC 1205: (1970) 3 SCR 370
158, 252
330.
Workman of Dimakuchi Tea Estate vs The Management of Dimakuchi Tea Estate
1958 SCR 1156: AIR 1958 SC 353
112 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
331.
Workmen of Dewan Tea Estate vs Management
AIR 1964 SC 1458: (1964) 5 SCR 548
275, 462
332.
Workmen of Edward Keventers Pvt. Ltd. vs Delhi Administration
1969 ILR Del 767 (DB)
260–62
333.
Workmen of Hindustan Shipyard (Pvt) Ltd. vs
(1961) 2 LLJ 526 (A.P.)
375
Industrial Tribunal, Hyderabad 334.
Workmen of Indian Standards Institution vs Management of Indian Standards Institute
(1960) 2 SCR 866: 1976 ILLJ SC 33
61, 106
335.
Workmen of Motipur Sugar Factory (Pvt) Ltd. vs Motipur Sugar Factory
(1965) 3 SCR 588: AIR 1965 SC 1803
350, 392, 447
336.
Workmen of Sudder Office Chinnamare vs Management
(1972) LIC 1262: (1971) 2 LLJ 620.
267, 268, 414, 415, 434
337.
Workmen of Sudder Workshop of Jorehaut Tea Co. Ltd. vs The Management of Jorehaut Tea Co. Ltd.
AIR 1980 SC 1454
481–84
338.
Workmen of Swadeshi Cotton Mills Co. Ltd. vs Swadeshi Cotton Mills Co. Ltd. Kanpur
1973 LIC 711 (All)
140, 246, 249
339.
Workmen of the Rajasthan Atomic Power Project vs Management of Rajasthan Atomic Power Project
AIR 1976 SC 441 1976 (32) FLR 90: 1976 LIC 315
231–33 (List of Cases continued )
(List of Cases continued ) Sl. No.
Name of the Case
Citation
Page Number in Book
340.
Workmen of Tirumala Tirupathi Devasthanam vs Management and Another
AIR 1980 SC 604
530–31
341.
Workmen vs M/s. Dharampal Premchand Saughandi
(1965) 3 S.C.R (394)
177
342.
Workmen vs New Egerton Woollen Mills
1969 (18) F.L.R. 228: (1969) 2 LLJ 782: (1967–68) 32 FJR 182)
505
343.
Yamuna Mills Co. Ltd vs Majdoor Mahajan Mandal, Baroda and Others
1957 (1) LLJ 620
190, 191
344.
Yogendra Nath Naskar vs CIT
(1969) 1 SCC 555: (1969) 3 SCR 742
125
Foreword Social Justice and Labour Law—A Judge’s Foreword Indian jurisprudence has many dimensions and labour law does occupy a prominent judicial space by way of case law, as is evident from the profusion of rulings on Parts III and IV of the Constitution and industrial statutes. The working class is not confined to urban factories and technological services that are well organized, but extend to the vastly dispersed villages of rural India. We are a socialist republic, as the Preamble to the Constitution articulates . There are several statutes, that deal with the rights and duties of the working people, which are enforceable through courts. Inevitably, trade unionism—with political and economic ideologies—had to come up for their semantic construction before the courts, especially the highest court, making the final pronouncement. Judges have their biases, because they often belong to the bourgeoisie. Consequently, capitalists resist socialist meanings, and labour injustice results in strikes and other industrial disputes. It is in this context that I have had the opportunity to deal with trade unions and explore the constructive role they play in producing harmony and peace, better understanding and just settlement of disputes between managements and workers. Without casting any reflections on the ‘robed brethren’ who rarely have the benefit of industrial dispute in action, I must be forgiven for saying that Justice Gajendragadkar was a pioneer in the field of labour law. During my time on the Bench, I took a liberal view of the rights of labour, who are the actual builders of Bharat with sweat and toil and hard engineering. There will be chaos in industrial jurisprudence if we do not evoke a sense of justice in those whose sweat and toil as operators of production result in factories, plantations and workshops. The great and now late D.A. Desai, Chinnappa Reddy and quite a few other eminent jurists, including myself, have striven towards the creation of a dynamic labour jurisprudence. Radical but realistic was my vision, shared by several of my colleagues. Law assigns a construction worker the status not of a mere wage earner but a skilled producer of goods and services. Many questions arise as to what is an ‘industry’ and who is a ‘worker’, how law must mediate in disputes, how the relations between workers and managements should be fairly regulated and how far courts can intervene to ensure social justice and how healthy conditions can be created through conciliation. I must frankly say that judges as a class have an ethos not happily in favour of the working class. The Politics of the Judiciary, written by Prof. Griffith, makes this clear: Judges are the product of a class and have the characteristics of that class. Typically coming from middle-class professional families, independent schools, Oxford or Cambridge, they spend
Foreword 37 20 to 25 years in successful practice at the bar, mostly in London, earning very considerable incomes by the time they reach their forties. This is not the stuff of which reformers are made, still less radicals.
Winston Churchill once told the House of Commons: The courts hold justly a high, and I think, unequalled pre-continence in the respect of the world in criminal cases, and in civil cases between man and man, no doubt, they deserve and command the respect and admiration of all classes of the community, but where class issues are involved, it is impossible to pretend that the courts command the same degree of general confidence. On the contrary, they do not, and a very large number of our population have been led to the opinion that they are, unconsciously, no doubt, biases.
Lord Justice Scrutton, in an address to the University of Cambridge, observed: Where are your impartial judges? They all move in the same circle as the employers, and they are all educated and nursed in the same ideas as the employers. How can a labour man or a trade unionist get impartial justice? It is very difficult sometimes to be sure that you have put yourself into a thoroughly impartial position between two disputants, one of your own class and one not of your class.
The points I have quoted above are not alien to the Indian forensic mentality. Cardozo’s great book The Judicial Process also hints at judicial predilections. If the Constitution is to receive fair curial treatment, judges must consciously negate the class character of the higher judiciary in India that has had a tradition of feudal and colonial conditioning. I must make it clear that I have had colleagues powerfully Left in tune with the Preamble to the Constitution and true to their oath of office. The majority of the judges, however, are of a different class, unwittingly shaped by their social milieu. Felix Frankfurter provides an apt reminder: For the highest exercise of judicial duty is to subordinate one’s personal pulls and one’s private views to the law of which we are all guardians—those impersonal convictions that make a society a civilized community, and not the victims of personal rule.
Brothers D.A. Desai and Chinnappa Reddy are precisely what the Constitution in its Preamble emphasises as a tryst with the people of India. I would not prolong these prefatory observations as the readers will read through the book for themselves and be able to judge impartially from the socialistic perspective. I know that there is a tendency, especially after American capitalist influence has gained hold on Indian economic philosophy, of rejecting Nehru and Indira Gandhi; but this trend must be corrected. A majority of judges, brought up contrary to the views of the founding fathers, are inclined to ignore the progressive Preamble and the labour law set out in Part IV of the Constitution. Industrial law, after US economic domination of Indian legal thought, has reached the vanishing point of social justice jurisprudence. History, in the long run, will rewrite the current pro-West verdict of the judiciary and will vindicate what we, in our profound convictions, dreamt—India’s labouring people in their vast majority would make India’s one billion and odd humans a happy family.
38 Social Justice and Labour Jurisprudence
Pro-US, critics notwithstanding, my consolation is that even Lord Denning had in a letter to me written: You have indeed been using your time to full advantage. Your book on Human Rights and the Law will be of the greatest value to many. During your time on the bench, you were a leader of thought on these matters and your judgements have received much acclaim. I find myself largely in agreement with your point of view. Meanwhile, with all best wishes for success in all the many things you still do so that others may learn of your wisdom.
Justice V.R. Krishna Iyer
Preface The labour legislations that govern the industrial relations aspect—namely the Trade Unions Act, 1926; the Industrial Employment (Standing Orders) Act, 1946; and the Industrial Disputes Act, 1947—historically contributed immensely to the growth of labour jurisprudence in India. A clear understanding of the content of these principal legislations is the first and foremost need. The labour legislation would see the light of the day, with a clear presumption that it is an adequate code in meeting the whole purpose meant under the long title to it. But when put into practice in a country like India with its myriad problems, many uncertainties and legislative gaps, advertent or inadvertent, are found in meeting the purposes. In this context, the role of the judiciary is paramount in maintaining regularity and certainty. The immediate post-Constitutional period witnessed the apex court, under Article 136 of the Constitution, convinced—contrary to the apprehensions of the first Law Commission that ‘labour matters were thrust upon a Court which has not the means or materials for adequately informing itself about the different aspects of the questions which arise in these appeals and therefore finds it difficult to do adequate justice’—that it could not only entertain matters from the labour courts and tribunals, but also expressed itself decisively and comprehensively on every subject that entered into labour–management relations. The credit for this initial step should go to the late Justice Gajendragadkar, former Chief Justice, along with his brethren judges for rendering invaluable decisions on labour matters, which in fact laid solid foundations as far as labour jurisprudence in India is concerned. Later, immediately after the Keshavananda Bharathi case, it was historically perceived that the apex court had elevated with pro-socialist judges. In this background, the contribution of Justice V.R. Krishna Iyer to the growth of labour jurisprudence was viewed as pro-labour . It is agonising to note that the labour laws, especially the laws relating to industrial relations, are perceived by employers in the country as rigid, restricting their freedom to carry on business with flexible labour so as to meet the competitive situations in the global market. Also, there is an impression that the awards of the industrial courts have made employers shell out huge amounts by way of back wages in case of a small lapse in conducting the domestic enquiry, which has left their business in ruins. No doubt the changing perceptions of the global market may require certain reforms in the area of industrial relations law in the country, specially in the areas relating to retrenchment and closure. But at the same time, the prevailing economic scenario of the country should be kept in mind—the percentage of work force made up by the unorganised sector in the country’s total working population, their wage levels, their pattern of employment, the prevailing social security measures, and their social and educational status.
40 Social Justice and Labour Jurisprudence
On the other hand, the workers and their organisations are vexed by the time-consuming processes involved in the adjudicating system. Already substantial amounts of information are available, through various studies, as to the reasons for such delay. This needs close examination in order for apt conclusions to be drawn. The statutory mandate of prescribing a time limit—under Section 10(2A) of the Industrial Disputes Act, 1947—within which the labour courts and the tribunals have to submit awards, whether in cases of individual disputes or in industrial disputes, in the order of reference by the appropriate government has become redundant in view of the experience gained. This was the major concern expressed by Justice V.R. Krishna Iyer while deciding labour disputes. The finger must be pointed towards the legislature for this lapse of continuing without any reforms in this area for years. In this book the labour judgements delivered by Justice V.R. Krishna Iyer, both speaking for the majority and in terms of the judgements concurring with the majority view, are placed on record contextually in accordance with their subject content as per the framework of industrial laws in this country. The authors place on record their own observations to negate the contrary views expressed with regard to Justice Krishna Iyer’s commitment in deciding the labour matters. The critics may be correct in their assertion that at one stage of his tenure, i.e., while deciding the Bangalore Water Supply and Sewerage Board case, he might have yielded too much in expanding the scope of the definition of ‘industry’; but it was done with a qualification, urging the Parliament to step in with a legislative reform, making his intention clear. Throughout his role as a judge of the apex court, Justice V.R. Krishna Iyer has demonstrated constructively the art of interpretating the provisions of labour legislations with the technicalities involved therein wherever there is ambiguity or inconsistency. The spirit and essence of the Directive Principles of State Policy under Part IV of the Constitution are what he held sacrosanct while he interpreted the provisions of labour welfare legislations. Where the law is sole in its intention, his approach was to interpret the spirit of it and the circumstances under which it has emanated from. Where the law contained a gap, the manner in which he filled the gap by solely confining himself to the long title of the legislation is admirable. Of course, there are also instances wherein he interfered with the awards of the labour courts and the industrial tribunals when they failed to follow what the legislation provided for, though such decisions went against the labour. The purpose of this work is to make very clear certain key aspects of industrial relations in India to those within the country and to the outside world, with a view to impressing upon the reader that the labour laws are not harsh but humane, oriented towards providing a protective mechanism for the economically weaker sections of this vast country. The authors pay tribute to Dr A. Jayagovind, Vice-Chancellor of the prestigious National Law School of India University, Bangalore, and Prof. Babu Mathew, Professor (on Lien), National Law School of India University, Bangalore, for their sincere inspiration, encouragement and support in this endeavour. The authors express their deep sense of gratitude to Mr Sachin Biraj, Research Officer, Centre for Labour Studies, Mrs Bernadine, Project Research Officer, and Mrs Pushpa of the Centre for Child and Law for their invaluable support in completing this work. The authors place on record their indebtedness to the Humanist Institute for Cooperation with Developing Countries, The Netherlands (HIVOS) for their valuable financial support in completing this work.
Preface 41
Finally, the fundamental purpose of this work is in one way to give a clear understanding of the very linkage between labour issues and Constitutional philosophy as perceived by Justice V.R. Krishna Iyer, and clarify the art of interpretation and understanding of the provisions of various labour legislations for students of law, researchers, academics, trade union organisations, and managerial persons. This is presented with due respect to the members of the bar and judicial fraternity in India. I. Sharath Babu Rashmi Shetty Disclaimer: All judgements, acts and laws in this book have been reproduced as it is from the original. The publishers are not liable for any issues that might arise therefrom.
Chapter 1
Introduction Judges occupy the public bench of justice. They implement the public’s sense of justice. If the courts are the fulcrum of the justice system, there is a strong case for the reform of court methodology and bestowal of attention on efficient management of judicial administration. Otherwise, the courts may be so overloaded or so mismanaged that they grind to a halt and the exercise of citizens’ rights is discouraged or frustrated. A vital aspect of judicial remedies is speeding the pace of litigation ‘from the cradle to the grave’. We are reluctant to make these self-critical observations towards putting our house in order, but when the consumers of justice—such as workmen—lose interest in the judicial process, legislative unawareness of the research and development of the courts and a simplification and acceleration of the judicative apparatus become matters of national concern. Law’s delays are, in some measure, caused by legislative inaction towards making competent, radical changes in the procedural laws and sufficient financing and modernising of the justice system a high-priority programme.1 Opposed to the traditional industrial culture of open competition or laissez faire, the present structure of industrial law is an outcome of long-term agitation and struggle by the working class for participation in industries for their growth and profits on an equal footing with the employers. Therefore, in interpreting the industrial law, which aims at promoting social justice, the interests of employers, employees and, in a democratic society, the people as a whole, who are the ultimate beneficiaries of the industrial activities, have to be kept in view.2 Several critical questions arose with regard to the interpretation of various aspects of the Industrial Disputes Act, 1947 and other related labour legislations immediately after the commencement of the Constitution. On all these questions, our courts have accepted the principles prevailing by way of precedents and the interpretation of the statutes, considering the socio-economic background from which these laws have emanated. The decisions rendered by his lordship Justice V.R. Krishna Iyer, including those wherein his coordination in delivering the dominant view was involved in the area of labour law, are central to this work. In every decision, his lordship referred to the previous ratio prevailing on the point and has analysed and applied the ratio while deciding similar issues with authority. Where the law was silent on the issue and where there was no prevailing ratio on the issue, Justice Krishna Iyer with precision and the application of interpretative skills decided the cases unambiguously. This way, in judicial terms, is called the ‘creativity of the judge’. This applied to important areas of industrial relations, where the Parliament construed the purpose by reading between the lines of the provisions of said legislations and Justice Krishna Iyer deals with this without leaving any impression of having gone beyond the statutory implication.
44 Social Justice and Labour Jurisprudence
Equal credit is richly deserved by the judges who occupied posts in the apex Court immediately after the commencement of the Indian Constitution. They are Justice P.B. Gajendragadkar, Justice K.N. Wanchoo, Justice K.C. Das Gupta, Justice Pathanjali Sastri, Justice J.M. Shelat, Justice Grover, Justice K.S. Hegde, Justice H.R. Khanna, Justice Jaswant Singh, Justice D.A. Desai, Justice O. Chinnappa Reddy and Justice P.B. Sawant. An immense contribution to labour jurisprudence immediately after the commencement of the Constitution was from Justice P.B. Gajendragadkar, who rendered labour judgements with great clarity and precision within the confinements of the Constitution and the relevant statutory provisions. Of course, at the same time, he was very cautious in adhering to the norms of industrial discipline to be followed by an industrial worker. The Constitution was the guiding principle for these judges in deciding labour matters. The Directive Principles of State Policy embodied in Part IV of the Constitution were the spirit enshrined in the judgements of this era. In this work, every case wherein either Justice Krishna Iyer’s majority view or his concurrent view were involved has been discussed at length in order to give readers a clear understanding of the judgement. His role as a judge involved rewriting the following provisions/areas under labour legislations. This was done in keeping with the Constitutional mandate under the Directive Principles of State Policy under Part IV as well as the object with which the labour legislations were enacted. While deciding each case, he went beyond the routine to consider the issue carefully with a view that such decisions would guide the deciding of similar cases in future. At the same time, he sounded a note of caution: that while exercising the wider power under Article 136, the Supreme Court must have due regard for the Constitutional limitations on Article 133(1) and owe allegiance to those restraints save in exceptional cases. 1. Interpretation of the definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947.3 2. Clarification of the meaning of the term ‘undertaking’ within the scope of the Industrial Disputes Act, 1947.4 3. Legally limiting the scope of the prerogative of the employer in dismissing the workman on the ground of ‘loss of confidence’.5 4. Defining the scope of the operation of Section 33(2)(b), i.e., whether it goes beyond the scope of acts of misconduct specified under the standing orders of the establishment. 5. Whether the scope of the powers of the arbitrator under Section 10A of the Industrial Disputes Act, 1947, covers the matters specified as outside the scope of the said Act.6 6. The antagonistic relationship between a claim for compensation for tortuous liability and the definition of ‘industrial dispute’ under Section 2(k) of the Industrial Disputes Act, 1947.7 7. The hard question relating to labour employed through a middleman and their claim for absorption as regular employees of the principal employer in situations where the provisions of the Contract Labour (Regulation & Abolition) Act, 1970, are defeated in employing such labour.8 8. Does Section 11A of the Industrial Disputes Act, 1947, include an arbitrator?9 9. Whether mass dismissal for participating in an illegal strike amounts to discharge simpliciter or discharge for misconduct.10 10. Entitlement to customary bonus by the workmen—the scope of Section 17 and Section 34 of the Payment of Bonus Act, 1965.11
Introduction 45
There is mention in the judgements delivered by Justice Krishna Iyer pertaining to grey areas in the legislations, relating to the position of other staff employed in the Constitutional functions of the government12 and the prohibition of strikes during the pendency of the proceedings before the authorities specified in Section 23(a) of the Industrial Disputes Act, 1947.13 Also one can find a noble gesture from Justice Krishna Iyer, while deciding cases involving a workman initiating flawed proceedings in respect of money due from the employer under special labour legislations. After having settled the right position of law by quashing the award of the tribunal, he disposed of the matter with an assurance from the employer’s counsel that the amount due would be paid to the workman without putting him to the hardship of repeating the proceedings to recover the money due.
Labour Issues—Attitude of the Judiciary of Late The Indian judicial experience is unique. Judicial accountability was very much in question in the first two decades of the Supreme Court, from 1950 to 1973. There were clashes between the Supreme Court’s decisions on property and on agrarian and economic reform, and the Government’s view that the Supreme Court was unsympathetic and at times hostile to its legislation on such matters. However, after 1973, there has been no such problem as the judiciary changed its direction.14 But the recent years’ developments in the labour judgements of the Supreme Court are very much a cause for concern. For nearly a decade, during the liberalisation era, the Indian judiciary has exhibited a trend of insensitivity towards upholding the prevailing political economy of the country as far as the issues pertaining to labour rights are concerned. Of late, the Supreme Court has rendered certain judgements pertaining to the primary aspects of labour rights and industrial relations recognised over the years, leading to certain concerns. Today no one speaks of judges’ accountability for their judgements in labour matters. The present scenario is that many state governments have either declared some regions ‘exclusive economic zones’, excluding them from the purview of the labour laws, or have provided exemptions to many sectors from the application of vital labour laws. The strength of the organised-sector workforce is receding everyday. The workers of the unorganised sector constitute 93 per cent of the total working population in the country, and they are working in totally exploitative conditions without any protective coverage under various labour legislations. It is equally painful to note that the Central Trade Union Movement in India has fallen way behind in addressing these issues. Labour jurisprudence in India has a history of more than five decades, emanating from the Directive Principles of State Policy in the Constitution. This is what the Supreme Court prior to the regime of Justice Krishna Iyer and during his regime insisted upon and incorporated while delivering its decisions. Today this soundness in the judgements relating to labour matters may be spoken or felt but no remedy is provided.15 In the recently decided State of UP vs Jai Bir Singh,16 a five-judge bench of the court held that: The word ‘industry’ seems to have been redefined under the Amendment Act keeping in view the judicial interpretation of the word ‘industry’ in the case of Bangalore Water Supply.17 Had there
46 Social Justice and Labour Jurisprudence been no such expansive definition of ‘industry’ given in Bangalore Water Supply18 case, it would have been open to Parliament to bring in either a more expansive or a more restrictive definition of industry by confining it or not confining it to industrial activities other than sovereign functions and public welfare activities of the State and its departments. Similarly, employment generated in carrying on of liberal professions could be clearly included or excluded depending on social conditions and demands of social justice. Comprehensive change in law and/or enactment of new law had not been possible because of the interpretation given to the definition of ‘industry’ in Bangalore Water Supply19 case. The judicial interpretation seems to have been one of the inhibiting factors in the enforcement of the amended definition of the Act for the last 23 years. The Supreme Court must, therefore, reconsider where the line, excluding some callings, services or undertakings from the purview of ‘industry’ should be drawn and what limitations can and should be reasonably implied in interpreting the wide words used in Section 2(j). That no doubt is rather a difficult problem to resolve more so when both the legislature and the executive are silent and have kept an important amended provision of law dormant on the statute-book. It is not necessary to say anything more and leave it to the larger Bench to give such meaning and effect to the definition clause in the present context with the experience of all these years and keeping in view the amended definition of ‘industry’ kept dormant for long 23 years. Pressing demands of the competing sectors of employers and employees and the helplessness of the legislature and the executive in bringing into force the Amendment Act compel this Bench, to make the reference. The decision in Bangalore Water Supply20 is not a unanimous decision. Of the five Judges who constituted the majority, three have given a common opinion but two others gave separate opinions projecting a view partly different from the views expressed in the opinion of the other three Judges. Beg, C.J. having retired had no opportunity to see the opinions delivered by the other Judges subsequent to his retirement. Krishna Iyer, J. and the two Judges who spoke through him did not have the benefit of the dissenting opinion of the other two Judges and the separate partly dissenting opinion of Chandrachud, J., as those opinions were prepared and delivered subsequent to the delivery of the judgment. Let the cases be now placed before Hon’ble Chief Justice of India for constituting a suitable larger Bench for reconsideration of the judgment of this Court in the case of Bangalore Water Supply.21
Thanks are due to the Supreme Court for conducting detailed, principled, empirical research on the Bangalore Water Supply22 decision. If one proceeds in this manner in respect of every case decided by the Supreme Court, that may be the best order of the day. The background for constituting the five-judge bench on a reference made in the State of Punjab vs Jai Bir Singh23 was due to apparent conflict between the judgements of two different benches of the Supreme Court on a question as to whether ‘Social Forestry Department’ of the state, which is a welfare scheme undertaken for the improvement of the environment, would be covered by the definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947, in the cases of Chief Conservator of Forests vs Jagannath Maruti Kondhare 24 (of three judges) and State of Gujarat vs Pratamsingh Narsinh Parmar 25 (of two judges). The Supreme Court ought not to have shown such a concern since the decision of the three judges would prevail in the circumstances. Moreover, the norm in jurisprudence that a smaller bench of the apex Court is always bound by the decision of a larger bench is seriously threatened in the circumstances.26 If this be the situation, why may not a smaller bench appeal to the Hon’ble Chief Justice of India to reconsider the decision in the Kesavananda Bharati27 case and the decision in the Steel Authority of India28 case?
Introduction 47
One may even entertain a motion that this must be a plausible approach to nullifying the pragmatic efforts of Justice Krishna Iyer in the Bangalore Water Supply 29 case, with regard to the definition of ‘industry’ under the Act. Was this exercise by the Supreme Court really necessary? The long title of the Industrial Disputes Act, 1947, clearly provides for the investigation and settlement of industrial disputes and for certain other purposes. As long as the management transparently exercises its powers in maintaining industrial discipline by having a clear policy within the managerial level, the situation should not warrant the extent of adverse effects suffered when matters reach the level of adjudication. If the approach of the Supreme Court is to narrow down the definition of ‘industry’ under the Act on the felt grounds, then it throws hundreds of labourers into the open market, as ‘unemployed’, without having any forum for the redressal of their grievances. Civil servants who are out of the purview of the Industrial Disputes Act, 1947, have remedies under the Constitution for the redressal of their grievances. But the employees who possess the character of neither ‘civil servant’ nor ‘workman’ under the Industrial Disputes Act, 1947, are left in despair, without any remedy under the present competitive global economy. There is no answer yet from the apex Court on this important need of the hour. Unlike Britain, we do not have comprehensive employment laws in India that deal with the employment-related rights of employees in the event of abrupt termination, dismissal or other related grievances, other than the Industrial Disputes Act, 1947.30 After all, the Supreme Court need not come down to the state of showing a grave concern for the industry and baptising their hire-and-fire policy at the cost of the starving labouring masses in India. Of course, recent decisions of the Supreme Court in enforcing industrial discipline as pertaining to acts of misconduct on the part of workmen is welcome, since judges like C.J. Gajendragadkar and Krishna Iyer have shown great concern for industrial discipline while dealing with such matters. The views of the nation on certain matters may definitely change and, unconsciously, judges interpret the law to correspond with the changes in national views, circumstances and progress. The most precious rights in any state are those of justice and equality. It is quite possible that gradually inroads may be made on these by the force of circumstances following the evolution of new national ideas which the yawning void of the future conceals from us. Yet the highest judiciary must lead the way with circumspection, keeping in view the social realities of our society. It should not yield to say that the political philosophy and economic necessity of the dominant classes may animate legal theory. NOTES 1. Justice V.R. Krishna Iyer’s observation in Straw Board Manufacturing Co. vs Its Workmen, AIR 1977 SC 941 at para 3. 2. State of UP vs Jai Bir Singh (2005) 5 SCC at para 33. 3. See Bangalore Water Supply and Sewerage Board vs A. Rajappa and Others. (1978) 2 SCC 213: AIR 1978 SC. 4. See M/s Avon Services Production Agencies (P) Ltd vs Industrial Tribunal. AIR 1979 SC 170. The same was nullified by an amendment act of 1982, by inserting section 2(ka). 5. See L. Michael & another vs M/s Johnson Pumps India Ltd. AIR 1975 SC 661. 6. See Rohtas Industries vs Its Union. AIR 1976 SC 425. 7. Ibid. 8. See Hussainbhai vs The Alath Factory Tezhilali Union, Kozhikode and Others. (1978) 4 SCC 257. 9. See Gujarat Steel Tubes Ltd. vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896.
48 Social Justice and Labour Jurisprudence 10. See Gujarat Steel Tubes Ltd. vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896. 11. See The Mumbai Kamgar Sabha Mumbai vs. M/s Abdulbhai Faizulbhai. AIR 2976 SC 1455. 12. In Bangalore Water Supply and Sewerage Board vs A. Rajappa and Others (1978) 2 SCC 213 : AIR 1978 SC 548 (para 74), it was observed that: ‘although we are not concerned in this case with those categories of employees who particularly come under departments charged with the responsibility for essential constitutional functions of government, it is appropriate to state that if there are industrial units severable from the essential functions and possess an entity of their own it may be plausible to hold that the employees of those units are workmen and those undertakings are industries. A blanket exclusion of every one of the host of employees engaged by government in departments falling under general rubrics like, justice, defence, taxation, legislature, may not necessarily be thrown out of the umbrella of the Act. We say no more except to observe that closer exploration, not summary rejection, is necessary.’ 13. See Gujarat Steel Tubes Ltd. vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896. At para 108, it is observed that: ‘Prefatory to the discussion about the factum of misconduct and its sequel, we must remind ourselves that the strike was illegal, having been launched when another industrial dispute was pending adjudication. Section 23(a) appears, at a verbal level, to convey such a meaning although the ambit of sub-clause (a) may have to be investigated fully in some appropriate case in the light of its scheme and rationale. It looks strange that the pendency of a reference on a tiny or obscure industrial dispute—and they often pend too long—should block strikes on totally unconnected yet substantial and righteous demands. The constitutional implications and practical complications of such a veto of a valuable right to strike often leads not to industrial peace but to seething unrest and lawless strikes.’ 14. Andhyarujina. T.R. 2005. ‘Judicial Accountability: India’s Methods and Experience’, in Cyrus Das and K. Chandra (eds), Judges and Judicial Accountability, p. 101. Delhi: Universal Law Publications Co. (P) Ltd. 15. See Steel Authority of India Ltd vs National Union Waterfront Workers (2001). 7 SCC1. The fundamental issue involved in the case was ‘when once the contract labour system was duly abolished by the appropriate Government under section 10 of the Contract Labour (Regulation & Abolition) Act, 1970, whether the erstwhile contract labour are entitled to be absorbed automatically as the regular employees of the principal employer’. The court unprovokingly reversed the previous ratio laid down by the court in Air India Statutory Corporation vs United Labour Union (1997). 9 SCC 377, and held that such workers are not entitled to such privilege (at paras 89 and 125[3]). Further, the court in that context held (at paras 8 and 9) that the history of exploitation of labour is as old as the history of civilization itself. There has been an ongoing struggle by labourers and their organizations against such exploitation but it continues in one form or the other. The Industrial Disputes Act, 1947, is an important legislation in the direction of attaining fair treatment to labour and industrial peace, which are the sine qua non for sustained economic growth of any country. After the advent of the Constitution of India, the State is under an obligation to improve the lot of the workforce. Articles 23, 38, 39, 43, 43-A, 14 and 15 are relevant in this regard. The Preamble to the Constitution is the lodestar and guides those who find themselves in a grey area while dealing with its provisions. It is now well settled that in interpreting a beneficial legislation enacted to give effect to the Directive Principles of State Policy which is otherwise Constitutionally valid, the consideration of the court cannot be divorced from those objectives. In a case of ambiguity in the language of a beneficial labour legislation, the courts have to resolve the quandary in favour of conferment of, rather than denial of, a benefit on the labour by the legislature but without rewriting and/or doing violence to the provisions of the enactment. 16. (2005) 5 SCC. 17. Bangalore Water Supply and Sewerage Board vs A. Rajappa and Others (1978) 2 SCC 213: 1978 SCC (L&S) 215. 18. Ibid. 19. Ibid. 20. Ibid. 21. Ibid. 22. Ibid. 23. (2005) 5 SCC 1. 24. (1996) 2 SCC 293. 25. (2001) 9 SCC 713.
Introduction 49 26. As to this, the court has justified its stance on the following grounds: ‘A necessity to re-examine the decision rendered in Bangalore Water Supply was felt in Coir Board Case (1998) 3 SCC 259 wherein it was observed that: Looking to the uncertainty prevailing in this area and in the light of the experience of the last two decades in applying the test laid down in the case of Bangalore Water Supply it is necessary that the decision is reexamined. The experience of the last two decades does not appear to be entirely happy. Instead of leading to industrial peace and welfare of the community (which was the avowed purpose of artificially extending the definition of industry), the application of the Industrial Disputes Act, 1947 to organizations, which were quite possibly not intended to be so covered by the machinery set up under the Act, might have done more damage than good, not merely to the organizations but also to employees by the curtailment of employment opportunities. An order of reference to the Chief Justice for constituting a larger Bench of more than seven judges, if necessary, was passed. However, when the matter was listed before a three-Judge Bench, the request for constituting a larger Bench was refused both on the grounds that the Industrial Disputes Act had undergone an amendment and that the matter did not deserve to be referred to a larger Bench as the decision of seven Judges in Bangalore Water Supply case was binding on Benches of less than seven Judges. But no such inhibition limits the power of the present Bench of five Judges which has been constituted on a reference made due to apparent conflict between the judgments of two different Benches of the Supreme Court. The experience of Judges in Coir Board case was not derived from the case in which the observations were made. The experience was from the cases regularly coming to the Supreme Court through the Labour Courts. It was experienced by all dealing in industrial law that overemphasis on the rights of the workers and undue curtailment of the rights of the employers to organize their business had given rise to a large number of industrial and labour claims resulting in awards granting huge amounts of back wages for past years, allegedly as legitimate dues of the workers, who were found to have been illegally terminated or retrenched. Industrial awards granting heavy packages of back wages sometimes result in taking away the very substratum of the industry. Such burdensome awards in many cases compel the employer having moderate assets to close down industries causing harm to interests of not only the employer and the workers but also the general public who is the ultimate beneficiary of material goods and services from the industry. The awards of reinstatement and arrears of wages for past years by Labour Courts by treating even small undertakings of employers and entrepreneurs as industries is experienced as a serious industrial hazard particularly by those engaged in private enterprises. The experience is that many times idle wages are required to be paid to the worker because the employer has no means to find out whether and where the workman was gainfully employed pending adjudication of industrial dispute raised by him. Exploitation of workers and the employers has to be equally checked. But law and particularly industrial law needs to be so interpreted as to ensure that neither the employers nor the employees are in a position to dominate the other. Both should be able to cooperate for their mutual benefit in the growth of industry and thereby serve public good. 27. Keshavananda Bharati vs State of Kerala. AIR 1973 SC 1461: (1973) 4 SC 228. 28. Bangalore Water Supply and Sewerage Board vs A. Rajappa and Others. (1978). 2 SCC 213: 1978 SCC (L&S) 215. 29. Ibid. 30. In the absence of such an approach, the numerous problems needing solution that now arise in the shape of industrial disputes cannot be tackled satisfactorily, and this is why every civilised government has thought of a machinery of conciliation officers, boards and tribunals for the effective settlement of disputes.
Chapter 2
Industrial Jurisprudence Introduction In this chapter, various aspects relating to the concept of industrial jurisprudence, the Constitutional commitment to labour and the principles of interpretation of labour legislations—as dealt with by Justice Krishna Iyer while deciding labour cases—have been analysed with a view to restating the position on these. Of course, the Supreme Court too has several times touched upon these issues while deciding labour cases. It is, however, in order to demonstrate Justice Krishna Iyer’s trendsetting vision of labour jurisprudence that these aspects have been dealt here. Industrial jurisprudence is not a static, rigid code of cold text, but dynamic, burgeoning and warm with life. To the Biblical interrogation ‘What man is there of you, who if his son asks bread, will give him a stone?’,1 it replies emphatically: ‘None’ Our industrial jurisprudence strives to treat capitalists and labour as co-sharers and to break away from the tradition of labour’s subservience to capital.2 The primary concern of industrial jurisprudence is to maintain peace among the various parties and ensure the contentment of the workers, the end product being increased production informed by distributive justice. Law, especially labour law, is the art of establishing economic order sustained by social justice. It aims at pragmatic success, but is guided by value-based realities. It believes in relativity and rejects absolutes. Article 43A—which emphasises the workers’ role in production as partners in the process—read in the light of the earlier accent on workers’ rights and social justice, accords a new status and sensitivity to industrial jurisprudence in our ‘socialist republic’. This social philosophy must inform interpretation and adjudication—a caveat needed because precedents become time-bound and no longer appropriate as the societal ethos progresses. The golden rule in a rapidly changing system is that there are no golden rules. We should be guided by realistic judicial responses to societal problems against the backdrop of the new radical values implied in reserving ‘social justice’ to labour, who are the production backbone of the nation.3 Industrial law in India has had many twilight patches, as illustrated by the problem of an employee whose services have been terminated simpliciter by the management. Two socially vital factors must inform the understanding and application of industrial jurisprudence. The first is the Constitutional mandate of Part IV, obligating the state to make ‘provision for securing just and humane conditions of work’. Security of employment is
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the first requisite of a worker’s life. The second, equally axiomatic consideration is that a worker who wilfully or anti-socially holds up the wheels of production or undermines the success of the business is a high risk and deserves, in the industrial interest, to be removed without tears. Legislation and judicial interpretation have woven the legal fabric based on these patterns.4 To lose sight of the crucial nature of legislation—that is, in terms of the role of industrial disputes and their settlement by law—and to regard it as mere enactment with little bearing on the terms and conditions of service in enterprises is to miss the distinctiveness of genre, unique flavour and legislative quintessence of the Industrial Disputes Act.5 Law is a form of order, and good law must necessarily mean good order. The roots of jurisprudence lie in the soil of society’s urges and it blooms with nourishment from the humanity it serves. To petrify statutory constructions by imposing pedantic impediments and to forget that the law of all laws is that the welfare of the people is paramount, is to bid farewell to the spirit of our Constitutional order. The Constitutional bias towards ensuring social justice to the weaker sections, including the working class, in the Directive Principles of State Policy is a factor that must enliven the judicial consciousness while decoding the meaning of legislation. Rules of construction of a Victorian vintage cannot override this value-laden guidebook that is the Constitution.6 Bidding farewell to the context and fanatically adhering to the text of the law may lead to the tyranny of literality—a hazardous road that misses the author’s meaning or reaches for a sense that the author never meant. Lord Denning has observed: ‘A judge should not be a servant of the words used. He should not be a mere mechanic in the powerhouse of semantics.’ Reed Dickerson has, in his ‘The Interpretation and Application of Statutes’ warned against ‘the disintegration of statutory construction’ and quoted Fuller to say:7 We do not proceed simply by placing the word in some general context … Rather, we ask ourselves, what can this rule be for? What evil does it seek to avert? Surely the judicial process is something more than a cataloguing procedure. … a rule or statute has a structural or systematic quality that reflects itself in some measure into the meaning of every principal term in it.8
In the decision of major industrial disputes, three factors are thus involved. The interests of the employees, who have received Constitutional guarantees under the Directive Principles; the interests of the employers, who have received a guarantee under Article 19 and other articles of Part III of the Constitution; and the interests of the community at large, which are so important in a welfare state. It is on lines cognizant of these that industrial jurisprudence has developed during the last two decades in India.9 Now, if a sacrifice is necessary in the overall interest of the industry or a particular undertaking, it would be both unfair and iniquitous to expect only one partner in the industry to make the sacrifice. Sacrifice for the survival of an industrial undertaking cannot be a unilateral action. It must be two-way traffic. Pragmatism compels a sacrifice on the part of both. Yet we need hardly state the obvious—that labour is the weaker partner and is more often called upon to make the entire and only sacrifice. However, the management need not have a merry time while making the workman the sacrificial goat. ‘If sacrifice is necessary, those who can afford and have the cushion and the capacity must bear
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the greater brunt making the shock of sacrifice as less poignant as possible for those who keep body and soul together with utmost difficulty.’10 And this is where industrial jurisprudence must step in. Our adjectival branch of jurisprudence, by and large, deals not with sophisticated litigants but the rural poor, the urban lay and the weaker societal segments for whom law will be an added terror if technical mis-descriptions and deficiencies in drafting pleadings and setting out the cause title create a secret weapon to non suit a party. Where foul play is absent and fairness is not faulted, latitude is a grace of processual justice. Test litigations, representative actions, pro bono publico and like broadened forms of legal proceedings are in keeping with the current accent on justice to the common man and a disincentive to those who wish to bypass the real issues on the merits by suspect reliance on peripheral, procedural shortcomings.11
Industrial law in India has not fully lived up to the current challenges of industrial life, either in terms of the substantive norms or regulations binding the three parties—the state, management and labour—or in the processual system that has baulked, by dawdling dysfunction, the achievement of early finality and prompt remedy in a sensitive area where quick solution is the very essence of real justice. The legislative and judicial processes have promises to keep if positive industrial peace, in tune with distributive economic justice and the continuity of active production, is to be accomplished. The architects of these processes will, we hope and expect, fabricate creative changes in the system, both normative and adjectival.12
Purpose of the Industrial Disputes Act, 1947 The Industrial Disputes Act 1947 is a special statute devoted wholly to the investigation and settlement of industrial disputes, which provides definitionally for the nature of the industrial disputes coming within its ambit. It creates an infrastructure for investigation into the solution of and adjudication upon industrial disputes. It also provides for the necessary machinery for the enforcement of awards and settlements. From alpha to omega, the Industrial Disputes Act has one special mission—the resolution of industrial disputes through specialised agencies, according to specialised procedures, and with special reference to the weaker categories of employees coming within the definition of ‘workmen’.13 The Industrial Disputes Act is a benign measure that seeks to pre-empt industrial tensions, provide the mechanics for dispute resolution and set up the necessary infrastructure so that the energies of both partners in production may not be dissipated in counterproductive battles and so that the assurance of industrial justice may create a climate of goodwill. Industrial peace is a national need and, absent law, order in any field will be absent. Chaos is the enemy of creativity, sans which production will suffer. Thus the great goal to which the Industrial Disputes Act is geared is establishing the legal mechanism for canalising conflicts towards conciliatory or adjudicatory processes.14 The very personality of the statute has a basis in welfare, being a piece of beneficial legislation that protects labour, promotes their contentment and regulates situations of crisis and tension where production may be imperilled by untenable strikes and blackmail lock-outs. The mechanism of the Act is geared towards conferment of regulated
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benefits to workmen and the resolution, according to a sympathetic rule of law, of conflicts, actual or potential, between managements and workmen. Its goal is the amelioration of the condition of workers, tempered by a practical sense of peaceful co-existence, to the benefit of both parties in industry—not a neutral position, but one laying restraints on laissez faire and concerned for the welfare of the weaker lot. To hit one’s opponent below the belt by trading legal phrases is not industrial law.15 Empathy with the statute is necessary to understand not merely its spirit, but also its sense.16 ‘It is no more open to debate that in the field of industrial jurisprudence declaration can be given that the termination of service is bad and the workman continues to be in service. The spectre of common law doctrine that contract of personal service cannot be specifically enforced or the doctrine of mitigation of damages does not haunt this branch of law.’17
The Constitution and Labour Philosophy The source and strength of the industrial branch of Third World jurisprudence is social justice, as proclaimed in the Preamble to the Constitution. A myriad devices, half-hidden in fold after fold of legal forms, depending on the degree of concealment needed—the type of industry, the local conditions and the like—may be resorted to when labour legislation casts welfare obligations on the real employer, based on Articles 38, 39, 42, 43 and 43A of the Constitution. ‘The Court must be astute to avoid mischief and achieve the purpose of the law and not be misled by the maya of legal appearances.’18 Industrial justice is not an application of rigid formula but, in consonance with Part IV of the Constitution, the award of wages that are substantially just, subject of course to the well-recognised principles evolved by this Court.19
Judicial Obligations The judicature, like other Constitutional instrumentalities, has a culture of national accountability. Two factors must be highlighted in this context. A court is more than a judge: a collegium has a personality that exceeds its members. The price that a collective process, free from the personality cult, has to pay consists in Jobian patience, free exchange of ideas and final decisions in conformity with the democracy of judicial functionality. Sometimes, when divergent strands of thought haunt the mentations of the members, we pause, ponder and reconsider because we follow the words of Oliver Cromwell commended for courts by Judge Learned Hand: ‘My brethren, I beseech you, in the bowels of Christ, think it possible that you may be mistaken.’ Utter incompatibility exists between judicial democracy and dogmatic infallibility; and so in this case, we have taken time, more time and repeated extensions of time to evolve a broad consensus out of our initial dissensus. Not procrastination, but plural toil is the hidden truth behind the considerable interval.20 Our Constitution guarantees the right to form associations not for gregarious pleasure, but to fight effectively for the redressal of grievances. Our Constitution is sensitive to workers’ rights. Our story of freedom and social emancipation led by the Fathers of the Nation has employed, from the highest of the motives, a path of combined action to
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resist evil and to right wrong even if it meant loss of business profits for the liquor vendor, the brothel-keeper and the dealer in foreign cloth. Without expatiating on these seminal factors, we may observe that English history, political theory and lifestyle being different from Indian conditions—ours being replete with organised boycotts and mass satyagrahas— we cannot incorporate English torts into India law without any adaptation. A tort transplant into a social organism is as complex an operation as a heart-transplant into an individual organism and requires as much care, law being life’s instrumentality and the rejection of exotics being a natural human tendency. Here judges must be sociological surgeons.21 When important issues demand the court’s collective judgement, an informed meeting of instructed minds is in many ways a sine qua non. But the torrent of litigation flooding the court drowns the judges in the daily drudgery of accumulated dockets. To gain leisure for fundamental reflections, with some respite from a paper-logged existence and with supportive research from trained law clerks, is a ‘consummation devoutly to be wished’ if the final court is to fulfil its trust with the Constitution and country. The Indian judicial process sui generis in some respects has its problems, which are Himalayan in dimension but are hardly appreciated in perspective and in their true proportions. Two of these have been mentioned by me in extenuation of the great gap between closure of judgement and its actual pronouncement.22 Law is no cold-blooded craft bound by traditional techniques and formal forceps handed down to us from the Indo-Anglian era, but a warm-blooded art which has made a break from the past and kept a tryst with the present, deriving its sole force from the Constitution enacted by the people of India. Law, as Vice President G.S. Pathak emphasised in several lectures, is a tool with which to engineer a peaceful ‘civil revolution’ one of the components of which is a fair deal for the weaker human sectors, such as the working class. The striking values of social justice enshrined in the Constitution impact on the interpretation of Indian laws, and to forget this essential postulate while relying on erudition is to weaken the vital flame of the democratic, socialist republic of India.23 Our judges are not monks or scientists, but participants in the living stream of our national life, steering the law between the dangers of rigidity on the one hand and of formlessness on the other. Our system faces no theoretical dilemma but a single continuous problem: how to apply to ever-changing conditions the never-changing principles of freedom. For the Indian judicial process, the nidus of these never-changing principles is the Indian Constitution. The best way to construe the scope of an Act of parliament is to not stop with the words of the sections. ‘Our law (like all others) consists of two parts viz., of body and soul. The letter of the law is the body of the law and the sense and reason of the law is the soul of the law….’ The social conscience of the judge hesitates to deprive the working class, for whom Part IV of the Constitution has shown concern, of such rights as they currently enjoy on the strength of mere implication by a statute unless there are compulsive provisions constraining the court to the conclusion.24 Appreciation of the Constitutional consciousness with regard to labour law shows us that the Constitution of India is not a non-aligned parchment but a partisan of social justice, with a direction and destination that it sets out in the Preamble and Article 38. When the evidence is read, the rulings, the statute and the rival pleas must be guided by this value set of the Constitution. Industrial law, however, is not only appraised from this perspective in the disputes before the Supreme Court, but it is also realised that India is a mixed economy with capitalist mores, only slowly wobbling towards a socialist order.
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After all, ideals apart, ‘law can never be higher than the economic order and the cultural development of society brought to pass by that economic order’. New jurisprudence in industrial relations must therefore prudently be tuned to the wavelength of our Constitutional values.25 An industry is a common venture, the participation being the capital and labour. Gone are the days when labour was considered a factor of production. Article 43A of the Constitution requires the State to take steps to secure the participation of workmen in the management of the undertaking, establishment or other organisations engaged in any industry. Thus, from being a factor of production, labour has become a partner in industry. It is now truly a common venture in the pursuit of a desired goal.26 The morality of law and the Constitutional mutation implied in Article 43A bring about a new equation in industrial relations.27
Interpretation of Labour Statutes: The Constitutional Values Statutory interpretation, in the creative Indian context, may look for light to the lodestar of Part IV of the Constitution, for example, Articles 39(a) and (c) and Article 43. Where two judicial choices are available, the construction in conformity with the social philosophy of Part IV has preference.28 Statutory construction, when courts consider welfare legislation with a bias towards economic justice, cannot turn on cold print glorified as grammatical construction, but must look to the teleological purpose and protective intendment. Words of multiple import have to be winnowed judicially to suit the social philosophy of the statute. The dictionaries are not dictators of statutory construction where the benignant mood of a law and, more emphatically, the definition clause furnish a different denotation. However, while canons of traditional sanctity cannot wholly govern, courts cannot go haywire in interpreting provisions by ignoring the text and context.29 The Constitution has expressed a deep concern for the welfare of workers and has provided in Article 42 that the State shall make provision for securing just and humane conditions of work and in Article 43 that the State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers—agricultural, industrial or otherwise—work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure, and so on. These are among the Directive Principles of State Policy. The mandate of Article 37 of the Constitution is that while the Directive Principles of State Policy shall not be enforceable by any court, the principles are ‘nevertheless fundamental in the governance of the country’ and ‘it shall be the duty of the State to apply these principles in making laws’. Addressed to the courts, what the injunction means is that while courts are not free to direct the making of legislation, courts are bound to evolve, affirm and adopt principles of interpretation that will further and not hinder the goals set out in the Directive Principles of State Policy. This command of the Constitution must be ever present in the minds of the judges when interpreting statutes that are concerned directly or indirectly with matters set out in the Directive Principles of State Policy.30
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In the field of statutory interpretation, there are no inflexible formulae or foolproof mechanisms. The sense and sensibility, the setting and the scheme, the perspective and the purpose—these help the judge to navigate towards the harbour of true intendment and meaning. The legal dynamics of social justice also guide the court in statutes of the type we are interpreting. In determining whether a statute is a special or a general one, the focus must be on the principal subject matter plus the particular perspective. For certain purposes, an Act may be general; for certain other purposes, it may be special. However, the court cannot blur the distinctions when dealing with the finer points of law. In law, we have a cosmos of relativity, not absolutes—as too in life.31 An economy of words is a legislative risk before a judiciary accustomed to the AngloSaxon meticulousness in drafting. For instance, a ‘tribunal’ is merely a seat of justice or a judicial body with the jurisdiction to render justice. If an arbitrator fulfils this functional role—and he does—how can he be excluded from the scope of the expression? A caste distinction between courts, tribunals, arbitrators and others is functionally fallacious and, in our context, stems from confusion. The Section makes only a hierarchical, not functional, distinction in speaking of tribunals and national tribunals. So we see no grounds to truncate the natural meaning of ‘tribunal’ on the supposed intent of parliament to omit—irrationally—the category of adjudicatory organs known as ‘arbitrators’. To cut down is to cripple and the art of interpretation makes whole rather than mutilate; it furthers the expressed purpose, rather than be hampered by narrow literality. It is perfectly open to the court to give the natural meaning to a word defined in an Act if the context in which it appears suggests a departure from the definition, because then there is something repugnant in the subject or context.32 Here we come upon the fundamental dilemma of interpretative technology vis-à-vis the judicative faculty. What are the limits of statutory construction? Does creativity in the jurisprudential area permit travel into semantic engineering as a substitute for verbalism? It is increasingly important for developing countries, where legislative transformation of the economic order is an urgent item on the national agenda, to have the judiciary play a meaningful role in the Constitutional revolution without ferretting out the flaws of the draftsman once the object and effect are plain. Judges may not be too ‘Anglophonic’ lest the system fail.33 We may reinforce this liberal rule of statutory construction, being a matter of importance in the daily work of the court, by reference to Roman law from the days of Justinian as carried down to the American Supreme Court. ‘Not all special cases can be contained in the laws and resolutions of the Senate’, said the Roman jurist Jullianus. ‘But where their meaning is manifest in some case, the one who exercises jurisdiction must apply the provision analogously and in this way administer justice.’ Prof. Bodenheimer has explained that Civil Law does not regard words as the sole basis of law but allows it to be modified by purpose. Celsus added the following admonition to these general principles of interpretation: ‘The laws should be liberally interpreted, in order that their intent be preserved’.34
Samuel Thorne has shown that, during certain periods of English medieval history, the position of the common law towards the construction of statutes was similar to the general attitude of the Roman and civil law. Statutes were frequently extended to situations not expressly covered by them.35
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Plowden pointed out that ‘when the words of a statute enact one thing, they enact all other things which are in the like degree’. Plowden demonstrated that a statutory remedy at that time was deemed to be merely illustrative of other analogous cases that deserved to be governed by the same principle.36 Prof. Bodenheimer states that the American trend is towards a purpose-oriented rather than a plain-meaning rule in its rigid orthodoxy. In United States vs American Trucking Association,37 the US Supreme Court wrote: When the plain meaning has led to absurd or futile results… this Court has looked beyond the words to the purpose of the Act. Frequently, however, even when the plain meaning did not produce absurd results but merely an unreasonable one ‘plainly at variance with the policy of the legislation as a whole’ this Court has followed that purpose rather than the literal words. When aid to construction of the meaning of words, as used in the statute is available, there can certainly be no ‘rule of law’ which forbids its use, however clear the words may be on ‘superficial examination’.38
This long digression has become important because, once in a while, social legislation that requires a sharing of social philosophy between the parliament and the judiciary meets its Waterloo in the higher courts because the actual role of interpretation shifts from judge to judge. We are clearly of the view that the statutory construction that fulfils the mandate of the statute must find favour with the judges, except where the words and the context rebel against such flexibility. We would prefer to be liberal rather than lexical when reading the meaning of the industrial legislation that develops from day to day in the growing economy of India.39 In interpreting the provisions of beneficient pieces of legislation that are intended to achieve the object of securing social justice to women workers employed in the plantations—which squarely falls within the purview of Article 42 of the Constitution— the beneficent rule of construction that would enable the woman worker not only to subsist but also to top up her dissipated energy, nurse her child, preserve her efficiency as a worker and maintain the level of her previous efficiency and output has to be adopted by the court.40
The Binding Nature of the Decisions of the Superior Courts It is trite to say, going by Anglophonic principles, that a ruling by a superior court is a binding law. It is not, in fact, of scriptural sanctity but is rather of ratio-wise luminosity within the edifice of facts where the judicial lamp plays the legal flame. Beyond its walls and hors du milieu, the court cannot impart vernal value to the decision, exalting the doctrine of precedents into a prison-house of bigotry, regardless of varying circumstances and myriad developments. Realism dictates that a judgement has to be read which is subject to the facts directly presented for consideration and not affecting those matters which may lurk below the record. Whatever be the position of a subordinate court’s casual observations, generalisations and sub silentia determinations must be judiciously read by courts of co-ordinate jurisdiction.41
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The Role of English Law as Precedent English law is not binding on the Supreme Court of India, but the jurisprudence of judicial review in this branch is substantially common for both Indian and Anglo-American systems, and so Halsbury has considerable persuasive value. The wider emergence of common canons of judicial review is a welcome trend towards a one-world public law.42
Powers of the High Courts under Article 226 of the Constitution The expansive and extraordinary power of the High Courts prescribed under Article 226 is as wide as the amplitude of the language used indicates, and so can affect any person— even a private individual—and be available for any (other) purpose—even one for which another remedy may exist. The amendment to Article 226(1A) reiterates the targets of the writs power as being inclusive of any person by the expressive reference to ‘the residence of such person’. The Supreme Court has spelt out wise and clear restraints on the use of this extraordinary remedy and High Courts will not go beyond those wholesome inhibitions except where the monstrosity of the situation or other exceptional circumstances cry out for timely judicial interdiction or mandate. The mentor of law is justice, and such a potent drug should be judiciously administered. Speaking in critical retrospect of this portentous prospect, the writ’s power has, by and large, been the people’s sentinel on the qui vive. To cut back on or liquidate that power may cast human rights into peril.43 While the remedy under Article 226 is extraordinary and is of Anglo-Saxon vintage, it is not a carbon copy of English processes. Article 226 is a sparing surgery—the lancet operates where injustice suppurates. While traditional restraints such as the availability of alternative remedy hold back the court and while judicial power should not ordinarily rush in where the other two branches fear to tread, judicial daring is not daunted where glaring injustice demands affirmative action. The wide words of Article 226 are designed to serve the lowly in their grievances if they belong to the court’s province and the remedy be appropriate to the judicial process. There is a native hue about Article 226, without being Anglophilic or Anglophobic in attitude. Viewed from this jurisprudential perspective, we have to be cautious both to not overstep as if Article 226 were as large as an appeal and to not fail to intervene where a grave error has crept in. Moreover, at the Supreme Court, we sit in appeal over the High Courts’ judgements. And an appellate power interferes not when the order appealed is not right, but only when it is clearly wrong. The difference is real, though fine.44 We are what we are because the framers of our Constitution have felt the need for a pervasive reserve power in the higher judiciary to right the wrongs in our conditions. Heritage cannot hamstring nor custom constrict where the language used is wisely wide. The British paradigms are not necessarily models for the Indian republic. So broad are the expressions designedly used in Article 226 that any order that should have been passed
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by a lower authority may be passed by the High Court. The very width of the power and the disinclination to meddle, except where gross injustice or fatal illegality and the like are present, inhibit the exercise but do not abolish the power.45 NOTES 1. Indian Express Newspapers (Bombay) and Another vs Indian Express Newspapers (Bombay) Employees Union and Others. AIR 1978 SC 1137 (para 3). 2. Management of Indian Oil Corporation vs Its Workmen. AIR 1975 SC 1856 (para 10). 3. Straw Board Manufacturing Co. vs Its Workmen. AIR 1977 SC 941 (Para 8). 4. Michael and another vs M/s Johnson Pumps and Another. AIR 1975 SC 66 (para 1). 5. L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 28). 6. L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 6). 7. Fuller, L., ‘Positivism and Fidelity to Law—A Reply to Prof. Hart’, Harvard Law Review, 71: 665, 666, 669. 8. Quoted in L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 8). 9. The Report of the National Commission on Labour, New Delhi: Government of India, Ministry of Labour, (1969) at para 57. 10. Hindustan Tin Works vs Its Employees. AIR 1979 SC 75 (Para 13). 11. Mumbai Kamgar Sabha vs Abdulbhai Faizulbhai AIR 1976 SC 1455 (Para 7). 12. Rohtas Industries vs Its Union. AIR 1976 SC 425 (para 2). 13. L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 51). 14. L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 22). 15. L. Michael vs M/s Johnson Pumps India Ltd. AIR 1975 SC 661 (para 21). 16. L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 22). 17. Hindustan Tin Works vs Its Employees. AIR 1979 SC 75 (para 9). 18. Hussainbhai vs The Alath Factory Tezhilali Union Kozhikode and others. AIR 1978 SC 1410 (para 5). 19. The Workman Shift Incharge Substation vs The Presiding Officer. AIR 1980 SC 511. 20. L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 2). 21. The Management of Indian Oil Corporation vs Its Workmen AIR 1975 SC 1856 (para 10). 22. L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 3). 23. L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 5). 24. The Management of Indian Oil Corporation vs Its Workmen. AIR 1975 SC 1856 (para 94). 25. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (para 44). 26. Hindusthan Tin Works vs Its Employees. AIR 1979 SC 75 (para 12). 27. Hindusthan Tin Works vs Its Employees. AIR 1979 SC 75 (para 12). 28. Mumbai Kamgar Sabha vs Abdulbhai Faizulbhai. AIR 1976 SC 1455 (para 29). 29. The State Bank of India vs Shri N. Sundara Money. AIR 1976 SC 1111 (paras 6 and 8). 30. U.P. State Electricity Board and another vs Hari Shankar Jain. AIR 1979 SC 65 (para 4A). 31. L.I.C. of India vs D.J. Bahadur. AIR 1980 SC 2181 (para 21). 32. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (paras 84 and 85). 33. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (para 89). 34. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (para 91). 35. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (para 92). 36. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (para 93). 37. (1940) 310 US 534, pp. 543–44. 38. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (para 95). 39. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (para 104). 40. B. Shah vs Presiding Officer. AIR 1978 SC 12 (para 18). 41. The Mumbai Kamgar Sabha, Bombay vs M/s. Abdulbhai Faizulbhai. AIR 1976 SC 1455 (para 38). 42. Rohtas Industries vs Its Union. AIR 1976 SC 425 (para 13). 43. Rohtas Industries vs Its Union. AIR 1976 SC 425 (para 9). 44. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (Para 73). 45. Gujarat Steel Tubes Ltd vs Gujarat Steel Tubes Mazdoor Sabha and Others. AIR 1980 SC 1896 (para 79).
60 Social Justice and Labour Jurisprudence
Chapter 3
Threshold Part Issues under the Industrial Disputes Act, 1947 The long title of the Industrial Disputes Act, 1947, provides for the investigation and settlement of industrial disputes and for certain other purposes. This is the only labour legislation through which a large content of labour jurisprudence has emerged since the date of its enactment. The primary concern of this legislation, when it was put into practice, related to the issues of threshold part jurisdiction. When a concern or activity is an industry, the disputing person is a workman or the dispute is an industrial dispute then only the provisions of this Act can be invoked into the aid. In this context, the first area of conflict was the definition of ‘industry’. It is better that tribunals, particularly those entrusted with the task of adjudicating labour disputes where delay may lead to misery and jeopardise industrial peace, should decide all issues in dispute at the same time without trying some of them as preliminary issues. Nor should High Courts, in the exercise of their jurisdiction under Article 226 of the Constitution, stop proceedings before a tribunal so that a preliminary issue may be decided by them. Neither the jurisdiction of the High Court under Article 226 of the Constitution nor the jurisdiction of the Supreme Court under Article 136 may be allowed to be exploited by those who can well afford to wait, to the detriment of those who can ill afford to wait by dragging the latter from court to court for adjudication of peripheral issues, avoiding a decision on issues more vital to them. The nature of the jurisdiction under Article 226 is supervisory and not appellate, while that under Article 136 is primarily supervisory although the Court may exercise all necessary appellate powers to do substantial justice. In the exercise of such jurisdictions, neither the High Court nor the Supreme Court is required to be too assiduous in interfering with the exercise of jurisdiction by special tribunals at interlocutory stages and preliminary issues.1
The Definition of ‘Industry’ Under Section 2(j) of the Industrial Disputes Act, 1947: Industry means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.
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The definition, as it is contained here, is in two parts. The first part simply defines what an industry is and the second part deliberately includes certain items within the ambit of ‘industry’. The definition was originally borrowed from the Australian Federal Statute (Common Wealth Conciliation and Arbitration Act, 1904). Hence, the Supreme Court initially— while deciding cases pertaining to the definition of ‘industry’—relied with approval on decisions given by the Australian courts with regard to the interpretation of this definition. There are several decisions rendered by the Supreme Court pertaining to the definition of ‘industry’ under the Act, in respect of different activities, be they carried on by the state or otherwise. Way back in 1953, the Supreme Court in the D.N. Banerji2 case went a step further and clarified precisely the scope of the definition of ‘industry’. Later, the period till 1978 witnessed the inconsistent approach of the apex Court in interpreting the definition of ‘industry’ under the Act.
Bangalore Water Supply and Sewerage Board vs A. Rajappa and Others3 In the background, behind the reason for referring this case before a larger bench,4 was the fact that the Supreme Court, in Workmen of Indian Standards Institution vs Management of Indian Standards Institute5 was confronted with the issue of whether the activities carried on by the Indian Standards Institute was an industry or not. It finally reached the conclusion that it was indeed an industry. Perhaps the judicial voyage pertaining to the interpretation of the definition of ‘industry’ over nearly a quarter of a century made the Court resolve the issue with all certainty this time. The Bangalore Water Supply6 case was based on simple facts, wherein an employee of the Bangalore Water Supply and Sewerage Board—which is a statutory body—upon claiming his retirement benefits as a workman under the Industrial Disputes Act, 1947, was rejected by the Board on the grounds that the activities of the Board did not fall within the purview of the definition of ‘industry’ under the Act. The majority decision that was rendered by Justice Krishna Iyer deserves applause for two reasons. First, he laid down a ‘triple test’ to decide the ambit and scope of the definition of ‘industry’ under the Act. Second, he also expressly reversed the negative trend set by the apex Court in important cases involving the industrial activities of an undertaking. It should be placed on record that before taking up the hearing of the case, the bench urged S.V. Gupta, the Attorney General of India, to take the time to consult the Government of India as to whether an amendment to the definition of the term ‘industry’ under the Act could be effected in the light of the prevailing decisions of the Supreme Court. Later, Gupta appeared before the Court and requested the Court to proceed with the hearing of the case. This is another background detail that compelled the Supreme Court to address the issue comprehensively in the light of the prevailing conflict. The judgement contains at the beginning the separate but concurring opinions delivered by M.H. Beg, C.J. Y.V. Chandrachud, Jaswant Singh and V.D. Tulzapurkar, JJ, have concurred with the majority view delivered by Justice Krishna Iyer. THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER The rather zigzag course of the landmark cases and the tangled web of judicial thought have perplexed one branch of Industrial Law, resulting from obfuscation of the basic concept
62 Social Justice and Labour Jurisprudence
of ‘industry’ under the Industrial Disputes Act, 1947 (for short, the Act). This bizarre situation, 30 years after the Act was passed and industrialization had advanced on a national scale, could not be allowed to continue. So, the urgent need for an authoritative resolution of this confused position which has survived—indeed, had been accentuated by—the judgement of the six-member bench in Management of Safdar Jung Hospital, New Delhi vs Kuldip Singh Sethi,7 if we may say so with deep respect, led to a reference to a larger bench of this die-hard dispute as to what an ‘industry’ under Section 2(j) means. Legalese and logomachy have the genius to injecting mystique into common words, alienating the laity in effect from the rule of law. What is the common worker or ordinary employer to do if he is bewildered by a definitional dilemma and is unsure whether his enterprise—say, a hospital, a university, a library, a service club, a local body, a research institute, a pinjarapole, a chamber of commerce, a Gandhi ashram—is an industry at all? Natural meaning is nervous of acceptance in court, where the meaning of meanings is lost in uncertain erudition and cases have even cancelled each other out while reading meaning. ‘I do not think,’ said Diplock, L.J., ‘that anywhere, except in a Court of Law, it would be argued with gravity that a Dutch barn or grain and fodder stores or any ordinary farm buildings are properly described as repositories. A Gloucestershire farmer would say they were farm buildings and would laugh at their being called ‘repositories’.’ In the same spirit, Stamp, J., rejected the argument that the carrying on of the business of a crematorium involved the ‘subjection of goods or materials to any process’ within Section 271(1)(c) of the Income Tax Act, 1952, as ‘a distortion of the English language…. I protest against subjecting the English language, and more particularly simple English phrase, to this kind of process of philology and semasiology’.8 Esoterica is anathema for law affecting the common man in the commerce of life, and so the starting point for our discussion is the determination to go by the plain, not the possible, sense of the words used in the definition, informed by the context and purpose of the statute, illumined by its scheme and setting and conceptually coloured by what is an industry at the current developmental stage in our country. In our system of precedents, our endeavour must be, as was argued by counsel, to reconcile prior pronouncements, if possible, and to reconsider the question altogether, if necessary. There are no absolutes in law since life, which it serves, is relative. What is an industry in America or the Soviet Union may not be one in India; and even in our Country, what was not an industry decades ago may well be one now. Our judgment can have no pontifical flavour in such cases, but seeks to serve the future hour till changes in the law or in industrial culture occur. Law—especially industrial law, which regulates the rights and remedies of the working class, unfamiliar with the sophistications of definitions and shower of decisions, unable to secure expert legal opinion, what with poverty pricing them out of the justice market and denying them the staying power to withstand the multi-decked litigative process— de facto denies social justice if legal drafting is vagarious, definitions indefinite and court rulings contradictory. Is it possible, that the legislative chambers are too preoccupied with other pressing business to listen to court signals calling for clarification of ambiguous clauses? A careful, prompt amendment of Section 2(j) would have pre-empted this docket explosion before tribunals and courts. This Court, perhaps more than the Legislative and Executive branches, must be deeply concerned with the law’s delays and to device a prompt delivery system of social justice.
Threshold Part Issues under the Industrial Disputes Act, 1947 63
Though the tailoring of a definition is the sole forensic job in this batch of appeals— dependent on which, perhaps, a few thousand other cases await decision—the cycloramic semantics of the simple word ‘industry’ and the judicial gloss on it in a catena of cases led to an avoidable glut of labour litigation, where speedy finality and working criteria are most desirable. And this delay in the disposal of thousands of disputes and the consequent partial paralysis in the industrial life is partly blameable on the absence of a mechanism of communication between the court and the law-making chambers. The great American judge, Justice Cardozo, while he was Chief Justice of New York Supreme Court, made this point: The Courts are not helped as they could and ought to be in the adaptation of law to justice. The reason they are not helped is because there is no one whose business it is to give warning that help is needed… We must have a courier who will carry the tidings of distress…. Today Courts and Legislature work in separation and aloofness. The penalty is paid both in the wasted effort of production and in the lowered quality of the product. On the one side, the Judges, left to fight against anachronism and injustice by the methods of judge-made law, are distracted by the conflicting promptings of justice and logic, of consistency and mercy, and the output of their labours bears the tokens of the strain. On the other side, the Legislature, informed only casually and intermittently of the needs and problems of the Courts, without expert or responsible or disinterested or systematic advice as to the workings of one rule or another, patches the fabric here and there, and mars often when it would mend. Legislature and Courts move on in proud and silent isolation. Some agency must be found to mediate between them.
The grave disquiet about arrears in courts must be accompanied by deeper insight into newer methodology than a collection of statistics and minor reforms. Appreciating the urgency of quick justice—a component of social justice—as a priority item on the agenda of Law Reforms and suspecting public unawareness of some essential aspects of the problem, we make these painful observations. This obiter exercise is in discharge of the Court’s obligation to inform the community in our developing country where to look for faults in the legal order and how to take meaningful corrective measures. The courts too have a constituency—the nation—and a manifesto—the Constitution. That is the validation of this divagation. Back to the single problem of thorny simplicity: What is an ‘industry’? Historically speaking, this Indian statute has its beginnings in Australia, even as the bulk of our corpus juris, with a colonial flavour, is a carbon copy of English law. Therefore, in interpretation, we may seek light Australasially, and so it is that the precedents of the Court have drawn on Australian cases as on English dictionaries. But India is India and its individuality, in law and society is attested by National Charter, so that statutory constructions must be homespun even if hospitable to alien thinking. The reference to us runs thus: One should have thought that an activist Parliament by taking quick policy decisions and by resorting to amendatory processes would have simplified, clarified and de-limited the definition of ‘industry’, and, if we may add ‘workman’. Had this been done with aware and alert speed by the Legislature, litigation which is the besetting sin of industrial life could well have been avoided to a considerable degree. That consummation may perhaps happen on a distant day, but this Court has to decide from day to day disputes involving this branch of industrial law and give guidance by declaring what is an industry, through the process of interpretation and re-interpretation, with a murky accumulation of case-law. Counsel on both sides have chosen
64 Social Justice and Labour Jurisprudence to rely on Safdar Jung9 each emphasising one part or other of the decision as supporting his argument. Rulings of this Court before and after have revealed no unanimity nor struck any unison and so, we confess to an inability to discern any golden thread running through the string of decisions bearing on the issue at hand. …the chance of confusion from the crop of cases in an area where the common man has to understand and apply the law makes it desirable that there should be a comprehensive, clear and conclusive declaration as to what is an industry under the Industrial Disputes Act as it now stands. Therefore, we think it necessary to place this case before the learned Chief Justice for consideration by a larger Bench. If in the meantime the Parliament does not act, this Court may have to illumine the twilight area of law and help the industrial community carry on smoothly.
So, the long and short of it remained: ‘What is an industry?’ Section 2(j) defines it: ‘industry’ means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workmen.
Let us put it plain. The canons of construction are trite that we must read the statute as a whole to get a hang of it and a holistic perspective of it. We must have regard for the historical background; objects and reasons; international thoughtways; popular understanding; contextual connotations; and suggestive subject matter. Equally important, dictionaries, while not absolutely binding, are aids to ascertain meaning. Nor are we writing on a tabula rasa. Since Banerji,10 decided a silver jubilee span of years ago, we have had a heavy harvest of rulings on what is an ‘industry’ and we have to be guided by the variorum of criteria stated therein as far as possible, and not spring a creative surprise on the industrial community by a stroke of freak originality. Another sobering sign: In a world of relativity where law and life interlace, a search for absolutes is a self-condemned exercise. Legal concepts, ergo, are relativist, and to miss this rule of change and developmental stage is to interpret oneself into error. Yet a third signpost: The functional focus of this industrial legislation and the social perspective of Part IV of the Paramount Law drive us to hold that the dual goals of the Act are the contentment of workers and peace in the industry. Judicial interpretation should be geared to their fulfilment, not to their frustration. A worker-oriented statute must receive a construction where, conceptually, the keynote must be the worker and the community, since the Constitution has shown concern for them, inter alia, in Articles 38, 39 and 43. A look at the definition, dictionary in hand, decisions in head and Constitution at heart, reveals some sure characteristics of an ‘industry’, narrowing down the twilight zone of turbid controversy. An industry is a continuity, is an organised activity, is a purposeful pursuit—not any isolated adventure, desultory excursion or casual, fleeting engagement motivelessly undertaken. Such is the common feature of a trade, business, calling, manufacture—(mechanical or handicraft-based) service, employment, industrial occupation or avocation. For those who know English and are not given to the luxury of splitting semantic hairs, this conclusion argues itself. The expression ‘undertaking’ cannot be torn off the words whose company it keeps, if birds of a feather flock together and noscitur a sociis is a commonsense guide to construction, ‘undertaking’ must be read down to conform to the restrictive characteristics shared by the society of words before and after.
Threshold Part Issues under the Industrial Disputes Act, 1947 65
Nobody will torture ‘undertaking’ in Section 2(j) to mean meditation or musheira, which are spiritual and aesthetic undertakings. Wide meanings must fall in line and discordance must be excluded from a sound system. From Banerji11 to Safdar Jung12 and beyond, this limited criterion has passed muster and we see no reason, after all the marathon of argument, to shift from this position. Likewise, an ‘industry’ cannot exist without a cooperative endeavour between employer and employee. No employer, no industry; no employee, no industry—not as a dogmatic proposition in economics, but as an articulate major premise of the definition and the scheme of the Act, and as a necessary postulate of industrial disputes and the statutory resolution thereof. An industry is not a futility, but geared to utilities in which the community has a concern. And in this mundane world where law lives now, economic utilities—material goods and services, not transcendental flights nor intangible achievements—are the functional focus of industry. Therefore, no temporal utilities, no statutory industry, is axiomatic. If society, in its advance, experiences subtler realities and assigns values to them, jurisprudence may reach out to such a collective good. Today, not tomorrow, is the first charge of the pragmatic law of Western heritage. So we are confined to material, not ethereal, end products. This much flows from a plain reading of the purpose and provision of the legislation and its Western origin and the ratio of all the rulings. We hold these triple ingredients to be unexceptionable. The relevant Constitutional entry speaks of industrial and labour disputes (Entry 22, List III, Schedule VII). The preamble to the Act refers to the ‘investigation and settlement of industrial disputes’. The definition of ‘industry’ has to be decoded in this background and our holding is reinforced by the fact that industrial peace, collective bargaining, strikes and lock-outs, industrial adjudications, works committees of employers and employees and the like connote organised, systematic operations and a collectivity of workmen cooperating with their employer in producing goods and services for the community. The betterment of the workmen’s lot, the avoidance of outbreaks blocking production and just and speedy settlement of disputes concern the community. In trade and business, goods and services are for the community, not for self-consumption. The penumbral area arrives as we move on to the other essentials needed to make an organised, systematic activity, oriented on productive collaboration between employer and employee—an ‘industry’ as defined in Section 2(j). Here we have to be cautious not to fall into the trap of definitional expansionism bordering on reductio ad absurdum, nor to truncate the obvious amplitude of the provision to fit it into our mental mould of beliefs and prejudices or social philosophy conditioned by class interests. Subjective wish shall not be father to forensic thought, if credibility with a pluralist community is a value to be cherished. ‘Courts do not substitute their social and economic beliefs for the judgements of the legislative bodies’ (see Constitution of the United States of America, Corwin, p. xxxi). Even so, this legislation has something to do with social justice between the ‘haves’ and the ‘have-nots’, and naive, fugitive and illogical cut-backs on the import of ‘industry’ may do injustice to this benignant enactment. Avoiding Scylla and Charybdis, we proceed to decipher the fuller import of the definition. To sum up, the personality of the whole statute, be it remembered, has a
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welfare basis, it being a beneficial legislation which protects labour, promotes their contentment and regulates situations of crisis and tension where production may be imperilled by untenable strikes and blackmail lock-outs. The mechanism of the Act is geared to conferment of regulated benefits to workmen and resolution, according to a sympathetic rule of law, of the conflicts, actual or potential, between managements and workmen. Its goal is amelioration of the condition of workers, tempered by a practical sense of peaceful co-existence, to the benefit of both—not a neutral position but restraints on laissez faire and concern for the welfare of the weaker lot. Empathy with the statute is necessary to understand not merely its spirit, but also its sense. One of the vital concepts on which the whole statute is built, is ‘industry’, and when we approach the definition in Section 2(j), we must be informed by these values. This certainly does not mean that we should strain the language of the definition to import into it what we regard as desirable in an industrial legislation, for we are not legislating de novo but construing an existing Act. Crusading for a new type of legislation with dynamic ideas for humanist justice and industrial harmony cannot be under the umbrella of interpreting an old, imperfect enactment. Nevertheless, statutory diction speaks for today and tomorrow; words are semantic seeds to serve the future hour. Moreover, as earlier highlighted, it is legitimate to project the value-set of the Constitution, especially Part IV, in reading the meaning of even a pre-Constitution statute. The paramount law is paramount and, Part IV sets out the Directive Principles of State Policy which must guide the judiciary, like other instrumentalities, in interpreting all legislation. Statutory construction is not a petrified process and the old bottle may, to the extent language and realism permit, be filled with new wine. Of course, the bottle should not break or lose shape. Lord Denning has stated the Judge’s task in reading the meaning of enactments: The English language is not an instrument of mathematical precision. Our literature would be much poorer if it were… He must set to work in the constructive task of finding the intention of Parliament, and he must do this not only from the language of the statute, but also from a consideration of the social conditions which gave rise to it and of the mischief which it was passed to remedy, and then he must supplement the written word so as to give ‘force and life’ to the intention of the Legislature… A Judge should ask himself the question, how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A Judge must not alter the material of which the Act is woven, but he can and should iron out the creases. The duty of the Court is to interpret the words that the Legislature has used; those words may be ambiguous, but, even if they are, the power and duty of the Court to travel outside them on a voyage of discovery are strictly limited.13
We may start the discussion with the leading case on the point, which perhaps may be treated as the mariner’s compass for judicial navigation: D.N. Banerji vs P.R. Mukherjee.14 But before setting sail, let us map out briefly the range of the dispute around the definition. Lord Denning, in Automobile Proprietary Ltd.,15 observed: It is true that ‘the industry’ is defined; but a definition is not to be read in isolation. It must be read in the context of the phrase which it defines, realising that the function of a definition is to give precision and certainty to a word or phrase which would otherwise be vague and uncertain— but not to contradict it or supplant it altogether.
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A definition is ordinarily the crystallisation of a legal concept promoting precision and rounding off blurred edges but, alas, the definition in Section 2(j), viewed in retrospect, has achieved the opposite. Even so, we must try to clarify. Sometimes, active interrogatories tell more than bland affirmatives and so, marginal omissions notwithstanding, we will string the points together in a few questions on which we have been addressed. A cynical jurist surveying the forensic scene may make unhappy comments. Counsel for the respondent Unions sounded that note. A pluralist society with a capitalist backbone, notwithstanding the innocuous objective ‘socialist’ added to ‘Republic’ by the Constitution (42nd Amendment Act, 1976), regards profit-making as a sacrosanct value. Elitist professionalism and industrialism is sensitive to the ‘worker menace’ and inclines to exclude such sound and fury as ‘labour unrest’ from its sanctified precincts by judicially de-industrialising the activities of professional men and interest groups to the extent feasible. Governments, in a mixed economy, share some of the habits of thought of the dominant class, and doctrines like ‘sovereign function’, which pull out economic enterprises run by them, come in handy. The latent love for club life and charitable devices and escapist institutions bred by clever capitalism and hierarchical social structure shows up as inhibitions transmuted into doctrines, interpretatively carving out immunities from the ‘industrial’ demands of labour by labelling many enterprises ‘non-industries’. Universities, clubs, institutes, manufactories and establishments managed by eleemosynary or holy entities, are instances. To objectify doctrinally subjective consternation is casuistry. A counter-critic, on the other hand, may acidly contend that if judicial interpretation, uninformed by life’s realities, were to go wild, every home will be not a quiet castle but tumultuous industry, every research unit will grind to a halt, every god will face new demands, every service club will be the venue of rumble and every charity choked off by brewing unrest—and the salt of the earth as well as the lowliest and the lost will suffer. Counsel for the appellants struck this pessimistic note. Is it not obvious from these rival thoughtways that law is value-loaded, that social philosophy is an inarticulate interpretative tool? This is inescapable in any school of jurisprudence. Now let us itemise, illustratively, the posers springing from the competing submissions, so that the contentions may be concretised. 1. (a) Are establishments run without a profit motive ‘industries’? (b) Are Charitable institutions ‘industries’? (c) Do undertakings governed by a no-profit, no-loss rule, statutorily or otherwise fastened, fall within the definition in Section 2(j)? (d) Do clubs or other organisations (like the YMCA), whose general emphasis is not on profit-making but on fellowship and self-service, fit into the definition? (e) To go to the core of the matter, is it an inalienable ingredient of ‘industry’ that it should be plied with a commercial object? 2. (a) Should cooperation between employer and employee be direct in so far as it relates to the basic service or essential manufacture which is the output of the undertaking? (b) Could a lawyer’s chamber or chartered accountant’s office, a doctor’s clinic or other liberal profession’s occupation or calling be designated an ‘industry’? (c) Would a University or college or school or research institute be called an ‘industry’? 3. (a) Is the inclusive part of the definition in Section 2(j) relevant to the determination of what is an ‘industry’? If so, what impact does it have on the categories? (b) Do domestic service drudges—who slave without respite—become ‘industries’ by this extended sense?
68 Social Justice and Labour Jurisprudence 4. Are governmental functions, stricto sensu, industrial and if not, what is the extent of immunity of the instrumentalities of government? 5. What rational criterion exists for a cut-back on the dynamic potential and semantic sweep of the definition implicit in the industrial law of a progressive society geared to greater industrialisation—and consequent concern for regulating relations and investigating disputes between employers and employees—as industrial processes and relations become more complex and sophisticated and as workmen become more right-conscious. 6. As the provision now stands, is it scientific to define ‘industry’ based on the nature—the dominant nature—of the activity, i.e. on the terms of the work, remuneration and conditions of service which bond the two wings together into an employer–employee complex?
Back to the Banerji,16 to begin at the very beginning. Technically, this bench that heard the appeals now is not bound by any of the earlier decisions. But we cannot agree with Justice Roberts of the U.S. Supreme Court that ‘adjudications of the Court were rapidly gravitating into the same class as a restricted railroad ticket, good for this day and train only’ (See Corwin XVII). The present—even the revolutionary present—does not break wholly with the past; but breaks bread with it, without being swallowed by it, and may eventually swallow it. While it is true, academically speaking, that the Court should be ultimately right rather than consistently wrong, the social interest in the certainty of the law is a value which urges continuity where possible, clarification where sufficient and correction where derailment, misdirection or fundamental flaw defeats the statute or creates considerable industrial confusion. Shri M.K. Ramamurthy, encored by Shri R.K. Garg, argued emphatically that after Safdarjung,17 the law was in trauma and so a fresh look at the problem is ripe. The learned Attorney General and Shri Tarkunde, who argued at effective, illuminating length, as well as Dr Singhvi and Shri A.K. Sen, who briefly and tellingly supplemented, did not hide the fact that the law was in Queer Street here, but sought to discern a golden thread of sound principle which could explain the core of the rulings which peripherally had contradictory thinking. In this situation, it is not wise, in our view, to reject everything ruled till date and fabricate new tests, armed with lexical wisdom or reinforced by vintage judicial thought from Australia. The Banerji18 case we take as good, and, anchored on its authority, we will examine later decisions to stabilise the law on the firm principles gatherable there from, rejecting erratic excursions. To sip every flower and change every hour is not realism but romance, which must not enchant the Court. Indeed, Sri Justice Chandrasekhara Aiyar, speaking for a unanimous bench, sketched the guidelines perceptively, if we may say so respectfully. Later cases have only added their glosses, not overruled it, and the fertile source of conflict has been the bashyams rather than the basic decision. Therefore, our task is not to supplant the ratio of Banerji19 but to straighten and strengthen it in its application, away from different deviations and aberrations. BANERJI20 The Budge Budge Municipality dismissed two employees, whose dispute was sponsored by the Union. The award of the Industrial Tribunal directed reinstatement, but the Municipality challenged the award before the High Court and this Court on the fundamental ground that a municipality, in discharging its normal duties connected with local self-government, is not engaged in any industry as defined in the Act.
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A panoramic view of the statute and its jurisprudential bearings has been projected there and the essentials of an ‘industry’ decocted. The definitions of ‘employer’ (Section 2[g]), ‘industry’ (Section 2[j]), ‘industrial dispute’ (Section 2[k]) and ‘workman’ (Section 2[e]) are a statutory dictionary, not popular parlance. It is plain that merely because the employer is a government department or a local body (and, a fortiori, a statutory board, society or like entity), the enterprise does not cease to be an ‘industry’. Likewise, what the common man does not consider as ‘industry’ need not necessarily stand excluded from the statutory concept (and vice versa). The latter is deliberately drawn wider, and in some respects narrower, as Chandrasekhara Aiyar, J., emphatically expressed: In the ordinary or non-technical sense, according to what is understood by the man in the street, industry or business means an undertaking where capital and labour co-operate with each other for the purpose of producing wealth in the shape of goods, machines, tools, etc., and for making profits. The concept of industry in this ordinary sense applied even to agriculture, horticulture, pisciculture and so on and so forth. It is also clear that every aspect of activity in which the relationship of employer and employee exists or arises does not thereby become an industry as commonly understood. We hardly, think in terms of an industry, when we have regard, for instance, to the rights and duties of master and servant, or of a Government and its secretariat, or the members of the medical profession working in a hospital. It would be regarded as absurd to think so; at any rate the layman unacquainted with advancing legal concepts of what is meant by industry would rule out such a connotation as impossible. There is nothing however to prevent a statute from giving the world ‘industry’ and the words ‘industrial dispute’ a wider and more comprehensive import in order to meet the requirements of rapid industrial progress and to bring about in the interests of industrial peace and economy, a fair and satisfactory adjustment of relations between employers and workmen in a variety of fields of activity. It is obvious that the limited concept of what an industry meant in early times must now yield place to an enormously wider concept so as to take in various and varied forms of industry, so that dispute arising in connection with them might be settled quickly without much dislocation and disorganisation of the needs of society and in a manner more adapted to conciliation and settlement than a determination of the respective rights and liabilities according to strict legal procedure and principles. The conflicts between capital and labour have now to be determined more from the standpoint of status than of contract. Without such an approach, the numerous problems that now arise for solution in the shape of industrial disputes cannot be tackled satisfactorily, and this is why every civilised government has thought of machinery of conciliation officers, Boards and Tribunals for the effective settlement of disputes. (emphasis added)
The dynamics of industrial law, even if incongruous with the popular understanding in this first proposition, we derive from Banerji:21 Legislation had to keep pace with the march of times and to provide for new situations. Social evolution is a process of constant growth, and the State cannot afford to stand still without taking adequate measures by means of legislation to solve large and momentous problems that arise in the industrial field from day to day almost.
The second, though trite, guidance that we get, is that we should not be beguiled by similar words in dissimilar statutes, contexts, subject-matters or socio-economic situations. The same words may mean one thing in one context and another in a different context. This is the reason why decisions on the meaning of particular words or collections of
70 Social Justice and Labour Jurisprudence
words found in other statutes of other nations are scarcely of much value when we have to deal with a specific statute of our own, they may persuade, but cannot pressure. We would only add that a developing country is anxious to preserve the smooth flow of goods and services, and interdict undue exploitation. Towards those ends labour legislation is enacted and must receive liberal construction to fulfil its role. Let us get down to the actual amplitude and circumscription of the statutory concept of ‘industry’. Not a narrow but an enlarged acceptation is intended. This is supported by several considerations. Chandrasekhara Aiyar, J., observes: Do the definitions of ‘industry’, ‘industrial disputes’ and ‘workman’ take in the extended significance, or exclude it? Though the word ‘undertaking’ in the definition of ‘industry’ is wedged in between business and trade on the one hand and manufacture on the other, and though, therefore, it might mean only a business or trade undertaking, still it must be remembered that if that were so, there was no need to use the word separately from business or trade. The wider import is attracted even more clearly when we look at the latter part of the definition which refers to ‘calling, service, employment, or industrial occupation or avocation of workmen’. ‘Undertaking’ in the first part of the definition and ‘industrial occupation or avocation’ in the second part obviously mean much more than what is ordinarily understood by trade or business. The definition was apparently intended to include within its scope what might not strictly be called a trade or business venture.
So ‘industry’ overflows trade and business. Capital, ordinarily assumed to be a component of ‘industry’, is an expendable item so far as statutory ‘industry’ is concerned. To reach this conclusion, the Court referred to ‘public utility service’ (Section 2[n]) and argued: A public utility service such as railways, telephones and the supply of power, light or water to the public may be carried on by private companies or business corporations. Even conservancy or sanitation may be so carried on, though after the introduction of local self-government this work has in almost every country been assigned as a duty to local bodies like our Municipalities or District Boards or Local Boards. A dispute in these services between employees and workmen is an industrial dispute, and the proviso to Section 10 lays down that where such a dispute arises and a notice under Section 22 has been given, the appropriate Government shall make a reference under the sub-section. If the public utility service is carried on by a corporation like a Municipality which is the creature of statute and which functions under the limitations imposed by the statute, does it cease to be an industry for this reason? The only ground on which one could say that what would amount to the carrying on of an industry if it is done by a private person ceases to be so if the same work is carried on by a local body like a Municipality is that in the latter there is nothing like the investment of any capital or the existence of a profit earning motive as there generally is in a business. But neither the one nor the other seems a sine quo non or necessary element in the modern conception of industry.
Absence of capital does not negative ‘industry’. Nay, even charitable services do not necessarily cease to be ‘industries’ definitionally, although popularly charity is not industry. Interestingly, the learned Judge dealt with the point. After enumerating typical municipal activities, he concluded: Some of these functions may appertain to and partake of the nature of an industry, while others may not. For instance, there is a necessary element of distinction between the supply of power
Threshold Part Issues under the Industrial Disputes Act, 1947 71 and light to the inhabitants of a Municipality and the running of charitable hospitals and dispensaries for the aid of the poor. In ordinary parlance, the former might be regarded as an industry but not latter. The very idea underlying the entrustment of such duties or functions to local bodies is not to take them out of the sphere of industry but to secure the substitution of public authorities in the place of private employers and to eliminate the motive of profit making as far as possible. The levy of taxes for the maintenance of the service of sanitation and the conservancy or the supply of light and water is a method adopted and devised to make up for the absence of capital. The undertaking or the service will still remain within the ambit of what we understand by an industry though it is carried on with the aid of taxation, and no immediate material gain by way of profit is envisaged.
The contention that charitable undertakings are not industries is, by this token, untenable. Another argument pertinent to our discussion is the sweep of the expression ‘trade’. The Court refers, with approval, to Lord Wright in the case of Bolton Corporation,22 where Law Lord had observed: Indeed ‘trade’ is not only in the etymological or dictionary sense, but in the legal usage, a term of the widest scope. It is connected originally with the word ‘trade’ and indicates a way of life or an occupation. In ordinary usage it may mean the occupation of a small shopkeeper equally with that of a commercial magnate. It may also mean a skilled craft. It is true that it is often used in contrast with a profession. A professional worker would not ordinarily be called a tradesman, but the word ‘trade’ is used in the widest application ‘trade unions’. Professions have their trade unions. It is also used in the Trade Boards Act to include industrial undertakings. I see no reason to exclude from the operation of the Industrial Courts Act the activities of local authorities, even without taking into account the fact that these authorities now carry on in most cases important industrial undertakings. The order expressly states in its definition section that ‘trade’ or ‘industry’ includes the performance of its functions by a ‘public local authority’. It is true that these words are used in Part III, which deals with ‘recognized terms and conditions of employment’, and in Part IV, which deals with ‘departures from trade practices’ in ‘any industry or undertaking’ and not in Part I, which deals with ‘national arbitration’ and is the part material in this case, but I take them as illustrating what modern conditions involve—the idea that the functions of local authorities may come under the expression ‘trade or industry’. I think the same may be said of the Industrial Courts Act and Reg. 58-AA, in both of which the word ‘trade’ is used in the very wide connotation which it bears in the modern legislation dealing with conditions of employment, particularly in relation to matters of collective bargaining and the like. (emphasis added)
In short, ‘trade’ embraces the functions of local authorities, even professions, thus departing from popular notions. Another facet of the controversy is next touched upon—i.e. profit-making motive is not a sine qua non of ‘industry’, functionally or definitionally. For this, Powers, J., in Federated Municipal and Shire Employees’ Union of Australia vs Melbourne Corporation23 was quoted with emphatic approval where the Australian High Court considered an industrial legislation: So far as the question in this case is concerned, as the arguments proceeded the ground mostly relied upon (after the Councils were held not to be exempt as State instrumentalities) was that the work was not carried on by the municipal corporations for profit in the ordinary sense of
72 Social Justice and Labour Jurisprudence the term, although it would generally speaking be carried on by the Councils themselves to save contractor’s profits. If that argument were sufficient, then a philanthropist who acquired a clothing factory and employed the same employees as the previous owner had employed would not be engaged in an occupation about which an industrial dispute could arise, if he distributed the clothes made to the poor free of charge or even if he distributed them to the poor at the bare cost of production. If the contention of the respondents is correct, a private company carrying on a ferry would be engaged in an industrial occupation. If a municipal corporation carried it on, it would not be industrial. The same argument would apply to baths, bridge-building, quarries, sanitary conttracts, gas-making for lighting streets and public halls, municipal building of house or halls, and many other similar industrial undertakings. Even coal-mining of use on municipal railways or tramways would not be industrial work if the contention of the respondents is correct. If the works in question are carried out by contractors or by private individuals it is said to be industrial, but not industrial within the meaning of the Arbitration Act or Constitution if carried out by municipal corporations. I cannot accept that view.
The negation of the profit motive as a telling test against ‘industry’ is clear from this quote. All the indicia of ‘industry’ are packed into the judgement which condenses the conclusion tersely to hold that ‘industries’ will cover ‘branches of work that can be said to be analogous to the carrying out of a trade or business’. The case, read as a whole, contributes to industrial jurisprudence, with special reference to the Act, a few positive facets and knocks down a few negative fixations. Governments and municipal and statutory bodies may run enterprises, which do not for that reason cease to be industries. Charitable activities may also be industries. Undertakings, sans a profit motive, may well be industries. Professions are not ipso facto beyond the pale of industries. Any operation carried on in a manner analogous to trade or business may legitimately be a statutory ‘industry’. The popular limitations on the concept of ‘industry’ do not amputate the ambit of legislative generosity in Section 2(j). Industrial peace and smooth supply to the community are among the aims and objects the Legislature had in view, as also the nature, variety, range and areas of disputes between employers and employees. These factors must inform the construction of the provision. The limiting role of the Banerji24 case must also be noticed so that a total view is gained. For instance, ‘analogous to trade or business’ cuts down ‘undertaking’, a word of fantastic sweep. Spiritual undertakings, casual undertakings, domestic undertakings, war waging, policing, justicing, legislating, tax collecting and the like are, prima facie, pushed out. Wars are not merchantable, nor justice saleable, nor divine grace marketable. So, the problem shifts to what is ‘analogous to trade or business’. As we proceed to the next set of cases, we come upon the annotation of other expressions like ‘calling’ and get to grips with the specific organisations which call for identification in the several appeals before us. At this stage, a close-up of the content and contours of the controversial words ‘analogous, etc.’, which consumed considerable time of counsel, may be taken. To be fair to Banerji,25 with the path-finding decision that conditioned and canalised and fertilised subsequent juristic–humanistic ideation, we must show fidelity to the terminological exactitude of the seminal expression used and search carefully for its import. The prescient words are: ‘branches of work that can be said to be analogous to the carrying out of a ‘trade or business’. The same judgement has negatived the necessity for a profit motive and included charity impliedly, has virtually equated private sector and public sector operations and has even perilously hinted at ‘professions’ being ‘trade’. In this perspective,
Threshold Part Issues under the Industrial Disputes Act, 1947 73
the comprehensive reach of ‘analogous’ activities must be measured. The similarity stressed relates to ‘branches of work’, and more—the analogy with trade or business is in the ‘carrying out’ of the economic adventure. So the parity is in the modus operandi, in the working—not in the purpose of the project nor in the disposal of the proceeds, but in the organisation of the venture, including the relations between the two limbs, viz. labour and management. If the mutual relations, the method of employment and the process of cooperation in the carrying out of the work bear close resemblance to the organisation, method, remuneration, relationship of employer and employee, and the like, then it is ‘industry’; otherwise not. This is the kernel of the decision—an activity-oriented, not motive-based, analysis. The landmark Australian case of the Melbourne Corporation,26 which was heavily relied on in the Banerji27 case, may engage us. That ruling contains dicta early in the century, which make Indian forensic fabianism, sixty years after, in a ‘socialist’ Republic, blush. That apart, the discussion in the leading judgements dealing with ‘industry’ from a Constitutional angle, but relying on statute similar to ours, is instructive. For instance, consider the promptings of profit as a condition of ‘industry’: Higgine, J., crushes that credo thus: The purpose of profit-making can hardly be the criterion. If it were, the labourers who excavated the underground passage for the Duke of Portland’s whim, or the labourers who build (for day) a tower of Babel or a Pyramid, could not be parties to an ‘industrial dispute.’
The worker-oriented perspective is underscored by Isaacs and Rich, JJ. It is at the same time, as is perceived, contended on the part of labour that matters even indirectly prejudicial to the workers are within the sphere of dispute. For instance, at p. 70 (para 175[4][a]), one of the competing contentions is thus stated: Long hours proceed from the competition of employer with employer in the same trade. Employer ought to be prevented from competing in this way at the expense of their workmen.
As a fact, in a later year, Lord James of Hereford in an award, held that one employer in a certain trade must conform to the practice of others. What must be borne steadily in mind, as evidenced by the nature of the claims made, is that the object of obtaining a large share of the product of the industry and of exercising a voice as to the general conditions under which it shall be carried on (para 100) covers all means, direct and incidental, without which the main object cannot be fully or effectively attained. Some of these will be particularised; but in the meantime it should be said that they will show in themselves— and from the character of the disputants to this will be confirmed—that so long as the operations are of capital and labour in cooperation for the satisfaction of material human needs, the objects and demands of labour are the same, whether the result of the operations be money or money’s worth. The inevitable conclusion, as it seems to us, is that in 1894 it was well understood that ‘trade disputes’, which at one time had a limited scope of action without altering their inherent and essential nature, so developed as to be recognised better under the name of ‘industrial disputes’ or ‘labour disputes’, and came to be more and more founded on the practical view that human labour was not a mere asset of capital but was a cooperating agency of equal dignity—a working partner—and entitled to consideration as such.
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The same two judges choose to impart a wide construction to the word ‘industry’, for they ask: How can we, conformably to recognized rules of legal construction, attempt to limit, in an instrument of self-government for this Continent, the simple and comprehensive words ‘industrial disputes’ by any apprehension of what we might imagine would be the effect of a full literal construction, or by conjecturing what was in the minds of the framers of the Constitution, or by the forms industrial disputes have more recently assumed? ‘Industrial warfare’ is no mere figure of speech. It is not the mere phrase of theorists. It is recognized by the law as the correct description of internal conflicts in industrial matters. It was adopted by Lord Loreburn, L.C. in Conway vs Wade.28 Strikes and lock-outs are by him correctly described as ‘weapons’.
These arguments hold good for the Indian industrial statute, and so Section 2(j) must receive comprehensive literal force, limited only by some cardinal criteria. One such criterion, in the monarchical vocabulary of English jurisprudence, is Crown exemption, reincarnating in a republic as the inalienable functions of constitutional government. No government, no order; no order, no law; no rule of law, no industrial relations. So the core functions of the State are paramount, and paramountcy is paramountcy. But this doctrinal exemption is not expansionist but strictly narrowed to necessitous functions. Isaacs and Rich, JJ., dwell on this topic and, after quoting Lord Watson’s test of the inalienable functions of a Constitutional government, state: Here we have the discrimen of Crown exemption. If a municipality either (1897) I QB 64, at 70–71 is legally empowered to perform and does perform any function whatever for the Crown, or is lawfully empowered to perform and does perform any function which constitutionally is inalienably a Crown function—as, for instance, the administration of justice—the municipality is in law presumed to represent the Crown, and the exemption applies. Otherwise, it is outside that exemption and, if impliedly exempted at all, some other principle must be resorted to. The making and maintenance of streets in the municipality is not within either proposition.
Now the cornerstone of industrial law is well laid by Banerji29 supported by Lord Mayor of the City of Melbourne. A chronological survey of post-Banerji30 decisions of this Court, with accent on the juristic contributions registered by them, may be methodical. Thereafter, a survey of cases in alien jurisdictions and derivation of guidelines may be attempted. Even here, we may warn ourselves that the literal latitude of the words in the definition cannot be allowed grotesquely inflationary play, but must be read down to accord with the broad industrial sense of the nation’s economic community, of which labour is an integral part. To bend beyond credible limits is to break with facts, unless language leaves no option. Forensic inflation of the sense of words shall not lead to an adaptational breakdown, outraging the good sense of even radical realists. After all, the Act has been drawn on an industrial canvas to solve the problems of industry, not of chemistry. A functional focus and social control desideratum must be in the mind’s eye of the Judge. The two landmark cases, the Corporation of the City of Nagpur vs Its Employees31 and the State of Bombay vs The Hospital Mazdoor Sabha,32 may now be analysed in the light of what we have just said. Filling the gaps in the Banerji33 decision and the authoritative connotation of the fluid phrase ‘analogous to trade and business’ were attempted in these
Threshold Part Issues under the Industrial Disputes Act, 1947 75
twin decisions. To be ‘analogous’ is to resemble in functions rele-vant to the subject, as between like features of two apparently different things. So, some kinship through resemblance to trade or business, is the key to the problem, if the Banerji34 case is the guide star. Partial similarity postulates selectivity of characteristics for comparability. Wherein lies the analogy to trade or business is then the query. Sri Subba Rao, with uninhibited logic, chases this thought and reaches certain tests in the Nagpur Municipality35 case, speaking for a unanimous bench. We respectfully agree with much of his reasoning, and proceed to deal with the decision. If the ruling were right, as we think it is, the riddle of ‘industry’ is resolved in some measure. Although foreign decisions, words and phrases, lexical plenty and definitions from other legislations were read before us to stress the necessity of direct cooperation between employer and employees in the essential product of the undertaking, of the need for the commercial motive, of services to the community, etc.—as implied inarticulately in the concept of ‘industry’— we bypass them as but marginally persuasive. The rulings of this Court, the language and scheme of the Act, and the well-known canons of construction exert real pressure on our judgement. And, in this latter process, next to the Banerji36 case comes the Corporation of Nagpur37 case, which spreads the canvas wide and illumines the expression ‘analogous to trade or business’, although it comes a few days after the Hospital Mazdoor Sabha38 case decided by the same bench. To be sure of our approach on a wider basis, let us cast a glance at internationally recognised concepts vis-à-vis industry. The International Labour Organisation (ILO) has had occasion to consider freedom of association for labour as a primary right and collective bargaining, followed by strikes if necessary, as a derivative right. The question has arisen as to whether public servants employed in the crucial functions of the government fell outside the orbit of industrial conflict. Convention 98 concerning the Application of the Principles of the Right to Organise and to Bargain Collectively, states in Article 6: This Convention does not deal with the position of public servants engaged in the administration of the State, nor shall it be construed as prejudicing their rights or status in any way.
Thus, it is well-recognised that public servants in the key sectors of administration stand out of the industrial sector. The committee of experts of the ILO had something to say about the carving out of public servants from the general category. Incidentally, it may be useful to note certain clear statements made by the ILO on the concepts of industry, workmen and industrial disputes—made not with clear-cut legal precision but with sufficient particularity for general purposes, although looked at from a different angle. We quote from Freedom of Association, Second Edition, 1976, which is a digest of the decisions of the Freedom of Association Committee of the governing body of the ILO: 2. Civil servants and other workers in the employment of the State: (250) Convention 98, and in particular Article 4 thereof concerning the encouragement and promotion of collective bargaining, applies both to the private sector and to nationalised undertakings and public bodies, it being possible to exclude from such application public servants engaged in the administration of the State. (Report 141, Case 729, para 15.)
76 Social Justice and Labour Jurisprudence (251) Convention 98, which mainly concerns collective bargaining, permits (Article 6) the exclusion of ‘public servants engaged in the administration of the State’. In this connection, the Committee of Experts on the Application of Conventions and Recommendations has pointed out that, while the concept of public servant may vary to some degree under the various national legal systems, the exclusion from the scope of the Convention of persons employed by the State or in the public sector, who do not act as agents of the public authority (even though they may be granted a status identical with that of public officials engaged in the administration of the State) is contrary to the meaning of the Convention. The distinction to be drawn, according to the Committee, would appear to be basically between civil servants employed in various capacities in government ministries or comparable bodies on the one hand and other persons employed by the government, by public undertakings or by independent public corporations. (Report 116, Case 598, para 377; Report 121, Case 635, para 81; Report 143, Case 764, para 87.) (254) With regard to a complaint concerning the right of teachers to engage in collective bargaining, the Committee, in the light of the principles contained in Convention 98 draws attention to the desirability of promoting voluntary collective bargaining, according to national conditions, with a view to the regulation of terms and conditions of employment. (Report 110, Case 573, para 194.) (255) The Committee has pointed out that Convention 98, dealing with the promotion of collective bargaining, covers all public servants who do not act as agents of the public authority, and consequently, among these employers of the postal and tele-communications services. (Report 139, Case 725, para 278.) (256) Civil aviation technicians working under the jurisdiction of the armed forces cannot be considered, in view of the nature of their activities, as belonging to the armed forces and as such liable to be excluded from the guarantees laid down in Convention 98; the rule contained in Article 4 of the convention concerning collective bargaining should be applied to them. (Report 116, Case 598, paras 375–378.)
This divagation was calculated only to emphasise certain fundamentals in international industrial thinking which accord with a wider conceptual acceptation for ‘industry’. The wings of the word ‘industry’ have been spread wide in Section 2(j) and this has been brought out in the decision in the Corporation of Nagpur39 case. That case was concerned with a dispute between a municipal body and its employees. The major issue considered there was the meaning of the much-disputed expression ‘analogous to the carrying on of a trade or business’. Municipal undertakings are ordinarily industries, as the Baroda Borough Municipality40 case held. Even so, the scope of ‘industry’ was investigated by the bench in the City of Nagpur41 case, which affirmed Banerji 42 and Baroda 43 cases. The Court took the view that the words used in the definition were prima facie of the widest import and declined to curtail the width of meaning by invocation of noscitur a sociis. Even so, the Court was disinclined to spread the net too wide by expanding the elastic expressions ‘calling’, ‘service’, ‘employment’ and ‘handicraft’. To be over-inclusive may be impractical; and so, while accepting the enlargement of meaning by the device of inclusive definition, the Court cautioned: But such a wide meaning appears to over-reach the objects for which the Act was passed. It is, therefore, necessary to limit its scope on permissible grounds, having regard to the aim, scope and the object of the whole Act.
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After referring to the rule in the Heydon’s case,44 Subba Rao, J., proceeded to outline the ambit of industry thus (at p. 680 of AIR): The word ‘employers’ in clause (a) and the word ‘employees’ in clause (b) indicate that the fundamental basis for the application of the definition is the existence of that relationship. The cognate definitions of ‘industrial dispute’, ‘employer’, ‘employee’, also support it. The long title of the Act as well as its preamble show that the Act was passed to make provision for the promotion of industries and peaceful and amicable settlement of disputes between employers and employees in an organised activity by conciliation and arbitration and for certain other purposes. If the preamble is read with the historical background for the passing of the Act, it is manifest that the Act was introduced as an important step in achieving social justice. The Act seeks to ameliorate the service conditions of the workers, to provide a machinery for resolving their conflicts and to encourage co-operative effort in the service of the community. The history of labour legislation both in England and India also shows that it was aimed more to ameliorate the conditions of service of the labour in organised activities than to anything else. The Act was not intended to reach the personal service which do not depend upon the employment of a labour force.
Whether the exclusion of personal services is warranted may be examined a little later. However, the Court proceeded to carve out the negative factors which—notwithstanding the literal width of the language of the definition—must, for other compelling reasons, be kept out of the scope of industry. For instance, the sovereign functions of the State cannot be included, although what such functions are has been aptly termed ‘the primary and inalienable functions of a constitutional government’. Even here, we may point out the inaptitude of relying on the doctrine of regal powers. That has reference, in this context, to the Crown’s liability in tort and has nothing to do with industrial law. In any case, it is open to the Parliament to make Laws that govern the State’s relations with its employees. Articles 309 to 311 of the Constitution of India, the enactments dealing with the defence forces and other legislation dealing with employment under statutory bodies may, expressly or by necessary implication, exclude the operation of the Industrial Disputes Act, 1947. That is a question of interpretation and statutory exclusion; but, in the absence of such a provision of law, it may indubitably be assumed that the key aspects of public administration like public justice stand outside the circle of ‘industry’. Even here, as has been brought out by the excerpts from the ILO documents, it is not every employee who is excluded but only certain categories who are primarily engaged and supportively employed in the discharge of the essential functions of constitutional government. In a limited way, this head of exclusion has been recognised throughout. Although we are not concerned in this case with those categories of employees who particularly come under the departments charged with the responsibility for essential constitutional functions of government, it is appropriate to state that if there are industrial units severable from the essential functions and possess an entity of their own, it may be plausible to hold that the employees of those units are ‘workmen’ and those undertakings are ‘industries’. A blanket exclusion of every one of the host of employees engaged by the government in departments falling under general rubrics—like justice, defence, taxation and legislature—may not necessarily be thrown out of the umbrella of the Act. We say no more except to observe that closer exploration, not summary rejection, is necessary. The Court proceeded in the Corporation of Nagpur45 case to pose for itself the import of the words ‘analogous to the carrying out of a trade or business’ and took the view that
78 Social Justice and Labour Jurisprudence
the emphasis was more on ‘the nature of the organised activity implicit in trade or business than to equate the other activities with trade or business’. Obviously, non-trade operations were in many cases ‘industry’. Relying on the Fabricated Engine Drivers46 case, Subba Rao, J., observed (at pp. 662, 683 of AIR): It is manifest from this decision that even activities of a municipality which cannot be described as trading activities can be the subject-matter of an industrial dispute.
The true test, according to the learned judge, was concisely expressed by Isaacs, J., in his dissenting judgement in the case of the Federated School Teachers’ Association of Australia vs State of Victoria:47 The material question is; What is the nature of the actual function assumed—is it a service that the State could have left to private enterprise, and, if so fulfilled, could such a dispute be ‘individual’?
Thus the nature of the actual function and of the pattern of organised activity is decisive. We will revert to this aspect a little later. It is useful to remember that the Court rejected the test attempted by counsel in the case (at p. 683 of AIR): It is said that unless there is a quid pro quo for the service. It cannot be an industry. This is the same argument, namely, that the service must be in the nature of trade in a different garb.
We agree with this observation and with the further observation that there is no merit in the plea that unless the public who are benefited by the services pay in cash, the services so rendered cannot be ‘industry’. Indeed, the signal service rendered by the Corporation of Nagpur48 case is to dispel the idea of ‘profit-making’. Relying on Australian cases which held that profit-making may be important from the income-tax point of view but irrelevant from an industrial dispute point of view, the Court approved of a critical passage in the dissenting judgement of Isaacs, J., in the School Teachers’ Association49 case: The contention sounds like an echo from the dark ages of industry and political economy… Such disputes are not simply a claim to share the material wealth… Monetary considerations for service are therefore, not an essential characteristic of industry in a modern State.
Even according to the traditional concepts of English law, profit has to be disregarded when ascertaining whether an enterprise is a business: 3. Disregard of Profit—Profit or the intention to make profit is not an essential part of the legal definition of a trade or business; and payment or profit does not constitute a trade or business that which would not otherwise be such.50
Does the badge of industrialism, broadly understood, banish from its fold, education? This question needs fuller consideration, as it has been raised in this batch of appeals
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and has been answered in favour of the employers by the Supreme Court in the Delhi University case.51 But since Subba Rao, J., has in support cited Isaacs, J., in the School Teachers’ Association52 case, which relates to the same problem, we may even here prepare the ground by dilating on the subject with special reference to the Australian case. That learned judge expressed surprise at the very question: The basic question raised by this case, strange as it may seem is whether the occupation of employees engaged in education, itself universally recognised as the key industry to all skilled occupations, is ‘industrial’ within the meaning of the Constitution.
The employers argued that it was fallacious to spin out ‘industry’ from ‘education’ and the logic was a specious economic doctrine. Isaacs, J., with unsparing sting and in fighting mood, stated and refuted the plea: The theory was that society is industrially organised for the production and distribution of wealth in the sense of tangible, ponderable, corpuscular wealth, and therefore an ‘industrial dispute’ cannot possibly occur except where there is furnished to the public—the consumers— by the combined efforts of employers and employee, wealth of that nature. Consequently, say the employers, ‘education’ not being ‘wealth’ in that sense, there never can be an ‘industrial dispute’ between employers and employed engaged in the avocation of education, regardless of the wealth derived by the employers from the joint co-operation. The contention sounds like an echo from the dark ages of industry and political economy. It not merely ignores the constant currents of life around us, which is the real danger in deciding questions of this nature, but it also forgets the memorable industrial organisation of the nations, not for the production or distribution of material wealth, but for services, national service, as the service of organised industry must always be. Examination of this contention will not only completely dissipate it, but will also serve to throw material light on the question in hand generally. The contention is radically unsound for two great reasons. It erroneously conceives the object of national industrial organization and thereby unduly limits the meaning of the terms ‘production’ and ‘wealth’ when used in that connection. But it further neglects the fundamental character of ‘industrial disputes’ as a distinct and insistent phenomenon of modern society. Such disputes are not simply a claim to share the material wealth jointly produced and capable of registration in statistics. At heart they are a struggle, constantly becoming more intense on the part of the employed group engaged in co-operation with the employing group in rendering services to the community essential for a higher general human welfare, to share in that welfare in a greater degree… That contention, if acceded to, would be revolutionary… How could it reasonably be said that a comic song or a jazz performance, or the representation of a comedy, or a ride in a tram-car or motor-bus, piloting a ship, lighting a lamp or showing a moving picture is more ‘material’ as wealth than instruction, either cultural or vocational? Indeed, to take one instance, a workman who travels in a tramcar a mile from his home to his factory is not more efficient for his daily task than if he walked ten yards, whereas his technical training has a direct effect in increasing output. If music or acting or personal transportation is admitted to be ‘industrial’ because each is productive of wealth to the employer as his business undertaking, then an educational establishment stands on the same footing. But if education is excluded for the reasons advanced, how are we to admit barbers, hair-dressers, taxi-car drivers, furniture removers, and other occupations that readily suggest themselves? And yet the doctrine would admit manufacturers of intoxicants and producers of degrading literatures and pictures, because these are considered to be ‘wealth’. The doctrine would concede, for instance, the establishments for the training of performing dogs, or of monkeys simulating human behaviour, would be
80 Social Justice and Labour Jurisprudence ‘industrial’, because one would have increased material wealth, that is, a more valuable dog or monkey, in the sense that one could exchange it for more money. If parrots are taught to say ‘Pretty Polly’ and to dance on their perch, that is, by concession, industrial, because it is the production of wealth. But if Australian youths are trained to read and write their language correctly and in other necessary elements of culture and vocation making them more efficient citizens, fitting them with more or less directness to take their place in the general industrial ranks of the nation and to render the services required by the community, that training is said not to be wealth and the work done by teachers employed is said not to be industrial.
So long as services are part of the wealth of a nation—and it is obscurantist to object to it—educational services are wealth, are ‘industrial’. We agree with Isaacs, J. More closely analysed the issue we may ask ourselves—as Isaacs, J., did—whether, if private scholastic establishments carried on teaching on the same lines as the State schools, giving elementary education free and charging fees for the higher subjects providing the same curriculum and so on by means of employed teachers, would such a dispute as we have here be an industrial dispute? … ‘I have already indicated my view’, says Isaacs, J.: …that education so provided constitutes in itself an independent industrial operation as a service rendered to the community. Charles Dickens evidently thought so when ninety years ago Squeers called his school ‘the shop’ and prided himself on Nickleby’s being ‘cheap’ at Pounds 5 a year and commensurate living conditions. The world has not turned back since then. In 1926 the Committee on Industry and Trade, in their report to the British Prime Minister, included among ‘Trade Unions’ those called ‘teaching’. If there appears that in 1897 there were six unions with a total membership of 45,319 and in 1924 there were seventeen unions with a membership of 194,946. The true position of education in relation to the actively operative trades is not really doubtful. Education, cultural and vocational, is now and is daily becoming as much as the artisan’s capital and tool, and to a great extent his safeguard against unemployment, as the employers’ banking credit and insurance policy are part of his means to carry on the business. There is at least as much reason for including the educational establishments in the constitutional power as ‘labour’ services, as there is to include insurance companies and as ‘capital’ services.
We have extensively excerpted from the vigorous dissent because the same position holds good for India, which is emerging from feudal illiteracy to industrial education. In Gandhi’s India, basic education and handicraft merge and in the latter half of our century, higher education involves field studies, factory training, house surgeoncy and clinical education; and sans such technological training and education in the humanities, industrial progress is self-condemned. If education and training are integral to industrial and agricultural activities, such services are part of ‘industry’ even if high-browism may be unhappy to acknowledge it. It is a class-conscious, inegalitarian outlook with an elitist aloofness which makes some people shrink from accepting educational institutions, vocational or other, as industries. The definition is wide and embraces training for industry, which, in turn, ensconces all processes of producing goods and services by employer– employee cooperation. Education is the nidus of industrialisation and itself is ‘industry’. We may consider certain aspects of this issue while dealing with later cases of our Court. Suffice it to say, that the unmincing argument of Isaacs, J., has been specifically approved in the Corporation of Nagpur53 and Hospital Mazdoor Sabha54 cases in a different aspect.
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Now we revert to the more crucial part of the Corporation of Nagpur55 decision. It is meaningful to notice that in this case the Court, in its incisive analysis, department by department, of variform municipal services, specifically observed: Education Department: This department looks after the primary education, i.e., compulsory primary education within the limits of the Corporation. (See the evidence of witness 1 for party 1.) This service can equally be done by private persons. The department satisfies the other tests. The employees of this department coming under the definition of ‘employees’ under the Act would certainly be entitled to the benefits of the Act.
The substantial breakthrough achieved by this decision in laying bare the fundamentals of ‘industry’ in its wider sense deserves mention. The ruling tests are clear. The ‘analogous’ species of quasi-trade qualify for becoming ‘industry’ if the nature of the organised activity implicit to a trade or business is shared by them. It is not necessary to ‘equate the other activities with trade, or business’. The pith and substance of the matter is that the structural, organisational, engineering aspects, crucial industrial relations such as wages, leave and other service conditions, as well as characteristic business methods (not motives) in running the enterprise, govern the conclusion. The presence of a profit motive is expressly negated as a criterion. Even the quid pro quo theory—which is the same monetary object in a milder version—has been dismissed. The subtle distinction, drawn in lovely lines and pressed with emphatic effect by Sri Tarkunde, between gain and profit, between no-profit, no-loss basis, having different results in the private and public sectors, is fascinating, but in the rough-and-tumble and sound and fury of industrial life, such nuances break down and nice refinements defeat. For the same reason, we are disinclined to chase the differential ambits of the first and the second parts of Section 2(j). Both read together and each, viewed from the angle of employer or employee and applied in its sphere, as the learned Attorney General pointed out, will make sense. If the nature of the activity is para-trade or quasi-business, it is of no moment that it is undertaken in the private sector, joint sector, public sector, philanthropic sector or labour sector; it is ‘industry’. It is the human sector, the way the employer–employee relations are set up and processed, that gives rise to claims, demands, tensions, adjudications, settlements, truce and peace in industry. That is the raison d’etre of industrial law itself. Two seminal guidelines of great moment flow from this decision: (a) the primary and predominant activity test; and (b) the integrated activity test. The concrete application of these two-fold tests is illustrated in the very case. We may set out in the concise words of Subba Rao, J. (at p. 684 of AIR): The result of the discussion may be summarized thus: (1) The definition of ‘industry’ in the Act is very comprehensive. It is in two parts: one part defines it from the standpoint of the employer and the other from the standpoint of the employee. If an activity falls under either part of the definition, it will be an industry within the meaning of the Act. (2) The history of industrial disputes and the legislation recognizes the basic concept that the activity shall be an organized one and not that which pertains to private or personal employment. (3) The regal functions described as primary and inalienable functions of State though statutorily delegated to a corporation are necessarily excluded from the purview of the definition. Such regal functions shall be confined to legislative power, administration of law and judicial power. (4) If a service rendered by an individual or private person could be an industry, it would equally be an industry in the hands of a corporation. (5) If a service rendered by a corporation is an industry, the employees
82 Social Justice and Labour Jurisprudence in the departments connected with that service, whether financial, administrative or executive would be entitled to the benefits of the Act. (6) If a department of a municipality discharged many functions, some pertaining to industry as defined in the Act and other non-industrial activities, the predominant functions of the department shall be the criterion for the purpose of the Act.
By these tokens, which find assent from us, the tax department of the local body is ‘industry’. The reason is this (at pp. 685, 686 of AIR): The scheme of the Corporation Act is that taxes and fees are collected in order to enable the municipality to discharge its statutory functions. If the functions so discharged are wholly or predominantly covered by the definition of ‘industry’, it would be illogical to exclude the tax department from the definitions. While in the case of private individuals or firms services are paid in cash or otherwise, in case of public institutions, as the services are rendered to the public, the taxes collected from them constitute a fund for performing those services. As most of the services rendered by the municipality come under the definition of ‘industry’, we should hold that the employees of the tax department are also entitled to the benefits under the Act.
The health department of the municipality too is held in that case to be ‘industry’—a fact which is pertinent when we deal later with hospitals, dispensaries and health centres (at p. 687 of AIR): This department looks after scavenging, sanitation, control of epidemics, control of food adulteration and running of public dispensaries. Private institutions can also render these services. It is said that the control of food adulteration and the control of epidemics cannot be done by private individuals and institutions. We do not see why. There can be private medical units to help in the control of epidemics for remuneration. Individuals may get the food articles purchased by them examined by the medical unit and take necessary action against guilty merchants. So too, they can take advantage of such a unit to prevent epidemics by having necessary inoculations and advice. This department also satisfies the other tests laid down by us, and is an industry within the meaning of the definition of ‘industry’ in the Act.
Even the General Administration Department is ‘industry’. Why? Because (at p. 689 of AIR): Every big company with different sections will have a general administration department. If the various departments collated with the department are industries, this department would also be a part of the industry. Indeed the efficient rendering of all the service would depend upon the proper working of this department, for, otherwise there would be confusion and chaos. The State Industrial Court in this case has held that all except five of the departments of the Corporation come under the definition of ‘industry’ and if so, it follows that this department, dealing predominantly with industrial department, is also an industry. Hence the employees of this department are also entitled to the benefits of this Act.
Running right through are three tests: (a) the paramount and predominant duty criterion (p. 971); (b) the specific service being an integral, non-severable part of the same activity (p. 960); and (c) the irrelevance of the statutory duty aspect. It is said that the functions of this department are statutory and no private individuals can discharge those statutory functions. The question is not whether the discharge of certain functions
Threshold Part Issues under the Industrial Disputes Act, 1947 83 by the Corporation has statutory backing, but whether those functions can equally be performed by private individuals. The provisions of the Corporation Act and the by-laws prescribe certain specifications for submission of plans and for the sanction of the authorities concerned before the building are put up. The same thing can be done by a co-operative society or a private individual. Co-operative societies and private individuals can allot lands for building houses in accordance with the conditions prescribed by law in this regard. The services of this department are therefore analogous to those of a private individual with the difference that one has the statutory sanction behind it and the other is governed by terms of contracts.
Be it noted that even cooperatives are covered by the learned judge, although we may deal with that matter a little later. The same bench decided both the Corporation of Nagpur56 case and the Hospital Mazdoor Sabha57. This latter case may be briefly considered now. It repels the profit motive and quid pro quo theory as having any bearing on the question. The wider import of Section 2(j) is accepted, but it expels essential ‘sovereign activities’ from its scope. It is necessary to note that the hospital concerned in this case was run by the government for the medical relief to the people. Nay, more: It had a substantial educational and training role. This group serves as a clinical trading group for students of the Grant Medical College which is a Government Medical College run and managed by the appellant for imparting medical sciences leading to the Degree of Bachelor of Medicine and Bachelor of Surgery of the Bombay University as well as various Post-Graduate qualifications of the said University and the College of Physicians and Surgeons, Bombay; the group is thus run and managed by the appellant to provide medical relief and to promote the health of the people of Bombay.
And yet the holding was that it was an industry. Medical education, without mincing words, is ‘industry’. This has no vulgarising import at all, since the term ‘industry’ is a technical one for the purposes of the Act, even as a masterpiece of painting is a priceless art but is ‘goods’ under the sales-tax law without any philistinic import. Law abstracts certain attributes of persons of things and assigns juridical values without any pejorative connotation about its other aspects. The Court admonishes that: Industrial adjudication has necessarily to be aware of the current of socio-economic thought ground; it must recognise that in the modern welfare State healthy industrial relations are a matter of paramount importance and its essential function is to assist the State by helping a solution of the industrial disputes which constitute a distinct and persistent phenomenon of modern industrialised States. In attempting to solve industrial disputes industrial adjudication does not and should not adopt a doctrinaire approach. It must evolve some working principles and should generally avoid formulating or adopting abstract generalisations. Nevertheless it cannot harp back to old age notions about the relations between employer and employee or to the doctrine of laissez faire which then governed the regulation of the said relations. That is why, we think in construing the wide words used in Section 2(j) it would be erroneous to attach undue importance to attributes associated with business or trade in the popular mind in days gone by.
Again, this note is reported on a later page: Isaacs, J., has uttered a note of caution that in dealing with industrial disputes industrial adjudicators must be conversant with the current knowledge on the subject and they should not ignore the constant currents of life around them for otherwise it would introduce a serious
84 Social Justice and Labour Jurisprudence infirmity in their approach. Dealing with the general characteristics of industrial enterprises the learned Judge observed that they contribute more or less to the general welfare of the community.
A conspectus of the clause has induced Gajendragadkar, J., to take note of the impact of provisions regarding the public utility service also: If the object and scope of the statute are considered there would be no difficulty in holding that the relevant words of wide import have been deliberately used by the Legislature in defining ‘industry’ in Section 2(j). The object of the Act was to make provision for the investigation and settlement of industrial disputes, and the extent and scope of its provisions would be realised if we bear in mind the definition of ‘industrial dispute’ given by Section 2(k), of ‘wages’ by Section 2(rr), ‘workman’ by Section 2(s), and of ‘employer’ by Section 2(g). Besides, the definition of a public utility service prescribed by Section 2(n) is very significant. One has merely to glance at the six categories of public utility service mentioned by Section 2(n) to realise that the rule of construction on which the appellant relies is applicable in interpreting the definition prescribed by Section 2(j).
The positive delineation of ‘industry’ is set in these terms: …as a working principle it may be stated that an activity systematically or habitually undertaken for the production or distribution of goods or for the rendering of material service to the community at large or a part of such community with the help of employees is an undertaking. Such an activity generally involves the co-operation of the employer and the employees; and its object is the satisfaction of material human needs. It must be organised or arranged in a manner in which trade or business is generally organised or arranged. It must not be casual nor must it be for oneself nor for pleasure. Thus the manner in which the activity in question is organised or arranged, the condition of the co-operation between employer and the employee necessary for its success and its object to render material service to the community can be regarded as some of the features which are distinctive of activities to which Section 2(j) applies. Judged by this test there would be no difficulty in holding that the State is carrying on an undertaking when it runs the group of hospitals in question.
Again: It is the character of the activity which decides the question as to whether the activity in question attracts the provision of Section 2(j); who conducts the activity and whether it is conducted for profit or not do not make a material difference.
By these tests, even a free or charitable hospital is an industry. That the Court intended such a conclusion is evident: If that be so, if a private citizen runs a hospital without charging any fees from the patients treated in it, it would nevertheless be an undertaking under Section 2(j). Thus the character of the activity involved in running a hospital brings the institution of the hospital within Section 2(j).
The ‘rub with the ruling’, if we may with great deference say so, begins when the Court inhibited from effectuating the logical thrust of its own crucial ratio: …though Section 2(j) uses words of very wide denotation, a line would have to be drawn in a fair and just manner so as to exclude some callings, services or undertakings. If all the words
Threshold Part Issues under the Industrial Disputes Act, 1947 85 used are given their widest meaning, all services and callings would come within the purview of the definition; even service rendered by a servant purely in a personal or domestic matter or even in a casual way would fall within the definition. It is not and cannot be suggested that in its wide sweep the word ‘service’ is intended to include service howsoever rendered in whatsoever capacity and for whatsoever reason. We must, therefore, consider where the line should be drawn and what limitations can and should be reasonably implied in interpreting the wide words used in Section 2(j); and that no doubt is a somewhat difficult problem to decide.
What is a ‘fair and just manner? It must be founded on grounds justifiable by the principles derived from the statute if it is not to be sublimation of subjective phobia, rationalisation of interests or judicialisation of non-jurists’ negatives. And this hunch, in our respectful view, has been proved true not by the positive pronouncement in the case, but by two points suggested but left open. One relates to education and the other to professions. We will deal with them in due course. Liberal Professions—When the delimiting line is drawn to whittle down a wide definition, a principled working test, not a projected wishful thought, should be sought. This conflict surfaced in the Solicitors case.58 Before us, too, a focal point of contest was whether the liberal professions are, ipso facto, excluded from ‘industry’. Two grounds were given by Gajendragadkar, J., for overruling Sri A.S.R. Chari’s submissions. The doctrine of direct cooperation and the features of liberal professions were given as good reasons to barricade professional enterprises from the militant clamour for more by lay labour. The learned judge expressed himself on the first salvational plea thus: When in the Hospital 59 case this Court referred to the organisation of the undertaking involving the co-operation of capital and labour or the employer and his employee, it obviously meant the co-operation essential and necessary for the purpose of rendering material service or for the purpose of production. It would be realised that the concept of industry postulates partnership between capital and labour or between the employer and his employees. It is under this partnership that the employer contributes his capital and the employees their labour and the joint contribution of capital and labour leads directly to the production which the industry has in view. In other words, the co-operation between capital and labour or between the employer and his employees which is treated as a working test in determining whether any activity amounts to an industry is the co-operation which is directly involved in the production of goods or in the rendering of service. It cannot be suggested that every form or aspect of human activity in which capital and labour co-operate or employer and employees assist each other is an industry. The distinguishing feature of an industry is that for the production of goods or for the rendering of service, co-operation between capital and labour or between the employer and his employees must be direct and must be essential. Co-operation to which the test refers must be co-operation between the employer and his employees which is essential for carrying out the purpose of the enterprise and the service to be rendered by the enterprise should be the direct outcome of the combined efforts of the employer and the employees.
The second reason for exoneration is qualitative: Looking at this question in a broad and general way, it is not easy to conceive that a liberal profession like that of an attorney could have been intended by the Legislature to fall within the definition of ‘industry’ under Section 2(j). The very concept of the liberal professions has its own special and distinctive features which do not readily permit the inclusion of the liberal professions into the four corners of industrial law. The essential basis of an industrial dispute is that
86 Social Justice and Labour Jurisprudence it is a dispute arising between capital and labour in enterprises where labour and capital combine to produce commodities or to render service. This essential basis would be absent in the case of liberal professions. A person following liberal profession does not carry on his profession in any intelligible sense with the active co-operation of his employees and the principal, if not the sole, capital which he brings into his profession is his special or peculiar intellectual and educational equipment. That is why on broad and general considerations which cannot be ignored, a liberal profession like that of an attorney must, we think, be deemed to be outside the definition of ‘industry’ under Section 2(j).
Let us examine these two tests. In the sophisticated, subtle, complex, assembly-line operations of modern enterprises, the tests of ‘direct’ and ‘indirect’, ‘essential’ and ‘inessential’ will snap easily. In an American automobile manufactory, everything from the shipping of iron ore into and the shipping of cars out of the vast complex takes place as myriad major and minor jobs. A million administrative, marketing and advertising tasks are done. Which, out of this maze of chores, is ‘direct’? A battle may be lost if winter wear were shoddy. Is the army’s tailor a direct contributory? An engineer may lose a competitive contract if his typist typed wrongly or shabbily or despatched late. He is a direct contributory to the disaster. No lawyer or doctor can impress client or court if his public-relations job or homework were poorly done, and that part depends on smaller men, adjuncts. Can the great talents in administration, profession, science or art shine if a secretary fades or faults? The whole theory of direct cooperation is an improvisation which with great respect, hardly impresses. Indeed, Hidayatullah, C.J., in the Gymkhana Club Employees’ Union60 case, scouted the argument about direct nexus, making specific reference to the Solicitors’61 case (at p. 560 of AIR): …The service of a solicitor was regarded as individual depending upon his personal qualifications and ability, to which employees did not contribute directly or essentially. Their contribution, it was held, had no direct or essential nexus with the advice or service. In this way learned professions were excluded.
To nail this essential nexus theory, Hidayatullah, C.J., argued (at pp. 560, 561 of AIR): What partnership can exist between the company and/or board of directors on the one hand and the menial staff employed to sweep floors on the other? What direct and essential nexus is there between such employees and production? This proves that what must be established is the existence of an industry viewed from the angle of what the employer is doing and if the definition from the angle of the employer’s occupation is satisfied, all who render service and fall within the definition of workman come within the fold of industry irrespective of what they do. There is then no need to establish a partnership as such in the production of material goods or material services. Each person doing his appointed task in an organization will be a part of the industry whether he attends to a loom or merely polishes door handles. The fact of employment as envisaged in the second part is enough provided there is an industry and the employee is workman. The learned professions are not industry not because there is absence of such partnership but because viewed from the angle of the employer’s occupation, they do not satisfy the test.
Although Gajendragadkar, J., in the Solicitors’62 case and Hidayatullah, J., in the Gymkhana63 case agreed that the learned professions must be excluded, on the question of direct or effective contribution in partnership, they flatly contradicted each other. The reasoning
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on this part of the case which has been articulated in the Gymkhana Club Employees’ Union64 (supra) appeals to us. There is no need for insistence upon the principle of partnership, the doctrine of direct nexus or the contribution of values by employees. Every employee in a professional office, be he a para-legal assistant or full-fledged professional employee or, down the ladder, a mere sweeper or janitor—everyone—makes for the success of the office, even the mali who collects flowers and places a beautiful bunch in a vase on the table spreading fragrance and pleasantness around. The failure of any one can mar even the success of everyone else. Efficient collectivity is the essence of professional success. We reject the plea that a member of a learned or liberal profession, for that sole reason, can self-exclude himself from operation of the Act. Professional immunity from labour’s demand for social justice because learned professions have a halo also stands on sandy foundations and, perhaps, validates G.B. Shaw’s witticism that all professions are conspiracies against the laity. After all, let us be realistic and recognise that we live in an age of experts, alias ‘professionals’, each having his ethics, monopoly, prestige, power and profit. The proliferation of professions is a ubiquitous phenomenon, and none but the tradition-bound will agree that theirs is not a liberal profession. Lawyers have their code. So too medics swearing by Hippocrates, chartered accountants and company secretaries, and other autonomous nidi of know-how. Sociological critics have tried to demythologise the learned professions. Perhaps they have exaggerated. Still, it is there. The politics of skill, not service of the people, is the current orientation, according to a recent book on ‘Professions for the People’: The English professions in the eighteenth century were an acceptable successor to the feudal ideal of landed property as a means of earning a living. Like landed property, a professional ‘competence’ conveniently ‘broke the direct connection between work and income...’65 for the gentryman. A professional career provided effects, aristocratic, protective coloration, and at the same time enabled one to make a considerable sum of money without sullying his hands with a ‘job’ or ‘trade’. One could carry on commerce by sleight of hand while donning the vestments of professional altruism. To boot, one could also work without appearing to drive income directly from it. As Reader explains: The whole subject of payment… seems to have caused professional men acute embarrassment, making them take refuge in elaborate concealment, fiction, and artifice. The root of the matter appears to lie in the feeling that it was not fitting for one gentleman to pay another for services rendered, particularly if the money passed directly. Hence, the device of paying a barristers’ fee to the attorney, not to the barrister himself. Hence, also the convention that in many professional dealings the matter of the fee was never openly talked about, which could be very convenient, since it precluded the client or patient from arguing about whatever sum his advisor might eventually indicate as a fitting honorarium.66 The established professions—the law, medicine, and the clergy—held (or continued to hold) estate-like positions: The three ‘liberal professions’ of the eighteenth century were the nucleus about which the professional class of the nineteenth century was to form. We have seen that they were united by the bone of classical education: that their broad and ill-defined functions covered much that later would crystallize out into new, specialised, occupations; that each, ultimately, derived much of its standing with the established order in the State…67
88 Social Justice and Labour Jurisprudence In the United States, professional associations are guilds in modern dress. Modern professional associations are organizational counterparts of the guilds. They are occupational self-interest organisations. Inasmuch as the professions still perform custom work and exercise a monopoly of training and skill, the guild analogy is plausible. However, aspects of economic history lead to a different conclusions. There has been a shift of emphasis on the part of professionals from control over the quality of the product or service, to control of price. Indeed, in America, professionals advertise, hold a strict monopoly, charge heavy fees and wear humanitarianism as an altruist mask. In England a Royal Commission has been appointed to go into certain aspects of the working of the legal profession. The Observer, in a leading article ‘WIGS ON THE GREEN’ dated 15 February 1976, wrote: In preparing for the challenge of a Royal Commission, lawyers ought to realise how deep public disillusionment goes, how the faults of the legal system are magnified by the feeling that the legal profession is the most powerful pressure group—some would say a mutual protection society—in the land, with its loyal adherents in Westminister, Whitehall, and on the Bench, like a great freemasonry designed to protect the statute quo. **** It robs the client of the benefits of free competition among barristers for his custom. It confirms his impression that Her Majesty’s courts, which he rightly regards as part of the service the State offers to all its citizens, are a private benefit society for lawyers. **** The fees that lawyers are paid, and the services that they give in return, must also be studied. A recent survey suggested that in one criminal court 79 per cent of barristers in contested cases and 96 per cent in uncontested cases saw their clients only on the morning of the hearing. How much is that worth? **** ....For Britain at present has a legal system which often looks as anachronistic as its wigs and gowns, a system in which solicitors are plentiful in well-to-do areas, and inaccessible in less fashionable districts; in which the law appears suited only to the property rights of the middle class, but oblivious of the new problems of poorer and less well-educated people, who need help with their broken marriages or their landlord-and-tenant disputes. Sooner rather than later, the legal system must be made to appear less like a bastion of privilege, more like a defender of us all. The American Medical Association has come in for sharp social criticism and litigative challenge. Which architect, engineer or auditor has the art to make huts, landscape little villages or bother about small units? And which auditor and company secretary has not been pressured to break with morals by big business? Our listening posts are raw life.
The Indian Bar and Medicine have a high social ethic upto now. Even so, the Dabholkar68 case cannot be ignored as freak or recondite. Doctors have been criticised for unsocial conduct. The halo conjured up in the Solicitors’69 case hardly serves to ‘de-industrialise’ the professions. After all, it is not infra dig for lawyers, doctors, engineers, architects, auditors, company secretaries or other professionals to regard themselves as workers in their own sphere or as employers or suppliers of specialised service to society. Even justicing is service and, but for the exclusion from industry on the score of sovereign functions, might qualify for being regarded as ‘industry’. The plea of ‘profession’ is irrelevant for industrial law except as an expression of anathema. No legal principle supports it.
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Speaking generally, the authors of the book ‘Professions for the People’ earlier mentioned state: Jethro K. Lisberman (1970, p. 3) warns: ‘Professionals are dividing the world into spheres of influence and erecting large signs saying “experts at work here, do not proceed further”.’ He shows that via such mechanisms as licensing, self-regulation, and political pressure the professions are augmenting the erosion of democracy. Professional turf is now ratified by the rule of law. If there is the case, it represents a significant development; the division of labour in society is again moving towards the legalization of social status quo occupational roles.
All this adds up to the decanonisation of the noble professions. Assuming that a professional, in our egalitarian ethos, is like any other man of common clay plying a trade or business, we cannot assent to the cult of the elite in carving out islands of exception to ‘industry’. The more serious argument of exclusion urged to keep the professions out of the coils of industrial disputes and the employees’ demands backed by agitations ‘red in tooth and claw’ is a sublimated version of the same argument. Professional expertise and excellence, with its occupational autonomy, ideology, learning, bearing and morality, holds aloft a standard of service which centres around the individual doctor, lawyer, teacher or auditor. This reputation and quality of special service being of the essence, the cooperation of the workmen in this core activity of professional offices is absent. The clerk and stenos, the bell-boys and doormen, the sweepers and menials have no art or part in the soul of professional functions, with its higher code of ethics and intellectual proficiency, their contribution being peripheral and low-grade, with no relevance to clients’ wants and requirements. This conventional model is open to the sociological criticism that it is an ideological cloak conjured up by highborns, a posture of noblesse oblige which is incongruous with raw life, especially in the democratic Third World and post-Industrial societies. To hug the past is to materialise the ghost. The paradigms of professionalism are gone. In the large solicitors’ firms, architects’ offices, medical polyclinics and surgeries, we find a humming industry, each section doing its work with its special flavour and culture and code, and making the end product worth its price. In a regular factory, you have highly skilled technicians whose talent is of the essence, managers whose ability organises and workmen whose coordinated input is from one angle secondary, from another significant. Let us look at a surgery or walk into a realtor’s firm. What physician or surgeon will not kill if an attendant errs or a clerk enters wrong or dispenses deadly dose? One such disaster somewhere in the assembly-line operations and the clientele will be scared despite the doctor’s distalled skill. The lawyer is no better and just cannot function without the specialised supportive tools of para-professionals like secretaries, librarians and law-knowing steno-typists, even the messengers and telephone girls. The mystique of professionalism easily melts in the hands of modern social scientists who have—as Watergate has shown in America (and has India had its counterparts?)—debunked and stripped the professional emperor naked. ‘Altruism’ has been exposed, cash has overcome craft nexus, and if professionalism is a mundane ideology, then ‘profession’ and ‘professional’ are sociological contributions to the pile. Anyway, in the sophisticated organisation of expert services, all occupations have central skills, an occupational code of ethics, a group culture, some occupational authority, and
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some permission to monopoly practice from the community. This incisive approach makes it difficult to ‘caste-ify’ or ‘class-ify’ the liberal professions as part and beyond the pale of ‘industry’ in our democracy. We mean no disrespect to the members of the professions. Even the judicial profession or administrative profession cannot escape the winds of social change. We may add that the modern world, particularly the Third World, can hope for a human tomorrow only through professions for the people, through expertise at the service of the millions. Indian primitivism can be banished only by pro bono publico professions in the field of law, medicine, education, engineering and what not. But that radicalism does not detract from the thesis that ‘industry’ does not spare professionals.... We see no rationale in the claim to carve out islets. Look: A solicitor’s firm or a lawyer’s firm becomes successful not merely by the talent of a single lawyer but the cooperative operations of several specialists, juniors and seniors. Likewise, the ancillary services of competent stenographers para-legal supportive services are equally important. The same test applies to other professions. The conclusion is inevitable that contribution to the success of the institution—every professional unit has an institutional goodwill and reputation—comes not merely from the professional or specialist but from all those whose excellence in their respective parts makes for the total proficiency. We have, therefore, no doubt that the claim for exclusion on the score of liberal professions is unwarranted from a functional and definitional angle. The floodgates of exemption from the obligations under the Act will be opened if professions flow out of its scope. Many callings may clamour to be regarded as liberal professions. In an age when traditions have broken down and the Old World professions of liberal descent have begun to resort to commercial practices (even legally, as in America, or factually, as in some other countries), exclusion under this new label will be infliction of injury on the statutory intent and effect. The result of this discussion is that the Solicitors’70 case is wrongly decided and must, therefore, be overruled. We must hasten, however, to repeat that a small category, perhaps large in numbers in the mofussil, may not squarely fall within the definition of ‘industry’. A single lawyer, a rural medical practitioner or urban doctor with a little assistant and/or menial servant may ply a profession but may not be said to run an industry. That is not because the employee does not make a contribution nor because the profession is too ‘high’ to be classified as a trade or industry, with its commercial connotations, but because there is nothing like organised labour in such employment. The image of industry or even quasi-industry is one of a plurality of workmen, not an isolated or single little assistant or attendant. The latter category is more or less like a personal avocation for livelihood, taking some paid or part time for another. The whole purpose of the Industrial Disputes Act is to focus on resolution of industrial disputes and regulation of industrial relations, and not to meddle with every little carpenter in a village or blacksmith in a town who sits with his son or assistant to work for the customers who trek in. The ordinary spectacle of a cobbler and his assistant or a cycle repairer with a helper we come across on the pavements of cities and towns repels the idea of industry and industrial dispute. For this reason, which applies all along the line—to small professions, petty handicraftsmen, domestic servants and the like—the solicitor or doctor or rural engineer, even like the butcher, the baker and the candlestick maker, with an assistant or without, does not fall within the definition of ‘industry’. In regular industries, of course, even a few employees are enough to bring them within Section 2(j). Otherwise automated indus-tries will slip through the net.
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Is Education an Industry? We will now move on to a consideration of education as an industry. If the triple tests of systematic activity, cooperation between employer and employee, and production of goods and services were alone to be applied, a university, a college, a research institute or any teaching institution will be industry. But in the University of Delhi71 case, it was held that the Industrial Tribunal was wrong in regarding the University as an industry because it would be inappropriate to describe education as an industrial activity. Gajendragadkar, J., agreed in his judgement that the employer–employee test was satisfied and that cooperation between the two was also present. Undoubtedly, education is a sublime cultural service, technological training and personality builder. A human being without education is a brute and nobody can quarrel with the proposition that education, in its spectrum, is significant service to the community. We have already given extracts from the rulings of the Australian judge Isaacs, J., to substantiate the thesis that education is not merely industry, but the mother of industries. A philistinic, illiterate society will be not merely uncivilised but incapable of industrialisation. Nevertheless, Gajendragadkar, J., observed: It would, no doubt, sound somewhat strange that education should be described as industry and the teachers as workmen within the meaning of the Act, but if the literal construction for which the respondents content is accepted, that consequence must follow.
Why is it strange to regard education as an industry? Its respectability? Its lofty character? Its professional stamp? Its cloistered virtue which cannot be spoilt by the commercial implications and the raucous voices of workmen? Two reasons are given to avoid the conclusion that imparting of education is an industry. The first ground relied on by the Court, is based upon the preliminary conclusion that teachers are not ‘workmen’ by definition. Perhaps they are not, because teachers do not do manual work or technical work. We are not too sure whether it is proper to disregard, with contempt, manual work and separate it from education; nor are we too sure whether, in our technological universe, education has to be excluded. However, that may be a battle to be waged on a later occasion by litigation, and we do not propose to pronounce on it at present. The Court, in the University of Delhi72 case, proceeded on the assumption viz. teachers are not workmen—which we will adopt to test the validity of the argument. The reasoning of the Court is best expressed in the words of Gajendragadkar, J.: It is common ground that teachers employed by educational institutions, whether the said institutions are imparting primary, secondary, collegiate or post-graduate education, are not workmen under Section 2(s), and so, it follows that the whole body of employees with whose co-operation the work of imparting education is carried on by educational institutions do not fall within the purview of Section 2(s), and any disputes between them and the institutions which employed them are outside the scope of the Act. In other words, if imparting education is an industry under Section 2(j), the bulk of the employees being outside the purview of the Act, the only disputes which can fall within the scope of the Act are those which arise between such institutions and their subordinate staff, the members of which may fall under Section 2(s). In our opinion, having regard to the fact that the work of education is primarily and exclusively carried on with the assistance of the labour and co-operation of teachers, the omission of the whole class of teachers from the definition prescribed by Section 2(s) has an important bearing and
92 Social Justice and Labour Jurisprudence significance in relation to the problem which we are considering. It would not have been the policy of the Act that education should be treated as industry for the benefit of a very minor and insignificant number of persons who may be employed by educational institutions to carry on the duties of the subordinate staff. Reading Sections 2(g), (j) and (s) together, we are inclined to hold that the work of education carried on by educational institutions like the University of Delhi is not an industry within the meaning of the Act.
The second argument which appealed to the Court to reach its conclusion is this: The distinctive purpose and object of education would make it very difficult to assimilate it to the position of any trade, business or calling or service within the meaning of Section 2(j).
Why so? The answer is given by the learned judge himself: Education seeks to build up the personality of the pupil by assisting his physical, intellectual, moral and emotional development. To speak of this educational process in terms of industry sounds so completely incongruous that one is not surprised that the Act has deliberately so defined workman under Section 2(s) as to exclude teachers from its scope. Under the sense of values recognised both by the traditional and conservative as well as the modern and progressive social outlook, teaching and teachers are, no doubt, assigned a high place of honour and it is obviously necessary and desirable that teaching and teachers should receive the respect that is due to them. A proper sense of values would naturally hold teaching and teachers in high esteem, though power or wealth may not be associated with them. It cannot be denied that the concept of social justice is wide enough to include teaching and teachers, and the requirement that teachers should receive proper emoluments and other amenities which is essentially based on social justice cannot be disputed; but the effect of excluding teachers from Section 2(s) is only this, that the remedy available for the betterment of their financial prospects does not fall under the Act. It is well-known that Education Departments of the State Governments as well as the Union Government, and the University Grants Commission carefully consider this problem and assist the teachers by requiring the payment to them of proper scales of pay and by insisting on the fixation of other reasonable terms and conditions of service in regard to teachers engaged in primary and secondary education and collegiate education which fall under their respective jurisdictions. The position nevertheless is clear that any problems connected with teachers and their salaries are outside the purview of the Act, and since the teachers from the sole class of employees with whose co-operation education is imparted by educational institutions, their exclusion from the purview of the Act necessarily corroborates the conclusion that education itself is not within its scope.
Another reason has also been adduced to reinforce this conclusion: It is well-known that the University of Delhi and most other educational institutions are not formed or conducted for making profit; no doubt, the absence of profit motive would not take the work of any institution outside Section 2(j) if the requirements of the said definition are otherwise satisfied. We have referred to the absence of profit motive only to emphasize the fact that the work undertaken by such educational institutions differs from the normal concept of trade or business. Indeed, from a rational point of view, it would be regarded as inappropriate to describe education even as a profession. Education in its true aspect is more a mission and a vocation rather than a profession or trade or business, however wide may be the denotation of the two latter words under the Act. That is why we think it would be unreasonable to hold that educational institutions are employers within the meaning of Section 2(g), or that the work of
Threshold Part Issues under the Industrial Disputes Act, 1947 93 teaching carried on by them is an industry under Section 2(j), because essentially, the creation of a well-educated healthy young generation imbued with a rational progressive outlook on life which is the sole aim of education, cannot at all be compared or assimilated with what may be described as an industrial process.
The Court was confronted by the Corporation of Nagpur73 case, where it had been expressly held that the education department of the Corporation was service rendered by the department and so the subordinate menial employees of the department came under the definition of ‘employees’ and would be entitled to the benefits of the Act. This was explained away by the suggestion that: the question as to whether educational work carried on by educational institutions like the University of Delhi which have been formed primarily and solely for the purpose of imparting education amounts to an industry within the meaning of Section 2(j) was not argued before the Court and was not really raised in that form.
We dissent, with utmost deference, these propositions and are inclined to hold, as the Corporation of Nagpur74 held, that education is ‘industry’, and as Isaacs, J., held in the Australian case75 that education is pre-eminently service. The actual decision in the University of Delhi76 case was supported by another ground, namely that the predominant activity of the University was teaching and since teachers did not come within the purview of the Act, only the incidental activity of the subordinate staff could fall within its scope but that could not alter the predominant character of the institution. We may deal with these contentions in a brief way, since the substantial grounds on which we reject the reasoning have already been set out elaborately. First, the premises relied on is that the bulk of the employees in the University is the teaching community: teachers are not ‘workmen’ and cannot raise disputes under the Act; the subordinate staff being only a minor category of insignificant numbers, the institution must be excluded, going by the ‘predominant character’ test. It is one thing to say that an institution is not an industry. It is altogether another thing to say that a large number of its employees are not ‘workmen’ and cannot therefore avail of the benefits of the Act, and so the institution ceases to be an industry. The test is not the predominant number of employees entitled to enjoy the benefits of the Act. The true test is the predominant nature of the activity. In the case of the University or an educational institution, the nature of the activity is—ex hypothesi—education, which is a service to the community. Ergo, the university is an industry. The error has crept in, if we may say so with great respect, in mixing up the numerical strength of the personnel with the nature of the activity. Secondly, there are a number of other activities of the University administration demonstrably industrial, which are severable although ancillary to the main cultural enterprise. For instance, a university may have a large printing press as a separate but considerable establishment. It may have a large fleet of transport buses with an army of running staff. It may have a tremendous administrative strength of officers and clerical cadres. It may have karmcharis of various use. As the Corporation of Nagpur77 case has effectively ruled, these operations—viewed in severality or collectively—may be treated as ‘industry’. It would be strange, indeed, if a university has 50 transport buses, hiring drivers, conductors, cleaners and the workshop technicians. How are they to be denied the benefits of the Act, especially when their work is separable from academic teaching, merely because
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the buses are owned by the same corporate personality? We find, with all deference, little force in this process of nullification of the industrial character of the University’s multi-form operations. The next argument which has appealed to the Court in the case is that education develops the personality of the pupil and this process, if described as industry, sounds grotesque. We are unable to appreciate the force of this reasoning, if we may respectfully say so. It is true that our societal values assign a high place of honour to education, but how does it follow from this that education is not a service? The sequitur is not easily discernible. The pejorative assumption seems to be that ‘industry’ is something vulgar, inferior, disparaging, and should not be allowed to sully the sanctified subject of education. In our view, ‘industry’ is a noble term and embraces even the most sublime activity. At any rate, in legal terminology located in the statutory definition, it is not money-making, it is not lucre-loving, it is not commercialising, it is not profit hunger. On the other hand, a team of painters who produce works of art and sell them or a travelling orchestra group that travels and performs and makes money may be an industry if they employ supportive staff of artistes or others. There is no degrading touch about ‘industry’, especially in the light of Mahatma Gandhi’s dictum that ‘work is worship’. Indeed, the colonial system of education, which divorced book learning from manual work and practical training, has been responsible for the calamities in the field. Gandhiji and Dr Zakir Hussain propagated basic education that used work as a modus operandus for teaching. We have hardly any hesitation in regarding education as an industry. The final ground accepted by the Court is that education is a mission and vocation rather than a profession or trade or business. The most that one can say is that this is an assertion which does not prove itself. Indeed, all life is a mission and a man without a mission is spiritually still-born. The high mission of life is the manifestation of the divinity already in man. To christen education as a mission, even if true, is not to negate its being an industry. We have to look at educational activity from the angle of the Act; and so viewed, the ingredients of education are fulfilled. Education is, therefore, an in-dustry and nothing can stand in the way of that conclusion. It may well be said by realists in the cultural field that educational managements depend so much on governmental support and some of them charge such high fees that schools have become a trade and managers merchants. Whether this will apply to universities or not, schools and colleges have been accused, at least in the private sector, of being tarnished with trade motives. Let us trade romantics for realities and see. With evening classes, correspondence courses, admissions unlimited, fees and government grants escalating, and certificates and degrees for prices, education—legal, medical, technological, school-level or collegiate education—is riskless trade for cultural entrepreneurs and haplessness of campus (‘industrial’) unrest. Imaginary assumptions are experiments with untruth. Our conclusion is that the University of Delhi78 case was wrongly decided and that education can be and is, in its institutional form, an industry.
Are Charitable Institutions Industries? Can charity be ‘industry’? This paradox can be unlocked only by examining the nature of the activity of the charity, for there are charities and charities. The grammar of labour law
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in a pluralist society tells us that the worker is concerned with wages and conditions of service, the employer with output and economies, and the community with peace, production and stream of supply. This complex of work, wealth and happiness, firmly grasped, will dissolve the dilemma of the law bearing on charitable enterprises. Charity is free; industry is business. Then how? A lay look may scare; a legal look will see; a social look will see through a hiatus inevitable in a sophisticated society with organisational diversity and motivational dexterity. If we mull over the major decisions we get a hang of the basic structure of ‘industry’ in its legal anatomy. Bedrocked on the ground norms, we must analyse the elements of charitable economic enterprises established and maintained for satisfying human wants. Easily three broad categories emerge; more may exist. The charitable element enlivens the operations at different levels in these patterns and the legal consequences are different, viewed from the angle of ‘industry’. For income-tax purposes, Trusts Act or company law or registration law or penal code requirements the examination will be different. We are concerned with a benignant disposition towards workmen and a trichotomy of charitable enterprises run for producing and/or supplying goods and services, organised systematically and employing workmen, is scientific. The first is one where the enterprise, like any other, yields profits but they are siphoned off for altruistic objects. The second is one where the institution makes no profit, but hires the services of employees as in other like businesses; but the goods and services, which are the output, are made available at low or no cost to the indigent needy who are priced out of the market. The third is where the establishment is oriented on a humane mission fulfilled by men who work not because they are paid wages, but because they share a passion for the cause and derive job satisfaction from their contribution. The first two are industries, the third not. What is the test of identity whereby these institutions with eleemosynary inspiration fall or do not fall under the definition of ‘industry’? All industries are organised, systematic activity. Charitable adventures which do not possess this feature, of course, are not industries. Sporadic or fugitive strokes of charity do not become industries. All three philanthropic entities we have itemised fall for consideration only if they involve cooperation between employers and employees to produce and/or supply goods and/or services. We assume, all three do. The crucial difference is over the presence of charity in the quasi-business nature of the activity. Shri Tarkunde, based on the Safdarjung79 case, submits that, ex hypothesi, charity frustrates commerciality and thereby deprives it of the character of industry. It is common ground that the first category of charities is disqualified for exemption. If a business is run for production and/or the supply of goods and services with an eye to profit, it is plainly an industry. The fact that the whole or substantial part of the profits so earned are diverted for purely charitable purposes does not affect the nature of the economic activity, which involves the cooperation of employer and employee and results in the production of goods and services. The workers are not concerned about the destination of the profits. They work and receive wages. They are treated like any other workmen in any like industry. All the features of an industry, as spelt out from the definition by the decisions of this Court, are fully present in these charitable businesses. In short, they are industries. The application of the income for philanthropic purposes, instead of filling private coffers, makes no difference either to the employees or to the character of the activities. Good Samaritans can be clever industrialists.
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The second species of charity is really an allotropic modification of the first. If a kindhearted businessman or a high-minded industrialist or service-minded operator hires employees like his non-philanthropic counterparts and, in cooperation with them, produces and supplies goods or services to the lowly and the lost, the needy and the ailing, without charging them any price or receiving a negligible return, people regard him as of charitable disposition and his enterprise as a charity. But then, so far as the workmen are concerned, it boots little whether he makes available the products free to the poor. They contribute labour in return for wages and conditions of service. For them, the charitable employer is exactly like a commercial-minded employer. Both exact hard work. Both pay similar wages. Both treat them as human machine cogs and nothing more. The material difference between the commercial and the compassionate employers is not with reference to the workmen but with reference to the recipients of goods and services. Charity operates not vis-à-vis the workmen, in which case they will be paying a liberal wage and generous extras with no prospect of strike. The beneficiaries of the employer’s charity are the indigent consumers. Industrial law does not take note of such extraneous factors but regulates industrial relations between employers and employers, employers and workmen, and workmen and workmen. From the point of view of the workmen, there is no charity. For them, charity must begin at home. From these strands of thought flows the conclusion that the second group may legitimately and legally be described as ‘industry’. The fallacy in the contrary contention lies in shifting the focus from the worker and the industrial activity to the disposal of the end product. This law has nothing to do with that. The income-tax law may have, social opinion may have. Some of the appellants may fall under the second category just described. While we are not investigating into the merits of those appeals, we may as well indicate in a general way that the Gandhi Ashram, which employs workers like spinners and weavers and supplies cloth or other handicrafts at concessional rates to needy rural consumers, may not qualify for exemption. Even so, particular incidents may have to be closely probed before pronouncing with precision upon the nature of the activity. If cotton or yarn is given free to workers, if charkhas are made available free for families, if fair price is paid for the net product and substantial charity thus benefits the spinners, weavers and other handicraftmen, one may have to again look closely into the character of the enterprise. If employees are hired and their services are rewarded by wages—whether on a cottage industry or a factory basis—the enterprises become industries, even if some kind of concession is shown and even if the motive and project may be to encourage and help poor families and find them employment. A compassionate industrialist is nevertheless an industrialist. However, if raw material is made available free and the finished product is fully paid for—rather exceptional to imagine—the conclusion may be hesitant but for the fact that the integrated administrative, purchase, marketing, advertising and other functions are like in trade and business. This makes them industries. Noble objectives, pious purposes, spiritual foundations and developmental projects are no reason not to implicate these institutions as industries. We now move on to economic activities and occupations of an altruistic character falling under the third category. The heart of trade or business or analogous activity is organisation with an eye on competitive efficiency by hiring employees, systematising processes, producing goods and services needed by the community and obtaining the money’s worth of work from the employees. If such be the nature of operations and employer—employee relations which
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make an enterprise an industry, the motivation of the employer in the final disposal of products or profits is immaterial. Indeed, the activity is patterned on a commercial basis, judging by what other similar undertakings and commercial ventures do. To qualify for exemption from the definition of ‘industry’ in a case where there are employers and employees, and systematic activities and production of goods and services, we need a totally different orientation, organisation and method which will stamp on the enterprise the imprint of commerciality. Special emphasis, in such cases, must be placed on the central fact of employer–employee relations. If a philanthropic devotion is the basis for the charitable foundation or establishment, the institution is headed by one who whole-heartedly dedicates himself to the mission and pursues it with passion, attracts others into the institution not for wages but for sharing in the cause and its fulfilment, then the undertaking is not ‘industrial’. Not that the presence of a charitable impulse extricates the institution from the definition in Section 2(j), but that there is no economic relationship such as is found in trade or business between the head who employs and the others who emotively flock to render service. In one sense, there are no employers and employees, but crusaders all. In another sense, there is no wage basis for the employment but voluntary participation in the production, inspired by lofty ideals and unmindful of remuneration, service conditions and the like. Supposing there is an Ashram or Order with a guru or other head. Let us further assume that there is a band of disciples, devotees or priestly subordinates in the Order, gathered together for prayers, ascetic practices, bhajans, meditation and worship. Supposing further that outsiders are also invited, daily or occasionally, to share in the spiritual proceedings. And let us assume that all the inmates of the Ashram and members of the Order, invitees, guests and other outside participants are fed, accommodated and looked after by the institution. In such a case, as often happens, the cooking and the cleaning, the bed-making and service may often be done, at least substantially, by the Ashramites themselves. They may chant in spiritual ecstasy even as material goods and services are made and served. They may affectionately look after the guests and all this they may do not for wages but for the chance to propitiate the Master, work selflessly and acquire spiritual grace. It may well be that they may have surrendered their lucrative employment to come into the holy institution. It may also be that they take some small pocket money from the donations or takings of the institution. Nay, more: there may be a few scavengers and servants, a part-time auditor or accountant employed on wages. If the substantial number of participants, in making available goods and services, if the substantive nature of the work, as distinguished from trivial items, is rendered by voluntary wageless sishyas, it is impossible to designate the institution as an industry, notwithstanding a marginal few who are employed on a regular basis for hire. The reason is that in the crucial, substantial and substantive aspects of institutional life, the nature of the relations between the participants is non-industrial. Perhaps when Mahatma Gandhi lived in Sabarmati and Aurobindo had his hallowed silence in Pondicherry, the inmates belonged to this chastened brand. Even now, in many foundations, centres, monasteries, holy orders and Ashrams in the East and in the West, spiritual fascination pulls men and women into the precincts and they work tirelessly for the Maharishi or Yogi or Swamiji, and are not wage-earners in any sense of the term. Such people are not workmen and such institutions are not industries despite some menials and some professionals in a vast complex being hired. We must look at the predominant
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character of the institution and the nature of the relations resulting in the production of goods and services. Stray wage-earning employees do not shape the soul of an institution into an industry. It now remains to make a brief survey of the precedents on this point. One case that is germane to the issue is that of the Bombay Panjarapole.80 A bench of this Court considered the earlier case law, including the decisions of the High Courts, bearing on humane activities for the benefit of sick animals. Let there be no doubt that kindness to our dumb brethren, especially invalids, springs from the highest motives of fellow feeling. In the land of the Buddha and Gandhi, no one dare argue to the contrary. So let there be no mistaking our compassionate attitude to suffering creatures. It is laudable and institutions dedicated to the amelioration of the conditions of animals deserve encouragement from the State and affluent philanthropists. But these considerations have no bearing on the crucial factors which invoke the application of the definition in the Act as already set out elaborately by us. ‘The manner in which the activity in question is organised or arranged, the condition of the co-operation between the employer and the employee necessary for its success and its object to render material service to the community’ is a pivotal factor in the activityoriented test of an ‘industry’. The compassionate motive and the charitable inspiration are noble but extraneous. Indeed, medical relief for human beings made available gratis by regular hospitals, run by the government or by philanthropists, employing doctors and supportive staff on business-like terms may not qualify for exemption from ‘industry’. Service to animals cannot be on a higher footing than service to humans. Nor is it possible to contend that love of animals is religious or spiritual any more than the love of human beings is. A panjarapole is no church, mosque or temple. Therefore, without going into the dairying aspects or the income and expenditure and other features of the Bombay Panjarapole,81 one may hold that the institution is an industry. After all, the employees are engaged on ordinary economic terms and with conditions of service as in other business institutions, and the activities also have organisational comparability to the other profit-making dairies of panjarapoles. What is different is the charitable object. What is common is the nature of the employer–employee relations. The conclusion, notwithstanding the humanitarian overtones, is that such organisations are also industries. Of course, in the Bombay Panjarapole82 case, the same conclusion was reached but on different and, to some extent, faulty reasoning. For the assumption in the judgement of Mitter, J., was that if the income were mostly from donations and the treatment of animals were free, perhaps such charity, be it a hospital for humans or animals, may not be an ‘industry’. We agree with the holding, not because panjarapoles have commercial motives but because, despite compassionate objectives, they share a business-like orientation and operation. In this view, Section 2(j) applies.
Is a Research Institution an Industry? We may proceed now to consider the applicability of Section 2(j) to institutions whose objectives and activities cover the research field in a significant way. This has been the bone of contention in a few cases in the past and is one of the appeals argued at considerable length and with considerable force by Shri Tarkunde, who has presented a panoramic view of the entire subject in his detailed submissions. An earlier decision of this Court in The Ahmedabad Textile Industries Research Association83 case has taken the view that even research institutes are roped in by definition, but later judicial thinking at the High Court
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and Supreme Court levels has leaned more in favour of exemption where a profit motive has been absent. The Kurji Holy Family Hospital was held not to be an industry because it was a non profit-making body and its work was in the nature of training, research and treatment.84 Likewise in Dhanrajgirji Hospital vs Workmen,85 a bench of this Court held that the charitable trust that ran the hospital and served research purposes and training of nurses was not an industry. The High Courts of Madras and Kerala have also held that research institutes such as the Pasteur Institute, the CSIR and the Central Plantation Crops Research Institute are not industries. The basic decision which has gone against the Ahmedabad Textile86 case is the Safdarjung87 case. We may briefly examine the rival viewpoints, although in substance we have already stated the correct principle. The view that commends itself to us is plainly in reversal of the ratio of the Safdarjung88 case, which has been wrongly decided, if we may say so with great respect. Does research involve collaboration between employer and employee? It does. The employer is the institution; the employees are the scientists, para-scientists and other personnel. Is scientific research ‘service’? Undoubtedly it is. Its discoveries are valuable contributions to the wealth of the nation. Such discoveries may be sold for a heavy price in the industrial or other markets. Technology has to be paid for and technological inventions and innovations may be patented and sold. In our scientific and technological age, nothing has more cash value—as intangible goods and invaluable services—than discoveries. For instance, the discoveries of Thomas Alva Edison made him fabulously rich. It has been said that his brain had the highest cash value in history for he made the world vibrate with the miraculous discovery of recorded sound. Unlike most inventors, he did not have to wait to get his reward in Heaven; he received it munificently on this gratified and grateful earth, thanks to the conversion of his inventions into money aplenty. Research benefits industry: Even though a research institute may be a separate entity, disconnected from the many industries that founded the institute itself, it can be regarded as an organisation propelled by systematic activity, modelled on cooperation between employer and employee, and calculated to throw up discoveries and inventions and useful solutions which benefit individual industries and the nation in terms of goods and services and wealth. It follows that research institutes, albeit run without a profit motive, are industries. True, Shri Tarkunde is right—if the Safdarjung89 case is rightly decided. The concluding portions of his decision proceeded on the footing that research and training have an exclusionary effect. That reasoning, as we have already expounded, hardly has our approval.
Are Clubs Industries? The wide words used in Section 2(f ), if applied without rational limitations, may cover every bilateral activity—even spiritual, religious, domestic, conjugal, pleasurable and political. But functional circumscription springs from the subject matter and other cognate considerations already set out early in this judgement. Industrial law—any law—may insanely run amok if limitless lexical liberality were to inflate expressions into bursting point or proliferate odd judicial arrows that, at random sent, hit many an irrelevant mark the legislative archer never meant. To read down words to yield relevant sense is a Pragmatic art, if care is taken to eschew subjective projections masked as judicial processes. The true test, as we apprehend from the economic history and functional philosophy of the Act, is based on the pathology of industrial friction and explosion, impeding community production and consumption and imperilling peace and welfare. This social pathology
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arises from the exploitative potential latent in organised employer–employee relations. So where the dichotomy of employer and workmen in the process of material production is present, the service of economic friction and need for conflict resolution show up. The Act is meant to obviate such confrontation, and ‘industry’ cannot functionally and nonfunctionally exceed this object. The question then is whether in a club situation—or a cooperative or even a monastery situation, for that matter—a dispute potential of the nature suggested exists. If it does, it is an industry, since the basic elements are satisfied. If productive cooperation between employer and employee is necessary, conflict between them is on the cards, be it a social club, mutual-benefit society, pinjarapole, public service or professional office. Tested on this touchstone, most clubs will fail to qualify for exemption. For clubs—gentlemen’s clubs, Proprietary clubs, service clubs, investment clubs, sports clubs, art clubs, military clubs or other brands of recreational association—when X-rayed from the industrial angle, project a picture on the screen typical of employers hiring employees for wages for rendering services and/or supplying goods on a systematic basis at specified hours. There is a cooperation: the club management providing the capital, the raw material, the appliances and auxiliaries, and the cooks, waiters, bell-boys, pickers, barmaids or other servants making available enjoyable eats, pleasures and other permissible services for the price paid by way of subscriptions or bills charged. The club life, the warm company, the enrichment of the spirits and the freshening of the mind are there. But these blessings do not contradict the coexistence of an ‘industry’ in the technical sense. Even tea tasters hired for high wages or commercial art troupes and games teams remunerated fantastically enjoy company, taste, travel and games; but, elementally, they are workmen with employers above and together constitute not merely entertainment groups but industries under the Act. The protean hues of human organisation project delightfully different designs, depending upon the legal prism and the filtering process used. No one can deny the cultural value of club life; neither can anyone blink at the legal result of the organisation. The only ground to extricate clubs from the coils of industrial law (except a specific statutory provision) is absence of employer–employee cooperation on the familiar luring– firing pattern. Before we explain this possible exemption—and it applies to many clubs at the poorer levels of society—we must meet another submission made by counsel. Clubs are exclusive: they cater to the needs and pleasures of their members, not of the community as such, and this latter feature salvages them from the clutches of industrial regulation. We do not agree. Clubs are open to the public for membership, subject to their own bye-laws and rules. But any member of the community complying with those conditions and waiting for his turn has a reasonable chance of membership. Even the world’s summit club—the United Nations—has cosmic membership subject to vetoes, qualifications, voting and what not. What we mean is that a club is not a limited partnership, but is formed from the community. Moreover, even the most exclusive clubs of imperial vintage and class snobbery admit members’ guests who are not specific souls but come from the undiffused community or part of a community. Clubs, speaking generally, are social institutions enlivening community life and are the fresh breath of relaxation in a faded society. They serve a section of it and answer the doubtful test of serving the community. They are industry. We have adverted to a possible category of clubs and associations which may swim out of the industrial pool—we mean self-serving clubs, societies, groups or associations. Less
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fashionable but more numerous in a poor, populous, culturally hungry country with democratic urges and youthful vigour is this species. Lest there should be a rush by the clubs we have considered and dismissed to get into this proletarian brood, if we may so describe them to identify, not at all to be pejorative, we must elucidate. It is a common phenomenon in parts of our country that workers, harijans, student youth at the lower rungs of the socio-economic ladder, weaker sections such as women and low-income groups quench their cultural thirst by forming gregarious organisations mainly for recreation. A few books and magazines, a manuscript house magazine contributed by and circulated among members, a football or volleyball game in the evenings— not golf, billiards or other expensive games—a music or drama group, an annual day, a competition and pretty little prizes, family get-togethers and even organising occasional meetings inviting VIPs—these tiny yet lucent cultural bulls dot our proletarian cheerlessness. And these hopeful organisms, if fostered, give a mass spread for our national awakening for those for whom no developmental bells yet toll. Even these people’s organs cannot be non-industries unless one strict condition is fulfilled. They should be—and usually are—self-serving. They are poor men’s clubs without the wherewithal of a Gymkhana90 or C.C.I. (Cricket Club of India),91 which reached the Supreme Court for adjudication. Indeed, they rarely reach a court, being easily priced out of our expensive judicial market. These self-service clubs do not have hired employees to cook or serve, to pick or chase balls, to tie up nets or arrange the cards table, the billiards table, the bar and the bath, or do those elaborate business management chores of the well-run city or country clubs. The members come and arrange things for themselves. The secretary, an elected member, keeps the key. Those interested in particular pursuits organise those terms themselves. Even the small accounts or clerical items are maintained by one member or other. On special evenings, all contribute efforts to make a good show, excursion, joy picnic or anniversary celebration. The dynamic aspect is self-service. In such an institution, a part-time sweeper or scavenger or multi-purpose attendant may sometimes exist. He may be an employee. This marginal element does not transform a little association into an industry, however. We have projected an imprecise profile and there may be minor variations. The central thrust of our proposition is that if a club or other like collectivity has a basic and dominant self-service mechanism, a modicum of employees at the periphery will not metamorphose it into a conventional club whose verve and virtue are taken care of by paid staff and where the members’ role is to only enjoy. These lesser folks’ Nehru Club, Gandhi Granthasala, Anna Manram, Netaji Youth Centre, Brother Music Club, Muslim Sports Club and like organs often named after national or provincial heroes and manned by members themselves as contrasted with the upper bracket’s Gymkhana Club, Cosmopolitan Club, Cricket Club of India, and National Sports Club of India, whose badge is pleasure paid for and provided through skilled or semi-skilled catering staff. We do not deal with 100-per cent social-service clubs which meet once in a way, hire a whole evening in some hotel, have no regular staff and devote their energies and resources also to social-service projects. There are many brands and we need not deal with every one. Only if they answer the test laid down affirmatively they qualify. The leading cases on the point are the Gymkhana92 and C.C.I.93 We must deal with them before we conclude this topic. The Madras Gymkhana Club,94 a blue-blooded members’ club, has the socialite cream of the city on its rolls. It offers choice facilities for golf, tennis and billiards; arranges dances,
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dinners and refreshments; entertains and accommodates guests; and conducts tournaments for members and non-members. These are all activities richly charged, with pleasurable service. For the fulfilment of these objects, the club employs officers, caterers and others on reasonable salaries. Does this club become an industry? The label matters little; the substance is the thing. A night-club for priced nocturnal sex is a lascivious ‘industry’. But a literary club, meeting weekly to read or discuss poetry, hiring a venue, and run solely by the self-help of the participants, is not. Hidayatullah, C.J., in Gymkhana95 ruled that the club was not an ‘industry’. Reason? ‘An industry is thus said to involve co-operation between employer and employees for the object of satisfying material human needs but not for oneself nor for pleasure nor necessarily for profit.’ It is not of any consequence that there is no profit motive, because that is considered immaterial. It is also true that the affairs of the club are organised in the way business is organised, that there is production of material and other services and, in a limited way, production of material goods, mainly in the catering department. But these circumstances are not truly representative in the case of the club because the services are to the members themselves, for their own pleasure and amusement, and the material goods are for their consumption. In other words, the club exists for its members. No doubt occasionally strangers also take benefit from its services, but they can only do so on the invitation of members. No one outside the list of members has the advantage of these services as of right. Nor can these privileges be bought. In fact they are available only to members or through members. If today the club were to stop entry of outsiders, no essential change in its character vis-à-vis the members would take place. In other words, the circumstance that guests are admitted is irrelevant to determine if the club is an industry. Even with the admission of guests being open, the club remains the same—that is to say, a members’ self-serving institution. No doubt the material needs or wants of a section of the community is catered for, but that is not enough. This must be done as part of trade or business or as an undertaking analogous to trade or business. This element is completely missing in a members’ club.
Why is the club not an industry? It involves the cooperation of employer and employees, organised like in a trade and calculated to supply pleasurable utilities to members and others. The learned Judge agrees that ‘the material needs or wants of a section of the community is catered for but that is not enough. This must be done as part of trade or business or as an undertaking analogous to trade or business. This element is completely missing in a members’ club’. ‘This element’? What element makes it analogous to trade? A profit motive? No, says the learned judge. Because it is a self-serving institution? Yes? Not at all. For, if it is selfservice, then why the expensive establishment and staff with high salary bills? It is plain as daylight that the club members do nothing to produce the goods or services. These are rendered by employees who work for wages. The members merely enjoy the club life, the geniality of company and exhilarating camaraderie to the accompaniment of dinners, dances, games and thrills. The ‘reason’ one may discover is that it is a members’ club in the sense that ‘the club belongs to members for the time being on its list of members and that is what matters. Those members can deal with the club as they like. Therefore, the club is identified with its members at a given point of time. Thus it cannot be said that the club has an existence apart from the members.’ We are intrigued by this reason. The ingredients necessary for an industry are present here and yet it is declared a non-industry because the club belongs to members only. But
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a company belongs to the shareholders only; a cooperative belongs to the members only; a firm of experts belongs to the partners only. And yet, if they employ workmen with whose cooperation goods and services are made available to a section of the community and the operations are organised in the manner typical of the business method and organisation, the conclusion is irresistible that an ‘industry’ emerges. Likewise, the members of a club may own the institution and become the employers for that reason. It is transcendental logic to jettison the inference of an ‘industry’ from such a factual situation on the ingenious plea that a club ‘belongs to members for the time being and that is what matters’. We are inclined to think that that just does not matter. The Gymkhana96 case, we respectfully hold, is wrongly decided. The case of the Cricket Club of India97 stands in a worse position. It is a huge undertaking with activities wide-ranging, with big budgets, an army of staff and profit-making adventures. Indeed, the members share in the gains of these adventures by getting money’s worth by cheaper accommodation, free or low-priced tickets for entertainment, and concessional refreshments; and yet Bhargava, J., speaking for the Court, held this mammoth industry a ‘non-industry’. Why? Is the promotion of sports and games by itself a legal reason for excluding the organisation from the category of industries if all the necessary ingredients are present? Is the fact that the residential facility is exclusive for members an exemptive factor? Do not the members share in the profits through the invisible process of lower charges? When all these services are rendered by hired employees, how can the nature of the activity be described as self-service, without taking liberty with reality? A number of utilities which have money’s worth are derived by the members. An indefinite section of the community, entering as the guests of the members, also share in these services. The testimony of the activities can leave none in doubt that this colossal ‘club’ is a vibrant collective undertaking which offers goods and services to a section of the community for payment and there is cooperation between employer and employees in this project. The plea of non-industry is unpresentable and exclusion is possible only by straining the law to snapping point to salvage a certain class of socialite establishments. Presbyter is only priest writ large. Club is ‘industry’ manu brevi.
Are Cooperatives Industries? Cooperative societies ordinarily cannot, we feel, fall outside Section 2(j). After all, the society, a legal person, is the employer. The members and/or others are employees and the activity partakes of the nature of trade. Merely because Cooperative enterprises deserve State encouragement, the definition cannot be distorted. Even if the society is worked by members only, the entity (save where they are few and self-serving) is an industry because the member-workers are paid wages and there can be disputes about rates and different scales of wages among the categories, i.e., between workers and workers or between workers and employer. These societies—credit societies, marketing cooperatives, producers’ or consumers’ societies, and apex societies—are industries. Do credit unions, organised on a cooperative basis, scale the definitional walls of ‘industry’? They do. The judgement of the Australian High Court in The Queen vs Marshall Ex Parte Federated Clerks Union of Australia98 helps reach this conclusion. There, a credit union which was a cooperative association which pooled the savings of small people and
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made loans to its members at a low interest, was considered from the point of view of industry. Admittedly, they were credit unions incorporated as cooperative societies and the thinking of Mason, J., was that such institutions were industrial in character. The industrial mechanism of society, according to Starke, J., included: all those bodies ‘of men associated, in various degrees of competition and co-operation, to win their living by providing the community with some service which it requires’.
Mason, J., went a step further to hold that even if such credit unions were an adjunct of industry, they could be regarded as industry. It is enough, therefore, if the activities carried on by credit unions can accurately be described as incidental to industry or to the organised production, transportation or distribution of commodities or other forms of material wealth. To our minds, the evidence admits of no doubt that the activities of credit unions are incidental in this sense. This was sufficient, in his view, to conclude that credit unions constituted an industry under an Act that has resemblance to our own. In our view, therefore, societies are industries.
The Safdarjung Hospital Case99 A sharp bend in the course of the law came when the Safdarjung100 case was decided. The present reference has come from that landmark case and necessarily, it claims our close attention. Even so, no lengthy discussion is called for, because the connotation of ‘industry’ has already been given by us at sufficient length to demarcate out deviation from the decision in the Safdarjung101 case. Hidayatullah, C.J., considered the facts of the appeals clubbed together there and held that all the three institutions in the bunch of appeals were not industries. Abbreviated reasons were given for the holding in regard to each institution, which we may extract for precise understanding: It is obvious that Safdarjung Hospital is not embarked on an economic activity which can be said to be analogous to trade or business. There is no evidence that it is more than a place where persons can get treated. This is a part of the functions of Government and the hospital is run as a Department of Government. It cannot, therefore, be said to be an industry. The Tuberculosis Hospital is not an independent institution. It is a part of the Tuberculosis Association of India. The hospital is wholly charitable and is a research institute. The dominant purpose of the hospital is research and training, but as research and training cannot be given without beds in a hospital, the hospital is run. Treatment is thus a part of research and training. In these circumstances the Tuberculosis Hospital cannot be described as industry. The objects of the Kurji Holy Family Hospital are entirely charitable. It carries on work of training, research and treatment. Its income is mostly from donations and distribution of surplus as profit is prohibited. It is, therefore, clear that it is not an industry as laid down in the Act.
Even a cursory glance makes it plain that the learned judge took the view that a place of treatment of patients, run as a department of government, was not an industry because it was a part of the functions of the government. We cannot possibly agree that running a hospital, which is a welfare activity and not a sovereign function, cannot be an industry.
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Likewise, dealing with the Tuberculosis Hospital case, the learned Judge held that the hospital was wholly charitable and also was a research institute. Primarily, it was an institution for research and training. Therefore, the Court concluded, the institution could not be described as ‘industry’. Non sequitur. A hospital facility, research products and training services are surely services and hence ‘industry’. It is difficult to agree that a hospital is not an industry. In the third case, the same factors plus the prohibition of profit, are relied on by the Court. We find it difficult to hold that absence of profit or functions of training and research, take the institution out the scope of industry. Although the facts of the three appeals considered in the Safdarjung102 case related only to hospitals with research-and-training component, the Bench went extensively into a survey of the earlier precedents and a crystallisation of the criteria for designating industries. After stating that trade and business have a wide connotation, Hidayatullah, C.J., took the view that professions must be excluded from the ambit of industry: A profession ordinarily is an occupation requiring intellectual skill, often coupled with manual skill. Thus a teacher uses purely intellectual skill, while a painter uses both. In any event, they are not engaged in an occupation in which employers and employees co-operate in the production or sale of commodities or arrangement for their production or sale or distribution and their services cannot be described as material service.
We are unable to agree with this rationale. It is difficult to understand why a school or a painting institute or a studio which uses the services of employees and renders the service to the community cannot be regarded as an industry. What is more baffling is the subsequent string of reasons presented by the learned Judge: What is meant by ‘material services’ needs some explanation too. Material services are not services which depend wholly or largely upon the contribution of professional knowledge, skill or dexterity for the production of a result. Such services being given individually and by individuals are services no doubt but not material services. Even an establishment where many such operate cannot be said to convert their professional services into material services. Material services involve an activity carried on through co-operation between employers and employees to provide the community with the use of something such as electric power, water, transportation, mail delivery, telephones and the like. In providing these services there may be employment of trained men and even professional men, but the emphasis is not on what these men do but upon the productivity of a service organised as an industry and commercially valuable. Thus the services of professional men involving benefit to individuals according to their needs, such as doctors, teachers, lawyers, solicitors, etc., are easily distinguishable from an activity such as transport service. The latter is of a commercial character in which something is brought into existence quite apart from the benefit to particular individuals. It is the production of this something which is described as the production of material services.
With the greatest respect to the learned Chief Justice, the arguments strung together in this paragraph are too numerous and subtle for us to imbibe. It is transcendental to define material service as excluding professional services. We have explained this position at some length elsewhere in this judgment and do not feel the need to repeat it here. Nor are we convinced that the Gymkhana103 and Cricket Club of India104 cases are correctly decided. The learned Judge placed accent on the non profit-making members’ clubs as being outside the pale of trade or industry. We demur to this proposition.
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Another intriguing reasoning in the judgement is that the Court has stated: it is not necessary that there must be a profit motive but the enterprises must be analogous to trade or business in a commercial sense.
However, somewhat contrary to this reasoning, we find—in the concluding part of the judgement—emphasis on the non profit-making aspect of the institutions. Equally puzzling is the reference to ‘commercial sense’; what precisely does this expression mean? It is interesting to note that the word ‘commercial’ has more than one semantic shade. If it means profit-making, the reasoning is self-contradictory. If it merely means a commercial pattern of organisation, of hiring and firing employees, of indicating the nature of the employer–employee relation (as in trade or commercial house), then the activity-oriented approach is the correct one. On that footing, the conclusions reached in this case do not follow, however. As a matter of fact, Hidayatullah, C.J., had in Gymkhana105 turned down the test of commerciality: Trade is only one aspect of industrial activity .... This requires co-operation in some form between employers and workmen and the result is directly the product of this association but not necessarily commercial.
Indeed, while dealing with the reasoning in the Hospital Mazdoor Sabha106 case, he observes: if a hospital, nursing home or a dispensary is run as a business, in a commercial way, there may be found elements of an industry there.
This facet suggests either a profit motive (which has been expressly negatived in the very case) or commercial type of activity, regardless of profit, which affirms the test which we have accepted (namely, that there must be employer–employee relations more or less on the pattern of trade or business). All that we can say is that there are different strands of reasoning in this judgement that are somewhat difficult to reconcile. Of course, when the learned judge states that the use of the first schedule to the Act depends on the condition precedent of the existence of an industry, we agree. But that by itself does not mean that a hospital cannot be regarded as an industry, profit or no profit, research or no research. We have adduced enough reasons in the various portions of this judgement to regard hospitals, research institutions and training centres as valuable material services to the community, qualifying for coming within Section 2(j). We must plainly state that vis-à-vis hospitals, Safdarjung107 was wrong and Hospital Mazdoor Sabha108 was right. Because of these problems of reconciliation of apparently contradictory strands of reasoning in Safdarjung,109 we find subsequent cases of this Court striking different notes. In fact, one of us (Bhagwati J.), in the case of Indian Standards Institution (workmen) vs Indian Standards Institution,110 referred even in the opening to the baffling, perplexing question that judicial ventures had not solved. We fully endorse the observations of the Court in the Indian Standards Institution111 case (at pp. 150, 151 of AIR): So infinitely varied and many-sided is human activity and with the incredible growth and progress in all branches of knowledge and ever widening areas of experience at all levels, it is
Threshold Part Issues under the Industrial Disputes Act, 1947 107 becoming so diversified and expanding in so many directions hitherto unthought of, that no rigid and doctrinaire approach can be adopted in considering this question. Such an approach would fail to measure up the needs of the growing welfare State which is constantly engaged in undertaking new and varied activities as part of its social welfare policy. The concept of industry, which is intended to be convenient and effective tool in the hands of industrial adjudication for bringing about industrial peace and harmony, would lose its capacity for adjustment and change. It would be petrified and robbed of its dynamic content. The Court should, therefore, so far as possible, avoid formulating or adopting generalisations and hesitate to cast the concept of industry in a narrow rigid mould which would not permit of expansion as and when necessity arises. Only some working principles may be evolved which would furnish guidance in determining what are the attributes or characteristics which would ordinarily indicate that an undertaking is analogous to trade or business.
Our endeavour in this decision is to provide such working principles. This Court, within a few years of the enactment of the salutary statute, explained the benign sweep of ‘industry’ in the Banerji112 case, which served as a beacon in later years—the Ahmedabad Textile Research113 case acted on it, and the Hospital Mazdoor Sabha114 and Nagpur Corporation115 cases marched in its sheen. The law shed steady light on industrial interrelations and the country’s tribunals and courts settled down to evolve a progressive labour jurisprudence, burying the bad memories of laissez faire and bitter struggles in this field and nourishing new sprouts of legality fertilised by the seminal ratio in Banerji.116 Indeed, every great judgement is not merely an adjudication of an existing lis but an appeal addressed by the present to the emerging future. And here the future responded, harmonising with the humanscape hopefully projected by Part IV of the Constitution. But the drama of a nation’s life, especially when it confronts die-hard forces, develops situations of imbroglio and shows a tendency to backtrack. And Law quibbles where Life wobbles. Judges only read signs and translate symbols in the national sky. So ensued an era of islands of exception dredged up by judicial process. Great clubs were privileged out, liberal professions swam to safety, educational institutions vast and small were helped out, diverse charities—disinclined to be charitable to their own weaker workmen—made pious pleas and philanthropic appeals to be extricated. A procession of decisions—in the Solicitors’ 117 case, the University of Delhi118 case, the Gymkhana Club119 case, the Cricket Club of India120 case, the Chartered Accountants (Rabindranath Sen vs First Industrial Tribunal, West Bengal)121 case, climaxed by the Safdarjung122 case, carved out sanctuaries. The sixmember bench, the largest which sat on this Court, conceptually to reconstruct ‘industry’, affirmed and reversed, held profit motive irrelevant but upheld charitable service as exemptive; and, in its lights and shadows, judicial thinking became ambivalent and industrial jurisprudence landed itself in a legal quagmire. Pinjarapoles sought salvation and succeeded in principle (the Bombay Pinjarapole case), chambers of commerce fought and failed, hospitals battled to victory (Dhanrajgirji Hospital ),123 a standards institute made a vain bid to extricate (the ISI 124 case), research institutes at the High Court level, waged and won non-industry status in Madras and Kerala. The murky legal sky paralysed tribunals and courts and administrations and then came, in consequence, this reference to a larger bench of seven Judges. Banerji125 amplified by the Corporation of Nagpur126 case, in effect met with its Waterloo in the Safdarjung127 case. But in this latter case, two voices could be heard and subsequent rulings zigzagged and conflicted precisely because of this built-in ambivalence.
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It behoves us, therefore, hopefully to abolish the blurred edges, illumine the penumbral areas and overrule what we regard as wrong. Hesitancy, half-tones and hunting with the hounds and running with the hare, can claim heavy penalty in the shape of industrial confusion, adjudicatory quandaries and administrative perplexity at a time when the nation is striving to promote employment through diverse strategies which need, for their smooth fulfilment, less stress and distress, more mutual understanding and trust based on a dynamic rule of law which speaks clearly, firmly and humanely. If the salt of law lose its savour of progressive certainty, wherewith shall it be salted? So we proceed to formulate the principles deducible from our discussion which are decisive, positively and negatively, of the identity of ‘industry’ under the Act. We speak not exhaustively, but to the extent covered by the debate at the bar and, to that extent, authoritatively until overruled by a larger bench or superseded by the legislative branch. 1. ‘Industry’, as defined in Section 2(j) and explained in Banerji,128 has a wide import. (i) Where (a) systematic activity, (b) organised by cooperation between employer and employee (the direct and substantial element is chimerical), (c) for the production and/or distribution of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss i.e. making, on a large scale of prasad or food), prima facie, there is an ‘industry’ in that enterprise. (ii) The absence of a profit motive or gainful objective is irrelevant, be the venture in the public, joint, private or other sector. (iii) The true focus is functional and the decisive test is the nature of the activity, with special emphasis on employer–employee relations. (iv) If the organisation is a trade or business, it does not cease to be one because of philanthropy animating the undertaking. 2. Although Section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to overreach itself. (i) ‘Undertaking’ must suffer a contextual and associational shrinkage as explained in Banerji129 and in this judgement; so also ‘service’, ‘calling’ and the like. This yields the inference that all organised activity possessing the triple elements in I (supra), although not trade or business, may still be ‘industry’, provided the nature of the activity viz. the employer–employee basis, bears resemblance to what we find in trade or business. This takes into the fold of ‘industry’ undertakings callings and services, adventures ‘analogous to the carrying on of trade or business’. All features, other than the methodology of carrying on the activity viz. in organising the cooperation between employer and employee—may be dissimilar. It does not matter if there is an analogy in the terms of employment. 3. Application of these guidelines should not stop short of their logical reach by invocation of creeds, cults or any inner sense of incongruity or outer sense of motivation for or resultant from the economic operations. The ideology of the Act being industrial peace, the regulation and resolution of industrial disputes between employer and workman, the range of this statutory ideology must inform the reach or the statutory definition. Nothing less, nothing more. (i) The consequences are (a) professions, (b) clubs, (c) educational institutions, (d) cooperatives, (e) research institutes, (f ) charitable projects and ( g) other kindred ventures, if they fulfil the triple tests listed in I (supra), cannot be exempted from the scope of Section 2(j).
Threshold Part Issues under the Industrial Disputes Act, 1947 109 (ii) A restricted category of professions, clubs, cooperatives, even gurukulas and little research labs may qualify for exemption if in simple ventures, substantially—and, going by the dominant nature criterion, substantively—no employees are entertained but in minimal matters and marginal employees are hired without destroying the no-employee character of the unit. (iii) If, in a pious or altruistic mission many employ themselves free or for small honoraria or like returns, mainly drawn by sharing in the purpose or cause—such as lawyers volunteering legal services at a free clinic, doctors serving in their spare hours in a free medical centre or ashramites working at the bidding of a Holiness, divinity or like central personality—and the services are supplied free or at a nominal cost and those who serve are not engaged for remuneration or on the basis of a master–servant relationship, then the institution is not an industry even if stray servants, manual or technical, are hired. Such eleemosynary or like undertakings alone are exempt—not other projects inspired by generosity, compassion or developmental passion. 4. The Dominant Nature Test (i) Where a complex of activities—some of which qualify for exemption, others not— involves employees in the total undertaking, some of whom are not ‘workmen’ (as in the University of Delhi130 case) or some departments are not productive of goods and services if isolated, even then the predominant nature of the services and the integrated nature of the departments (as explained in the Corporation of Nagpur131 case) will be the true test. The whole undertaking will be an ‘industry’, although those who are not ‘workmen’ by definition may not benefit by the status. (ii) Notwithstanding the previous clauses, the State’s sovereign functions, strictly understood, (alone) qualify for exemption, not the welfare activities or economic ventures undertaken by government or statutory bodies. (iii) Even in departments discharging sovereign functions, if there are units that are industries and they are substantially severable, then they can be considered to come within Section 2(j). (iv) Constitutional and competently enacted legislative provisions may well remove from the scope of the Act categories that otherwise may be covered thereby. 5. We overrule the decisions in the Safdarjung,132 Solicitors’,133 Gymkhana,134 Delhi University,135 and Dhanrajgirji Hospital 136 cases and other rulings whose ratio runs counter to the principles enunciated above. The decision in the Hospital Mazdoor Sabha137 is hereby rehabilitated.
We conclude with diffidence because the Parliament, which has a commitment to the political nation to legislate promptly in vital areas such as industry and trade and articulate welfare expectations in the ‘conscience’ of the Constitution, has hardly intervened to restructure the rather clumsy, vaporous, tall-and-dwarf definitions or tidy up the scheme although judicial theses and antitheses disclosed in the two decades long decisions over two long decades should have produced a legislative synthesis becoming of a welfare state and socialistic society in a world setting where ILO norms are advancing and India needs updating. We feel confident, in another sense, since counsel stated at the bar that a bill on the subject is in the offing. The rule of law, we are sure, will run with the rule of life— Indian life—at the threshold of a decade of new development in which labour and management, guided by the State, will constructively partner the better production and fair diffusion of national wealth. We have stated that, save the case of the Bangalore Water Supply and Sewerage Board appeal, we are not disposing of the others on the merits. We dismiss that appeal with costs and direct that all the others be posted before a smaller Bench for disposal on the merits in accordance with the principles of law herein laid down.
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A Separate but Concurring Judgement Delivered by Chief Justice Beg— Bangalore Water Supply vs A. Rajappa & Others I am in general agreement with the line of thinking adopted and the conclusions reached by my learned brother Krishna Iyer. I would, however, like to add my reasons for this agreement and to indicate my approach to a problem where relevant legislation leaves so much for determination by the Court as to enable us to perform a function very akin to legislation. My learned brother has relied on what was considered in England a somewhat unorthodox method of construction in Seaford Court Estates Ltd. vs Asher,138 where Lord Denning, L.J., said: When a defect appears a Judge cannot simply fold his hands and blame the draftsman. He must set to work on the constructive task of finding the intention of Parliament - and then he must supplement the written words so as to give ‘force and life’ to the intention of legislature. A Judge should ask himself the question how, if the makers of the Act had themselves come across this ruck in the texture of it, they would have straightened it out? He must then do as they would have done. A Judge must not alter the material of which the Act is woven, but he can and should iron out the creases. When this case went up to the House of Lords it appears that this Law Lords disapproved of the bold effect of Lord Denning to make ambiguous legislation more comprehensive. Lord Simonds found it to be ‘a naked usurpation of the legislative function under the thin disguise of interpretation’. Lord Morton (with whom Lord Goddard entirely agreed) observed: ‘These heroics are out of place.’ Lord Tucker said: ‘Your Lordships would be acting in a legislative rather than a judicial capacity if the view put forward by Denning, L.J., were to prevail.’ Perhaps, with the passage of time, what may be described as the extension of a method resembling the ‘arm-chair rule’ in the construction of wills, Judges can more frankly step into the shoes of the legislature where an enactment leaves its own intentions in much too nebulous or uncertain a state. In M. Pontish vs Veeramallappa,139 Sarkar, J., approved of the reasoning, set out above, adopted by Lord Denning. And, I must say that, in a case where the definition of ‘industry’ is left in the state in which we find it, the situation perhaps calls for some judicial heroics to cope with the difficulties raised. In his heroic efforts, my learned brother Krishna Iyer, if I may say so with great respect, has not discarded the tests of industry formulated in the past. Indeed, he has actually restored the tests laid down by this Court in D.N. Banerji’s140 case, and, after that, in the Corporation of the City of Nagpur vs Its Employees,141 and State of Bombay vs The Hospital Mazdoor Sabha,142 to their pristine glory. My learned brother has, however, rejected what may appear, to use the word employed recently by an American Jurist, ‘excrescences’ of subjective notions of Judges which may have blurred those tests. The temptation is great, in such cases, for us to give expression of what may be purely objective personal predilections. It has, however, to be resisted if law is to possess a direction in conformity with constitutional objectives and criteria which must impart that reasonable state of predictability and certainty to interpretations of the Constitution as well as to the laws made under it which citizens should expect. We have, so to speak, to chart what may appear to be a sea in which the ship of law like Noah’s ark may have to be navigated. Indeed, Lord Sankey on one occasion, said that Law itself is like the ark to which people look for some certainty and security amidst the shifting sands of political life and vicissitudes of times. The Constitution and the directive principles of State policy, read with the basic fundamental rights, provide us with a compass. This Court has tried to indicate in recent cases that the meaning of what could be described as a basic ‘structure’ of the Constitution must necessarily be found in express provisions of the construction and not merely in objective notions about meanings of words. Similar must be the reasoning we must employ in extracting the core of meaning hidden between the interstices of statutory provisions.
Threshold Part Issues under the Industrial Disputes Act, 1947 111 Each of us is likely to have a subjective notion about ‘industry’. For objectivity, we have to look first to the words used in the statutory provision defining industry in an attempt to find the meaning. If that meaning is clear, we need proceed no further. But, the trouble here is that the words found there do not yield a meaning so readily. They refer to what employers or workers may do as parts of their ordinary avocation or business in life. When we turn to the meaning given of the term ‘worker’ in Section 2(s) of the Act, we are once more driven back to find it in the bosom of ‘industry’, for the term ‘worker’ is defined as one: Employed in any industry to do any skilled or unskilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be express or implied, and for the purposes of any proceeding under this Act in relation to an industrial dispute, includes any such person who has been dismissed, discharged or retrenched in connection with or as a consequence of, that dispute, or whose dismissal, discharge or retrenchment has led to that dispute. The definition, however, excludes specifically those who are subject to the Army Act, 1950, or the Air Force Act, 1950, or the Navy Discipline Act, 1934, as well as those who are employed in the Police Service, officers and other employees of a prison, those employed in mainly managerial or administrative capacities, and those who, being employed in a supervisory capacity, draw wages exceeding Rs 500 per mensem. Thus, in order to draw the ‘circle of industry’, to use the expression of my learned brother Iyer, we do not find even the term ‘workman’ illuminating. The definition only enables us to see that certain classes of persons employed in the service of the State are excluded from the purview of industrial dispute which the Act seeks to provide for in the interests of industrial peace and harmony between the employers and employees so that the welfare of the nation is secured. The result is that we have then to turn to the preamble to find the object of the Act itself, to the legislative history of the Act, and to the socio-economic ethos and aspirations and needs of the times in which the Act was passed. The method which has been followed, whether it be called interpretation of construction of a part of an organic whole in which the statute, its objectives, its past and its direction for the future, its constitutional setting are all parts of this whole with their co-related functions. Perhaps it is impossible, in adopting such a method of interpretation, which some may still consider unorthodox, a certain degree of subjectivity. But, our attempt should be not to break with the well-established principles of interpretation in doing so. Progressive, rational and beneficial modes of interpretation import and fit into the body of the old what may be new. It is a process of adaptation for giving new vitality in keeping with the progress of thought in our times. All this, however, is not really novel, although we may try to say it in a new way. If one keeps in mind what was laid down in Heydon’s143 case referred to by my learned brother Krishna Iyer, the well-known principle that a statute must be interpreted as a whole, in the context of all the provisions of the statute, its objects, the preamble and the functions of various provisions, the true meaning may emerge. It may not be strictly a dictionary meaning in such cases. Indeed, even in a modern statute the meaning of a term such as ‘industry’ may change with a rapidly changed social and economic structure. For this proposition I can do no better than to quote Subba Rao, J. speaking for this Court in The Senior Electric Inspector vs Laxmi Narayan Chopra144 The legal position may be summarised thus: The maxim contemporanea expositio as laid down by Coke was applied to construing ancient statutes but not to interpreting Acts which are comparatively modern. There is a good reason for this change in the mode of interpretation. The fundamental rule of construction is the same whether the Court is asked to construe a
112 Social Justice and Labour Jurisprudence provision of an ancient statute or that of a modern one, namely, what is the expressed intention of the Legislature. It is perhaps difficult to attribute to a legislative body functioning in a static society that its intention was couched in terms of considerable breadth so as to take within its sweep the future developments comprehended by the phraseology used. It is more reasonable to confine its intention only to the circumstances obtaining at the time the law was made. But in a modern progressive society it would be unreasonable to confine the intention of a Legislature to the meaning attributable to the word used at the time the law was made, for a modern Legislature making laws to govern a society which is fast moving must be presumed to be aware of an enlarged meaning the same concept might attract with the march of time and with the revolutionary changes brought about in social, economic, political and scientific and other fields of human activity. Indeed, unless a contrary intention appears, an interpretation should be given to the words used to take in new facts and situations, if the words are capable of comprehending them. In the Workmen of Dimakuchi Tea Estate vs The Management of Dimakuchi Tea Estate145 it was observed: A little careful consideration will show, however, that the expression ‘any person’ occurring in the third part of the definition clause cannot mean anybody and everybody in this wide world. First of all, the subject-matter of dispute must relate to (i) employment or nonemployment or (ii) terms of employment or conditions of labour of any person; these necessarily import a limitation in the sense that a person in respect of whom the employer-employee relation never existed or can never possibly exist cannot be the subject-matter of a dispute between employers and workmen. Secondly, the definition clause must be read in the context of the subject-matter and scheme of the Act, and consistently with the objects and other provisions of the Act. It is well-settled that the words of a statute, when there is a doubt about their meaning are to be understood in the sense in which they best harmonise with the subject of the enactment and the object which the Legislature has in view. Their meaning is found not so much in a strictly grammatical or etymological propriety of language, not even in its popular use, as in the subject or in the occasion on which they are used, and the object to be attained.146 It was also said there: It is necessary, therefore, to take the Act as a whole and examine its salient provisions. The long title shows that the object of the Act is ‘to make provision for the investigation and settlement of industrial disputes, and for certain other purposes.’ The preamble states the same object and Section 2 of the Act which contains definitions states that unless there is anything repugnant in the subject or context certain expressions will have certain meanings. Thus, it is in the context of the purpose of the Act that the meaning of the term ‘industry’ was sought. Again dealing with the objects of the Act before us in Budge Budge Municipality147 case this Court said: When our Act came to be passed, labour disputes had already assumed big proportions and there were clashes between workmen and employers in several instances. We can assume therefore that it was to meet such a situation that the Act was enacted, and it is consequently necessary to give the terms employed in the Act referring to such disputes as wide an import as reasonably possible.
Threshold Part Issues under the Industrial Disputes Act, 1947 113 In that very case this Court also said (at p. 308 of SCR: at p. 60 of AIR): There is nothing, however, to prevent a statute from giving the word ‘industry’ and the words ‘industrial dispute’ a wider and more comprehensive import in order to meet the requirements of rapid industrial progress and to bring about in the interests of industrial peace and economy, a fair and satisfactory adjustment of relations between employers and workmen in a variety of fields of activity. It is obvious that the limited concept of what an industry meant in early times must now yield place to an enormously wider concept so as to take in various and varied forms of industry, so that disputes arising in connection with them might be settled quickly without much dislocation and disorganisation of the needs of the society and in a manner more adopted to conciliation and settlement than a determination of the respective rights and liabilities according to strict legal procedure and principles. Again, in Hospital Mazdoor Sabha case148 this Court said: If the object and scope of the statute are considered there would be no difficulty in holding that the relevant words of wide import have been deliberately used by the Legislature in defining ‘Industry’ in Section 2(j). The object of the Act was to make provision for the investigation and settlement of industrial disputes, and the extent and scope of the provisions would be realised if we bear in mind the definition of ‘industrial disputes’ given by Section 2(k), of ‘wages’ by Section 2(rr), ‘workman’ by Section 2(s), and of ‘employer’ by Section 2(g). It added: It is obvious that the words used in an inclusive definition denote extension and cannot be treated as restricted in any sense. I may here set out the definition given by the Act of the term ‘industry’ in Section 2, subsection (j): (j) ‘Industry’ means any business, trade, undertaking, manufacture or calling of employers and includes any calling, service, employment, handicraft, or industrial occupation or avocation of workman. It seems to me that the definition was not meant to provide more than a guide. It raises doubts as to what could be meant by the ‘calling of employers’ even in business, trade, undertaking or manufacture could be found capable of being more clearly delineated. It is clear that there is no mention here of any profit motive. Obviously, the word ‘manufacture’ of employers could not be interpreted literally. It merely means a process of manufacture in which the employers may be engaged. It is, however, evident that the term ‘employer’ necessarily postulates employees without whom there can be no employers. But, the second part of the definition makes the concept more nebulous as it, obviously, extends the definition to ‘any calling, service, employment, handicraft or industrial occupation or avocation of workman.’ I have already examined the meaning of the term ‘workman’ which refers us back to what is an ‘industry’. It seems to me that the second part, relating to workmen, must necessarily indicate something which may exclude employers and include an ‘industry’ consisting of individual handicraftsmen or workmen only. At any rate, the meaning of industrial disputes includes disputes between workmen and workmen also. Therefore, I cannot see how we can cut down the wide ambit of last part of the definition by searching for the predominant meaning in the first part unless we were determined, at the outset, to curtail the scope of the second part somehow. If we do that, we will be deliberately cutting
114 Social Justice and Labour Jurisprudence down the real sweep of the last part. Neither ‘noscitur a sociis’ rule nor the ‘ejusdem generis’ rule are adequate for such a case. There is wisdom in the suggestion that in view of these difficulties in finding the meaning of the term ‘industry’, as defined in the Act, it is best to say that an industry cannot strictly be defined but can only be described. But laying down such a rule may again leave too wide a door open for speculation and subjective notions as to what is describable as an industry. It is, perhaps, better to look for a rough rule of guidance in such a case by considering what the concept of ‘industry’ must exclude. I think the phrase ‘analogous to industry’, which has been used in the Safdarjung Hospital 149 case could not really cut down the scope of ‘industry’. The result, however, of that decision has been that the scope has been cut down. I, therefore, completely agree with my learned brother that the decisions of this Court in Safdarjung Hospital 150 case and other cases mentioned by my learned brother must be held to be overruled. It seems to me that the term ‘analogous to trade or business’ could reasonably mean only activity which results in goods made or manufactured or services rendered which are capable of being converted into saleable ones. They must be capable of entering the world of ‘res commerciam’ although they may be kept out of the market for some reason. It is not the motive of an activity in making goods or rendering a service, but the possibility of making them marketable if one who makes goods or renders services so desires, that should determine whether the activity lies within the domain or circle of industry. But, even this may not be always a satisfactory test. The test indicated above would necessarily include the type of services which are rendered purely for the satisfaction of spiritual or physiological urges of person rendering those services. These cannot be bought or sold. For persons rendering such services there may be no ‘industry’, but, for persons who want to benefit from the services rendered, it could become an ‘industry’. When services are rendered by groups of charitable individuals to themselves or others out of missionary zeal and purely charitable motives, there would hardly be any need to invoke the provisions of the Industrial Disputes Act to protect them. Such is not the type of persons who will raise such a dispute as workmen or employees whatever they may be doing. This leads one to consider another kind of test. It is that, wherever an industrial dispute could arise between either employers’ and their workmen or between workmen and workmen, it should be considered an area within the sphere of ‘industry’ but not otherwise. In other words, the nature of the activity will be determined by the conditions which give rise to the likelihood of occurrence of such disputes and their actual occurrence in the sphere. This may be a pragmatic test. For example, a lawyer or solicitor could not raise a dispute with his litigants in general on the footing that they were his employers. Nor could doctors raise disputes with their patients on such a footing. Again, the personal character of the relationship between a doctor and his assistant and a lawyer and his clerk may be of such a kind that it requires complete confidence and harmony in the productive activity in which they may be co-operating so that, unless the operations of the solicitor or the lawyer or the doctor take an organised and systematised form of business or trade, employing a number of persons, in which disputes could arise between employers and their employees, they would not enter the field of industry. The same type of activity may have both industrial and non-industrial aspects or sectors. I would also like to make a few observations about the so-called ‘sovereign’ functions which have been placed outside the field of industry. I do not feel happy about the use of the term ‘sovereign’ here. I think that the term ‘sovereign’ should be reserved, technically and more correctly, for the sphere of ultimate decisions. Sovereignty operates on a sovereign plane of its own as I suggested in Keshavananda Bharati’s151 case supported by a quotation from Ernest Barker’s Social and Political Theory. Again, the term ‘Regal’, from which the term ‘sovereign’ functions appears to be derived, seems to be a misfit in a Republic where the citizen shares the political sovereignty in which he has even a legal share, however small, inasmuch as he exercises the right to vote. What is meant by the use of the term ‘sovereign’, in relation to the activities of the State, is more accurately brought out by using the term ‘governmental’ functions although there are difficulties
Threshold Part Issues under the Industrial Disputes Act, 1947 115 here also, inasmuch as the Government has entered largely new fields of industry. Therefore, only those services which are governed by separate rules and constitutional provisions, such as Articles 310 and 311 should, strictly speaking, be excluded from the sphere of industry by necessary implication. I am impressed by the argument that certain public utility services which are carried out by governmental agencies or corporations are treated by the Act itself as within the sphere of industry. If express rules under other enactments govern the relationship between the State as an employer and its servants as employees it may be contended, on the strength of such provisions, that a particular set of employees are outside the scope of the Industrial Disputes Act for that reason. The special excludes the applicability of the general. We cannot forget that we have to determine the meaning of the term ‘industry’ in the context of and for the purposes of matters provided for in the Industrial Disputes Act only. I have contended myself with a very brief and hurried outline of my line of thinking partly because I am in agreement with the conclusions of my learned brother Krishna Iyer and I also endorse his reasoning almost wholly, but even more because the opinion I have dictated just now must be given today if I have to deliver it at all. From tomorrow I cease to have any authority as a Judge to deliver it. Therefore, I have really no time to discuss the large number of cases cited before us, including those on what are known as ‘sovereign’ functions. I will, however, quote a passage from State of Rajasthan vs Mst. Vidhyawati152 where this Court said: In this connection it has to be remembered that under the Constitution we have established a welfare State, whose functions are not confined only to maintaining law and order but extend to engaging in all activities including industry, public transport, State trading, to name only a few of them. In so far as the State activities have such wide ramifications involving not only the use of sovereign powers but also its powers as employers in so many public sectors, it is too much to claim that the State should be immune from the consequences of tortious acts of its employees committed in the course of their employment as such. I may also quote another passage from Rajasthan State Electricity Board vs Mohan Lal153 to show that the State today increasingly undertakes commercial functions and economic activities and services as part of its duties in a Welfare State. The Court said there: Under the Constitution, the State is itself envisaged as having the right to carry on trade or business as mentioned in Article 19(1)(g). In Part IV, the State has been given the same meaning as in Article 12 and one of the Directive Principles laid down in Article 46 is that the State shall promote with special care the educational and economic interests of the weaker sections of the people. The State, as defined in Article 12, is thus comprehended to include bodies created for the purpose of promoting the educational and economic interests of the people. The State, as constituted by our Constitution, is further specifically empowered under Article 298 to carry on any trade or business. The circumstance that the Board under the Electricity Supply Act is required to carry on some activities of the nature of trade or commerce does not, therefore, give any indication that the Board must be excluded from the scope of the word ‘State’ as used in Article 12. Hence, to artificially exclude State-run industries from the sphere of the Act, unless statutory provisions, expressly or by a necessary implication have that effect, would not be correct. The question is one which can only be solved by more satisfactory legislation on it. Otherwise, Judges could only speculate and formulate tests of ‘industry’ which cannot satisfy all. Perhaps to seek to satisfy all is to cry for the moon. For the reasons given above, I endorse the opinion and the conclusions of my learned brother Krishna Iyer.
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VIEWS EXPRESSED BY Y.V. CHANDRACHUD, JASWANT SINGH AND V.D. TULZAPURKAR, JJ. We are in respectful agreement with the view expressed by Krishna Iyer, J. in his critical judgment that the Bangalore Water Supply and Sewerage Board appeal should be dismissed. We will give our reasons later indicating the area of concurrence and divergence, if any, on the various points in controversy on which our learned Brother has dwelt.
THE AFTERMATH No doubt the apex Court’s decision in the Rajappa154 case has put an end to the plethora of unending controversies with regard to the definition of ‘industry’ under the Act that assailed the Court for nearly three decades. Certainly the decision is a landmark in the history of the labour jurisprudence of the country. After all, the Court had not done this job out of its own whims and convictions, but has taken a pragmatic approach by looking into the scheme of the Industrial Disputes Act, 1947. The first casualty of this judicial reform was from the highest legislature of the country in the year 1982. Of course, the amended definition was in tune with the Rajappa155 decision except certain exceptions thereunder. The reason for not bringing the amended definition into force by notification was that no alternative machinery for redressal of service disputes for such excluded workmen has been provided by law; therefore, till date, the amended definition has not been brought into force. Hence even today we are governed by the Rajappa156 decision as far as the interpretation of definition of ‘industry’ under the Act is concerned. In spite of the fact that the Supreme Court had categorically analysed the various tests that are to be observed while determining whether an activity is an industry or not, advertently or inadvertently, a catena of cases have stood before the High Courts and the apex Court later. THE IMPACT OF THE NEW POLITICAL ECONOMY ON THE RAJAPPA DECISION Nearly for two decades, the summit court did not respond to the resistance against the Rajappa157 ratio on the definition of ‘industry’. A mild resistance started in the late 1990s and gradually picked up momentum to climax in 2005.
State of UP vs Jai Bir Singh158 In the case of the State of UP vs Jai Bir Singh,159 the fundamental reason for referring the Bangalore Water Supply160 case before the Chief Justice of India for constituting a suitable larger bench for reconsideration of the judgement was that the experience of past years had shown that the majority view in the Bangalore Water Supply161 case, instead of ushering in industrial peace, has given rise to large number of awards granting reinstatement of service and huge amounts of back wages to workers, compelling employers having only moderate assets to close down their industries, causing harm not only to employers and workers but the public in general, they being the ultimate beneficiaries. The interpretation has to be a balanced one, with regard for the interests of the workers and the employers, as also the public. How far is this observation relevant in the context of the purpose of labour laws in the country?
Threshold Part Issues under the Industrial Disputes Act, 1947 117
This case, along with other connected cases, has been listed before the Constitution bench of five judges, which found an apparent conflict between the decisions of the two benches of the apex Court in the cases of the Chief Conservator of Forests vs Jaganath Maruthi Kondhare162 (presided over by a bench of three judges) and the State of Gujarat vs Pratamsingh Narsinh Parmar163 (a bench of two judges). THE JUDGEMENT DELIVERED
BY JUSTICE
D.M. DHARMADHIKARI
On the question of whether ‘Social Forestry Department’ of State, which is a welfare scheme undertaken for improvement of the environment, would be covered by the definition of ‘industry’ under Section 2(j) of the Industrial Disputes Act, 1947, the aforesaid benches (supra) of this Court culled out differently the ratio of the seven-judge bench decision of this court in the case of Bangalore Water Supply and Sewerage Board vs A. Rajappa164 (shortly hereinafter referred to as Bangalore Water case). The bench of three judges in the case of Chief Conservator of Forests vs Jaganath Maruthi Kondhare165 based on the decision in the Bangalore Water166 case, came to the conclusion that Social Forestry Department is covered by the definition of ‘industry,’ whereas the two–judge bench in the State of Gujarat vs Pratamsingh Narsinh Parmar167 case took a different view. As the cleavage of opinion between the two benches of this Court seems to have been on the basis of the seven-judge bench decision of this Court in the case of Bangalore Water,168 the present case (along with the other connected cases in which correctness of the decision in the Bangalore Water169 case is doubted) has been placed before this bench. Various decisions rendered by this Court prior to and after the decision in the Bangalore Water170 case on the interpretation of the word ‘industry’ under the Industrial Disputes Act, 1947, have been cited before. It has been strenuously urged on behalf of the employers that the expansive meaning given to the word ‘industry’, with certain specified exceptions carved out in the judgement of the Bangalore Water171 case is not warranted by the language used in the definition clause. It is urged that the government and its departments, while exercising its ‘sovereign functions’, have been excluded from the definition of ‘industry’. On the question of ‘what is sovereign function, there is no unanimity in the different opinions expressed by the judges in the Bangalore Water172 case. It is submitted that in a Constitutional democracy, where sovereignty vests in the people, all welfare activities undertaken by the State in discharge of its obligation under the directive principles of State Policy contained in Part IV of the Constitution are ‘sovereign functions’. To restrict the meaning of ‘sovereign functions’ to only specified categories of so-called ‘inalienable functions’ like law and order, legislation, judiciary, administration and the like is uncalled for. It is submitted that the definition of ‘industry’ given in the Act is no doubt wide, but not so wide as to hold it to include in it all kinds of ‘systematic organized activities’ undertaken by the State and even individuals engaged in professions and philanthropic activities. On behalf of the employers, it is also pointed out that there is no unanimity in the opinions expressed by the Judges in the Bangalore Water173 case on the ambit of the definition of ‘industry’ given in the Act. Pursuant to the observations made by the Judges in their different opinions in the judgement of Bangalore Water,174 the Legislature responded and amended the Act by the Industrial Disputes (Amendment) Act, 1982. In the amended definition, certain specified types of activities have been taken out of the purview of the word ‘industry’. The Act stands amended, but the amended provision redefining the word
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‘industry’ has not been brought into force because notification to bring those provisions into effect has not been issued in accordance with sub-section (2) of Section 1 of the Amendment Act. The amended definition thus remains in the statute unenforced for a period now of more than 23 years. On behalf of the employers, it is pointed out that all other provisions of the Amendment Act of 1982, which introduced amendments in various other provisions of the Industrial Disputes Act, have been brought into force by the issuance of a notification, but the Amendment Act to the extent of its substitute definition of ‘industry’, with specified categories of industries taken out of its purview, has not been brought into force. Such a piecemeal implementation of the Amendment Act, it is submitted, is not contemplated by sub-section (2) of Section 1 of the Amendment Act. The submission made is that if in response to the opinions expressed by the seven Judges in the Bangalore Water175 case, the legislature intervened and provided a new definition of the word ‘industry’ with the exclusion of certain public utility services and welfare activities, the unamended definition should be construed and understood with the aid of the amended definition, which although not brought into force is nonetheless part of the statute. On behalf of the employees, learned counsel vehemently urged that the decision in the Bangalore Water176 case being in the field as binding precedent for more than 23 years and having been worked to the complete satisfaction of all in the industrial field, on the principle of stare decisis, this Court should refrain from referring the case to a larger bench for reconsideration. It is strenuously urged that upsetting the law as settled by the Bangalore Water177 case was neither expedient nor desirable. It is pointed out that earlier an attempt was made to seek enforcement of the amended Act through this Court (see Aeltemesh Rein vs Union of India178). The Union came forward with an explanation that for employees of the categories of industries excluded under the amended definition, no alternative machinery for redressal of their service disputes has been provided by law, and therefore the amended definition was not brought into force. We have heard the learned counsel appearing on behalf of the employers and on the other side on behalf of the employees at great length. With their assistance, we have surveyed critically all the decisions rendered so far by this Court on the interpretation of the definition of ‘industry’ as contained in Section 2(j) of the Act. We begin with a close examination of the decision in the Bangalore Water179 case for considering whether a reference to a larger bench for reconsideration of that decision is required. Justice Krishna Iyer, who delivered the main opinion on his own behalf and on behalf of Bhagwati and Desai JJ, in his inimitable style has construed the various expressions used in the definition of ‘industry’. After critically examining the previous decisions, he has recorded his conclusions thus (SCC, pp. 282–84, paras 139–44): 139… So we proceed to formulate the principles, deducible from our discussion, which are decisive, positively and negatively of the identity of ‘industry’ under the Act. We speak not exhaustively, but to the extent covered by the debate at the Bar and, to the extent authoritatively, until overruled by a larger Bench or superseded by the legislative bench. 140. ‘Industry’, as defined in Section 2(j) and explained in Banerji,180 has a wide import. (a) Where (i) systematic activity, (ii) organized by co-operation between employer and employee (the direct and substantial element is chimerical) (iii) for the production and/or distribution
Threshold Part Issues under the Industrial Disputes Act, 1947 119 of goods and services calculated to satisfy human wants and wishes (not spiritual or religious but inclusive of material things or services geared to celestial bliss i.e. making, on a large scale or prasad or food), prima facie, there is an ‘industry’ in that enterprise. (b) Absence of profit motive or gainful objective is irrelevant, be the venture in the public, joint, private or other sector. (c) The true focus is functional and the decisive test is the nature of the activity with special emphasis on employer–employee relations. (d) If the organization is a trade or business it does not cease to be one because of philanthropy animating the undertaking. 141. Although Section 2(j) uses words of the widest amplitude in its two limbs, their meaning cannot be magnified to over reach itself. (a) ‘Undertaking’ must suffer a contextual and associational shrinkage as explained in Banerji181 and in this judgment; so also, service, calling and the like. This yields the inference that all organized activity possessing the triple elements in I (supra), although not trade or business, may still be ‘industry’ provided the nature of the activity, viz. the employer–employee basis, bears resemblance to what we find in trade or business. This takes into the fold of ‘industry’ undertakings, callings and services, adventures ‘analogous to the carrying on of trade or business’. All features, other than the methodology of carrying on the activity, viz. in organizing the cooperation between employer and employee may be dissimilar. It does not matter, if on the employment terms there is analogy. 142. Application of these guidelines should not stop short of their logical reach by invocation of creeds, cults or inner sense of incongruity or outer sense of motivation for or resultant of the economic operations. The ideology of the Act being industrial peace, regulation and resolution of industrial disputes between employer and workman, the range of this statutory ideology must inform the reach of the statutory definition. Nothing less, nothing more. (a) The consequences are (i) professions, (ii) clubs, (iii) educational institutions, (iv) co-operatives, (v) research institutes, (vi) charitable projects and (vii) other kindred adventures, if they fulfil the triple tests listed in I (supra), cannot be exempted from the scope of Section 2(j). (b) A restricted category of professions, clubs, co-operative and even gurukulas and little research labs, may qualify for exemption if, in simple ventures, substantially and, going by the dominant nature criterion, substantively, no employees are entertained but in minimal matters, marginal employees are hired without destroying the non-employee character of the unit. (c) If, in a pious or altruistic mission many employ themselves, free or for small honoraria or like return, mainly drawn by sharing in the purpose or cause, such as lawyers volunteering to run a free legal services clinic or doctors serving in their spare hours in a free medical centre or ashramites working at the bidding of the holiness, divinity or like central personality, and the services are supplied free or at nominal cost and those who serve are not engaged for remuneration or on the basis of master and servant relationship, then, the institution is not an industry even if stray servants, manual or technical, are hired. Such eleemosynary or like undertaking alone are exempt - not other generosity, compassion, developmental passion or project. 143. The dominant nature test: (a) Where a complex of activities, some of which qualify for exemption, others not, involves employees on the total undertaking, some of whom are not ‘workmen’ as in the University of Delhi182 case or some departments are not productive of goods and services if isolated,
120 Social Justice and Labour Jurisprudence even then, the predominant nature of the services and the integrated nature of the departments as explained in the Corporation of Nagpur,183 will be the true test. The whole undertaking will be ‘industry’ although those who are not ‘workmen’ by definition may not benefit by the status. (b) Notwithstanding the previous clauses, sovereign functions, strictly understood, (alone) qualify for exemption, not the welfare activities or economic adventures undertaken by government or statutory bodies. (c) Even in departments discharging sovereign functions, if there are units which are industries and they are substantially severable, then they can be considered to come within Section 2(j). (d) Constitutional and competently enacted legislative provisions may well remove from the scope of the Act categories which otherwise may be covered thereby. 144. We overrule Safdarjung,184 Solicitors,185 Gymkhana,186 Delhi University,187 Dhanrajgirji Hospital 188 and other rulings whose ratio runs counter to the principles enunciated above and Hospital Mazdoor Sabha189
What is to be noted is that the opinion of Krishna Iyer, J., on his own behalf and on the behalf of Bhagwati and Desai, JJ. was only generally agreed to by Beg, C.J., who delivered a separate opinion with his own approach to the interpretation of the definition of the word ‘industry’. He agreed with the conclusion that the Bangalore Water Supply and Sewerage Board is an ‘industry’ and its appeal should be dismissed, but he made it clear that since the judgement was delivered on his last working day which was a day before he was to retire, he did not have enough time to go into a discussion of the various judgements cited, particularly on the nature of the sovereign functions of the State and whether the activities in discharge of those functions would be covered in the definition of ‘industry’. What he stated reads thus: (SCC, pp. 291–92, para 165) 165. I have contented myself with a very brief and hurried outline of my line of thinking partly because I am in agreement with the conclusions of my learned Brother Krishna Iyer and I also endorse his reasoning almost wholly, but even more because the opinion I have dictated just now must be given today if I have to deliver it at all. From tomorrow I cease have any authority as a Judge to deliver it. Therefore, I have really no time to discuss the large number of cases cited before us, including those on what are known as ‘sovereign functions’.
Beg, C.J., clearly seems to have dissented from the opinion of his other three brethren on excluding only certain State-run industries from the purview of the Act. According to him, that is a matter purely of legislation and not of interpretation. These were his observations: (SCC, p. 291) 163. I would also like to make a new observation about the so-called ‘sovereign functions’ which have been placed outside the field of industry. I do not feel happy about the use of term ‘sovereign’ here. I think that the term ‘sovereign’ should be reserved, technically and more correctly, for the sphere of ultimate decisions. Sovereignty operates on a sovereign plane of its own as I suggested in Kesavananda Bharati’s190 case supported by a quotation from Ernest Barker’s Social and Political theory. Again, the term ‘Regal’, from which the term ‘sovereign’ functions appears to be derived, seems to be a misfit in a Republic where the citizen share, however small, inasmuch as he exercises the right to vote. What is meant by the use of the term ‘sovereign’, in relation to the activities of the state, is more accurately brought out by using the term ‘governmental’
Threshold Part Issues under the Industrial Disputes Act, 1947 121 functions although there are difficulties here also inasmuch as the Government has entered largely new fields of industry. Therefore, only those services which are governed by separate rules and constitutional provisions, such as Articles 310 and 311 should, strictly speaking, be excluded form the sphere of industry by necessary implication.
Since Beg, C.J., was to retire on 22 February 1978, the bench delivered the judgement on 21 February 1978 with its conclusion that the appeal should be dismissed. The above conclusion was unanimous, but the three Hon’ble judges—namely, Chandrachud, J., on behalf of himself, and Jaswant Singh, J., speaking for himself and Tulzapurkar, J.—on the day the judgement was delivered, i.e., as on 21 February, had not prepared their separate opinions. They only declared that they would deliver their separate opinions later. This is clear from paragraph 170 of the judgement, which reads thus: We are in respectful agreement with the view expressed by Krishna Iyer J. in his critical judgement that the Bangalore Water Supply and Sewerage Board appeal should be dismissed. We will give our reasons later indicating the area of concurrence and divergence, if any, on the various points in controversy on which our learned Brother has dwelt.
On the retirement of Beg, C.J., Chandrachud, J., took over as the Chief Justice. He delivered his separate opinion on 7 April 1978, which was obviously neither seen by Beg, C.J., nor dealt with by the other three judges: Krishna Iyer, Bhagwati and Desai. As can be seen from contents of the separate opinion subsequently delivered by Chandrachud, C.J. (as he then was), he did not fully agree with the opinion of Krishna Iyer, J., that the definition of ‘industry’, although of wide amplitude, can be restricted to take out of its purview certain sovereign functions of the State limited to its ‘inalienable functions’ and other activities which are essentially for the self and spiritual attainments. Chandrachud, C.J., seems to have projected a view that all kinds of organised activities giving rise to an employer–employee relationship are covered by the wide definition of ‘industry’, and its scope cannot be restricted by identifying and including certain types of industries and leaving some other types impliedly outside its purview. A separate opinion was delivered much later by Jaswant Singh, J., for himself and Tulzapurkar, J., after they had gone through the separate opinion given by Chandrachud C.J. (as he then was). The opinion of Jaswant Singh, J., for himself and Tulzapurkar, J., is clearly a dissenting opinion, in which it is said that they are not agreeable with categories 2 and 3 of the charities excluded by Brother Krishna Iyer, J. In the dissenting opinion of the two Judges, the definition covers only such activities as are: ‘Systematically and habitually carried on commercial lines for production of goods or for rendering material services to the community’. The dissenting opinion is on the lines of the opinion of Gajendragadkar, J., in the case of the State of Bombay vs Hospital Mazdoor Sabha,191 where it was observed that although the definition in the Act is very wide, ‘a line has to be drawn in a fair and just manner’ to exclude some callings or services or undertakings which do not fit in with the provisions of the Act. We may quote from the dissenting opinion of Jaswant Singh, J. (for himself and for Tulzapurkar, J.). However, bearing in mind the collection of the terms in which the definition is couched and applying the doctrine of noscitur a sociis (which as pointed out by this Court in State of Bombay vs Hospital Mazdoor Sabha192 means that, when two or more words which are susceptible of
122 Social Justice and Labour Jurisprudence analogous meaning are coupled together they are understood to be used in the cognate sense. They take as it were their colour from each other, that is, the more general is restricted to a sense analogous to a less general. Expressed differently, it means that the meaning of a doubtful word may be ascertained by reference to the meaning of words associated with it), we are of the view that despite the width of the definition it could not be the intention of the legislature that categories 2 and 3 of the charities alluded to by our learned Brother Krishna Iyer in his judgement, hospitals run on charitable basis or as a part of the functions of the Government or Local bodies like municipalities and educational and research institutions whether run by private entities or by Government and liberal and learned professionals like that of doctors, lawyers and teachers, the pursuit of which is dependent upon an individual’s own education, intellectual attainments and special expertise should fall within the pale of the definition. We are inclined to think that the definition is limited to those activities systematically or habitually undertaken on commercial line by private entrepreneurs with the cooperation of employees for the production or distribution of goods or for the rendering of material services to the community at large or a part of such community. It is needless to emphasise that in the case of liberal professions, the contribution of the usual type of employees employed by the professionals to the value of the end product (viz advise and services rendered to the client) is so marginal that the end product cannot be regarded as the fruit of the cooperation between the professional and his employees.
The judges thus delivered different opinions in the case of Bangalore Water193 at different points of time, and in some cases, without going through or having an opportunity of going through the opinions of the other judges. They have themselves recorded that the definition clause in the Act is so wide and vague that it is not susceptible to a very definite and precise meaning. In the opinions of all of them, it is suggested that to avoid reference of the vexed question of interpretation to larger benches of the Supreme Court, it would be better that the Legislature intervened and clarified the legal position by simply amending the definition of ‘industry’. The Legislature did respond by amending the definition of ‘industry’; but unfortunately, 23 years were not enough for the Legislature to provide alternative disputes resolution forums to the employees of specified categories of industries excluded from the amended definition. The legal position thus continues to be unclear and to a large extent uncovered by the decision of Bangalore Water194 case as well. Krishna Iyer, J., himself, who delivered the main judgement in the Bangalore Water195 case, at various places in his opinion expressed that the attempt made by the Court to impart definite meaning to the words in the wide definition of ‘industry’ is only a working solution until a more precise definition is provided by the Legislature. See the following observations: 2… Our judgement here has no pontifical flavour but seek to serve the future hour till changes in the law or in industrial culture occur. 3… Law, especially industrial law, which regulates the rights and remedies of the working class, unfamiliar with the sophistications of definitions and shower of decisions, unable to secure expert legal opinion, what with poverty pricing them out of the justice market and denying them the staying power to withstand the multi-decked litigative process, de facto denies social justice if legal drafting is vagarious, definitions indefinite and court rulings contradictory. Is it possible, that the legislative chambers are too preoccupied with other pressing business to listen to court signals calling for clarification of ambiguous clauses? A careful prompt amendment of Section 2(j) would have pre-empted this docket explosion before tribunals and courts. This Court perhaps more than the legislative and executive branches, is deeply concerned with law’s delays and to devise a prompt delivery system of social justice.
Threshold Part Issues under the Industrial Disputes Act, 1947 123
It is to be noted further that in the order of reference made to the seven-judge bench in the Bangalore Water Supply and Sewerage Board 196 case, the judges referring the case had stated thus: …the chance of confusion from the crop of cases in an area where the common man has to understand and apply the law makes it desirable that there should be a comprehensive, clear and conclusive declaration as to what is an industry under the Industrial Disputes Act as it now stands. Therefore, we think it necessary to place this case before the learned Chief Justice for consideration by a larger Bench. If in the meantime Parliament does not act, this Court may have to illumine the twilight area of law and help the industrial community carry on smoothly.
In the separate opinions of the other Hon’ble Judges in the Bangalore Water197 case, similar observations have been made by this Court to give some precision to the very wide definition of ‘industry’. It was an exercise done with the hope of a suitable legislative change on the subject, which all the Judges felt to be imminent and highly desirable. See the following concluding remarks (SCC, p. 284, para 145): 145. We conclude with diffidence because Parliament, which has the commitment to the political nation to legislate promptly in vital areas like industry and trade and articulate the welfare expectations in the ‘conscience’ portion of the constitution, has hardly intervened to restructure the rather clumsy, vaporous and tall and dwarf definition or tidy up the scheme although judicial thesis and antithesis, disclosed in the two-decades-long decisions, should have produced a legislative synthesis becoming of a welfare State and socialistic society, in a world setting where ILO norms are advancing and India needs updating.
The separate opinion of Beg, C.J., has the same refrain and he also observes that the question could be solved only by more satisfactory legislation. Chandrachud, C.J. (as he then was), in his separate opinion delivered on 7 April 1978, concurred partly but went a step further in expanding the definition of ‘industry’. He has felt the necessity for legislative intervention at the earliest and has observed thus: 175… But having thus expressed its opinion in a language which left no doubt as to its meaning, the Court went on to observe that though Section 2(j) used words of a very wide denotation, ‘it is clear’ that a line would have to be drawn in a fair and just manner so as to exclude some callings, services or undertakings from the scope of the definition. This was considered necessary because if all the words used in the definition were given their widest meaning, all services and all callings would come within the purview of the definition including services rendered by a person in a purely personal or domestic capacity or in a casual manner. The Court then undertook for examination what it euphemistically called ‘a somewhat difficult’ problem to decide and it proceeded to draw a line in order to ascertain what limitations could and should be reasonably implied in interpreting the wide words used in Section 2(j). I consider, with great respect, that the problem is far too policy-oriented to be satisfactorily settled by judicial decisions. Parliament must step in and legislate in a manner which will leave no doubt as to its intention. That alone can afford a satisfactory solution to the question which has agitated and perplexed the judiciary at all levels.
The dissenting opinion of Jaswant Singh, J., for himself and Tulzapurkar, J., concludes with the following observations: 187… In view of the difficulty experienced by all of us in defining the true denotation of the term ‘industry’ and divergence of opinion in regard thereto—as has been the case with this
124 Social Justice and Labour Jurisprudence Bench also—we think, it is high time that the legislature steps in with a comprehensive Bill to clear up the fog and remove the doubts and set at rest once for all the controversy which crops up from time to time in relation to the meaning of the foresaid term rendering it necessary for larger Benches of this Court to be constituted which are driven to the necessity of evolving a working formula to cover particular cases.
The above observations, contained in the dissenting view of Jaswant Singh, J., have proved prophetic. The Legislature has intervened and amended the definition of ‘industry’ in 1982; but for more than 23 years, the amended provision not having been brought into force, the unamended definition with the same vagueness and lack of precision continues to confuse the courts and the parties. The inaction of the legislative and executive branches has made it necessary for the judiciary to reconsider the subject over and over again in the light of the experience of the working of the provisions on the basis of the interpretation in the judgement of Bangalore Water198 case, rendered as far back as in the year 1978. In the case of the Coir Board vs Indira Devai P.S.,199 a two-judge bench of the Supreme Court, speaking through Sujata V. Manohar, J., surveyed all previous decisions of the Court, including the seven-judge bench decision in the Bangalore Water200 case, and passed an order of reference to the Chief Justice for constituting a larger bench of more than seven judges if necessary. See the following part of that order: 24. Since the difficulty has arisen because of the judicial interpretation given to the definition of ‘industry’ in the Industrial Disputes Act, there is no reason why the matter should not be judicially re-examined. In the present case, the function of the Coir Board is to promote coir industry, open markets for it and provide facilities to make the coir industry’s products more marketable. It is not set up to run any industry itself. Looking to the predominant purpose for which it is set up we would not call it an industry. However, if one were to apply the tests laid down by Bangalore Water Supply and Sewerage Board 201 case it is an organisation where there are employers and employees. The organisation does some useful work for the benefit of others. Therefore, it will have to be called an industry under the Industrial Disputes Act. We do not just think that such a sweeping test was contemplated by the Industrial Disputes Act, nor do we think that every organisation which does useful service and employs people can be labelled as industry. We, therefore, direct that the matter be placed before the Hon’ble Chief Justice of India to consider whether a larger Bench should be constituted to reconsider the decision of this Court in Bangalore Water Supply and Sewerage Board.202
When the matter was listed before a three–judge bench (in the case of the Coir Board vs Indira Devai P.S.),203 the request for constituting a larger bench for the reconsideration of the judgement in the Bangalore Water204 case was refused both on the grounds that the Industrial Disputes Act has undergone an amendment and that the matter does not deserve to be referred to a larger bench as the decision of seven judges in the Bangalore Water205 case is binding on benches of this Court of less than seven judges. The order refusing reference of the seven-judge bench decision by the three-judge bench in the Coir Board vs Indira Devai P.S.206 case reads thus: 1. We have considered the order made in Civil Appeals Nos. 1720–21 of 1990. The Judgement in Bangalore Water Supply and Sewerage Board vs V. A. Rajappa207 was delivered almost two decades ago and the law has since been amended pursuant to the judgement though the date of enforcement of the amendment has not been notified.
Threshold Part Issues under the Industrial Disputes Act, 1947 125 The Judgement delivered by seven learned Judges of this Court in the Bangalore Water Supply208 case does not, in our opinion, require any reconsideration on a reference being made by two– judge bench of this Court, which is bound by the Judgement of the larger Bench. The appeals, shall, therefore, be listed before the appropriate Bench for further proceedings.
Thus, the reference sought by the two judges to a larger Bench (of more than seven judges) was declined by the three-judge bench. As has been held by the Court subsequently in the case of the Central Board of Dawoodi Bohra Community vs State of Maharashtra,209 it was open to the Chief Justice on a reference made by two Hon’ble Judges of this Court to constitute a bench of more than seven judges for reconsideration of the decision in the Bangalore Water Case.210 In any case, no such inhibitions limits the power of a bench of five judges, which has been constituted on a reference made due to an apparent conflict between the judgements of two benches of the Court. As has been stated by us above, the decision in the Bangalore Water211 case is not a unanimous decision. Of the five judges who constituted the majority, three have given a common opinion; but two others had given separate opinions, projecting a view partly different from the views expressed in the opinion of the other three judges. Beg, J., having retired, had no opportunity to see the opinions delivered by the other Judges subsequent to his retirement. Krishna Iyer, J., and the two Judges who spoke through him did not have the benefit of the dissenting opinion of the other two judges and the separate, partly dissenting opinion of Justice Chandrachud, as those opinions were prepared and delivered subsequent to the delivery of the judgement in the Bangalore Water case.212 In such a situation, it is difficult to ascertain whether the opinion of Justice Krishna Iyer given on his own behalf and on behalf of Bhagawati and Desai JJ., can be held to be an authoritative precedent which would require no reconsideration even though the judges themselves expressed the view that the exercise of interpretation done by each one of them was tentative and was only a temporary exercise till the Legislature stepped in. The Legislature subsequently amended the definition of the word ‘industry’, but due to the lack of will both on the part of the Legislature and the Executive, the amended definition for a long period of 23 years, has remained dormant. Shri Andhyarujina, Learned Senior Counsel appearing for the M/s National Remote Sensing Agency—which is an agency constituted by the government in the discharge of1its sovereign functions dealing with defence, research, atomic energy and space falling in the excluded category in sub-clause (6) of the amended definition of ‘industry’ in Section 2(j)—relies on the following decisions in support of his submission that where the unamended definition in an Act is ambiguous and has been interpreted by the Court not exhaustively but tentatively until the law is amended, the amendment actually brought into the statute can be looked at for the construction of the unamended provisions (Cape Brandy Sydicat vs IRC213 case, followed in the Yogendra Nath Naskar vs CIT 214 case, in turn referred to and relied upon in the Kajori Lal Agarwal vs the Union of India215 case; the case of the State of Bihar vs S.K. Roy;216 Thiru Manickam and Company vs the State of Tamil Nadu217). Shri Andhyarujina further argued that, by the Industrial Disputes (Amendment) Act of 1982, not only was the definition of ‘industry’ as provided in the clause amended, but various other provisions of the principal Act were also amended. Sub-section (2) of Section 1 of the Amendment Act states that the Act ‘Shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint’. It is submitted that either the whole of the Act should have been notified for enforcement or
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not at all.… It is argued that such piecemeal enforcement of the Act is not permissible by sub-section (2) of Section 1 of the Amendment Act. Bennion’s Statutory Interpretation (third edition) is relied on in support of the submission that when the Amendment Act mandates the Central Government to issue a notification specifying the date on which the provisions of the Act should be brought into force, such an enabling provision implies that the enforcement of the Act has to be done within a reasonable time. Failure to enforce the Act for a period of more than 23 years is an unconstitutional attempt by the executive branch of the State to frustrate the clear intention of the Legislature. Reliance has been placed by Senior Advocate Shri Andhyarujina on the court of appeal decision in R.V. Secretary of State for the Home Department ex p Fire Brigades Union,218 which was upheld by the House of Lords in a decision reported in the same volume.219 It was held in that case thus: Having regard to the overriding legislative role of Parliament, the enacted provisions represented a detailed scheme approved by the legislature which until repealed stood as an enduring statement of its will; that while the provisions remained unrepealed it was not open to the Secretary of State to introduce a radically different scheme under his prerogative powers; and that, accordingly, in purporting to implement the tariff scheme, he had acted unlawfully and in abuse of those powers.
The House of Lords, in approving the decision of the court of appeals, held: That Section 17(1) of the Criminal Justice Act, 1988 imposed a continuing obligation on the Secretary of State to consider whether to bring the statutory scheme in Sections 108 to 117 into force; that he could not lawfully bind himself not to exercise the discretion conferred on him; that the tariff scheme was inconsistent with the statutory scheme; and that, accordingly, the Secretary of State’s decision not to bring Sections 108 to 117 into force and to introduce the tariff scheme in their place had been lawful.
Senior advocates Ms Indira Jaising and Mr Colin Gonsalves, counsel appearing for the employees, very vehemently opposed the prayer made on behalf of the employers for referring the matter to a larger bench for reconsideration of the decision in the Bangalore Water Supply220 case. It is submitted that even though the definition in the Industrial Disputes Act had been amended in 1982 and, it has not been brought into force for more than 23 years, the reasons disclosed to the Court when the enforcement of the Amendment Act was sought in the case of Aeltemesh Rein vs the Union of India221 is a sound justification. The stand of the Union of India was that for the category of industries excluded in the amended definition, no alternative industrial disputes resolution forums could be created. For the aforesaid reason, the Central Government did not enforce the provisions of the amended Act, which provided a new and restrictive definition of ‘industry’. Learned counsel on behalf of the employees relied on the A.K. Roy vs the Union of India222 decision in support of their submissions that it is not open to the Court to issue a mandamus to the Government to bring into force the provisions of an Act. It is submitted that it is the prerogative of the government, in accordance with the provisions of sub-section (2) of Section 1 of the Amendment Act, to enforce the provisions of the Act when it finds that there were conditions suitable to take out of the purview of the definition of ‘industry’ certain categories of ‘industries’ in which the employees have been provided separate forums for the redressal of their industrial disputes. For the purpose of these cases, we need not go into the aforesaid side issue because neither is there any substantive petition nor has a prayer been made in any of the cases
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before us seeking issuance of mandamus to the government to publish a notification in the Official Gazette for the enforcement of the amended definition of ‘industry’ as provided in the Amendment Act of 1982. The only question before us is as to whether the amended definition, which is now undoubtedly a part of the statute (although not enforced), is a relevant piece of subsequent legislation which can be taken aid of to amplify or restrict the ambit of the definition of ‘industry’ in Section 2(j) of the Act as it stands in its original form. On behalf of the employees, it was submitted that pursuant to the decision in the Bangalore Water223 case although the Legislature responded by amending the definition of ‘industry’ to exclude certain specified categories of industries from the purview of the Act, employees of the excluded categories of industries could not be provided with alternative forums for the redressal of their grievances. The unamended definition of ‘industry’, as interpreted by the Bangalore Water224 case, has since been the settled law of the land in the industrial field. The settled legal position, it is urged, has operated well and no better enunciation of scope and effect of the ‘definition’ could be made either by the Legislature or by the Indian Labour Organisation in its report. After hearing learned counsels for the contesting parties, we find there are compelling reasons—more than one—before us for making a reference on the interpretation of the definition of ‘industry’ in Section 2(j) of the Act to a larger bench and for reconsideration by it, if necessary, of the decision rendered in the case of the Bangalore Water Supply & Sewerage Board.225 The larger bench will have to necessarily go into all the legal questions in all dimensions and depth depth. We briefly indicate why we find justification for a reference, although it is stiffly opposed on behalf of the employees. In the judgement of the Bangalore Water Supply226 case, Krishna Iyer, J.—speaking for himself and on behalf of the other two Hon’ble judges agreeing with him—proceeded to deal with the interpretation of the definition of ‘industry’ on a legal premise, stating thus: A worker–oriented statute must receive a construction where, conceptually, keynote thought must be the worker and the community, as the Constitution has shown concern for them, inter alia, in Articles 38, 39 and 43.
With utmost respect, the statute under consideration cannot be looked at only as a worker-oriented statute. The main aim of the statute, as is evident from its preamble and various provisions contained therein, is to regulate and harmonise the relationships between employers and employees for maintaining industrial peace and social harmony. The definition clause read with other provisions of the Act under consideration deserves interpretation keeping in view interests of the employer, who has put his capital and expertise into the industry, and the workers, who by their labour equally contribute to the growth of the industry. The Act under consideration has a historical background of the Industrial Revolution inspired by the philosophy of Karl Marx. It is a piece of social legislation. Opposed to the traditional industrial culture of open competition or laissez faire, the present structure of industrial law is an outcome of long-term agitation and struggle of the working class for participation on an equal footing with the employers in industries for its growth and profits. In interpreting, therefore, the industrial law, which aims at promoting social justice, interests of employers, employees and, in a democratic society, the people who are the ultimate beneficiaries of industrial activities have to be kept in view. Ms Indira Jaising fervently appealed that in interpreting industrial law in India— which is obliged by the Constitution to uphold democratic values, as has been said in some other judgement by Krishna Iyer, J.—‘the court should be guided not by ‘Maxwell’ but
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‘Gandhi’ who advocated the protection of the interest of the weaker sections of the society as the prime concern in democratic society. In the legal field, the Court has always derived guidance from the immortal saying of the great Judge Oliver W. Holmes that ‘the life of law has never been logic, it has been experience’. The spirit of law is not to be searched in any ideology or philosophy, which might have inspired it but it may be found in the experience of the people who made and put it into practice. In the case of the Coir Board 227 Sujatha V. Manohar, J., speaking for the bench while passing an order of reference to a larger bench for reconsideration of the judgement of the Bangalore Water Supply & Sewerage Board 228 has observed: Looking to the uncertainty prevailing in this area and in the light of the experience of the last two decades in applying the test laid down in the case of Bangalore Water Supply229 it is necessary that the decision in Bangalore Water Supply230 case is re-examined. The experience of the last two decades does not appear to be entirely happy. Instead of leading to industrial peace and welfare of the community (which was the avowed purpose of artificially extending the definition of industry), the application of the Industrial Disputes Act to organisations which were, quite possibly, not intended to be so covered by the machinery set up under the Industrial Disputes Act, might have done more damage than good, not merely to the organisations but also to employees by the curtailment of employment opportunities.
The above quoted observations were criticised on behalf of the employees, stating that for making them there was no material before the Court. We think that the observations of the learned judges are not without foundation. The experience of Judges at the apex Court is not derived from the case in which the observations were made. The experience was from the cases regularly coming to this Court through the Labour Courts. It is experienced by all dealing in industrial law that overemphasis on the rights of the workers and undue curtailment of the rights of the employers to organise their business through employment and non-employment has given rise to a large number of industrial and labour claims resulting in awards granting huge amounts of back wages for past years, allegedly as legitimate dues of the workers who are found to have been illegally terminated or retrenched. Industrial awards granting heavy packages of back wages sometimes result in taking away the very substratum of the industry. Such burdensome awards in many cases compel the employer with moderate assets to close down industries, causing harm to interests of not only the employer and the workers, but also the general public, who is the ultimate beneficiary of material goods and services from the industry. The awards of reinstatement and arrears of wages for past years by Labour Courts by treating even small undertakings of employers and entrepreneurs as ‘industries’ is experienced as a serious industrial hazard, particularly for those engaged in private enterprises. The experience is that many times idle wages have to be paid to the worker because the employer has no means to find out whether and where the workman was gainfully employed pending adjudication of industrial dispute raised by him. Exploitation of workers and the employers has to be equally checked. Law, and particularly industrial law, needs to be so interpreted as to ensure that neither the employers nor the employees are in a position to dominate the other. Both should be able to cooperate for their mutual benefit in the growth of the industry and thereby serve public good. An overexpansive interpretation of the definition of ‘industry’ might be a deterrent to private enterprise in India, where public employment opportunities are scarce. The people
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should, therefore, be encouraged towards self-employment. To embrace within the definition of ‘industry’ even liberal professionals like lawyers, architects, doctors, chartered accountants and the like—which are occupations based on talent, skill and intellectual attainments—is experienced as a hurdle by professionals in their self-pursuits. In carrying on their professions, if necessary, some employment is generated, that should not expose them to the rigours of the Act. No doubt even liberal professions are required to be regulated, and reasonable restrictions in favour of those employed for them can, by law, be imposed; but that should be the subject of a separate, suitable legislation. If we adopt an ideological or philosophical approach, we would be treading on the wrong path against which learned Shri Justice Krishna Iyer himself recorded a caution in his imitable style thus (Bangalore Water Supply case)231: Here we have to be cautious not to fall into the trap of definitional expansionism bordering on reduction ad absurdum nor to truncate the obvious amplitude of the provisions to fit it into our mental mould of beliefs and prejudices or social philosophy conditioned by class interests. Subjective wish shall not be father to the forensic thought, if credibility with a pluralist community is a value to be cherished. ‘Courts do not substitute their social and economic beliefs for the judgement of legislative bodies.’
A worker-oriented approach in construing the definition of ‘industry’, unmindful of the interest of the employer or the owner of the industry and the public who are the ultimate beneficiaries, would be a one-sided approach and not in accordance with the provisions of the Act. We also wish to enter a caveat on confining ‘sovereign functions’ to the traditional so described as ‘inalienable functions’, comparable to those performed by a monarch, a ruler or a non-democratic government. The learned Judges in the Bangalore Water Supply232 case seem to have confined only such sovereign functions outside the purview of ‘industry’ which can be termed strictly as Constitutional functions of the three wings of the State, i.e. the executive, the legislature and the judiciary. The concept of sovereignty in a constitutional democracy is different from the traditional concept of sovereignty which is confined to ‘law and order’, ‘defence’, ‘law-making’ and ‘justice dispensation’. In a democracy governed by the Constitution, the sovereignty vests in the people and the State is obliged to discharge its Constitutional obligations contained in the Directive Principles of State Policy in Part IV of the Constitution of India. From that point of view, wherever the government undertakes public welfare activities in discharge of its Constitutional obligations as provided in Part IV of the Constitution, such activities should be treated as activities in discharge of sovereign functions falling outside the purview of ‘industry’. Whether employees employed in such welfare activities of the government require protection, apart from the Constitutional rights conferred on them, may be a subject of separate legislation; but for that reason, such governmental activities cannot be brought within the fold of industrial law by giving an undue expansive and wide meaning to the words used in the definition of ‘industry’. In response to Bangalore Water Supply & Sewerage Board 233 case, Parliament intervened and substituted the definition of ‘industry’ by including within its meaning some activities of the government and excluding some other specified governmental activities and ‘public utility services’ involving sovereign functions. For the past 23 years, the amended definition has remained unenforced on the statute book. The government has been experiencing difficulty in bringing into effect the new definition. Issuance of notification as
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required by sub-section (2) of Section 1 of the Amendment Act, 1982, has been withheld so far. It is, therefore, high time for the court to re-examine the judicial interpretation given by it to the definition of ‘industry’. The Legislature should be allowed greater freedom to come forward with a more comprehensive legislation to meet the demands of employers and employees in the public and private sectors. The inhibition and the difficulties which are being exercised (sic experienced) by the legislature and the executive in bringing into force the amended industrial law, more due to judicial interpretation of the definition of ‘industry’ in the Bangalore Water Supply 234 case, need to be removed. The experience of the workings of the provisions of the Act would serve as a guide for a better and more comprehensive law on the subject to be brought into force without inhibition. The word ‘industry’ seems to have been redefined under the Amendment Act keeping in view the judicial interpretation of the word ‘industry’ in the case of Bangalore Water.235 Had there been no such expansive definition of ‘industry’ given in the Bangalore Water 236 case, it would have been open to Parliament to bring in either a more expansive or a more restrictive definition of ‘industry’ by confining it or not confining it to the industrial activities other than sovereign functions and public welfare activities of the State and its departments. Similarly, employment generated in carrying on of liberal professions could be clearly included or excluded, depending on social conditions and the demands of social justice. Comprehensive change in law and/or enactment of a new law had not been possible because of the interpretation given to the definition of ‘industry’ in the Bangalore Water 237 case. The judicial interpretation seems to have been one of the inhibiting factors in the enforcement of the amended definition of the Act for the last 23 years. In the Bangalore Water 238 case not all the judges in interpreting the definition clause invoked the doctrine of noscitur a sociis. We are inclined to accept the view expressed by the six-judge bench in the case of Safdarjung Hospital,239 that keeping in view the other pro-visions of the Act and the words used in the definition clause, although ‘profit motive’ is irrelevant, in order to encompass the activity within the word ‘industry’, the activity must be ‘analogous to trade or business in a commercial sense’. We also agree that the mere enumeration of ‘public utility services’ in Section 2(n) read with the first schedule should not be held decisive. Unless the public utility service positively answers the test of being an ‘industry’ as defined in clause (j) of Section 2, the enumeration of such public utility service in the first schedule to the Act would not make it an ‘industry’. The six judges also considered the inclusion of services such as hospitals and dispensaries as public utility services in the definition under Section 2(n) of the Act and rightly observed thus: When Parliament added the sixth clause under which other services could be brought within the protection afforded by the Act to public utility services, it did not intend that the entire concept of industry in the Act, could be ignored and anything brought in. Therefore, it said that an industry could be declared to be a public utility service. But what could be so declared had to be an industry in the first place.
The decision in the case of Safdarjung Hospital 240 was a unanimous decision by all six Judges and we are inclined to agree with the following observations in the interpretation of the definition clause: But in the collocation of the terms and their definitions these terms have a definite economic content of a particular type and on the authorities of this Court have been uniformly accepted as excluding professions and are only concerned with the production and availability of material
Threshold Part Issues under the Industrial Disputes Act, 1947 131 services. Industry has thus been accepted to mean only trade and business, manufacture, or undertaking analogous to trade or business for the production of material goods or wealth and material services.
The six Judges unanimously upheld the observations in Gymkhana Club241 case: …before the work engaged in can be described as an industry, it must bear the definite character of ‘trade’ or ‘business’ or ‘manufacture’ or ‘calling’ or must be capable of being described as a undertaking resulting in material goods or material services.
In construing the definition clause and determining its ambit, one has not to lose sight of the fact that in activities in hospitals and education, concepts such as the right of the workers to go on ‘strike’ or the employer’s right to ‘close down’ and ‘layoff ’ are not contemplated, because they are services in which the motto is ‘service to the community’. If patients or students are to be left to the mercy of the employer and employees exercising their rights at will, the very purpose of the service activity would be frustrated. We are respectfully inclined to agree with the observations of Shri Justice P.B. Gajendragadkar in the case of the Harinagar Cane Farm:242 As we have repeatedly emphasised in dealing with industrial matters, industrial adjudication should refrain from enunciating any general principles or adopting any doctrinaire considerations. It is desirable that industrial adjudication should deal with problems as and when they arise and confine its decisions to the points which strictly arise on the pleadings between the parties.
We conclude, agreeing with the conclusion of the Hon’ble with the Judges in the case of the Hospital Mazdoor Sabha:243 [T]hough Section 2(j) used words of very wide denotation, a line would have to be drawn in a fair and just manner so as to exclude some callings, services or undertakings.
This Court must, therefore, reconsider where the line should be drawn and what limitations can and should be reasonably implied in interpreting the wide words used in Section 2(j). That, no doubt, is rather a difficult problem to resolve—more so when both the Legislature and the Executive are silent and have kept an important amended provision of law dormant on the statute books. We do not consider it necessary to say anything more and leave it to a larger bench to give such meaning and effect to the definition clause in the present context, with the experience of all these years and keeping in view the amended definition of ‘industry’ kept dormant for long 23 years. Pressing demands of the competing sectors of employers and employees and the helplessness of the Legislature and the Executive in bringing into force the Amendment Act compel us to make this reference. Let the cases be now placed before the Hon’ble Chief Justice of India for constituting a suitable larger bench for a reconsideration of the judgement of this Court in the case of the Bangalore Water Supply.244
A Ravage? Indeed the five-judge bench of the apex Court had laid emphasis only on one aspect, that is, that the Chief Justice of India should constitute a suitable larger bench for the
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reconsideration of the decision in the Bangalore Water Supply 245 case. At the same time, the Court expressed deep concern over the amended definition not having been brought into force. If one goes by the observations made in the cases referred to earlier in this chapter, it is abundantly clear that the Bangalore Water Supply 246 case has created more reversals than progress for industrial development in the country. The reasons for these industrial reversals are the shedding of back wages and retrenchment compensation by the employers. Is this a reflection of the apex Court’s concern for the social security and protection of the working-class masses in India? On one hand, the Court speaks of the segregation of the ‘sovereign functions’ (with an enlarged ambit) beyond the purview of the definition of ‘industry’; at the same time, it shows concern for the capital invested by individuals for the purpose of obtaining a return. At one stage, the Judiciary questioned the wisdom of Parliament in listing the public– utility service industries in the first schedule of the Industrial Disputes Act. The issue that stood before the Court in the Jai Bir Singh247 case pertained to the activities of a Stateowned department, that is, the Social Forestry Department. In this context the Court expressed its anxiety over the damage caused to the concerns by virtue of the Rajappa248 decision. On the contrary, the Court did not go to the extent of relying on the statistics for the percentage of people living below the poverty line, the number of starvation deaths and the percentage of unemployed citizens in the country. Is this exercise by the apex Court really necessary at this stage? Perhaps the reasons for shedding crores of rupees by way of back wages and such by employers is due to their own lapses in developing a clear management policy rather than the statute. A proper domestic enquiry or a proper notice in accordance with the provisions of the Industrial Disputes Act, 1947, would suffice to meet the real purposes of the said legislation.
The Definition of ‘Workman’ The second aspect of the threshold part jurisdiction of the Industrial Disputes Act, 1947, is the definition of ‘workman’. In spite of clarity, precision, explanation and exceptions, the Judiciary is confronted in some cases with the matter of an interpretation of the definition, due to the factual nature of the work done by the disputing party always being relevant in considering the definition. The excluding part of the definition clearly provides that a person who is employed mainly in a managerial or administrative capacity or who, being employed in a supervisory capacity, draws wages exceeding Rs 1,600 per mensem or who exercises (either by the nature of the duties attached to the office or by reason of the powers vested in him or her) functions mainly of a managerial nature is excluded from the definition of ‘workman’.249
Punjab National Bank vs Ghulam Dastagir 250 In this case, the issue relating to the definition of ‘workman’ under the Act was a primary concern before the Supreme Court.
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FACTS OF THE CASE The area manager of this nationalised bank was given a personal allowance by the bank to enable him to employ a driver for a vehicle provided by the bank. The jeep, which the driver was to drive, its petrol and oil requirements, and its maintenance all fell within the financial responsibility of the bank. The industrial dispute was between the individual driver, the respondent, and the management of the Punjab National Bank, Calcutta Branch, as to the justifiability of the termination of the services of Ghulam Dastagir, driver, with effect from the 27th May 1975. The reference assumes what really is the most contested point in the case is whether the respondent was the driver of the said bank. Also, the basic jurisdictional issue is whether the respondent workman was a person employed by the bank. If he was, his termination was illegal. If he was not, the reference to the industrial dispute was without jurisdiction. The industrial tribunal examined the matter at some length and came to the conclusion that the driver was employed by the bank. Consequently, a direction for reinstatement together with back wages was made. It was contended by the appellants that on the peculiar facts and circumstances present in the case, it was impossible to reach the conclusion that the driver concerned was employed by the bank. His employer, the area manager, had been given a personal allowance of Rs 200 by the bank to enable him to employ a personal driver of his own. The bank insisted that Rs 200 was the maximum allowance payable and if the expense incurred was less than Rs 200, the allowance would be reduced to the actual. In this regard, they have relied on the case Shivnandan Sharma vs Punjab National Bank251 and subsequent decisions.252
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Speaking for the majority, Justice Krishna Iyer observed that social justice is the signature tune of the Constitution of India and this note is nowhere more vibrant than in industrial jurisprudence. There is no doubt that the proposition laid down in the Shivnandan Sharma253 case is unexceptionable law and the crucial tests in most cases are as to who exercises control and supervision over the workman. It is clear that the direction and control are the telling factors in deciding whether the driver in the present case was an employee of the bank. This test does not exclude other factors and indeed, as Lord Macmillan in the Mersey Docks and Harbour Board vs Coggins & Griffith254 case rightly stressed, the question in each case turns on its own circumstances and the decisions in other cases are rather illustrative than determinative. To crystallise such criteria conclusively is baffling, but broad indications are available from the decisions. The ‘beedi cases’ turn on the reality of ‘independent contractors’ standing between the management and the beedi workers. The Supreme Court, in many such cases, discovered that there was a common practice of using deceptive devices and that the so-called independent contractors were really agents or workers of the management posing as independent contractors for the purpose of circumventing the Factories Act and like statutes, which compel managements to meet certain economic and social obligations towards the workers. It is no doubt that if in this case there is evidence to show colourable devices resorted to by the bank, then the conclusion would have been adverse to the management. On the other hand, the evidence adduced before the tribunal, oral and documentary, only led to one conclusion: that the bank made available a certain allowance to facilitate the area manager to engage the driver privately. Of course the jeep he was to drive, its petrol and oil requirements, and its maintenance, all fell within the financial responsibility of the bank. So far as the driver was concerned, his salary was paid by the manager, who drew the same by way of allowance from the bank. There is nothing on record to indicate that the control and direction of the driver vested in the bank.
134 Social Justice and Labour Jurisprudence After all, the evidence is clearly to the contrary. In the absence of material to make out that the driver was employed by the bank, was under its direction and control, was paid his salary by the bank and otherwise included in the army of employees in the establishment of the bank, there cannot be any assumption of this crucial point which remains to be proved. It must be remembered that there is no case of camouflage or circumvention of any statute here. It is not unusual for public sector industries or a nationalised banking institution to give allowances to its high-level officers, leaving it to them to engage the services of drivers or others for fulfilling the needs for which the allowances are meant. In this view, it is clear that the award fails as it is unsupportable and hence the award is reversed. It is conceivable that the facts in the case of the employment of other drivers may be different. If other materials are available regarding the terms and conditions of service, regarding the direction and the control of the drivers and regarding other indicia of employment, the conclusion may be different. Therefore it cannot be dogmatised generally as to the nature of the employment of other drivers under this bank or other industry even where features of allowance may be present. This is stated because, as Lord Macmillan pointed out in the case referred to, the facts vary from case to case. Evidence is shaped in each case and conclusions are reached on the basis of the facts and evidence of each case. There is no invariable proposition where fluid facts are involved. The Court also impressed upon the respondent’s counsel that the system of allowances, in a country where there is wide unemployment, may lead to individual injustice with an exploitative edge. It is likely that if the bank had to employ drivers for their vehicles, the terms and conditions would have been much higher but in the private sector, individual drivers may be hired as ‘personal’ employees on lower pay. This is not a desirable tendency for a publicsector undertaking such as a nationalised bank. Further, the Court also felt that the possibility of abuse of the system of drivers’ allowances and the obligation of the public sector undertakings to be model employers will lead to a change in the approach of nationalised banks and other public-sector undertakings towards the issue of employing persons on a private basis by senior officers, with the management itself giving some small sum by way of allowance in lieu of procuring such services. On the other hand, a fair and straightforward method would be for the bank or like institution to engage its own driving staff. It is also important to remember that the vehicles belong to the industry and if drivers hired on a private basis by officers are allowed to use such vehicles, there may be potential damage and reckless use. In the long run, both from the point of view of the employment morality and the preservation of institutional property, it may be wise to revise the approach to issues like the one which the Court had been confronted with. Of course, on the facts in this case, it is decided that what is considered is the only conclusion which is possible. Even so, this does not preclude banking institutions and like undertakings adopting a different policy which is considered as commendable. In the course of the arguments it was indicated to the counsel appearing for the appellant when he presented the case of the management that the approach of this Court may not turn purely on the technicalities of evidence but on the consideration of social justice. The counsel readily responded to the spirit in which the Court put this aspect to him. He gave an assurance to the Court that this driver, though not an employee of the bank, would be paid ex gratia a sum of Rs 7,500 by deducting the sum which has already been paid on an earlier occasion. The appellant bank will further see that, within three months from today, the respondent driver is absorbed in the personal service of one or other of the higher officers of the bank in or around Calcutta on a salary of not less than Rs 250. The driver respondent was to be given intimation by registered notice about this offer of absorption. And, if he did not report within one month of the receipt of such notice, this part of the assurance will lapse.
Indeed this judgement, delivered by Justice Krishna Iyer for the majority of the Court renders invaluable propositions. As a law court, the apex Court had to confine itself strictly to the principles of evidence in determining the question of whether the disputing workman was in fact really employed by the bank under the guise of an extra allowance paid to
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the manager. The facts involved did not go beyond anything but that an allowance was paid by the manager to his servant who was engaged to drive the car. But at the same time, based on the sound submissions of the counsel appearing for the respondent, Justice Krishna Iyer aptly perceived the prospective trend of the forms of exploitation of labour by institutions such as banks and public-sector undertakings in the country. This, in one way, leads to show a form of renaissance of the contract-labour system, which is at present deeply rooted in the country in the new neo-liberal order, which the Court at that point of time showed the deserving resistance. Due to absence of support of any statute to prove the employer–employee relationship, the Court rightly rejected the findings of the industrial tribunal of the Central Government. In view of the helplessness of the disputing workman in claiming his absorption, however, the Court at the end of its judgement offered a suitable relief for absorption on a salary of not less than Rs 250 within three months from the date of delivering the judgement. In India, labour legislations to a large extent support the instances in determining the employer–employee relationship directly. Legislations such as the Industrial Employment (Standing Orders) Act, 1946, the Employees’ State Insurance Act, 1948, and the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, provide sufficient legal support in proving the relationship of employer and employee. In cases of this type, wherein the agent of an employer is asked to make his own arrangements for his conveyance and in such cases a person is employed by the agent himself, do not come under any statute regarding the relationship of employer and employee.
The Definition of ‘Industrial Dispute’ The third element of the threshold part jurisdiction under the Act is the definition of ‘industrial dispute’. The definition consists of three ingredients, the consideration of which has assumed paramount importance for the apex Court. The first and foremost ingredient of the definition is the factum of dispute. This is necessarily a mixed question of fact and law. This issue at times leads to questioning the very competency of the appropriate government to refer a dispute to the authorities provided under Section 10(1) of the Act. In any dispute involving the discharge or dismissal of a workman, the mere fact that the matter has come before a conciliation officer followed by a failure report thereunder to the appropriate government should invariably lead to the conclusion that there exists an industrial dispute. Section 12(1) of the Act provides that where any industrial dispute exists or is apprehended, the conciliation officer may—or where the dispute relates to a public-utility service and a notice under Section 22 has been given, shall—hold conciliation proceedings in the prescribed manner. This particular provision was invoked only to show the existence or non-existence of an industrial dispute in cases where the appropriate government referred such a dispute for adjudication based on the report sent by the conciliation officer under Section 12(5) of the Act. The first ingredient of the definition, that is, the factum of dispute—whether it is confined to the fact of the existence of an industrial dispute or to the case of apprehension of an industrial dispute—is something that still stands for clarity. The Supreme Court, in the case we will now discuss, considered the powers of the appropriate government in referring an industrial dispute to the various authorities provided under Section 10(1) of the Act.
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Shambu Nath Goyal vs Bank of Baroda255 This case apparently stands on a simple footing, but involves an important question of law pertaining to the interpretation of the definition of ‘industrial dispute’ under Section 2(k) of the Act. This was an appeal by special leave out of an award made by the industrial tribunal of Chandigarh. The appellant was a clerk in the Bank of Baroda. The management, after conducting an enquiry into charges of misconduct, dismissed him from service. The industrial dispute arising out of the dismissal of the workman was espoused by the bank workers’ union. On the failure of conciliation proceedings recorded by the conciliation officer, the Government of India made a reference of the case to the court in the following terms: whether the action of the management of Bank of Baroda in dismissing the appellant was justified? If not, to what relief is he entitled?
Before the tribunal, the management had raised a preliminary objection that as no demand in respect of the appellant was made upon the management, there was no industrial dispute in existence and therefore the reference made by the government under Section 10 of the Industrial Disputes Act was incompetent. The Tribunal upheld the contention of the management that as no demand, either oral or in writing, had been made by the concerned workman before approaching the conciliation officer, there was no dispute in existence on the date of the reference and therefore the reference made by the government was incompetent. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Sec. 2(k) defines Industrial Dispute as under: ‘industrial dispute’ means any dispute or difference between employers and employers, 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. A bare perusal of the definition would show that where there is a dispute or difference between the parties contemplated by the definition and the dispute or difference is connected with the employment or non-employment or the terms of employment or with the conditions of labour of any person there comes into existence an industrial dispute. The Act nowhere contemplates that the dispute would come into existence in any particular, specific or prescribed manner. For coming into existence of an industrial dispute a written demand is not a sine qua non, unless of course in the case of public utility service because Section 22 forbids going on strike without giving a strike notice. The key words in the definition of industrial dispute are ‘dispute’ or ‘difference’. What is the connotation of these two words? In Beetham vs Trinidad Cement Ltd.,256 Lord Denning while examining the definition of expression of ‘trade dispute’ in Section 2(1) of Trade Disputes (Arbitration and Inquiry) Ordinance of Trinidad observed: by definition a ‘trade dispute’ exists wherever a ‘difference’ exists and a difference can exist long before the parties become locked in a combat. It is not necessary that they should have come to blows. It is sufficient that they should be sparring for an opening.
Threshold Part Issues under the Industrial Disputes Act, 1947 137 Thus the term ‘industrial dispute’ connotes a real and substantial difference having some element of persistency and continuity till resolved and likely if not adjusted to endanger the industrial peace of the undertaking or the community. When parties are at variance and the dispute or difference is connected with the employment, or non-employment or the terms of employment or with the conditions of labour there comes into existence an industrial dispute. To read into definition the requirement of written demand for bringing into existence an industrial dispute would tantamount to re-writing the section. The reference in this case was made under Section 10(1) which provides inter alia that where the appropriate Government is of opinion that any industrial dispute exists or is apprehended, it may at any time by order in writing refer the matter to adjudication as therein mentioned. The power conferred by Section 10(1) on the Government to refer the dispute can be exercised not only where an industrial dispute exists but when it is also apprehended. From the material placed before the Government, Government reaches an administrative decision whether there exists an industrial dispute or an industrial dispute is apprehended and in either event it can exercise its power under Section 10(1). But in making a reference under Section 10(1) the Government is doing an administrative act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. The Court cannot therefore, canvass the order of reference closely to see if there was any material before the Government to support its conclusion, as if it was a judicial or quasi- judicial determination. No doubt it will be open to a party seeking to impugn the resulting award to show that what was referred by the Government was not an industrial dispute within the meaning of the Act, and that therefore, the Tribunal had no jurisdiction to make the award. But, if the dispute was an industrial dispute as defined in the Act, its factual existence and expediency of making a reference in the circumstances of a particular case are matters entirely for the Government to decide upon and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because in its opinion there was no material before the Government on which it could have come to an affirmative conclusion of those matters (vide Madras State vs C.P. Sarathy).257 The Tribunal, however, referred to the decision of the Court in Sindhu Settlement Corporation Ltd vs Industrial Tribunal,258 in which the Court proceeded to ascertain whether there was in existence an Industrial Dispute at the date of reference, but the question whether in case of an apprehended dispute Government can make reference under Section 10(1) was not examined. But that apart the question whether an industrial dispute exists at the date of reference is a question of fact to be determined on the material placed before the Tribunal with the cautions enunciated in C.P. Sarathy’s259 case. Undoubtedly, it is for the Government to be satisfied about existence of the dispute and the Government does appear to be satisfied. However, it would be open to the party impugning the reference that there was no material before the Government, and it would be open to the Tribunal to examine the question, but that does not mean that it can sit in appeal over the decision of the Government and come to a conclusion that there was no material before the Government. In this case the Tribunal completely misdirected itself when it observed that no demand was made by the workman claiming reinstatement after dismissal. When the enquiry was held, it is an admitted position, that the workman appeared and claimed reinstatement. After his dismissal he preferred an appeal to the Appellate forum and contended that the order of dismissal was wrong, unsupported by evidence and in any event he should be reinstated in service. If that was not a demand for reinstatement addressed to employer what else would it convey? That appeal itself is a representation questioning the decision of the management dismissing the workman from service and praying for reinstatement. There is further a fact that when the Union approached the Conciliation Officer, the management appeared and contested the claim for reinstatement. There is thus unimpeachable evidence that the concerned workman persistently demanded reinstatement. If in this background the Government came to the conclusion that
138 Social Justice and Labour Jurisprudence there exists a dispute concerning workman and it was an industrial dispute because there was demand for reinstatement and a reference was made, such reference could hardly be rejected on the ground that there was no demand and the Industrial Dispute did not come into existence. Therefore, the Tribunal was in error in rejecting the reference on the ground that the reference was incompetent. Accordingly the appeal was allowed and the Award of the Tribunal was set aside and the matter was remitted to tribunal for disposal according to law as expeditiously as possible.
The Apex Court rightly rejected the Award of the Tribunal by interpretating the definition of ‘industrial dispute’ in a manner provided under the Act. The existence or the apprehension of an industrial dispute is a mixed question of law and fact. The mere fact that the Union approaching the conciliation officer challenging the order of dismissal made by the management and the management participating in conciliation proceedings in pursuance of the dispute, resulting in failure speaks volumes about the existence of an industrial dispute. The language in Section 12(1) of the Act is very clear to the effect that the duties of the conciliation officer stem from the factum of the existence or apprehension of an industrial dispute between the parties. This decision of the Apex Court has paved the way in removing the ambiguities pertaining to the existence of an industrial dispute between the parties and the role of the Industrial Disputes Act, 1947 in investigating and settlement of industrial disputes.
The Definition of ‘Award’ and its Scope The term ‘award’260 is defined in the Act with a purpose of including the determination by the adjudicating authorities of an ‘interim relief ’ moved by the parties. The adjudicating authorities, in the course of their proceedings under the scope of an order of reference, have to confront certain ‘preliminary objections’ put forth either by the employer or by workmen. One fundamental ‘preliminary objection’ that ultimately relates to the very scope and content of the term ‘award’ is the very fact of existence of an industrial dispute between the parties concerned. Then inevitably certain issues stand for determination before the higher courts. One such instance will now be discussed in order to gain a clear understanding of the definition and scope of the term ‘award’ from the decision of the Supreme Court in the following case.
Cox and Kings (Agents) vs Their Workmen and Others261 In this case, the appellants dismissed from service three of their workmen after a domestic enquiry conducted against them on certain charges. In May 1967, the Lieutenant Governor of Delhi made a reference under Section 10 read with Section 12(5) of the Industrial Disputes Act to the Labour Court of Delhi to determine: Whether the termination of services of the three workmen shown in the order were unlawful and unjustified, and if so, to what relief are these workmen entitled.
By an amendment of their written statement in February 1969, augmented by an application dated 17 March 1971, the management raised a preliminary objection that since no demand notice had been served on the management, no industrial dispute had
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legally come into existence, and as such the reference was invalid and the Labour Court had no jurisdiction to adjudicate it.262 By an order dated 27 September 1972, the Labour Court accepted the objection, holding that: No industrial dispute came into existence before this reference, as the workmen have failed to establish serving of demand on the management prior to this reference. The effect of this finding is that the reference could not have been made for adjudication and the same is accordingly invalid and hence the question of deciding the issue as in the reference or other issues does not arise as the industrial dispute under reference did not come into existence in accordance with law before this reference. The award is made accordingly.
Thereafter, on 25 October 1972, the workmen raised a dispute by serving demand notices on the management. By his order dated 2 May 1973, the Lieutenant Governor, Delhi, again made a reference to the Labour Court under the Act for adjudication of the same matter relating to the termination of the services of the aforesaid workmen. The principal question that arises in this appeal is: Whether an order of the Labour Court to the effect, that since no demand of the workmen had been served on the employer, no industrial dispute had come into existence in accordance with law, and as such the Reference was invalid and the Court had no jurisdiction to adjudicate the matter referred to it by the Government, is an ‘award’263 for the purposes of Section 19 of the ID Act?
The management raised, inter alia, a preliminary objection that a second reference within one year of the first ‘award’ dated 27 September 1972 was not competent in view of what is contained in Section 19 of the Act. By an order dated 2 May 1973, the Labour Court dismissed the preliminary objection. After recording the evidence produced by the parties, the court held on merits that the termination of the services of the three workmen was illegal and unjustified. This award was made by the Labour Court on 1 May 1975. It was contended by the appellant that the determination dated 27 September 1972 by the Labour Court was an ‘award’ as defined in Section 2(b) of the Act, and in view of sub-section (3) of Section 19, it had to be in operation for a period of one year. It could be terminated only by a notice given under sub-sections (4) and (6) of Section 19. Since no such notice was given, the award continued to be in operation. The second award, dated 1 May 1975, thus could not be made during the period the first award was in operation. Emphasis has also been laid on the point that the ‘award’ dated 27 September 1972 had been duly published by the government under Section 17(1) and had assumed finality under sub-section (2) of the same section. It was submitted that no second reference could be validly made by the government during the period in which the first award remained operative, and since the second reference, dated 2 May 1973, was made before the expiry of the period of the first award (which had been not terminated in the manner laid down in Section 19), it was invalid and the consequential adjudication by the Labour Court on its basis was null and void. In this connection, the appellants relied upon a judgement of the Supreme Court in the case of the Management of Bangalore, Woollen, Cotton & Silk Mills vs the Workmen,264 wherein it was held that when there is a subsisting award binding on the parties, the tribunal has no jurisdiction to consider the same points in a fresh reference. Reference has also been
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made to a single-bench judgement of the Allahabad High Court in the Workmen of Swadeshi Cotton Mills vs Swadeshi Cotton Mills, Kanpur 265 case. As against this, the respondents contended that the Labour Court’s order, dated 1 May 1972, was not an ‘award’ within the definition of the term in Section 2(b) of the Industrial Disputes Act, inasmuch as it was not a determination, on merits, of any industrial dispute or of any question relating to an industrial dispute. In this connection, reliance was placed on a judgement by the apex Court in the case of the Institute of Textiles vs Its workmen.266 EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE SARKARIA There is no dispute that the order on the earlier Reference was made by the Labour Court on 27-9-1972, while the second Reference with the same terms of Reference to that Court was made by the Government on 2-5-1973, i.e., within one year of the earlier order. It is common ground that the period of one year for which an award normally remains in operation under sub-section (3) was not reduced or curtailed by the Government under Section 19 or under any other provisions of the Act. It is further admitted between the parties that no notice was given by any party of its intention to terminate the order dated 27-9-1972. The controversy with regard to the first point therefore narrows down into the issue: Whether the determination dated 27-9-1972 of the Labour Court was an award as defined in Section 2(b) of the Act? The definition of ‘award’ in Section 2(b) falls in two parts. The first part covers a determination, final or interim, of any industrial dispute. The second part takes in a determination of any question relating to an industrial dispute. But the basic postulate common to both the parts of the definition, is the existence of an industrial dispute, actual or apprehended. The ‘determination’ contemplated by the definitions of the industrial dispute or a question relating thereto, on merits. It is to be noted further that Section 2 itself, expressly makes the definition subject to ‘anything repugnant in the subject or context’. It is therefore necessary to consider this definition in the context of Section 19 and other related provisions of the Act. The appellants contended that the order dated 27-9-1972 is not a determination of any industrial dispute, as such, falling under the first part of the definition. However, it is argued that the expression ‘or any question relating thereto’ in the second part of the definition is of wide amplitude and should be spaciously construed. It is maintained that a question, whether or not an industrial dispute exists, will itself be a question relating to an industrial dispute within the intendment of the second part of the definition. It was observed that the contention appears to be attractive but does not stand a close examination. Sub-section (1) of Section 10 indicates when the matters can be referred to the Labour Court for adjudication. The sub section expressly makes formation of opinion by the appropriate Government ‘that any industrial dispute exists or is apprehended’ as a condition precedent to the exercise of the power of making a Reference. Sub-section (4) gives a mandate to the Labour Court to confine its adjudication to those points of dispute which have been specified in the order of Reference, or are incidental thereto. From a conjoint reading of clause (b) of Section 2 and sub-sections (1) and (4) of Section 10, it is clear that in order to be an ‘award’ within the second part of the definition, a determination must be (i) an adjudication of a question or point relating to an industrial dispute, which has been specified in the order of Reference or is incidental thereto, and (ii) such adjudication must be one on merits. The Labour Court’s order, dated 27-9-1972, in the light of the above enunciation did not satisfy any of the criteria indicated above. It did not determine the questions or points specified in the Government’s Order of Reference. Nor was it an adjudication on merits of any industrial dispute or a question relating thereof. The only question determined by the order 27-9-1972,
Threshold Part Issues under the Industrial Disputes Act, 1947 141 was about the existence of a preliminary fact viz., existence of an industrial dispute which in the Labour Court’s opinion was a sine qua non for the validity of the reference and exercise of further jurisdiction by the Court. Rightly or wrongly, the Court found that this preliminary jurisdictional fact did not exist, because ‘no industrial dispute had come into existence in accordance with the law’, and, in consequence, the Reference was invalid and the Court was not competent to enter upon the reference and determine the matter referred to it. With this finding, the Court refused to go into the merits of the question referred to it. There was no determination on merits of an industrial dispute or a question relating thereto. It was therefore held that the Labour Court’s determination dated 27-9-1972 did not possess the attributes essential to bring it within the definition of an ‘award’. The mere fact that this order was published by the Government under Section 17(1) of the Act did not confer that status on it. The Court relied on its own earlier decision in Technological Institute of Textiles vs Its Workmen.267 In this case, there was a settlement which in the absence of necessary formalities, was not binding on the parties. Certain items of dispute were not pressed and withdrawn under the terms of such settlement. In the subsequent Reference before the Industrial Tribunal, some of the items of dispute were withdrawn and no award was made in respect thereto. Thereafter, these items were referred for adjudication along with certain other matters to the Tribunal. It was contended on behalf of the Management that subsequent Reference with regard to the items which had been withdrawn and not pressed in the earlier award had not been terminated in full, Ramaswamy, J., speaking for the Court, repelled this contention, with these observations: It is manifest in the present case that there has been no adjudication on merits by the industrial tribunal in the previous reference with regards to the matters covered by items (1) and (3) of the present reference because the workman had withdrawn those matters from the purview of the dispute. There was also no settlement, because the demands in question had been withdrawn by the workman and there was no agreement between the parties in regard thereto. The conclusion therefore, is that the bar of Section 19 of the Industrial Disputes Act does not operate with regard to the matters covered by items (1) and (3) of the present reference and the argument put forward by the appellant on this aspect of the case must be rejected. It was observed that facts of the case before the Court are different, yet the principle enunciated therein viz. that the bar of Section 19 operates only with regard to a determination made on merits, is fully applicable. By any reckoning, the decision dated 27-9-1972, of the Labour Court by its very nature did not impose any continuing obligation on the parties bound by it. This was an additional reason for holding that the second reference was not barred by anything contained in sub-section (3) or other provisions of Section 19. On these grounds, the apex Court did not accept the contentions of the appellants in this regard; but as far as the issue of reinstatement with back wages was concerned, the Court made slight modifications to the findings of the Labour Court.
The Meaning and Scope of ‘Undertaking’ under the Industrial Disputes Act, 1947 The Industrial Disputes Act, 1947, does not as such contain the definition of an ‘undertaking’. But the word ‘undertaking’ is contained in the definition of ‘industry’ under Section 2(j) of the Act. In the case of Avon Services Production Agencies vs the Industrial Tribunal,268 the Supreme Court had occasion to deal with the issue of the scope of
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‘undertaking’ inter alia, wherein two employees were retrenched by the appellant which was engaged in the business of manufacturing fire fighting foam compound. Though this case stands on a simple footing, the facts involved in this case have far-reaching implications in view of the judgement delivered in it. The outcome of this judgement virtually compelled Parliament to initiate a legislative reform that appears to be a pro labour amendment. But taking into consideration the ratio of the Court, the amendment almost renders the decision futile.
Avon Services Production Agencies vs the Industrial Tribunal The company had set up two factories, one at Bombay and the other at Ballabhgarh. The industrial dispute which is the subject matter of the appeal relates to the Ballabhgarh factory. According to the appellant, this factory, when commissioned in 1962, was divided into two sections, now styled as two separate undertakings: (a) a manufacturing section and (b) packing material making section. The manufacturing section comprised two sub-sections: the chemical section (that is, Foam Compound Manufacturing Section) and the boiler section. The packing material section was again composed of two sub-sections: one manufacturing containers and the other painting the containers. Respondents 3 and 4, according to the appellant, were employed in the painting section. Around 1964 the appellant decided to buy containers from the market and consequently closed down its packing material making section but continued the painting sub-section. On 13 July 1971, the appellant purported to serve a notice on respondents 3 and 4 and others, intimating them that the management has decided to close the painting section, effective 13 July, due to unavoidable circumstances and hence the services of the three workmen would no longer be required and, therefore, they are retrenched. Even though it is alleged that the notice was served upon the three workmen, the tribunal found that the notice never reached respondents 3 and 4. By the notice, the workmen concerned were also informed that they should collect their dues under Section 25FFF of the Industrial Disputes Act, 1947, from the office of the company. Subsequently, the trade union of the employees served a notice of demand on 16 July 1971, inter alia, calling upon the appellants to reinstate respondents 3 and 4 and the third workman and also to pay them full back wages. Subsequently the Government of Haryana referred the demands 2 to 9 to the industrial tribunal for adjudication. In respect of demand No. 1, relating to the reinstatement of three workmen in the painting section, a reference was refused on the ground that there was no work for painting in the factory where these two workmen were working. This refusal to refer the demand concerning respondents 3 and 4 became the subject matter of a very serious submission on behalf of the company that the reference made by the government was invalid. To proceed further with the narrative, subsequently the Government of Haryana, by its order dated 23 November 1972, referred the following dispute to the industrial tribunal for adjudication: Whether the retrenchment of Sarvashri Mohammed Yamin and Mohammed Yasin was justified and in order? If not, to what relief they are entitled?
The tribunal registered the reference at No. 82/72 and proceeded to adjudicate upon the dispute. Three issues were raised before the tribunal and it is necessary to set down
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the three issues here in order to point out that one of the contentions raised at the hearing of this appeal was never put forth before the tribunal. The issues framed by the tribunal are: 1. Whether the present reference is bad in law for the reason given in para No. 1 of the preliminary objection in the written statement? (On management). 2. Whether the statement of claim filed on behalf of the workmen is not in order? (On management). 3. Whether the retrenchment of Sarvashri Mohammed Yamin and Mohammad Yasin was justified and in order? If not, to what relief they are entitled?
The industrial tribunal rightly held that respondents 3 and 4 were retrenched and the case would squarely fall under Section 25F of the Industrial Disputes Act, 1947, and as the appellant (employer) has not complied with the pre-condition laid down in Sections 25F(a) and (b) of the Act—to wit, serving of one month’s notice or wages in lieu of such notice and payment of retrenchment compensation—the retrenchment was invalid. The tribunal was further of the opinion that as both the workmen have been in service for 15 years or so, they could have been conveniently absorbed in some other department and therefore the retrenchment was unjustified. The tribunal accordingly directed the reinstatement of respondents 3 and 4 with full back wages. The relevant point contended by the appellant was that the tribunal was in error in holding that respondents 3 and 4 were retrenched from service and that their case would be governed by Section 25F, while in fact the services of respondents 3 and 4 were terminated on account of closure of the painting undertaking of the appellant company and therefore the case would be governed by Section 25FFF, and that failure to pay compensation and notice charges simultaneously with termination of service being not a pre-requisite, the termination would neither be illegal nor invalid. EXCERPTS FROM THE JUDGMENT DELIVERED BY JUSTICE D.A. DESAI Section 25F prescribes conditions precedent to retrenchment of workmen. The conditions precedent are: (a) giving one month’s notice in writing to the workman sought to be retrenched indicating the reasons for retrenchment and the retrenchment can be brought about on the expiry of the notice period or on payment of wages in lieu of such notice for the period of notice; (b) payment of retrenchment compensation as per the formula prescribed therein. No notice to the workman would be necessary if the retrenchment is under an agreement which specifies a date for the termination of service. Section 25 FFF prescribes liabilities of an employer to pay compensation to workmen in case of closing down of undertaking. The relevant portion of Section 25 FFF as under: 25 FFF(1) Where an undertaking is closed down for any reason whatsoever every workman who has been in continuous service for not less than one year in that undertaking immediately before such closure shall, subject to the provision of sub-section (2) be entitled to notice and compensation in accordance with the provisions of Section 25F, as if the workman had been retrenched: Provided that where the undertaking is closed down on account of unavoidable circumstances beyond the control of the employer, the compensation to be paid to the workman under clause (b) of Section 25F, shall not exceed his average pay for three months.
144 Social Justice and Labour Jurisprudence A comparison of the language employed in Section 25F and section 25FFF(1) would bring about in bold relief the difference between phraseology employed by the Legislature and its impact on the resultant rights of the workmen, Under Section 25F a workman employed in an industrial undertaking cannot be retrenched by the employer until the payment is made as provided in clauses (a) and (b). Section 25FFF(1) provides that the workman shall be entitled to notice and compensation in accordance with the provisions of Section 25F if the undertaking is closed for any reason as if the workman has been retrenched. Taking note of this difference in language, this Court in State of Bombay vs the Hospital Mazdoor Sabha269 held that the failure to comply with the provision prescribing conditions precedent for valid retrenchment invalid and inoperative. Expounding this position, a Constitution Bench of this Court in M/S Hatisingh Mfg Co Ltd vs Union of India, AIT270 held that the Legislature has not sought to place closure of an undertaking on the same footing as retrenchment under Section 25F. By Section 25F a prohibition against retrenchment until the conditions prescribed by that section are fulfilled, is imposed; by Section 25FFF(1) termination of employment on closure of the undertaking without payment of compensation and without either serving notice is not prohibited. Payment of compensation and payment of wages for the period of notice are not, therefore, conditions precedent to closure. Further it was held that the expression ‘undertaking’ is not defined in the Act. It finds its place in the definition of the expression ‘industry’ in Section 2(j) of the Act. While ascertaining the amplitude of the expression ‘undertaking’ in the definition of the expression ‘industry’, noscitur a sociis canon of construction was invoked and a restricted meaning was assigned to it in Bangalore Water Supply and Sewerage Board vs Rajappa.271 While thus reading down the expression in the context of Section 25FFF it must mean separate and distinct business or commercial or trading or industrial activity. It cannot comprehend an infinitesimally small part of a manufacturing process.
It is interesting to note that at the time when this case was decided by this Court, the Industrial Disputes Act, 1947, the definitions of ‘closure’ and ‘industrial establishment or undertaking’. Perhaps the outcome of this decision compelled the Parliament to go for negative legislative reform to nullify the effect of this judgement as far as the law relating to a situation of closure of an undertaking. The newly inserted definitions pertaining to ‘closure’ and ‘industrial establishment or undertaking’ read as follows: (i) ‘Closure’ means the permanent closing down of a place of employment or part thereof;272 (ii) ‘Industrial establishment or undertaking’ means an establishment or undertaking in which any industry is carried on; Provided that where several activities are carried on in an establishment or undertaking and only one or some of such activities is or are an industry or industries, then— (a) if any such establishment or undertaking carrying on any activity, being an industry is severable from the other unit or units of such establishment or undertaking, such a unit shall be deemed to be a separate industrial establishment or undertaking; (b) if the predominant activity or each of the predominant activities carried on in such establishment or undertaking or any unit thereof is an industry and the other activity or each of the other activities carried on in such establishment, or undertaking or unit thereof is not severable from and is, for the purpose of carrying on, or aiding the carrying on of, such predominant activity or activities, the entire establishment or undertaking or, as the case may by, unit thereof shall be deemed to be an industrial establishment or undertaking;273
Threshold Part Issues under the Industrial Disputes Act, 1947 145 Thus history has shown that the threshold part issues or jurisdictional definitions have consumed lengthy time in adjudicating the labour issues under the Industrial Disputes Act, 1947. To conclude, it is relevant to repeat again the observations made by Justice O. Chinnappa Reddy in the B.P. Maheswari vs Delhi Administration274 case: We think it is better that tribunals, particularly those entrusted with the task of adjudicating labour disputes where delay may lead to misery and jeopardise industrial peace, should decide all issues in dispute at the same time without trying some of them as preliminary issues. Nor should High Courts in the exercise of their jurisdiction under Article 226 of the Constitution stop proceedings before a Tribunal so that a preliminary issue may be decided by them. Neither the jurisdiction of the High Court under Article 226 of the Constitution nor the jurisdiction of this Court under Article 136 may be allowed to be exploited by those who can well afford to wait to the detriment of those who can ill afford to wait by dragging the latter from Court to Court for adjudication of peripheral issues, avoiding decision on issues more vital to them. The nature of jurisdiction under Article 226 is supervisory and not appellate while that under Article 136 is primarily supervisory but the Court may exercise all necessary appellate powers to do substantial justice. In the exercise of such jurisdiction neither the High Court nor this Court is required to be too astute to interfere with the exercise of jurisdiction by special tribunals at interlocutory stages and preliminary issues.
NOTES 1. D.P. Maheshwari vs Delhi Administration. (1983) 47 FLR 477: (1983) LLJ 424. 2. D.N. Banerji vs P.R. Mukherjee. (1953) SCR 302:AIR 1953 SC 58. 3. AIR 1978 SC 548. 4. The bench consisted of M.H. Beg (Chief Justice), Y.V. Chandrachud, P.N. Bhagawati, V.R. Krishna Iyer, Jaswant Singh, V.D. Tulzapurkar and D.A. Desai, JJ. 5. (1960) 2 SCR 866:1976 I LLJ SC 33. 6. AIR 1978 SC 548. 7. (1971) I SCR 177:AIR 1970 SC 1407. This case was heard by Hidayatullah (Chief Justice), J.C. Shah, K.S. Hegde, A.N. Grover, A.N. Ray and I.D. Dua, JJ. The majority decision was delivered by Chief Justice Hidayatullah. 8. P. St. J. Langan (ed.), 1969. Maxwell on the Interpretation of Statutes, 12th edn. London: Sweet and Maxwell. 9. (1971) I SCR 177:AIR 1970 SC 1407. 10. (1953) SCR 302:AIR 1953 SC 58. 11. (1953) SCR 302:AIR 1953 SC 58. 12. (1971) I SCR 177:AIR 1970 SC 1407. 13. O.P. Malhotra, 1998. The Industrial Disputes, vol. I, pp. 44, 45. Delhi: Universal Law Publishing Co. 14. (1953) SCR 302:AIR 1953 SC 58. 15. Hotel and Catering Industry Training Board vs Automobile Proprietary Ltd. (1968) 1 WLR 1526, 1530. 16. (1953) SCR 302:AIR 1953 SC 58. 17. (1971) I SCR 177:AIR 1970 SC 1407. 18. (1953) SCR 302:AIR 1953 SC 58. 19. (1953) SCR 302:AIR 1953 SC 58. 20. (1953) SCR 302:AIR 1953 SC 58. 21. (1953) SCR 302:AIR 1953 SC 58. 22. (1943 AC 166). 23. 26 CL.R 508 (Aus). 24. AIR 1953 SC 58. 25. AIR 1953 SC 58. 26. 26 CLR 508 (Aus). 27. AIR 1953 SC 58. 28. 1909 AC, 506. 29. AIR 1953 SC 58. 30. AIR 1953 SC 58.
146 Social Justice and Labour Jurisprudence 31. (1902) 2 SCR 942:AIR 1960 SC 675. 32. (1960) 2 SCR 866:AIR 1960 SC 610. 33. AIR 1953 SC 58. 34. AIR 1953 SC 58. 35. AIR 1960 SC 675. 36. AIR 1953 SC 58. 37. AIR 1960 SC 675. 38. AIR 1960 SC 610. 39. (1960) 2 SCR 942:AIR 1960 SC 675. 40. 1957 SCR 33:AIR 1957 SC 110. 41. (1960) 2 SCR 942:AIR 1960 SC 675. 42. AIR 1953 SC 58. 43. 1957 SCR 33:AIR 1957 SC 110. 44. 1584 (76) ER 634. 45. AIR 1960 SC 675. 46. 1913 16 CLR 245 (Aus). 47. (1929) 41 CLR 569. 48. AIR 1960 SC 675. 49. (1929) 41 CLR 569 (Aus). 50. Halsbury’s Laws of England, 3rd Edition, Vol. 38, p. 11. 51. 1964 (2) SCR 703:AIR 1963 SC 1873. 52. (1929) 41 CLR 569 (Aus). 53. AIR 1960 SC 675. 54. AIR 1960 SC 610. 55. AIR 1960 SC 675. 56. AIR 1960 SC 675. 57. AIR 1960 SC 610. 58. 1962 supp (3) SCR 157:AIR 1962 SC 1080. 59. AIR 1960 SC 610. 60. 1968 (1) SCR 742:AIR 1968 SC 554. 61. AIR 1962 SC 1080. 62. AIR 1962 SC 1080. 63. 1968 (1) SCR 742:AIR 1968 SC 554. 64. 1968 (1) SCR 742:AIR 1968 SC 554. 65. Reader, 1966, p. 3. 66. Reader, 1966, p. 37. 67. Reader, 1966, p. 23. 68. AIR 1976 SC 242. 69. AIR 1962 SC 1080. 70. AIR 1962 SC 1080. 71. 1964 (2) SCR 703:AIR 1963 SC 1873. 72. 1964 (2) SCR 703:AIR 1963 SC 1873. 73. AIR 1960 SC 675. 74. AIR 1960 SC 675. 75. (1929) 41 CLR 569. 76. AIR 1963 SC 1873. 77. AIR 1960 SC 675. 78. AIR 1963 SC 1873. 79. (1971) I SCR 177:AIR 1970 SC 1407. 80. (1972) I SCR 202:AIR 1971 SC 2422. 81. (1972) I SCR 202:AIR 1971 SC 2422. 82. (1972) I SCR 202:AIR 1971 SC 2422. 83. 1961 (2) SCR 480:AIR 1961 SC 484. 84. 1971 (1) SCR 177:AIR 1970 SC 1407. 85. AIR 1975 SC 2032. 86. 1961 (2) SCR 480:AIR 1961 SC 484. 87. Safdarjung Hospital vs Kuldip Singh Sethi. (1971) I SCR 177:AIR 1970 SC 1407. 88. (1971) I SCR 177:AIR 1970 SC 1407.
Threshold Part Issues under the Industrial Disputes Act, 1947 147 89. (1971) I SCR 177:AIR 1970 SC 1407. 90. AIR 1968 SC 554. 91. AIR 1969 SC 276. 92. AIR 1968 SC 554. 93. AIR 1969 SC 276. 94. AIR 1968 SC 554. 95. AIR 1968 SC 554, pp. 564, 565. 96. AIR 1968 SC 554. 97. 1969 (1) SCR 600:AIR 1969 SC 276. 98. 1975 (132) CLR 595. 99. AIR 1970 SC 1407. 100. AIR 1970 SC 1407. 101. AIR 1970 SC 1407. 102. AIR 1970 SC 1407. 103. AIR 1968 SC 554. 104. AIR 1969 SC 276. 105. AIR 1968 SC 554. 106. AIR 1960 SC 610:1960 I LLJ 251 SC. 107. AIR 1970 SC 1407. 108. AIR 1960 SC 610. 1960 I LLJ 251 SC. 109. AIR 1970 SC 1407. 110. 1976(2) SCR 138:AIR 1976 SC 145. 111. 1976(2) SCR 138:AIR 1976 SC 145. 112. AIR 1953 SC 58. 113. AIR 1961 SC 484. 114. AIR 1960 SC 610. 115. AIR 1969 SC 675. 116. AIR 1953 SC 58. 117. AIR 1962 SC 1080. 118. AIR 1963 SC 1873. 119. AIR 1968 SC 554. 120. AIR 1969 SC 276. 121. (1963) 1 LLJ 567 (Cal). 122. AIR 1970 SC 1407. 123. AIR 1975 SC 2032. 124. AIR 1976 SC 145. 125. AIR 1953 SC 58. 126. AIR 1960 SC 675. 127. AIR 1970 SC 1407. 128. AIR 1953 SC 58. 129. AIR 1953 SC 58. 130. AIR 1963 SC 1873. 131. AIR 1960 SC 675. 132. AIR 1970 SC 1407. 133. AIR 1962 SC 1080. 134. AIR 1968 SC 554. 135. AIR 1963 SC 1873. 136. AIR 1975 SC 2032. 137. AIR 1960 SC 610. 138. (1949) 2 All ER 155. p. 164. 139. AIR 1961 SC 1107. p. 1115. 140. (1953) SCR 302:AIR 1953 SC 58. 141. (1960) 2 SCR 942:AIR 1960 SC 675. 142. (1960) 2 SCR 866:AIR 1960 SC 610. 143. (1584) 76 ER 637. 144. 1962 SCR 146:AIR 1962 SC 159. 145. 1958 SCR 1156 at p. 1163:AIR 1958 SC 353 at p. 356. 146. Maxwell, Interpretation of Statutes, p. 55.
148 Social Justice and Labour Jurisprudence 147. 1953 SCR 302 at p. 310:AIR 1953 SC 58 at p. 61. 148. 1960 (2) SCR 866 at p. 875:AIR 1960 SC 610 at p. 614. 149. AIR 1970 SC 1407. 150. AIR 1970 SC 1407. 151. AIR 1973 SC 1461. 152. 1962 Supp (2) SCR 989 at p. 1002:AIR 1962 SC 933 at p. 938. 153. 1976 (2) SCR 377 at p. 385:AIR 1967 SC 1857 at p. 1863. 154. AIR 1978 SC 548. 155. AIR 1978 SC 548. 156. AIR 1978 SC 548. 157. AIR 1978 SC 548. 158. (2005) 5 SCC 1. A five-judge bench consisting of N. Santosh Hegde, K.G. Balakrishnan, D.M. Dharmadhikari, Arun Kumar and B.N. Srikrishna, JJ heard the case and the majority decision was delivered by Justice D.M. Dharmadhikari. 159. (2005) 5 SCC 1. 160. AIR 1978 SC 548. 161. AIR 1978 SC 548. 162. (2005) 5 SCC 1. 163. (1996) 2 SCC 293:1996 SCC (L&S) 500. 164. (2001) 9 SCC 713:2002 SCC (L&S) 269. 165. (1978) 2 SCC 213:1978 SCC (L&S) 215. 166. (1996) 2 SCC 293:1996 SCC (L&S) 500. 167. (1978) 2 SCC 213:1978 SCC (L&S) 215. 168. (2001) 9 SCC 713:2002 SCC (L&S) 269. 169. (1978) 2 SCC 213:1978 SCC (L&S) 215. 170. (1978) 2 SCC 213:1978 SCC (L&S) 215. 171. (1978) 2 SCC 213:1978 SCC (L&S) 215. 172. (1978) 2 SCC 213:1978 SCC (L&S) 215. 173. (1978) 2 SCC 213:1978 SCC (L&S) 215. 174. (1978) 2 SCC 213:1978 SCC (L&S) 215. 175. (1978) 2 SCC 213:1978 SCC (L&S) 215. 176. (1978) 2 SCC 213:1978 SCC (L&S) 215. 177. (1978) 2 SCC 213:1978 SCC (L&S) 215. 178. (1978) 2 SCC 213:1978 SCC (L&S) 215. 179. (1988) 4 SCC 54:1988 SCC (Cri) 900. 180. (1978) 2 SCC 213:1978 SCC (L&S) 215. 181. AIR 1953 SC 58. 182. AIR 1953 SC 58. 183. AIR 1963 SC 1873. 184. AIR 1960 SC 675. 185. Safdarjung Hospital vs Kuldip Singh Sethi. (1970) 1 SCC 735. 186. National Union of Commercial Employees vs M.R. Meher. 1962 Supp (3) SCR 157:AIR 1962 SC 1080. 187. Secretary Madras Gymkhana Club Employees Union vs Gymkahana Club. (1968) 1 SCR 742:AIR 1968 SC 554. 188. University of Delhi vs Ram Nath. (1964) 2 SCR 703:AIR 1963 AC 1873. 189. Dhanrajgirji Hospital vs Workmen. (1975) 4 SCC 621:1975 SCC (L&S) 342. 190. State of Bombay vs Hospital Mazdoor Sabha. (1960) 2 SCR 866:AIR 1960 SC 610. 191. Kesavananda Bharati vs State of Kerala. (1973) 4 SCC 225. 192. (1960) 2 SCR 866:AIR 1960 SC 610. 193. (1960) 2 SCR 866:AIR 1960 SC 610. 194. (1978) 2 SCC 213:1978 SCC (L&S) 215. 195. (1978) 2 SCC 213:1978 SCC (L&S) 215. 196. (1978) 2 SCC 213:1978 SCC (L&S) 215. 197. (1978) 2 SCC 213:1978 SCC (L&S) 215. 198. (1978) 2 SCC 213:1978 SCC (L&S) 215. 199. (1978) 2 SCC 213:1978 SCC (L&S) 215. 200. (1998) 3 SCC 259:1998 SCC (L&S) 806. 201. (1978) 2 SCC 213:1978 SCC (L&S) 215.
Threshold Part Issues under the Industrial Disputes Act, 1947 149 202. (1978) 2 SCC 213:1978 SCC (L&S) 215. 203. (1978) 2 SCC 213:1978 SCC (L&S) 215. 204. (2000) 1 SCC 224:2000 SCC (L&S) 120. 205. (1978) 2 SCC 213:1978 SCC (L&S) 215. 206. (1978) 2 SCC 213:1978 SCC (L&S) 215. 207. (2000) 1 SCC 224:2000 SCC (L&S) 120. 208. (1978) 2 SCC 213:1978 SCC (L&S) 215. 209. (1978) 2 SCC 213:1978 SCC (L&S) 215. 210. (2005) 2 SCC 673:2005 SCC (L&S) 246: 2005 SCC (Cri) 546. 211. (1978) 2 SCC 213:1978 SCC (L&S) 215. 212. (1978) 2 SCC 213:1978 SCC (L&S) 215. 213. (1978) 2 SCC 213:1978 SCC (L&S) 215. 214. (1921) 2 KB 403:90 LJKB 461 (CA). 215. (1969) 1SCC 555:(1969) 3 SCR 742. 216. (1966) 3 SCR 141:AIR 1966 SC 1538. 217. 1966 Supp SCR 259:AIR 1966 SC 1995. 218. (1977) 1 SCC 199:1977 SCC (tax) 165:AIR 1977 SC 518. 219. (1995) 2 WLR 1:(1995) 1 All ER 888:(1995) 2 AC 513 (CA). 220. R. vs Secretary of State for the Home Department, ec p Fire Brigades Union. (1995) 2 WLR 464:(1995) 2 ALL E R 244 (HL). 221. (1978) 2 SCC 213:1978 SCC (L&S) 215. 222. 1988 4 SCC 54. 223. (1982) 1 SCC 271:1982 SCC (Cri) 152. 224. (1978) 2 SCC 213:1978 SCC (L&S) 215. 225. (1978) 2 SCC 213:1978 SCC (L&S) 215. 226. (1978) 2 SCC 213:1978 SCC (L&S) 215. 227. (1978) 2 SCC 213:1978 SCC (L&S) 215. 228. Coir Board vs Indira Devi P.S. (1998) 3 SCC 259:1998 SCC (L&S) 806. 229. (1978) 2 SCC 213:1978 SCC (L&S) 215. 230. (1978) 2 SCC 213:1978 SCC (L&S) 215. 231. (1978) 2 SCC 213:1978 SCC (L&S) 215. 232. (1978) 2 SCC 213:1978 SCC (L&S) 215. 233. (1978) 2 SCC 213:1978 SCC (L&S) 215. 234. (1978) 2 SCC 213:1978 SCC (L&S) 215. 235. (1978) 2 SCC 213:1978 SCC (L&S) 215. 236. (1978) 2 SCC 213:1978 SCC (L&S) 215. 237. (1978) 2 SCC 213:1978 SCC (L&S) 215. 238. (1978) 2 SCC 213:1978 SCC (L&S) 215. 239. (1978) 2 SCC 213:1978 SCC (L&S) 215. 240. Safdarjung Hospital vs Kuldip Sethi. (1970) I SCC 735. 241. Safdarjung Hospital vs Kuldip Sethi. (1970) I SCC 735. 242. Secretary, Madras Gymkhana Club Employees’ Union vs Gymkhana Club. (1968) I SCR 742:AIR 1968 SC 554. 243. Harinagar Cane Farm vs State of Bihar. AIR 1964 SC 903. 244. State of Bombay vs Hospital Mazdoor Sabha. (1960) 2 SCR 866:AIR 1960 SC 610. 245. (1978) 2 SCC 213:1978 SCC (L&S) 215. 246. (1978) 2 SCC 213:1978 SCC (L&S) 215. 247. (1978) 2 SCC 213:1978 SCC (L&S) 215. 248. State of U.P. vs Jai Bir Singh. (2005) 5 SCC. 249. (1978) 2 SCC 213:1978 SCC (L&S) 215. 250. Definition of ‘workman’ prior to the Amendment Act of 1982: The definition of ‘workman’ as given originally in the Act of 1947 read as follows: ‘Workman’ means any person employed (including an apprentice) in any industry to do any skilled or unskilled, manual or clerical work for hire or reward and includes, for the purpose of any proceedings under this Act in relation to an industrial dispute, a workman discharged during that dispute, but does not [include] any person employed in the naval, military or air services of the Crown.
150 Social Justice and Labour Jurisprudence The word ‘Crown’ was substituted by the word ‘Government’ by the Adaptation of Laws Order, 1950. By the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 (36 of 1956), the previous definition was omitted and a new definition was inserted, reading as follows: ‘Workman’ means any person (including an apprentice) employed in any industry to do any skilled or unskilled manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be expressed or implied, and for the purpose of any proceeding under this Act in relation to an industrial dispute includes any such person who has been dismissed, discharged or retrenchment has led to that dispute, but does not include any such person… (i) who is subject to the Army Act, 1950 (46 of 1950), or the Air Force Act, 1950 (45 of 1950), or Navy (Discipline) Act, 1934 (34 of 1934); (ii) who is employed in the police service or as an officer or other employee of a prison; or (iii) who is employed mainly in a managerial or administrative capacity; or (iv) who, being employed in a supervisory capacity, draws wages exceeding five hundred rupees per mensem or exercise[s], either by the nature of the duties attached to the office or by reason of the powers vested in him, functions mainly of a managerial nature. 251. AIR 1978 SC 481. 252. AIR 1955 SC 404. 253. AIR 1966 SC 370. 254. AIR 1966 SC 370. 255. 1947 AC 1. 256. AIR 1978 SC 1088. 257. (1960) 1 All E R 274. p. 279. 258. AIR 1953 SC 53. 259. AIR 1968 SC 529. 260. AIR 1953 SC 53. 261. Under Section 2(b) of the Act, ‘award’ means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, industrial tribunal or national industrial tribunal and includes an arbitration award made under Section 10A. 262. AIR 1977 SC 1666. This case was heard by V.R. Krishna Iyer, R.S. Sarkaria and Jaswant Singh, JJ. The majority judgement was delivered by Justice R.S. Sarkaria. 263. Under Section 2(k) of the Industrial Disputes Act, an ‘industrial dispute’ means any dispute or difference between employers and employers, or between employers and workmen, or between workmen and workmen, which is connected with the employment, non-employment or the terms of employment or with the conditions of labour, of any persons. The essential ingredients of the definition are the following; 1. the factum of the dispute; 2. the parties to the dispute; and 3. the subject matter of the dispute. 264. Under Section 2(b) of the ID Act ‘award’ means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Tribunal and includes an arbitration award made under Section 10A. 265. AIR 1968 SC 585. 266. 1973 LIC 711 (All). 267. 1965 II LLJ 149 (SC). 268. 1965 II LLJ 149 SC. 269. AIR 1979 SC 170. The case was heard by V.R. Krishna Iyer and D.A. Desai, JJ. The majority judgement was delivered by Justice D.A. Desai. 270. (1960) 2 SCR 866 at p. 871:AIR 1960 SC 610. 271. (1960) 3 SCR 528:AIR 1960 SC 923. 272. 1978 (36) FLR 266:AIR 1978 SC 548. 273. See Section 2(cc) of the Act. Inserted by Act 46 of 1982 with effect from 21 August 1984. 274. Inserted by Act 46 of 1982 with effect from 21 August 1984. 275. 1983 (2) LLJ 424.
Collective Bargaining Agreement Issues 151
Chapter 4
Collective Bargaining Agreement Issues The collective bargaining process plays an important role in establishing healthy relations between the labour and the management. It is a process wherein labour and management participate in negotiations regarding demands of common concern that may be made by each party and reach an amicable settlement. The basis for any industrial conflict is the failure of the collective bargaining process. A study of a few cases would reveal a mixed trend of factors contributing to the failure of the collective bargaining process. Sometimes it is the mixed contribution of both parties, in some cases the extremely unbending attitude of the management, and in other cases the extremely stubborn nature of union leaders that ultimately results in cases of lock-out or closure of an industrial establishment. The Industrial Disputes Act, 1947, provides a mechanism for the strengthening of the settlements entered into by the parties, for the adjudication of industrial disputes and for the regulation of the rights and privileges of the parties concerned. The long title of the Act provides for the investigation and settlement of industrial disputes, which means adjudication of such disputes also. The Act envisages collective bargaining contracts between the unions representing workmen and the management, a matter which falls outside the realm of common law or the Indian law of contract.1 The Industrial Disputes Act, 1947, does not define the reasons on account of which workmen can go on strike or when an employer can lawfully declare a lock-out in an industry or establishment. But the law simply defines a ‘strike’ and a ‘lock-out’ in contrast to each other. Strike and lock-out are viewed as antithesis to each other. No law in India enables workers to go on strike or employers to declare a lock-out of their workmen. The Act only imposes appropriate legal disabilities on the workers’ right to go on strike or the employers’ right to declare a lock-out, as the case may be. A strike is legal if it does not violate any provisions of statute. Hence, in India, the workers’ right to go on strike is a customary right. A well-recognised custom is, of course, one of the sources of law. It is argued that a strike is a legitimate weapon in the hands of workmen for the redressal of their grievances and if they are made liable for breach of contractual remedies or for the damages suffered by the employer on account of a strike then the basic idea of a strike as a means of having the grievances redressed will be taken away. The fallacy in this argument is that it presupposes the strike to be legal and justified. Our Constitution guarantees the right to form associations, not for gregarious pleasure, but to fight effectively for the redressal of grievances. Our Constitution is sensitive to workers’ rights. Our story of freedom and social emancipation led by the Father of the Nation has employed, from the highest of motives, combined action to resist evil and to right wrong even if it meant
152 Social Justice and Labour Jurisprudence
loss of business and profits for the liquor vendor, the brothel-keeper and the foreign– cloth dealer. English history, political theory and lifestyle being different from Indian conditions, which are replete with organised boycotts and mass satyagrahas, we cannot incorporate English torts without any adaptation into Indian law.2
The Far-reaching Impact of Nullifying Settlements As already stated, the reason for any industrial conflict is the failure of the collective bargaining process. But at the same time, it is quite interesting to examine whose fault or attitude allows the conflict to persist. In India, we do not come across any doctrinal research to establish a precise conclusion as to whose fault it was that a dispute persisted, rather than reaching an amicable settlement. Here is an example of a situation to substantiate this proposition.
Mahabir Jute Mills, Gorakhpur, vs Shibban Lal Saxena and Others3 A bench of four judges presided over this case and delivered a concurrent view. If one looks at the facts and the position of law, it is quite difficult to be convinced by the decision rendered in this case, however. The Industrial Disputes Act, 1947, under Section 12(5) provides: ‘if, on a consideration of the report of the Conciliation Officer under sub-section (4), the appropriate Government is satisfied that there is a case for reference to a Board, Labour Court, Tribunal or National Tribunal, it may make such reference. Where the appropriate Government does not make such a reference it shall record and communicate to the parties concerned its reasons therefor.’4 The Government of Uttar Pradesh enacted the U.P. Industrial Disputes Act (28 of 1947), wherein the relevant provision is not similar to Section 12(5) of the Industrial Disputes Act, 1947, in substance. The entire controversy in this case surrounded one particular issue, that is, whether the appropriate government is bound to furnish reasons to the parties concerned for not referring the dispute to the concerned authorities. THE FACTS OF THE CASE The Mahabir Jute Mills Mazdoor Sabha was formed in 1946 and the respondent in this case was the president of the union. There arose some disputes between the management and the union. The union gave a notice of general strike, listing 18 demands. Later, a total strike was launched and during the strike period the respondent left for China. Meanwhile, the management arrived at a settlement with the working president of the union and the dispute was resolved. Subsequently, after the return of the respondent with his re-entry into the union, matters assumed serious proportions and the disputes reached a high pitch. He agitated with the settlement reached and insisted for a re-opening of the settlement. He also started an agitation and the workers responded to the ‘go slow’ call given by the respondent, which resulted in heavy losses to the management. The strike went on for several days. It is alleged that the president had delivered a number of inflammatory speeches against the management. The management initiated
Collective Bargaining Agreement Issues 153 disciplinary proceedings against the workers, numbering 1,000, and terminated all from service. It appears that 200 workers were taken back into employment due to the reason they tendered an apology. In view of these developments, the union invoked the jurisdiction of the regional conciliation officer under Section 3 of the U.P. Industrial Disputes Act, 1947. A conciliation board, consisting of the additional regional conciliation officer as the chairman, and Shibban Lal Saxena and Shri Arora representing the labour and the management respectively as members, was constituted. The board heard the case, but unfortunately no settlement could be arrived at. Consequently, the report of the board members was forwarded to the labour commissioner and the same was placed before the government. The chairman of the board sent a secret report to the labour commissioner, recommending that the allegations made by the workers against the management were baseless and should not be entertained. After considering the reports, the Government of U.P., by its order, refused to make a reference to the industrial tribunal on the ground that it was not expedient to do so. There was some controversy before the single judge of the High Court on the question as to when the order of the government was received by the workers. The High Court accepted the plea of the workers that there was sufficient delay in communicating the order by the government to the workers as a result of which a writ petition was filed before the High Court after a year and a half. But the High Court found that the petitioners were not guilty of laches.
THE JUDGEMENT DELIVERED BY JUSTICE S. MURTAZA FAZIL ALI The learned single judge, while allowing the petition, set aside the order of the Government and directed the Government to make a reference to the industrial tribunal, ignoring the secret report sent by the Assistant Regional Conciliation Officer. Another reason which the single judge gave was that the order of the Government did not state any reasons and was not a speaking order, hence it was legally invalid and was fit to be quashed. The Division Bench of the High Court in appeal has not accepted—and in our opinion, rightly—this part of the order of the High Court which was set aside. The Division Bench held as the order of the government was purely an administrative order, unless there was any provision that required the Government to give reasons for the order, the same could not be vitiated for the absence of the reasons. The High Court observed thus: The function of the Government is administrative. In law administrative decisions are not generally required to be accompanied by a statement of reasons. There is nothing in the Industrial Disputes Act or the notification aforesaid requiring the State Government to state its reason in support of its conclusions. There was nothing particular in the present case impelling the issuance of such a direction to the State Government. We find ourselves in complete agreement with the view taken by the High Court on this point. In a diverse society such as ours, the government has to work through several administrative agencies which have got a very wide sphere. If every administrative order is required to give reasons, it will bring the governmental machinery to a standstill. It is well settled that while the rules of natural justice apply to administrative proceedings, it is not necessary that the administrative orders should be speaking orders unless the statute specifically enjoins such a requirement. But we think it desirable that such orders should contain reasons when they decide matters affecting rights of parties. The Division Bench of the High Court, however, set aside the order of the government refusing to make a reference to the industrial tribunal and directed it to reconsider the matter on the following three grounds: 1. That the government took into consideration the secret report, which had seriously prejudiced and coloured its decision;
154 Social Justice and Labour Jurisprudence 2. that in accordance with the principles of natural justice, the regional conciliation officer should have shown the secret report to the other members of the conciliation board so that they may have had the opportunity to rebut the same; and 3. that the government order was based on the secret report sent by the additional regional conciliation officer as also the report of the labour commissioner. In the aforesaid order of the Division Bench of the High Court, certain mandatory directions have been given to the government to ignore the secret report as also the report of the labour commissioner and to consider the report of the other members of the conciliation board, namely Shibban Lal Saxena and Arora. The Division Bench of the High Court has, however, granted the certificate of fitness by its order dated 9 April 1973. Coming to first ground which weighed with the High Court in setting aside the order of the government refusing to make a reference to the industrial tribunal, it seems to us that the High Court has proceeded on a complete misconception of the real position and on a premise which is, wrong on a point of fact. Having perused the materials placed before us, we find that there is no reliable material on record at all to show that the government order was based mainly on the secret report of the additional regional conciliation officer or of the labour commissioner. The order does not say so; it only recites that the reference to the industrial tribunal was refused because the government did not think it expedient to make a reference. The High Court, however, com-pletely overlooked the specific averment made in the counter affidavit filed by the government before the High Court. In paragraph 29 of this counter affidavit, while rebutting the allegations made by the petitioner, it was stated: That with respect to the contents of para 38 of the said affidavit it is stated that the opinion of the Government that it was expedient to refer the dispute to adjudication was formed after the matter was fully considered by the State Government. The report of the Labour Commissioner submitted through his letter No. 7241/I-CR-CB-5(147)/1955 dated 22nd October, 1955, was also before the Department concerned. A true copy of the said letter of the Labour Commissioner is Annexure III to this affidavit. The Government took the decision after considering the said report and other surrounding circumstances. It is denied that there was any discrimination against the petitioner Union. Each case was duly considered on its merits and only those cases were dropped which in the opinion of the Government were not fit for reference. This averment, which has not been proved to be false, manifestly shows that the government, before making the impugned order, had considered all the aspects, including the reports of the chairman and the members of the conciliation board, the labour commissioner and other surrounding circumstances. In these circumstances, the finding of the Division Bench of the High Court that the order of the government was based merely on the secret report of the chairman or that of the labour commissioner is not sustainable. We fail to understand on what basis the High Court has presumed that the government acted solely on the secret report of the regional conciliation officer. Under Section 4-K of the U.P. Industrial Disputes Act, the statute confers the power on the government to refer any industrial dispute if it is of the opinion that such a dispute exists or that any matter is connected with or relevant to the dispute. The section runs as follows: Where the State Government is of opinion that any industrial dispute exists or is apprehended, it may at any time by order in writing refer the dispute or any matter appearing to be connected with, or relevant to, the dispute to a Labour Court if the matter of industrial dispute is one of those contained in the First Schedule, or to a Tribunal if the matter of dispute is one contained in the First Schedule or the Second Schedule for adjudication:
Collective Bargaining Agreement Issues 155 Provided that where the dispute relates to any matter specified in the Second Schedule and is not likely to affect more than one hundred workmen, the State Government may, if it so thinks fit, make the reference to a Labour Court. This section, therefore, gives a wide discretion to the state government to act under certain circumstances. If the government, on the basis of the materials before it, comes to the conclusion that no real dispute existed and it was not expedient to make a reference, one can hardly find fault with the order of the government, passed under Section 4-K of the U.P. Industrial Disputes Act. There can be no doubt that the secret report of the additional regional conciliation officer and the report of the labour commissioner, like other circumstances, had to be considered by the government in making its overall assessment of the situation; there was no reason for excluding the secret report submitted by the additional regional conciliation officer at all. In these circumstances, the first ground on which the Division Bench has set aside the government order was not legally sound and cannot be sustained. As regards the second ground, the main contention of Gupte, learned counsel for the appellant, has been that the High Court was in error in applying the principles of natural justice to a matter like this. He submitted that the cases relied upon by the judge of the high court regarding the application of the principles of natural justice to administrative proceedings cannot be invoked in the facts and circumstances of this case. To begin with, we have to examine the ambit and scope of the conciliation board and the procedure adopted by it by virtue of the provisions contained in the notification issued by the government under Section 3 of the U.P. Industrial Disputes Act. The relevant portion of the notification runs thus: 5. Functions of the Boards and submission of Memorandum of Report. (1) Upon reference of a dispute to the Conciliation Board under cl. 4 it shall be its duty to endeavour to bring about a settlement of the dispute, and for this purpose the Board shall, in such manner as it thinks fit, and without delay, investigate the dispute and all matters affecting the merits and just settlement thereof, and may do all such things as it thinks fit for the purpose of inducing the parties to come to an amicable settlement. (2) In any case where the Conciliation Board is successful in bringing about an amicable settlement between the parties it shall prepare a memorandum stating the terms of settlement arrived at and the chairman shall send copies thereof to the State Government, the Labour Commissioner, U.P. and the parties concerned. (3) Where no amicable settlement can be reached on one or more than one issue, the Chairman shall, within seven days (excluding holidays but not annual vacations observed by courts subordinate to the High Court) of the close of the proceedings, send to the State Government and the Labour Commissioner, a full report setting forth the steps taken by the Board for ascertaining the facts and circumstances relating to the dispute and for bringing about an amicable settlement thereof. (4) The memorandum under sub-clause (2) or the report under sub-clause (3) shall be submitted by the Chairman within thirty days (excluding holidays but not annual vacations observed by courts subordinate to the High Court) of the date on which the reference was made to the Board: Provided that the State Government may extend the said period from time to time. (5) The memorandum under sub-clause (2) or the report under sub-clause (3) shall be signed by the Chairman and such members as may be present: Provided that the memorandum under sub-clause (2) shall also be signed by the parties to the dispute Provided that nothing in this clause shall be deemed to prevent any member of the Board from submitting a dissenting report.
156 Social Justice and Labour Jurisprudence A perusal of this notification clearly shows that the jurisdiction of the conciliation board is very limited. The procedure prescribed for the board does not involve any adjudicatory process but is purely of an exploratory nature, and what the board has to do is make an effort to bring about an amicable settlement between the management and the workers, and if it fails to do so it has to send a detailed report to the government. That is the limited area within which the board has to function. Nevertheless, it is not disputed in this case that the conciliation board held a full investigation in the matter, heard the parties, and framed as many as 33 issues after going into the matter, and then the chairman and the members sent their reports. Thus, before making the reports, all the rules of natural justice were fully complied with: The parties were given a hearing, their points of view were fully considered, and in fact the representative of the management and that of the labour were members of the board. There is no provision in the notification or in the U.P. Industrial Disputes Act which enjoins that the report submitted by the chairman or any other members should be shown to one another. This also does not appear to be necessary. The High Court seems to think that because the chairman did not show his secret report to the other members of the board, this has resulted in the violation of the principles of natural justice. We are, however, unable to agree with this line of reasoning. The principles of natural justice are no doubt very essential, but they have got their own limits and cannot be stretched too far. We would like to deal with some cases which have been referred to in the judgement of the High Court and which are also relied upon by Chowdhri, counsel for the respondents. In the first place, reliance was placed on the case of A.K. Kraipak vs Union of India,5 where this Court observed: The aim of the rules of natural justice is to secure justice or to put it negatively to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. In other words they do not supplant the law of the land but supplement it… If the purpose of the rules of natural justice is to prevent miscarriage of justice one fails to see why those rules should be made inapplicable to administrative enquiries. Often times it is not easy to draw the line that demarcates administrative enquiries from quasi-judicial enquiries. This Court, however, took care to point out as follows: What particular rule of natural justice should apply to a given case must depend to a great extent on the facts and circumstances of that case, the framework of the law under which the enquiry is held and the constitution of the Tribunal or body of persons appointed for that purpose. Whenever a complaint is made before a court that some principles of natural justice had been contravened the court has to decide whether the observance of that rule was necessary for a just decision on the facts of that case. The facts in the Kraipak 6 case are quite different from the facts in the present case. In the Kraipak 7 case, the main grievance of the petitioner was that in the selection board which was constituted for recommending the promotion of state officers to the Indian Forest Service Cadre, the chief conservator of forests was also a member although he himself was a candidate for promotion to the Indian Forest Service Cadre. Thus what happened was that the chief conservator of forests acted as a judge in his own cause. This was undoubtedly a gross violation of the principles of natural justice, because the very person who stood as a candidate also sat on the selection board that had to decide his own future as that of his rivals. Such is, however, not the case here. The conciliation board had completed its proceedings and the stage at which, according to the High Court, the rules of natural justice had to be applied was the stage of submitting the report. A full hearing was given to the parties concerned.
Collective Bargaining Agreement Issues 157 Thus all the indicia of the principles of natural justice were present in the facts of the present case. In these circumstances, we are satisfied that the Kraipak 8 case could not be called into support of the reason given by the High Court. Reliance was also placed on the case of the Union of India vs J.N. Sinha,9 where also it was pointed out by the Court that: Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends on the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred and the effect of the exercise of that power. In the present case, we have already pointed out that neither clause (5) of the notification referred to above nor Section 3 of the U.P. Industrial Disputes Act contained any provision which required that the members of the conciliation board were to show their reports to one another, nor did Section 3 of the U.P. Industrial Disputes Act. All that was required was that they should send their reports to the government through the labour commissioner. This was undoubtedly done. We are, therefore, unable to see any infraction of the rules of natural justice in the present case. Reliance was also placed on the decision of this Court in State of Orissa vs Dr (Miss) Binapani Dei.10 This case also does not appear to us to be of any real assistance to the respondents, because in that case the entire procedure of inquiry held was in violation of the rules of natural justice. That, however, is not the position here. It was then contended by Gupte that after quashing the order of the government refusing to make a reference and asking it to reconsider, it was not open to the High Court to have given peremptory directions so as to circumscribe the statutory jurisdiction of the government under Section 4-K of the U.P. Industrial Disputes Act. In our opinion, this contention is well founded and must prevail. Even if the High Court thought that the impugned order of the government suffered from any legal infirmity, all that it could have done was to have asked the government to reconsider it; but it had no jurisdiction to direct the government on how to act and how to exercise its statutory discretion which was conferred by Section 4-K of the U.P. Industrial Disputes Act. There was absolutely no warrant for the High Court prohibiting the government from considering the secret report of the additional regional conciliation officer or that of the labour commissioner. The government was fully entitled to consider the matter in all its comprehensive aspects and the secret reports of the chairman of the conciliation board and that of the labour commissioner were undoubtedly relevant materials which the government could have considered. The High Court could not debar the government from considering those matters nor could it compel the government to exercise its discretion in a particular manner. In the circumstances, we are satisfied that the order of the High Court is not legally sustainable and must be quashed. The other point which arises for consideration is as to the relief which could be granted to the appellant. Gupte, counsel for the appellant, submitted that after the judgement of the High Court, the government passed another order dated 6 February 1973, by which—in consonance with the directions given by the High Court—it made a reference to the industrial tribunal. It was submitted that it was not at all proper for the government to have revived a dead issue after more than 20 years and further, as the order of the government was based on the order of the High Court, if the order of the High Court was quashed, the order of the government making a reference to the industrial tribunal would fall automatically. We find ourselves in agreement with the counsel for the appellant. There can be no doubt that the order of the government dated 6 February 1973 is undoubtedly based on the order passed by the Division Bench of the High Court. This is proved by a letter written by Vishnu Prakash, up sachiv (deputy secretary),
158 Social Justice and Labour Jurisprudence U.P. Government, to the manager of the appellant mills. The relevant portion of the letter, after being translated in English, runs thus: I am directed to say that their Lordships of the High Court in their Judgment in Special Appeal No. 1963/915 State vs Shri Shibban Lal Saxena (M/s. Mahabir Jute Mills, Sahjanwa) have ordered that the Government after taking the dissenting reports from both the parties should consider on the question whether the aforesaid dispute should be referred for adjudication. Therefore you are requested that within 10 days from the date of the receipt of this letter to send your dissenting report and whether further you want to say on your behalf to the Government. A perusal of this letter clearly shows that the government did not exercise its independent decision under Section 4-K of the U.P. Industrial Disputes Act, but was guided mainly by the judgement of the High Court and the directions given in special appeal filed in the High Court. If the order of the High Court is quashed, then it will undoubtedly materially affect the decision of the government in making a reference to the industrial tribunal. Had the government made the reference uninfluenced by the High Court’s directions, the legal situation would have been different. The learned counsel for the respondents submitted that no prayer was made by the appellant for quashing the order of the government for making a reference to the industrial tribunal. It was, however, not necessary for the appellant to make such a prayer because if the High Court’s order is quashed, then any subsequent proceeding which comes into existence as a result of the High Court’s order would fall to the ground as a logical corollary of our finding. The counsel for the respondents, after due consideration, submitted that he would have no objection if the government order for making a reference is quashed, provided the government’s decision to make a fresh reference to the industrial tribunal on the dispute is not fettered. We would, however, like to make it clear that the government has ample discretion to make a reference to the industrial tribunal under Section 4-K of the U.P. Industrial Disputes Act if it thinks fit. The Supreme Court in the case of the Western India Match Company vs the Western India Match Company Workers Union11 clearly held that even if a reference was refused by the government, that will not debar the government from making a reference at a later time if it was satisfied that in the changed circumstances a reference is necessary. For the reasons given above, we allow the appeal, quash the order of the High Court dated 8 May 1972 and as a consequence of this, also set aside the order of the government dated 6 February 1973 for making a reference to the industrial tribunal. In the peculiar circumstances of this case, however, we would make no order as to costs throughout.
Wages for Strike Period The Industrial Disputes Act, 1947, defines a strike and provides for its prohibition. In India, industrial jurisprudence is very clear as to the ‘no work, no pay’ effect. Employment in any establishment or industry is essentially a contract between the employer and the workman. Wages are the sum payable by an employer to his workmen if the terms and conditions of employment, be they express or implied, are fulfilled by the workmen.12 The question with which the Judiciary was confronted related to wages during the strike period. In this context, the Judiciary has evolved altogether new propositions such as (a) strikes that are legal and justified; (b) strikes that are legal but unjustified; (c) strikes that are illegal and unjustified; and (d ) strikes that are illegal but justified.
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Crompton Greaves vs the Workmen13 This was a case relating to the legality and justifiability of a strike undertaken by the workers. This issue is pertinent from the point of view of workers’ entitlement to wages during the strike period. The most interesting aspect of this case lies in the analysis of the circumstances under which a strike is designated as illegal and unjustified. THE FACTS OF THE CASE This appeal by special leave challenges the award dated 30 December 1970 by the VIII Industrial Tribunal, West Bengal, in a reference made to it by the State Government under Section 10 of the Industrial Disputes Act, 1947, holding ‘the striking workmen entitled to their wages’ for a portion of the strike period viz. from 11 January 1968 to the end of February 1968—and directing the appellant to pay the same to the workmen within one month from the date of the publication of the award in the Calcutta Gazette. On 27 December 1967, the appellant which is an engineering concern engaged in the manufacture and sale of electrical products such as motor fans, motor control gears, transformers and other electrical instruments, and has its registered office at Bombay and branches at several places in India, intimated Greaves Cotton and Crompton Parkinston Associates concerns workmen’s union, Calcutta, of its decision to reduce the strength of the workmen in its branch at Calcutta on the ground of severe recession in business. Apprehending mass retrenchment of the workers, who numbered 353, the union sought the intervention in the matter of the labour minister. The labour commissioner arranged joint conferences in his office of the representatives of the union and the company with a view to explore avenues for conciliation and amicable settlement. Two conferences were accordingly held on 5th and 9th January 1968, in which both parties participated. As a result of these conferences, the company agreed to hold bipartite talks with the representatives of the union at its Calcutta office on the morning of 10 January 1968 to find out the possibility of an agreed solution. The talk, as agreed, did take place; but no agreement could be arrived at. Whereas according to the union, the management of the company was not serious to arrive at a negotiated settlement and merely made a show of discussing the matter with its representatives. According to the management of the company, the unseemly and recalcitrant attitude adopted by the union during the course of the talks led them to believe that the union was not interested in any fruitful negotiation. The Assistant Labour Commissioner, however, continued to use his good offices to bring about an amicable settlement through another joint conference that was scheduled for 12 January 1968. On the afternoon of 10 January 1968, the company—without informing the labour commissioner that it was proceeding to implement its proposed scheme of retrenchment—hung up a notice retrenching 93 of its workmen belonging to the Calcutta office. Treating the step taken by the company as pretty serious demanding urgent attention and immediate action, the workmen resorted to a strike with effect form 11 January 1968, after giving notice to the appellant and the labour directorate; they continued the strike upto 26 June 1968. In the meantime, the industrial dispute in relation to the justification of the aforesaid retrenchment was referred by the government to the industrial tribunal on 1 March 1968. Subsequently, the government, vide its order No. 8890–I.R./IR/10L-79/67 dated 13 December 1968, referred the issue of the workmen’s entitlement to wages for the strike period from 11 January 1968 to 26 June 1968 to the industrial tribunal for adjudication. By its aforesaid order dated 30 December 1976, the industrial tribunal acceded to the workmen’s demand for wages for the period commencing from 11 January 1968 to the end of February 1968, but rejected their demand for the remaining period of the strike, observing that redress for the retrenchment having been sought by the union itself through the tribunal, there remained no justification for the workmen to continue the strike. The scope of the appeal was, therefore, restricted to the determination of the short
160 Social Justice and Labour Jurisprudence question of entitlement or otherwise of the striking workmen to wages for the period commencing from 11 January 1968 and ending 29 February 1968.
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE JASWANT SINGH It is well settled that in order to entitle the workmen to wages for the period of strike, the strike should be legal as well as justified. A strike is legal if it does not violate any provisions of the statute. Again, a strike cannot be said to be unjustified unless the reasons for it are entirely perverse or unreasonable. Whether a particular strike was justified or not is a question of the facts and circumstances of each case. It is also well settled that the use of force or violence or acts of sabotage resorted to by the workmen during a strike disentitles them to wages for the strike period. In the light of the above mentioned principles, the following two points arise for consideration: 1. Whether the aforesaid strike was illegal or unjustified? 2. Whether the workmen resorted to force or violence during the portion of the strike period commencing from January 11th 1968 and ending with February 29th 1968? No specific provision of law has been brought to our notice on behalf of the appellant which rendered the strike illegal during the period under consideration. The strike cannot also be said to be unjustified as before the conclusion of the talks for conciliation which were going on through the instrumentality of Assistant Labour Commissioner, the Company retrenched as many as 93 of its workmen without even intimating to the Labour Commissioner that it was carrying out its proposed plan of effecting retrenchment of the workmen. It is therefore answered in the negative. The Tribunal has held that it has not been proved that the workmen resorted to force and violence during the period in question. We have ourselves gone through the entire evidence adduced in the case but have not been able to discern anything therein which may impel us to take a view different from the one taken from the Tribunal. May be that force and violence was resorted to by the striking workmen but the vital question that confronts us is whether the Company has been able to establish it. No clear, cogent and disinterested evidence has been adduced to substantiate the charge that the striking workmen gheraoed the managerial staff or assaulted and intimidated the loyal employees or cut off electric lines or prevented any dealer from entering the business premises of the Company and transacting business with it. No prosecution also appears to have been launched in regard to any of these alleged incidents excepting the one by C.G. Biswanathan which was also later withdrawn. The Company has failed to produce either Mr Bose or any other employee mentioned in its various letters to the police. The material on the record thus falls far short of the standard of proof required in cases of this nature. The Tribunal was, therefore, justified in holding that the Management had failed to prove that the workmen resorted to force or violence during the relevant period with which we are concerned. Accordingly, we cannot interfere with the decision of the Tribunal in this appeal under Article 136 of the Constitution.
The Legality of Strikes The Industrial Disputes Act prohibits the commencement and continuation of a strike or a lock-out, as the case may be. In the event of any violations, the Act provides appropriate penal provisions.14 The Indian Trade Union Act, 1926, provides certain immunities for a
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registered trade union under Sections 17 and 18. The immunity provided under Section 18 sub-section (2) is paramount, since it provides immunity for a registered trade union in respect of tortuous liability under certain circumstances in respect of acts done in contemplation or furtherance of a trade dispute.15 If the acts of a registered trade union while contemplating or furthering a trade dispute fall outside the scope of the immunity under sub-section (2) of Section 18, the proceedings would lie. Whether the machinery provided under the Industrial Disputes Act or the regular civil courts constitute the proper authorities to entertain such proceedings is one of the issues that was central to the following case.
Rohtas Industries vs Its Union16 In this case, very interesting fundamental issues figured for consideration before the Supreme Court. They were as follows: 1. The scope of arbitrators under Section 10A of the Industrial Disputes Act to adjudicate matters provided not only under the Industrial Disputes Act but also a claim by the management under tortuous liability against a registered trade union. 2. The scope of registered trade unions’ immunity under Section 18(2) of the Trade Unions Act, 1926, in respect of acts done in contemplation and furtherance of a trade dispute.
The decision rendered by Justice V.R. Krishna Iyer, speaking for the majority, involved a consideration of the issues relating to the positions of English and Indian law in respect of conspiracy as a tort and the scope of the High Court under Article 226 to interfere with the award made by arbitrators under Section 10A of the Act. THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER We permit ourselves a few preliminary observations disturbingly by the not altogether untypical circumstances of these two appeals, before proceeding to state the facts, set out the submissions and decide the points. Industrial law in India has not fully lived up to the current challenge of industrial life both in the substantive norms or regulations binding the three parties—the State, Management and Labour—and in the proccesual system which has baulked, by dawdling dysfunctions, early finality and prompt remedy in a sensitive area where quick solution is of the very essence of real justice. The legislative and the judicial processes have promises to keep it positive industrial peace, in tune with distributive economic justice and continuity of active production, were to be accomplished. The architects of these processes will, we hopefully expect, fabricate creative changes in the system, normative and adjectival. The two appeals before us, passported by special leave under Art. 136 relate to an industrial dispute with its roots in 1948, meandering along truce, union rivalry and the like, into strike and settlements, the last of which led to an arbitration award in 1959 which, in turn, promoted two writ petitions before the High Court. After a spell of a few years they ripened into a judgement. Appeals to this court followed and, after long gestation of six years for preparation of papers and a like period the cases are ready for final hearing or parturition in all 12 years after the grant of leave. By this cumulative lapse of time the generation of workers who struck work two decades ago have themselves all but retired, the representative Union itself which sponsored the dispute has, the other side faintly states, ceased to command representative character, the Managements themselves have, out of many motives, disclaimed the intention to recover the huge sums
162 Social Justice and Labour Jurisprudence awarded to them by the arbitrators and the only survival after death, as it were, is a die-hard litigation tied up to a few near academic, but important, legal points for adjudication by the highest Bench. On this elegiac note we will enter the relevant areas of facts and law since we must decide cases brought before us, however stale the lis. At this stage we may mention our strong feeling that where the superior courts, after hearing full arguments, are clearly inclined to affirm the judgement under appeal for substantially similar reasons as have weighed with the lower court, there is no need to give lengthy reasons for dismissing the appeal. Brevity, except in special cases, may well fill the bill where the fate is dismissed. On this score we are disposed to make short shrift of the appeals with stating but the necessary facts the points pressed have defeated condensation. Two connected managements of industries in the same locality, who figure as appellants before us, had a running industrial dispute with their workers, which has had a long history moving in a zig-zag course and sicklied over by alleged internecine trade-union strife. There were two trade unions which were perhaps of competitive strength and enjoying recognition. One of them, the Rohtas Industries Mazdoor Sabha (for short the Mazdoor Sabha) was the representative union during the relevant period while the other, the Rohtas Industries Seva Sangh (for brevity, the Seva Sangh) was not a party before this court and so we are not concerned with it except for the purpose of noticing its presence in the settlement of the dispute which starts the story so far as the litigation is concerned. There was a strike in the industry (for our purpose the expression embraces both the appellants) which came to an end by virtue of a memorandum of agreement dated 2 October 1957, to which not merely the management but also the two registered unions aforementioned and the two un-registered unions which had a lesser following, were party. The terms of the said agreement provided inter alia that: The employees’ claim for wages and salaries for the period of strike and the company’s for compensation for losses due to strike shall be submitted for arbitration of Sri. J.N. Majumdar and R.C. Mitter, Ex-High Court Judge and Ex-Members of the Labour Appellate Tribunal of India as joint arbitrators and their decisions on the two questions shall be final and binding on all the parties. (Clause 7 of agreement.) This agreement was admittedly arrived at conciliation proceedings contemplated by the Industrial Disputes Act, 1947 (for short, the Act), and the reference to arbitration spelt out in clause 7 directly and admittedly fell under Section 10-A of the Act. It is apparent that the arbitrators were seized of two questions: (a) the claim of the workers for wages for the period of strike: and (b) the claim of management for compensation for its losses flowing from the strike. The Broad of arbitrators, two retired judges of the Calcutta High Court—held extensive hearings spread over a year and a half, made a lengthy award marshalling the evidence, adducing the reasons, discussing the law and recording its decision on the two vital issues. At the end of the detailed and reasoned record of conclusions, the award runs thus: Our award accordingly is: (1) That the workmen participating in the strike are not entitled to wages and salaries for the period of the strike. (2) That the company do recover from the workmen participating in the strike, compensation assessed at Rs 80,000 (rupees eighty thousand). (3) That the workmen jointly and severally do pay to the company one-eight of the total costs of the arbitration. In default of payment the company will be at liberty to recover the same in such manner as it thinks fit. Subject to this the parties do bear their respective costs. The workmen were deprived of their wages during the period of the strike on the score that it was an illegal strike. Both sides seem to have accepted this finding after an unsuccessful
Collective Bargaining Agreement Issues 163 challenge in the High Court and happily industrial peace is said to be prevailing currently. What did hurt the Mazdoor Sangh more and what the management did try to have and to hold as a bonanza was the second finding that the strikers, apart from forfeiting wages, do pay compensation in the huge sum of Rs 6,90,000 in one case and Rs 80,000 in the other, for the loss of profits suffered by the manufacturing business of the management, a pronouncement unusual even according to counsel for the appellant although sustainable in law, according to him. For the workers this unique direction of industrial law is fraught with ominous consternation and dangerous detriment. The Mazdoor Sangh challenged the award as illegal and void by filing two writ petitions but the High Court quashed that part of the award which directed payment of compensation by the workers to the management and, as earlier pointed out, both sides have chosen to abide by the award in the relation of the denial of wages during the strike period. The Main Points Urged: The short but important issue, which has projected some serious questions of law, is as to whether the impugned part of the award has been rightly voided by the High Court. We may as well formulate them but highlight the only major submission that merits close examination, dealing with the rest with terse sufficiency. In logical order, Counsel for the appellant urged that: (1) (a) an award under Section 10A of the Act savours of a private arbitration and is not amenable to correction under Article 226 of the Constitution. (b) Even if there be jurisdiction, a discretionary desistence from its exercise is wise, proper and in consonance with the canons of restraint this Court has set down. (2) The award of compensation by the arbitrators suffers from no vice which can be regarded as a recognized ground for the High Court’s interference. (3) The view of law taken by the High Court on (i) the supposed flaw in the award based on ‘mixed motives’ for the offending strike; (ii) the exclusion of remedies other than under Section 26 of the Act; and (iii) the implied immunity from all legal proceedings against strikers allegedly arising from Section 18 of the Trade Union Act, 1926 is wrong. A few other incidental arguments have cropped up but the core contentions are what we have itemized above. The expansive and extraordinary power of the High Courts under Article 22617 is as wide as the amplitude of the language used indicates and so can affect any person—even a private individual—and be available for any (other) purpose—even one for which another remedy may exist. The amendment of Article 226 in 1963 inserting Art 226(1A) reiterates the targets of the writ power as inclusive of any person by the expressive reference to ‘the residence of such person’. But it is one thing to affirm the jurisdiction, another to authorise its free exercise like a bull in a china shop. This Court has spelt out wise and clear restraints on the use of this extraordinary remedy and High Courts will not go beyond those wholesome inhibitions except where the monstrosity of the situation or other exceptional circumstances cry for timely judicial interdict or mandate. The mentor of law is justice and a potent drug should be judiciously administered. Speaking in critical retrospect and portentous prospect, the writ power has, by and large, been the people’s sentinel on the qui vive and to cut back on or liquidate that power may cast a peril to human rights. We hold that the award here is not beyond the legal reach of Article 226, although this power must be kept in severely judicious leash. Many rulings of the High Courts, pro and con, were cited before us to show that an award under Section 10A of the Act is insulated from interference under the Article 226 but we respectfully agree with the observations of Gagendragadkar, J. (as he then was) in Engineering Mazdoor Sabha18 which nails the argument against the existence of jurisdiction. The learned Judge clarified (at p. 640 of SCR): (at p. 881 of AIR): Article 226 under which a writ of certiorari can be issued in a appropriate case, is, in a sense, wider than Article 136, because the power conferred on the High Courts to issue certain writs is not conditioned or limited by the requirement that the said writs can be issued only against the orders of courts or Tribunal under Article 226(1), an appropriate writ can be
164 Social Justice and Labour Jurisprudence issued to any person or authority, including in appropriate cases any Government, within the territories prescribed. Therefore even if the arbitrator appointed under Section 10A is not a Tribunal under Article 136 in a proper case, a writ may lie against his award under Article 226. We agree that the position of an arbitrator under Section 10A of the Act (as it then stood) vis-a-vis Article 227 might have been different. Today, however, such an arbitrator has power to bind even those who are not parties to the reference or agreement and the whole exercise under Section 10A as well as the source of the force of the award on publication derives from the statute.19 It is legitimate to regard such an arbitrator now as part of the methodology of the sovereign’s dispensation of justice, thus falling within the rainbow of statutory tribunal amenable to judicial review. This observation made en passant by us is induced by the discussion at the Bar and turns on the amendments to Section 10A and cognate provisions like Section 23, by Act XXXVI of 1964. Should the Court invoke this high prerogative under Article 226 in the present case? That depends. We will examine the grounds on which the High Court has, in the present case, excised a portion of the award as illegal, keeping in mind the settled rules governing judicial review of private arbitrator’s awards. Suffice it to say, an award under Section 10A is not only not invulnerable but more sensitively susceptible to the writ lancet being a quasi-statutory body’s decision. Admittedly, such an award can be upset if an apparent error of law stains its face. The distinction, in this area, between a private award and one under Section 10A is fine, but real. However it makes slight practical difference in the present case; in other cases it may. The further grounds for invalidating an award need not be considered as enough unto the day is the evil thereof. Thus, we arrive at a consideration of the appellant’s second submission, perhaps the most significant in the case, that the High Court had no legitimate justification to jettison the compensation portion of the award. Even here, we may state that Counsel for the appellants, right at the outset, mollified possible judicial apprehensions springing from striking workers being held liable for loss of management’s profits during the strike period by the assurance that the clients were inclined to abandon realization of the entire compensation, even if this Court upheld that part of the award in reversal of the judgment of the High Court—a generous realism. He fought a battle for principle, not pecunia. We record this welcome fact and proceed on that footing. The relevant law which is beyond controversy now has been clearly stated in Halsbury’s Laws of England thus: Error of Law on the face of award—An arbitrator’s award may be set aside for error of law appearing on the face of it, though the jurisdiction is not lightly to be exercised… The jurisdiction is one that exists at common law independently of statute. In order to be a ground for setting aside the award, an error in law on the face of the award must be such that there can be found in the award, or in a document actually incorporated with it, some legal proposition which is the basis of the award and which is erroneous. …where the question referred for arbitration is a question of construction, which is, generally speaking, a question of law, the arbitrator’s decision cannot be set aside only because the court would itself have come to a different conclusion; but if it appears on the face of the award that the arbitrator has proceeded illegally, as for instance, by deciding on evidence which was not admissible, or on principles of construction which the law does not countenance, there is error in law which may be ground for setting aside the award. We adopt this as sound statement of the law. Not that English law binds us but that the jurisprudence of judicial review in this branch is substantially common for Indian and AngloAmerican systems and so Halsbury has considerable persuasive value. The wider emergence of
Collective Bargaining Agreement Issues 165 common canons of judicial review is a welcome trend towards a one-world public law. Indeed, this Court has relied on the leading English decisions in several cases. We may content ourselves with adverting to Bungo Steel Furniture,20 and to the unreported decision Babu Ram.21 In simple terms, the Court has to ask itself whether the arbitrator has not tied himself down to an obviously unsound legal proposition in reaching his verdict as appears from the face of the award. Bhargava, J., speaking for the majority, in Bungo Steel state the law: It is now a well-settled principle that if an arbitrator, in deciding a dispute before him, does not record his reasons and does not indicate the principles of law on which he has proceeded, the award is not on that account vitiated. It is only when the arbitrator proceeds to give his reasons or to lay down principles on which he has arrived at his decisions that the Court is competent to examine whether he has proceeded contrary to law and is entitled to interfere if such error in law is apparent on the face of the award itself. In Bharat Barrel & Drum Manufacturing Co.22 dealing with a private award and the conditions necessary for exercise of writ jurisdiction to correct an error of law apparent on the record, did not lay down the law differently from what we have delineated. In one of the leading English cases Champsey Bhara & Co.23 followed in India, Lord Dunedin defined, ‘error of law on the face of the award’ as ‘where the question of law necessarily arises on the face of the award or upon some paper accompanying and forming part of the award’ and said that then only the error of law therein would warrant judicial correction. The law Lord expressed himself lucently when he stated: An error in law on the face of the award means, in their Lordships’ view, that you can find in award… some legal proposition which is the basis of the award and which you can then say is erroneous. Williams J., in the case of Hookinsons vs Feraie 24 hit the nail on the head by using the telling test as firmly established, viz., where the question of law necessarily arises on the face of the award. In this view the enquiry by the court before venturing to interfere is to ascertain whether an erroneous legal proposition is the basis of the award. Nay, still less. Does a question of law (not even a proposition of law) necessarily arise on the award followed by a flaw some finding explicit or visibly implicit? Then the court can correct. Tucker, J., in James Clark 25 formulates the law to mean that if the award were founded on a finding which admits of only one proposition of law as its foundation and that law is erroneous on its face, the Court has the power and, therefore, the duty to set right. While the Judge cannot explore, by chasing subterranean routes or ferret out by delving deep what lies buried in the unspoken cerebration of the arbitrator and interfere with the award on the discovery of an error of law by such adventure, it is within his purview to look closely at the face of the award to discern the law on which the arbitrator has acted if it is transparent, even translucent but lingering between the lines or merely wearing a verbal veil. If by such an intelligent inspection of the mien of the award—which is an index of the mind of the author—an error of law forming the basis of the verdict is directly disclosed, the decision is liable to judicial demolition. In James Clark,26 the issue was posed with considerable clarity and nicety. If, at its face value, the award appears to be based on an erroneous finding of law alone, it must fail. The clincher is that the factual conclusion involving a legal question must necessarily be wrong in point of law. Even though the award contains no statement of the legal proposition if the facts found raise ‘a clear point of law which is erroneous on the face of it’, the Court may rightly hold that an error of law on the face of the award exists and invalidates. Let us put the proposition more expressively and explicitly. What is important is a question of law arising on the face of the facts found and its resolution ex facie or sub-silentio. The arbitrator may not state the law as such. Even then such cute silence confers no greater or subtler
166 Social Justice and Labour Jurisprudence immunity on the award than plain speech. The need for a speaking order, where considerable numbers are affected in their substantial rights, may well be a facet of natural justice or fair procedure, although, in this case, we do not have to go so far. If, as here, you find an erroneous law as the necessary buckle between the facts found and the conclusions recorded, the award bears it condemnation on its bosom. Not a reference in a narrative but a clear legal nexus between the facts and the finding. The law sets no premium on juggling with drafting the award or hiding the legal error by blanking out. The inscrutable face of the sphinx has no better title to invulnerability than a speaking face which is a candid index of the mind. We may, by way of aside, express hopefully the view that a minimal judicialisation by statement, laconic or lengthy, of the essential law that guides the decision, is not only reasonable and desirable but has, over the ages, been observed by arbitrators and quasi-judicial tribunals as a norm of processual justice. We do not dilate on this part of the argument as we are satisfied that be the test the deeply embedded rules to issue certiorari or the traditional grounds to set aside an arbitration award ‘thin partition do their bounds divide’ on the facts and circumstances of the present case. The decisive question now comes to the fore. Did the arbitrators commit an error of law on the face of the award in the expanded sense we have explained? The basic facts found by the arbitrators are beyond dispute and admit of a brief statement. We summarise the fact situation succinctly and fairly when we state that according to the arbitrators, the strike in question was in violation of Section 24 of the Act and therefore illegal. This illegal strike animated by interunion power struggle, inflicted losses on the management by forced closure. The loss flowing from the strike was liable to be recompensed by award of damages. In this chain of reasoning is necessarily involved the question of law as to whether an illegal strike causing loss of profit is a delict justifying award of damages. The arbitrators held, yes. We hold this to be an unhappy error of law—loudly obtrusive on the face of the award. We may as well set out, for the sake of assurance, the simple steps in the logic of the arbitrators best expressed in their own words which we excerpt: (a) It is argued that strike is a legitimate weapon in the hands of workmen for redressal of their grievances and if they are made liable for loss on account of strike then the basic idea of strike as a means for having the grievances redressed will be taken away. The fallacy in this argument is that it presupposes the strike not to be illegal and unjustified. In the present case we found the strike to be otherwise. The workmen have got no right of getting their grievances redressed by resorting to illegal means which is an offence. (b) It has been argued that the claim for compensation is not an industrial dispute as defined in the Industrial Disputes Act. Considering the issue of compensation in a watertight compartment the argument might appear to be attractive. But, in our opinion, in this case the claim for compensation by the company is a consequence flowing from an admitted industrial dispute, which in this case is whether the strike was illegal and/or unjustified and as against the condition of service as laid down in the certified standing order on which point our finding has been against the workmen… The award of the tribunal, in its totality, is quite prolix, the reasons stated in arguing out its conclusions many and thus it is just to state that in the present case the arbitrators—two retired judges of the Calcutta High Court—have made a sufficiently speaking award both on facts and on law. They have referred to the strike being illegal with specific reference to the provisions of the Act, but faulted themselves in law by upholding a case for compensation as axiomatic necessarily based on a rule of common law, i.e. English common law. The rule of common law thus necessarily arising on the face of the award is a clear question of law. What is the rule of common law? Counsel for the appellants inevitably relied on the tort of ‘conspiracy’ and referred us to Moghul Steam Ship Co;27 Alien vs Flood;28 Quinn vs Leathem29 and Sorrel vs Smith.30 These decisions of the English Courts are response to the societal requirements
Collective Bargaining Agreement Issues 167 of the industrial civilisation of the 19th century England. Trade and Industry on the laissez faire doctrine flourished and the law of the torts was shaped to serve the economic interests of the trading and industrial community. Political philosophy and economic necessity of the dominant class animate legal theory. Naturally, the British law in this area protected business from the operations of a combination of men, including workers, in certain circumstance. Whatever the merits of the norms, violation of which constituted ‘conspiracy’ in English law, it is a problem for creative Indian jurisprudence to consider, detached from Anglophonic inclination, how far a mere combination of men working for furthering certain objectives can be prohibited as a tort, according to the Indian value system. Our Constitution guarantees the right to form associations, not for gregarious pleasure, but to fight effectively for the redressal of grievances. Our Constitution is sensitive to workers’ rights. Our story of freedom and social emancipation led by the Father of the Nation has employed, from the highest of motives, combined action to resist evil and to right wrong even if it meant loss of business profits for the liquor vendor, the brothel-keeper and the foreign-cloth dealer. Without expatiating on these seminal factors, we may observe that English history, political theory and life-style being different from Indian conditions replete with organised boycotts and mass satyagrahas, we cannot incorporate English torts without any adaptation into Indian law. A tort transplant into a social organism is as complex and careful an operation as a heart-transplant into an individual organism, law being life’s instrumentality and rejection of exotics being a natural tendency. Here, judges are sociological surgeons. Let us examine ‘conspiracy’, in the English law of tort to see if even there it is possible to hold that an illegal strike per se spells the wrong. We may state that till recently it could not be said with any certainty that there was any such tort as ‘conspiracy’. Salmond thought that there was not… It is interesting that in that edition of Salmond, Mogul 31 is linked up by the learned author with a capitalist economy. Be that as it may, the common law of England today is more or less clear some rumblings notwithstanding: A combination willfully to do an act causing damage to a man in his trade or other interests is unlawful and if damage in fact is caused is actionable as a conspiracy. To this there is an exception where the defendants’ real and predominant purpose is to advance their own lawful interests in matter in which they honestly believe that those interests would directly suffer if the action against the plaintiff was not taken. In truth, the Crofter case has made Section 1 of the Trade Disputes Act, 1906, largely unnecessary, for there will now be few conspiracies arising out of trade disputes which are protected at common law. The essence of actionable conspiracy is best brought out by Salmond: The tort is unusual because it emphasises the purpose of the defendants rather than the results of their conduct. Even then there are mixed motives. ‘Liability will depend on ascertaining which is the predominant object or the true motive or the real purpose of the defendant. Mere combination or action, even if it be by illegal strike, may be far away from a ‘conspiracy’ in the sense of the law because in all such cases, except in conceivable exceptional instances, the object or motive is to advance the workers’ interests or to steal a march over a rival union but never or rarely to destroy or damage the industry. It is difficult to fancy workers who live by working in the industry combining to kill the goose that lays the golden eggs. The inevitable by-product of combination for cessation of work may be loss to the management but the obvious intendment of such a collective bargaining strategy is to force the employer to accept the demand of the workers for betterment of their lot or redressal of injustice, not to inflict damage on the boss. In short, it is far too recondite for an employer to urge that a strike, albeit illegal, was motivated
168 Social Justice and Labour Jurisprudence by destruction of the industry. A scorched earth policy may, in critical times of a war, be reluctantly adopted by a people, but such an imputed motive is largely imaginary in strike situations. However, we are clear in our minds that if some individuals destroy the plant or damage the machinery willfully to cause loss to the employer, such individuals will be liable for the injury so accused. Sabotage is no weapon in workers’ legal armoury. The leading case of Sorrel vs Smith32 emphasizes that a combination of two or more persons for the purpose of injuring a man in his trade is unlawful and, if it results in damage to him, is actionable. The real purpose of the combination is the crucial test between innocence and injury. It may well be that even where there is an offending object, it may be difficult for a court to hold that there is tort if one may read into the facts an equal anxiety for the defendants to promote their success which produces the plaintiff ’s extinction. There is a penumbral region, as Lord Summer pointed out in Sorrel:33 How any definite line is to be drawn between acts, whose real purpose is to advance the defendant’s interests, and acts, whose real purpose is to injure the plaintiff in his trade, is a thing which I feel at present beyond my power. It is absolutely plain that the tort of conspiracy necessarily involves advertence to and affirmation of the object of the combination being the infliction of damage or distraction on the plaintiff. The strike may be illegal but if the object is to bring the employer to terms with the employees or to bully the rival trade union into submissions, there cannot be an actionable combination in tort. In the present case, it is unfortunate that the arbitrators simply did not investigate or pass upon the object of the strike. If the strike is illegal, the tort of conspiracy is made out, appears to be the opposition of law writ tersely into the award. On the other hand, it is freely conceded by counsel for the appellant that the object was inter-union rivalry. There is thus a clear lapse in the law on the part of the arbitrators manifest on the face of the award. We have earlier referred to the need for a fresh look at conspiracy as a tort when we bodily borrow the elements of English law and apply them to Indian Law. It is as well that we notice that even in England considerable criticism is mounting on the confused state of the law of conspiracy. J.T. Cameron has argued… that experience has already shown that conspiracy is a hydra perfectly capable of growing two heads to replace an amputated one, and the authorities contain material which could be used to impose liability in very wide and varied circumstances. It is time therefore, to consider what form legislation should take, and to urge that proper answer is to remove the tort of conspiracy from the law altogether, and with the Rookes vs Barnard version of intimation, and to put in its place a different basis of liability. (Conspiracy and Intimidation: An Anti-Metaphysical Approach) The author complains that the fundamental basis is unsatisfactory and uncertain and demands that a complete rewriting of the principles on which the tort of conspiracy and intimidation is necessary. We may as well suggest that, to silence possible mischief flowing from the confused state of the law and remembering how dangerous it would be if long, protracted, but technically illegal strikes were to be followed by claims by managements for compensation for loss of profits, a legislative reform and restatement of the law were undertaken at a time when the State is anxious for industrial harmony consistent with workers’ welfare. This rather longish discussion has become necessary because the problem is serious and sensitive and the law is somewhat slippery even in England. We are convinced that the award is bad because the error of law is patent. The High Court has touched upon another fatal frailty in the tenability of the award of compensation for the loss of profits flowing from the illegal strike. We express our concurrence with the High Court that the sole and whole foundation of the award of compensation by the
Collective Bargaining Agreement Issues 169 arbitrators, ignoring the casual reference to an ulterior motive of inter-union rivalry, is squarely the illegality of the strike. The workers went on strike claiming payment of bonus as crystallized by the earlier settlement (dated 2 October 1957). There thus arose an industrial dispute within Section 2(k) of the Act. Since conciliation proceedings were pending the strike was ipso jure illegal (Sections 23 and 24). The consequence, near or remote, of this combined cessation of work caused loss to the management. Therefore the strikers were liable in damages to make good the loss. Such is the logic of the award. It is common case that the demands covered by the strike and the wages during the period of the strike constitute an industrial dispute within the sense of Section 2(k) of the Act. Section 23, read with Section 24, it is agreed by both sides, makes the strike in question illegal. An ‘illegal strike’ is a creation of the Act. As we have pointed out earlier, the compensation claimed and awarded is a direct reparation for the loss of profits of the employer caused by the illegal strike. If so, it is contended by the respondents, the remedy for the illegal strike and its fallout has to be sought within the statute and not de hors it. If this stand of the workers is right, the remedy indicated in Section 26 of the Act, viz., prosecution for starting and continuing an illegal strike, is the designated statutory remedy. No other relief outside the Act can be claimed on general principles of jurisprudence. The result is that the relief of compensation by proceedings in arbitration is contrary to law and bad. The Premier Automobiles34 case settles the legal issue involved in the above argument. The Industrial Disputes Act is a comprehensive and self-contained code as for so it speaks and the enforcement of rights created thereby can only be through the procedure laid down therein. Neither the civil court nor any other tribunal or body can award relief. Untwalia, J., speaking for an unanimous court, has, in Premier Automobiles35 observed: The object of the Act, as its preamble indicates, is to make provision for the investigation and settlement of industrial dispute, which means adjudication of such dispute also. The Act envisages collective bargaining, contracts between union representing the workmen and the management, a matter which is outside the realm of the common law or the Indian law of contract. After sketching the scheme of the Act, the learned judge stated the law thus: …the civil court will have no jurisdiction to try and adjudicate upon an industrial dispute if it concerned enforcement of certain right or liability created only under the Act. *
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In Doe vs Bridges36 are the famous and off quoted words of Lord Tenterden, C.J., saying: Where an Act creates an obligation and enforces the performance in a specified manner, we take it to be a general rule that performance cannot be enforced in any other. Barraclough vs Brown and Ors,37 decided by the House of Lords is settled telling, particularly Lord Watson’s statement of the law at p. 622: The right and the remedy are given uno flatu and one cannot be dissociated from the other. In short, the enforcement of a right or obligation under the Act, must be by a remedy provided uno flatu in the statute. To sum up, in the language of the Premier Automobiles Ltd:38 If the industrial dispute relates to the enforcement of a right or an obligation created under the Act, then the only remedy available to the suitor is to get adjudication under the Act.
170 Social Justice and Labour Jurisprudence Since the Act which creates rights and remedies has to be considered as one homogeneous whole, it has to be regarded uno flatu, in one breath, as it were. On this doctrinal basis, the remedy for the illegal strike (a concept which is the creature not of the common law but of Section 24 of the Act) has to be sought exclusively in Section 26 of the Act. The claim for compensation and the award thereof in arbitral proceedings is invalid on its face—‘on its face’ we say because this jurisdictional point has been considered by the arbitrators and decided by committing an ex facie legal error. It was argued, and with force in our view, that the question of compensation by workers to the management was wholly extraneous to the Act and therefore, outside the jurisdiction of a voluntary reference of industrial dispute under Section 10A. While we are not called upon to pronounce conclusively on the contention, since we have expressed our concurrence with the High Court on other grounds, we rest content with briefly sketching the reasoning and its apparent tenability. The scheme of the Act, if we may silhouette it, is to codify the law bearing on industrial dispute. The jurisdiction essence of proceedings under the Act is the presence of an ‘industrial dispute’. Strikes and lockouts stem from such disputes. The machinery for settlement of such disputes at various stages is provided for by the Act. The statutory imprimatur is given to settlement and awards, and norms of discipline during the pendency of proceedings are set down in the Act. The prescriptions stipulated, as for example the prohibition of a strike, are followed by penalties, if breached. Summary procedures for adjudication as to whether conditions of service, etc., of employees have been changed during the pendency of proceedings, special provision for recovery of money due to workers from employers and other related regulations are also written into the Act. Against this backdrop, we have to see whether a claim by an employer from his workmen of compensation consequent on any conduct of theirs, comes within the purview of the Act. Suffice it to say that a reference to arbitration under Section 10A is restricted to existing or apprehended industrial disputes. Be it noted that we are not concerned with a private arbitration, but a statutory one governed by the Industrial Disputes Act, deriving its validity, enforceability and protective mantle during the pendency of the proceedings, from Section 10A. No industrial dispute, no valid arbitral reference. Once we grasp this truth, the rest of the logic is simple. What is the industrial dispute in the present case? Everything that overflows such disputes spills into areas where the arbitrator deriving authority under Section 10A has no jurisdiction. The consent of the parties cannot create arbitral jurisdiction under the Act. In this perspective, the claim for compensation can be a lawful subject for arbitration only if it can be accommodated by the definition of ‘industrial dispute’ in Section 2(k). Undoubtedly this expression must receive a wide connotation, calculated as it is to produce industrial peace. Indeed, the legislation, substitutes for free bargaining between the parties a binding award; but what disputes or differences fall within the scope of the Act? This matter fell for the consideration of the Federal Court in Western India Automobile Association.39 Without launching on a long discussion, we may state that compensation for loss of business is not a dispute or difference between employers 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’. We are unable to imagine a tort liability or compensation claim based on loss of business being regarded as an industrial dispute as defined in the Act, having regard to the language used, the setting and purpose of the statute and the industrial flavour of the dispute as one between the management and workmen. In this context, we are strengthened in our conclusion by the provisions of Section 33C which provides for speedy recovery of money due to a workman from an employer under a settlement or an award, but not for the converse case of money due to an employer from workmen. There is no provision in the Act which contemplates a claim for money by an employer from the workmen. And indeed, it may be a little startling to find such a provision, having regard to workmen being the weaker section and Part IV of the Constitution being loaded in
Collective Bargaining Agreement Issues 171 their favour. The new light shed by the benign clauses of Part IV must illumine even preIndependence statutes in the interpretative process. As yet, and hopefully, claims by employers against workmen on grounds of tortious liability have not found a place in the pharmacopoeia of Indian industrial law. However, as earlier stated, we do not pronounce finally as it is not necessary. There was argument at the Bar that the High Court was in error in relying on Section 18 of the Trade Unions Act, 1926 to rebuff the claim for compensation. We have listened to the arguments of Shri B.C. Ghosh in support of the view of the High Court, understood on a wider basis. Nevertheless, we do not wish to rest our judgment on that ground. Counsel for the appellants cited some decisions to show that an award falling outside the orbit of the Indian Arbitration Act can be enforced by action in court. We do not think the problem so posed arises in the instant case. We dismiss the appeal but, in the circumstances, there will be no order as to costs.
The Scope and Coverage of Settlements under the Industrial Disputes Act, 1947 Section 2(p) of the Act defines ‘settlement’ as ‘a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement has been signed by the parties thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorised in this behalf by the appropriate Government and the conciliation officer.’ A clear reading of clause (p) of Section 2 of the Act would show that it envisages two kinds of settlements—(a) a settlement which is arrived at in the course of conciliation proceedings, that is, a settlement arrived at with the assistance and concurrence of the conciliation officer who is duty bound to promote right settlement and to do everything he can to induce the parties to come to a fair and amicable settlement of the dispute;40 and (b) a written agreement between employer and workmen arrived at otherwise than in the course of the conciliation proceedings. For the validity of the second type of settlement, it is essential that the parties thereto should send a copy of such settlement to an officer authorised in this behalf by the appropriate government and the conciliation officer. A perusal of Section 18 of the Act would show that whereas a settlement arrived at by agreement between the employer and the workmen otherwise than in the course of conciliation proceedings shall bind only the parties to the agreement, a settlement arrived at in the course of conciliation proceedings under the Act is binding not only on the parties to the industrial dispute but also on other persons specified in clauses (b), (c) and (d) of sub-section (3) of Section 18 of the Act.41 When a reference is made of a dispute under Section 10 or Section 10A, the legal process springs into action. The award is published under Section 17(1) and acquires finality by virtue of Section 17(2) unless under Section 17A(1) the appropriate government declares that the award shall not be enforceable.42 An award, adjudicatory or arbitral, and a settlement, either arrived at in the course of conciliation proceedings or by parties themselves, shall be binding because of statutory sanction. Section 19 relates to the period of operation of settlements and awards and
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there also it is clear that both settlements and awards, as is evident from a reading of subSections (2) and (6) of Section 19, stand on the same footing. Section 19 thus has a key role to play in the life and death of awards and settlements. Section 9A fetters the management’s right to change the conditions of service of workmen in respect of certain matters including wages and allowances.43 It is clear that the Industrial Disputes Act, 1947, substantially equates an award with a settlement from the point of view of their legal force. No distinction in regard to the nature and period of their effect can be discerned by virtue of sub-sections (2) and (6) of Section 19. Any person who commits a breach of any term of any settlement or award shall be punishable with imprisonment for a term which may extend to six months, or with fine, or with both, and where the breach is a continuing one, with a further fine which may extend to Rs 200 for every day during which the breach continues after the conviction for the first. The court trying the offence, if it fines the offender, may direct that the whole or any part of the fine realised from him shall be paid, by way of compensation to any person who, in its opinion, has been injured by such breach.44
Tata Chemicals vs its Workmen Prior to the decision of the Supreme Court in the Tata Chemicals vs Its Workmen45 case, the Supreme Court in the Herbertsons vs Their Workmen and Others46 held that when a recognised union negotiates with an employer, the workers as individuals do not come into the picture. It is not necessary that each individual worker should know the implications of the settlement since a recognised union, which is expected to protect the legitimate interests of labour, enters into a settlement in the best interests of labour. This would be the normal rule. We cannot altogether rule out exceptional cases where there may be allegations of malafides, fraud or even corruption or other inducements. Prima facie, a settlement in the course of collective bargaining is entitled to due weight and consideration. Unless it can be demonstrated that the objectionable portion is such that it completely outweighs all the other advantages gained, the court will be slow to hold a settlement as unfair and unjust. The settlement has to be accepted or rejected as a whole and we are unable to reject it as a whole as unfair or unjust. But in the Tata Chemicals vs Its Workmen47 case the Supreme Court has taken a different view by interpretating the provisions of Section 18 of the Act. This the Court has done after duly considering the award of the tribunal on its merits and also by looking into the circumstances prevailing under the statutory norms. The application of the ratio lies in the understanding of the concept involved in any particular case, based on its own facts and circumstances. This is exactly depicted in this case. THE FACTS OF THE CASE This appeal by special leave is directed against the award, dated 21 February 1977 of the Industrial Tribunal, Gujarat, in reference 13 of 1975 made on 21 January 1975, by the Government of Gujarat in exercise of its powers under Section 10(1)(d) of the Industrial Disputes Act, 1947 for adjudication of the dispute, relating to five demands—washing allowance, woollen jersey, unclean allowance, transport allowance and variable dearness
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allowance linked with the Ahmedabad cost-of-living index and adequate dearness allowance equal to that of textile workers of Ahmedabad (which is 100 per cent neutralisation) sponsored by the Chemicals Kamdar Sangh, Mithapur (hereafter referred to as ‘the Sangh’). The appellant was a public limited company registered under the Indian Companies Act and had its factory at Mithapur in the state of Gujarat. As per its practice and policy of recognising and negotiating with the union enjoying the support of the largest number of its workers, it carried on its dealings with the Sangh (which was the recognised union) till 25 January 1973, when the Assistant Commissioner of Labour, Ahmedabad, declared— as a result of the verification made by him—that the Tata Chemicals Employees’ Union (hereafter referred to as ‘the Employees’ Union’) was entitled to be recognised under the Code of Discipline in view of the fact that 55 per cent of the total number of the employees of the concern were its members and addressed a communication to the appellant requesting it to recognise the said union. Pursuant to this communication, the appellant accorded recognition to the Employees’ Union with effect from 25 January 1973. Thereupon the Sangh filed a special civil application challenging the aforesaid order of the Assistant Commissioner of Labour in the High Court of Gujarat, which was summarily rejected vide its order dated 3 April 1973. On 18 June 1973, the Employees’ Union submitted a charter of demands to the appellant that included inter alia a demand for dearness allowance at 100 per cent of the Ahmedabad cotton textile rate, popularly known as the textile dearness allowance. In respect of these demands, the conciliation officer summoned a conciliatory meeting for 26 July 1973. Meanwhile, on 9 July 1973, the Sangh—representing about 800 workmen of the concern—submitted the aforesaid charter of demands before the management, which also included a demand for dearness allowance as paid to the workers of the cotton textile industry. The charter also contained an intimation to the management of the Sangh’s intention to resort to a strike for the realisation of its demands. As negotiations between the parties for an amicable settlement did not prove fruitful, the Sangh wrote to the Conciliation Officer, Rajkot, on 17 July 1973, requesting him to intervene. After preliminary discussions with both the parties, the conciliation officer admitted the case for conciliation on 30 August 1973. As the conciliation proceedings held by him from time to time between 7 September 1973 and 6 November 1973 (to which the Employees’ Union was also made a party at its request) did not lead to a settlement between the parties, the conciliation officer submitted his failure report to the state government on 14 December 1973. On even date, the appellant arrived at an agreement with the Employees’ Union in respect of the demands submitted by the latter on behalf of its daily rated and monthly rated members, including clerical staff. It was agreed between the parties to this settlement that it would remain in force for a period of three years with effect from 1 January 1974. A notice with regard to the settlement with the Employees’ Union was put up on the general noticeboard by the appellant on 17 December 1973. On 21 January 1975, the state government made, as already stated, a reference to the industrial tribunal for the adjudication of the dispute respecting the aforesaid demands raised by the Sangh. In the course of the reference proceedings, the Employees’ Union adopted a nebulous and shifting stand. In its anxiety to maintain its status as the recognised majority union having the sole right of collective bargaining and settling industrial disputes, it insisted in the first instance on its right to actively participate in the proceedings and inter alia questioned the right of the Sangh to raise the demand with regard to a variable dearness allowance, as also the right
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of the government to refer the demand for adjudication, alleging that earlier in 1968, when it raised a demand for 100 per cent textile dearness allowance, the Sangh resisted the same and entered into a settlement with the appellant company on 31 July 1969 for a period of five years. Later on, abandoning its initial stand, it supported the demand of the Sangh, averring that having regard to the huge profits made by the appellant company over the years, the workmen were entitled to the payment of a dearness allowance not only on the lines of the textile dearness allowance, but a still higher dearness allowance like that of the employees in the Bombay head office of the appellant company. In the written statement filed by it, the appellant company not only challenged the locus standi of the Employees’ Union to raise any demand on behalf of the workmen or to support the demands raised by the Sangh in view of the aforesaid settlement dated 14 December 1973, but also maintained that in view of the said settlement, which continued to be in operation, the Sangh was precluded from raising any dispute in respect of the demands which are the subject matter of reference to the tribunal for adjudication. It further contended that as the benefit accruing from the settlement had been and was being taken by all the workmen, the reference was incompetent and the tribunal had no jurisdiction to adjudicate upon the demands incorporated therein. While it resisted the first four demands raised by the Sangh on mere technicalities, with regard to the demand for variable dearness allowance, the appellant company averred that in view of the fact that all the employees were being paid dearness allowance in accordance with the recommendation of the Central Wage Board for the Heavy Chemicals and Fertiliser Industry and that neutralisation in the increase in cost of living under the said scheme of payment in case of Group I factories was not cent per cent but was equivalent to 92 per cent, the demand for variable dearness allowance was not valid. The appellant further urged that in the matter of fixation of dearness allowance, the formula of industry-cum-region was to be adhered to and the total pay packet of the comparable concerns in the region had to be taken into consideration. On an examination of the material adduced before it—including the facts and figures relating to the appellant company’s investments, reserves, production, percentage of wages of workers, profits and declared dividend and so on—the industrial tribunal came to the conclusion that the appellant company was a very flourishing and highly integrated chemical complex of long standing, whose profits were continually rising; that no other unit in the heavy chemicals industry in the region could be favorably compared with the appellant company so far as the extent and nature of production, business and financial capacity were concerned; that the industries in other parts of Gujarat—such as Sarabhai Chemicals, Baroda; Anil Starch, Ahmedabad; Alembic Chemicals Works, Baroda; Atul Products, Bulsar; and Ahmedabad Manufacturing and Calico Printing, Chemical Division, Ahmedabad—which were included in the list of heavy chemicals factories covered by the Wage Board were paying 100 per cent of the dearness allowance linked to the Ahmedabad cost-of-living index number known as the textile dearness allowance and that the total pay packet which was being paid to the workers of Mithapur, where the prices of essential commodities were comparatively higher than at any other place in the district (such as Jamnagar, Dharangadhra, Porbandar, and Bhavnagar) was much less than Sarabhai Chemicals, Baroda; and disallowing the objections raised by the appellant company and considering the textile dearness allowance as a scientific formula faithfully reflecting the rise and fall in the consumer price index for the working class, which afforded maximum protection to the workmen in the lowest basic wage slab, adopted the same and inter alia
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directed the appellant company to pay to all the concerned employees, including the daily rated workmen in different categories in grades I, III, V, VI, VII and VIII and the monthly rated clerical, technical and supervisory staff falling in Grades V, VI and VII, uniform dearness allowance varying from 85 per cent of the Ahmedabad textile dearness allowance (old) to 95 per cent of the Ahmedabad Textile Dearness Allowance as before the old revision phased over a period of three years beginning from 1 February 1975 (that is to say, at 85 per cent from 1 February 1975 to 31 December 1976 and at 95 per cent from 1 January 1977 and onwards). EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE JASWANT SINGH Appearing on behalf of the appellant, Mr Pai has addressed us only in regard to the Sangh’s demand and the Tribunal’s award in respect of variable dearness allowance. He has contended that regard being had to the fact that the aforesaid settlement dated 14 December 1973 between the appellant Company and the Employees’ Union covered the demand regarding V.D.A. sponsored by the Sangh and the benefit accruing from the settlement was taken by the entire body of workmen, the aforesaid reference by the State Government as regards the V.D.A. was invalid and the Tribunal had no jurisdiction to adjudicate upon the same. He has further urged that in fixing the V.D.A., the Tribunal has erred in ignoring the industry-cum-region principle which is well recognised in the industrial world. Mr Tarkunde has, on the other hand, urged that the aforesaid settlement dated 14 December 1973 did not cover the demand regarding V.D.A. sponsored by the Sangh; that in any event, the said settlement was binding only on the parties thereto, and the Sangh not being a signatory to the settlement, it was perfectly open to it even though it was a minority union to sponsor the demand in question and to the Government to make the reference. He has further contended that there being no comparable concern in the region, the Industrial Tribunal was right in taking into consideration the dearness allowance paid by Sarabhai Chemicals and other concerns in other parts of Gujarat. Five questions arise for consideration in this case—(i) whether the settlement of 14 December 1973 covered the demand with respect to variable dearness allowance sponsored by the Sangh, (ii) whether the aforesaid reference by the Government was invalid and the Industrial Tribunal was incompetent to make the award in question during the currency of settlement arrived at by the Employees’ Union which had been duly recognised under the Code of Discipline, (iii) whether the acceptance of the benefits flowing from the aforesaid settlement not only by the members of the majority union but also by the members of the Sangh operated as an implied agreement by acquiescence and debarred the Sangh from raising the demand, (iv) whether it was legal and proper for the Tribunal to link the scheme of dearness allowance with the Ahmedabad Dearness Allowance when the recommendation of the Wage Board set up for the industry in 1968 for adoption of All India Consumer Price Index as the basis of Dearness Allowance had been accepted and was being implemented and (v) whether in fixing the dearness allowance, the Industrial Tribunal was justified in going beyond the region and taking into consideration for the purpose of comparison the dearness allowance paid by Sarabhai Chemicals and other concerns in other parts of the State.48 Before dealing with these points, we consider it necessary and proper to refer to a few provisions of the Act. Clause (p) of Section 2 of the Act defines ‘settlement’ as under: 2. (p) ‘settlement’ means a settlement arrived at in the course of conciliation proceeding and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceeding where such agreement had been signed by the parties
176 Social Justice and Labour Jurisprudence thereto in such manner as may be prescribed and a copy thereof has been sent to an officer authorised in this behalf by the appropriate Government and the Conciliation Officer. An analysis of the abovementioned clause would show that it envisages two categories of settlement—(i) a settlement which is arrived at in the course of conciliation proceeding, i.e., which is arrived at with the assistance and concurrence of the Conciliation Officer who is duty bound to promote a right settlement and to do everything he can to induce the parties to come to a fair and amicable settlement of the dispute (see The Bata Shoe Co. (P) Ltd. vs D.N. Ganguly)49 and (ii) a written agreement between employer and workmen arrived at otherwise than in the course of conciliation proceeding. For the validity of the second category of settlement, it is essential that the parties thereto should have subscribed to it in the prescribed manner and a copy thereof should have been sent to an officer authorised in this behalf by the appropriate Government and the Conciliation Officer. The consequences of the aforesaid two categories of settlement which are quite distinct are set out in Section 18 of the Act which reads as under: (1) A settlement arrived at by agreement between the employer and workmen otherwise than in the course of conciliation proceeding shall be binding on the parties to the agreement. (2) Subject to the provisions of sub-section (2), an arbitration award which had become enforceable shall be binding on the parties to the agreement who referred the dispute to arbitration. (3) A settlement arrived at in the course of conciliation proceeding under this Act or an arbitration award in a case where a notification has been issued under sub-section (3A) of Section 10A or an award of a Labour Court, Tribunal or National Tribunal which has become enforceable shall be binding on— (a) all parties to the industrial dispute; (b) all other parties summoned to appear in the proceeding as parties to the dispute, unless the Board, Arbitrator, Labour Court, Tribunal or National Tribunal, as the case may be, records the opinion that they are were so summoned without proper cause; (c) where a party referred to in clause (a) or clause (b) is an employer, his heirs, successors assigns in respect of the establishment to which the dispute relates; (d) where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who are employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part. A bare perusal of the above quoted section would show that whereas a settlement arrived at by agreement between the employer and the workmen otherwise than in the course of conciliation proceeding is binding only on the parties to the agreement, a settlement arrived at in the course of conciliation proceedings under the Act is binding not only on the parties to the industrial dispute but also on other persons specified in clauses (b), (c) and (d) of sub-section (3) of Section 18 of the Act. We are fortified in this conclusion by a decision of this Court in Ramnagar Cane & Sugar Co. Ltd. vs Jatin Chakravorty,50 where it was held as follows: When an industrial dispute is thus raised and is decided either by settlement or by an award, the scope and effect of its operation is prescribed by Section 18 of the Act. Section 18(1) provides that a settlement arrived at by agreement between the employer and the workmen otherwise than in the course of conciliation proceeding shall be binding on the parties to the agreement; whereas Section 18(3) provides that a settlement arrived at in the course of conciliation proceedings which has become enforceable shall be binding on all the parties
Collective Bargaining Agreement Issues 177 specified in clauses (a), (b), (c) and (d) of sub-section (3). Section 18(3)(d) makes it clear that, where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who are employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part, would be bound by the settlement... In order to bind the workmen, it is not necessary to show that the said workmen belong to the union which was a party to the dispute before the conciliator. The whole policy of Section 18 appears to be to give an extended operation to the settlement arrived at in the course of conciliation proceedings, and that is the object with which the four categories of persons bound by such settlement are specified in Section 18, sub-section (3). Similar view seems to have been held by another Division Bench of this Court in The Jhagrakhan Collieries (P) Ltd. vs Shri G.C. Agrawal, Presiding Officer, Central Government Industrial Tribunal-cum-Labour Court, Jabalpur.51 The legal position emerging from the aforementioned provisions of the Act being clear, we now proceed to tackle the questions set out above. As the first two questions are inseparably linked up, we propose to deal with them together. Although, prima facie there seems to be considerable force in the Sangh’s stand that paras 2.3, 3.1, 3.2 and 3.3 of the aforesaid agreement of 14 December 1973 arrived at between the Employees’ Union and the appellant Company related only to the special pay and did not cover the Sangh’s demand for variable dearness allowance linked to the Ahmedabad cost of living index, we do not consider it necessary to go into this question, as the said agreement not having been arrived at during the course of a conciliation proceeding, it could not, according to Section 18(1) of the Act, bind any one other than the parties thereto. A fortiori, the fact that the Employees’ Union which had been duly recognised under the Code of Discipline arrived at the aforesaid agreement with the appellant Company could not operate as a legal impediment in the way of the Sangh (which was not a party to the agreement) to raise a demand or dispute with regard to the variable dearness allowance linked to the Ahmedabad cost of living index or affect the validity of the reference by the Government or the jurisdiction of the Industrial Tribunal to go into the dispute. The conclusion that a minority union can validly raise an industrial dispute gains support from Section 2(k) of the Act, which does not restrict the ambit of the definition of ‘industrial dispute’ to a dispute between an employer and a recognised majority union but takes within its wide sweep any dispute or difference between employer and workmen including a minority union of workmen which is connected with employment or terms of employment or conditions of labour of workmen as well as the observations made by this Court in Workmen vs M/s. Dharampal Premchand (Saughandhi).52 It may also be relevant to mention in this connection that both the Counsel for the Employees’ Union and the Counsel for the appellant Company admitted before the Industrial Tribunal that the aforesaid agreement had been terminated by two months’ notice (see p. 39 of the Industrial Tribunal’s Award). We have, therefore, no hesitation in holding that neither the Sangh was precluded from raising the demand or the dispute, nor was the Government debarred from making the reference, nor was the Industrial Tribunal’s competence to go into the dispute and make the award affected in any manner. The first two questions are decided accordingly. Re Question No. 3—This question is no longer res integra. In Jhagrakhan Collieries (P) Ltd. vs Shri G.C. Agrawal, Presiding Officer, Central Government Industrial Tribunal-cum-Labour Court, Jabalpur,53 Sarkaria, J., speaking for the Bench, observed that ‘an implied agreement by acquiescence, or by conduct such as acceptance of a benefit under an agreement to which the worker acquiescing or accepting the benefit was not a party, being outside the purview of the Act, is not binding on such a worker either under sub-section (1) or under sub-section (2) of Section 18. It follows, therefore, that even if 99 per cent of the workers have impliedly accepted
178 Social Justice and Labour Jurisprudence the agreement arrived at by drawing V.D.A. under it, it will not—whatever its effect under the general law—put an end to the dispute before the Labour Court and make it functus officio under the Act.’ Accordingly, the theory of implied agreement by acquiescence sought to be built up on behalf of the appellant on the basis of the acceptance of the benefits flowing from the agreement even by the workmen who were not signatories to the settlement is of no avail to the appellant Company and cannot operate as an estoppel against the Sangh or its members.
The Force of a Settlement under the Industrial Disputes Act, 1947, as against the Provisions of the General Statute: The Rule The Industrial Disputes Act, 1947, provides for the period of operation of an award and settlement. But the law is silent on the question of the operation and validity of the terms of such award or settlement subsequent to its termination as per the provisions of the Act.
LIC vs D.J. Bahadur In the case of LIC of India vs D.J. Bahadur,54 Justice V.R. Krishna Iyer, speaking for the majority, resolved authoritatively on this unanswered legislative mechanism with the aid of the prevailing ratio and also held that the provisions of any general legislation that has an application to a particular class of employees cannot supersede the terms under a settlement entered within the framework of special legislation, that is, the Industrial Disputes Act, 1947. The case was heard by V.R. Krishna Iyer, R.S. Pathak and A.D. Koshal. All three judges delivered separate judgements with certain deviations. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER A preliminary divagation has become necessary since applications and enquiries had been made more than once about the postponement of the judgment. The first anniversary of the closure of oral submissions in the above case is just over; and this unusual delay between argument and judgment calls from me, the presiding judge of the Bench which heard the case, a word of explanation and clarification so that misunderstanding about the judges may melt away in the light. A better appreciation of this Court’s functional adversities and lack of research facilities will promote more compassion than criticism and in that hope I add this note. The judicature, like other Constitutional instrumentalities, has a culture of national accountability. Two factors must be highlighted in this context. A court is more than a judge; a collegium has a personality which exceeds its members. The price a collective process, free from personality cult, has to pay is long patience, free exchange and final decision in conformity with the democracy of judicial functionality. Sometimes, when divergent strands of thought haunt the mentations of the members, we pause, ponder and reconsider because we follow the words of Oliver Cromwell commended for courts by Judge Learned Hand: My brethren, I beseech you, in the bowels of Christ, think it possible that you may be mistaken.
Collective Bargaining Agreement Issues 179 Utter incompatibility exists between judicial democracy and dogmatic infallibility; and so, in this case, we have taken time, more time and repeated extension of time to evolve a broad consensus out of our initial dissensus. Not procrastination but plural toil is the hidden truth behind the considerable interval. Secondly, when important issues demand the court’s collective judgment, an informed meeting of instructed minds, in many ways, is a sine qua non. But the torrent of litigation flooding the court drowns the judges in the daily drudgery of accumulated dockets. To gain leisure for fundamental reflections with some respite from paper-logged existence and supportive research from trained law clerks is a ‘consummation devoutly to be wished’ if the final court is to fulfill its trust with the Constitution and country. The Indian judicial process, sui generis in some respects, has its problems, Himalayan in dimension but hardly appreciated in perspective and in true proportions two of which have been mentioned by me in extenuation of the great gap between closure for judgment and its actual pronouncement. Having said this, I must proceed to deal with the merits of the case and the conclusions we have reached in our diverse opinions. By majority, anyway, we dismiss the appeal and find no merit in the contentions of the appellant. The Fundamental Differences in Approach: My learned brother [Justice] Koshal has, after long reflection on the issues in this appeal, expressed his conclusion, with which I respectfully disagree. Our difference stems from basic divergence in legal interpretation and judicial perspective. Law is no cold-blooded craft bound by traditional techniques and formal forceps handed down to us from the Indo-Anglican era but a warm-blooded art, with a break from the past and a tryst with the present, deriving its soul force from the Constitution enacted by the People of India. Law, as Vice President G.S. Pathak used to emphasise in several lectures, is a tool to engineer a peaceful ‘civil revolution’, one of the components of which is a fair deal to the weaker human sector like the working class. The striking social justice values of the Constitution impact on the interpretation of Indian laws and to forget this essential postulate while relying on foreign erudition is to weaken the vital flame of the Democratic, Socialist Republic of India. Chief Justice Earl Warren of the United States has spelt out with clarity and felicity the correct judicial approach to the issues at stake in this case: Our judges are not monks or scientists, but participants in the living stream of our national life, steering the law between the dangers of rigidity on the one hand and of formlessness on the other. Our system faces no theoretical dilemma but a single continuous problem: how to apply to ever-changing conditions the never-changing principles of freedom.55 For the Indian judicial process, the nidus of these never-changing principles is the Constitution. The bearing of this broad observation on statutory construction will become evident when we get down to the discussion. Now let me proceed to the merits, but, at the outset, underscore the Constitutional bias towards social justice to the weaker sections, including the working class, in the Directive Principles of State Policy, a factor which must enliven judicial consciousness while decoding the meaning of legislation. Victorian-vintage rules of construction cannot override this value-laden guidebook. The flawless flow of facts, so far as I am able to remember, aided by our notes, finds expression in the stream of narration in our learned brother’s judgment and that frees me from a like exercise. But our consensus on the facts is no less than our dissensus on the law. In the pages that follow I adopt, for convenience, the same acronyms and abbreviations as have been used by brother [Justice] Koshal in his judgment. To begin with, I have to stress three key circumstances which colour the vision of social justice: (a) the factum of payment of bonus, without break, since 1959 by the Corporation56 to
180 Social Justice and Labour Jurisprudence its employees; (b) the consciousness that the Management in this case is no asocial, purely profit-oriented private enterprise but a model employer, a statutory corporation, created by nationalisation legislation inspired by socialistic objectives; and (c) the importance of industrial peace for securing which a special legislation, viz. the Industrial Disputes Act, 1947 (the ID Act, for short), has been in operation for 33 years. The Corporation is itself a limb of the State as defined in Article 12 and Articles 38, 39 and 43, which deal with workers’ weal and have, therefore, particular significance. The Corporation, to begin with, had to take over the staff of the private insurers lest they should be thrown out of employment on nationalisation. These private companies had no homogenous policy regarding conditions of service for their personnel, but when these heterogeneous crowds under the same management (the Corporation) divergent emoluments and other terms of service could not survive and broad uniformity became a necessity. Thus, the statutory transfer of service from former employees and standardization of scales of remuneration and other conditions of employment had to be and were taken care of by Section 11 of the Life Insurance Corporation Act, 1956 (for short, the LIC Act). The obvious purpose of this provision was to enable the Corporation initially to absorb the motley multitudes from many companies who carried with them varying incidents of service as to fit them into a fair pattern, regardless of their antecedent contracts of employment of industrial settlements or awards. It was elementary that the Corporation could not perpetuate incongruous features of service of parent insurers, and statutory power had to be vested to vary, modify or supersede these contracts, geared to fair, equitable and, as far as possible, uniform treatment of the transferred staff. Unless there be unmistakable expression of such intention, the ID Act will continue to apply to the Corporation employees. The office of Section 11 of the LIC Act was to provide for a smooth take-over and to promote some common conditions of service in a situation where a jungle of divergent contracts of employment and industrial awards or settlements confronted the State. Unless such rationalisation and standardization were evolved the ensuing chaos would itself have spelt confusion, conflicts and difficulties. This functional focus of Section 11 of the LIC Act will dispel the scope for interpretative exercises unrelated to the natural setting in which the problem occurs. The inference is clear that Section 11 does not repel the ID Act as that is not its purpose. Farewell to the context and fanatical adherence to the text may lead to the tyranny of literality—a hazardous road which misses the meaning or reaches a sense which the author never meant. Lord Denning has observed: A judge should not be a servant of the words used. He should not be a mere mechanic in the powerhouse of semantics. Reed Dickerson has in his ‘The Interpretation and Application of Statute’ warned against ‘the disintegration of statutory construction’ and quoted Fuller57 to say: …We do not proceed simply by placing the word in some general context… Rather, we ask ourselves, what can this rule be for? What evil does it seek to avert? …Surely the judicial process is something more than a cataloguing procedure. …A rule or statute has a structural or systematic quality that reflects itself in some measure into the meaning of every principal term in it. I lay so much emphasis on the guide-lines to statutory interpretation as this case turns solely on the seeming meaning of certain provisions (for example Section 11) of the LIC Act as capable of perpetual use, not only initial exercise, as the Minister in Parliament indicated. But, as we will presently see, the decisive aspect of the case turns on another point, viz. the competing
Collective Bargaining Agreement Issues 181 claims for dominance as between the ID Act and the LIC Act in areas of conflict. Of course, the problem of decoding the legislative intent is fraught with perils and pitfalls, as the learned author has noted:58 To do his cognitive job well, a judge must be unbiased, sensitive to language usages and shared tacit assumptions, perceptive in combining relevant elements affecting meaning, capable of reasoning deductively, and generously endowed with good judgment. In view of these formidable demands, it is hardly surprising that judges often disagree on the true meaning of a statute. Even so, legal engineering, in the province of deciphering meaning, cannot abandon the essay in despair and I shall try to unlock the legislative intent in the light of the text and as reflecting the context. A capsulated presentation of the conspectus of facts will aid the discussion. The battle is about current bonus, the employer is the Life Insurance Corporation and the employees belong to Classes III and IV in the service of the Corporation. The LIC Act brought into being a statutory corporation, i.e. the Life Insurance Corporation, and life was breathed into it as from 1 September 1956. Since there was nationalisation of life insurance business under the LIC Act, private insurers’ assets and liabilities of employees were transferred to the Corporation. We are concerned only with the employees and their services and Section 11 of the LIC Act covers this field. I may extract the said provision to make it clear that it deals with the remuneration, terms and conditions and other rights and privileges of transferred employees: (1) Every whole-time employee of an insurer whose controlled business has been transferred to and vested in the Corporation and who was employed by the insurer wholly or mainly in connection with his controlled business immediately before the appointed day shall, on and from the appointed day, become an employee of the Corporation, and shall hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same on the appointed day if this Act had not been passed, and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation: Provided that nothing contained in this sub-section shall apply and any such employee who has, by notice in writing given to the Central Government prior to the appointed day intimated his intention of not becoming an employee of the Corporation. (2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scales of remuneration and the other terms and conditions of service applicable to employees of insurers whose controlled business has been transferred to, and vested in, the Corporation, it is necessary so to do, or that, in the interests of the Corporation and its policy-holders, a reduction in the remuneration payable, or a revision of the terms and conditions of service applicable, to employees or any class of them is called for, the Central Government may, notwithstanding anything contained in sub-section (1), or in the Industrial Disputes Act, 1947, or in any other law for the time being in force, or in any award, settlement or agreement for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of the service to such extent and in such manner as it thinks fit; and if the alteration is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months’ remuneration unless the contract of service with such employee provides for a shorter notice of termination.
182 Social Justice and Labour Jurisprudence Explanation: The compensation payable to an employee under this sub-section shall be in addition to, and shall not affect, any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service. (3) If any question arises as to whether any person was a whole time employee of an insurer or as to whether any employee was employed wholly or mainly in connection with the controlled business of an insurer immediately before the appointed day, the question shall be referred to the Central Government, whose decision shall be final. (4) Notwithstanding anything contained in the Industrial Disputes Act, 1947, or in any other law for the time being in force, the transfer of the service of any employee of an insurer to the Corporation shall not entitle any such employee to any compensation under that Act or other law, and no such claim shall be entertained by any court, tribunal or other authority. Recruitment of fresh employees is provided for by Section 23. And Section 49 empowers the Corporation to make regulations in a general way for all the purposes of the Act, including the terms and conditions of service of the employees of the Corporation. Pursuant to its powers, the Central Government promulgated the Life Insurance Corporation (Alteration of Remuneration and other Terms and Conditions of Service of Employees) Order, 1957 (the 1957 Order, for short). This related to the conditions of service of the transferees and was not confined only to Class III and Class IV employees among them. It was a general Order, not one limited to workmen as defined in Section 2(s) of the ID Act. Clause 9 of the 1957 Order states that no bonus will be paid but certain other benefits of insurance, medical care etc. are mentioned therein. Clause 9 was later amended, providing for non-profit sharing bonus to certain classes of employees. Be that as it may, the Corporation, with the clear approval of the Central Government, reached a settlement with its employees on 2 July 1959 providing for payment of cash bonus from 1 September 1956 to 31 December 1961. Obviously, this was under the ID Act and not under the LIC Act and proceeded on the clear assumption that the ID Act provisions regarding claims of bonus applied to workmen in the employment of the Corporation. In 1960, the Life Insurance Corporation of India (Staff ) Regulations, 1960 (the 1960 Regulations) were framed. Regulation 58 states: The Corporation may, subject to such directions as the Central Government may issue, grant non-profit-sharing bonus to its employees and the payment thereof, including conditions of eligibility for the bonus, shall be regulated by instructions issued by the Chairman from time to time. Here again, it must be noted that the provision is general and covers the entire gamut of employees of the Corporation and is not a specific stipulation regarding that class of employees who are workmen under the ID Act and whose industrial disputes will be governed ordinarily by the ID Act. Consistently with the good relations between the Corporation and its workmen, the settlement of 1959 was followed by those of 1963, 1970 and 1972, providing for bonus for workmen in the service of the Corporation. Rocketing costs of living, rising aspirations and frustrations of socio-economic life and the general expectations from model employers like the public sector enterprises have led workmen in this country to make escalating demands for better emoluments, including bonus. Naturally, the workmen under the Corporation raised disputes for bonus and other improved conditions. The employer, consistently with the long course of conduct by both sides as if the ID Act did govern their relations, entered into settlements dated 24 January 1974
Collective Bargaining Agreement Issues 183 and 6 February 1974, pursuant to the provisions of Section 18 read with Section 2(p) of the ID Act. Clause 8 of these settlements specificated the scale of bonus and clause 12 thereof is more general and may be read here: Clause 8. Bonus. (i) No profit-sharing bonus shall be paid. However, the Corporation may, subject to such directions as the Central Government may issue from time to time, grant any other kind of bonus to its Class III and IV employees. (ii) An annual cash bonus will be paid to all Class III and Class IV employees at the rate of 15 per cent of the annual salary (i.e. basic pay inclusive of special pay, if any, and dearness allowance and additional dearness allowance) actually drawn by an employee in respect of the financial year to which the bonus relates. (iii) Save as provided herein, all other terms and conditions attached to the admissibility and payment of bonus shall be as laid down in the settlement on bonus dated 26 June 1972. Clause 12. (1) This Settlement shall be effective from 1 April 1973 and shall be for a period of four years, i.e., from 1 April 1973 to 31 March 1977. (2) The terms of the settlement shall be subject to the approval of the Board of the Corporation and the Central Government. (3) This Settlement disposes of all the demands raised by the workmen for revision of terms and conditions of their service. (4) Except as otherwise provided or modified by this Settlement, the workmen shall continue to be governed by all the terms and conditions of service as set forth and regulated by the Life Insurance Corporation of India (Staff ) Regulations, 1960, as also the administrative instructions issued from time to time, and they shall, subject to the provisions thereof, including any period of operation specified therein, be entitled to the benefits thereunder. It is important and, indeed, is an impressive feature that these two settlements cover a wide ground of which bonus is but one item. Equally significant is the fact that the Board of the Corporation and the Central Government, which presumably knew the scope of the LIC Act and the ID Act, did approve of these settlements. The thought of terminating the payment of bonus to the employees covered by the 1974 settlements apparently occurred to the Central Government a year later and the Payment of Bonus (Amendment) Ordinance, 1975 [replaced by the Payment of Bonus (Amendment) Act, 1976], was brought into force to extinguish the effect of the 1974 settlements and the claims for bonus put forward by the workers thereunder. This Act was successfully challenged and this Court struck down the said legislation in Madan Mohan Pathak vs Union of India59 and directed the Corporation to pay to its Class III and IV employees bonus for the years 1 April 1975 to 31 March 1977. Thereupon, the Corporation issued to its workmen certain notices under Section 19(2) of the ID Act and Section 9-A of the same Act. Likewise, the Central Government, on 26 May 1978, issued a notification under Section 49 of the LIC Act substituting a new regulation for the old Regulation 58. All these three steps were taken to stop payment of bonus to the workmen under the two settlements and led to a challenge of their validity in the Allahabad High Court under Article 226 of the Constitution. If the two notices and the changed regulation were good, they did deprive the workmen of their benefits of bonus pursuant to the settlements reached under the ID Act. But the workmen contended that the proceedings under the LIC Act could not prevail against the continued flow of bonus benefits under the ID Act. The High Court (Lucknow Bench) struck down the appellant’s actions as of no consequence and void and
184 Social Justice and Labour Jurisprudence sustained the claim for bonus based on the settlements of 1974. The Corporation has come up in appeal to this Court, assailing the findings of the High Court. The Corporation is clearly an ‘industry’, and the ‘workmen’ raised demands for bonus, the management responded constructively and for long years settlements, as envisioned by the ID Act, were entered into and the stream of industrial peace flowed smooth. Industrial settlements marked their relations, the last of which were in 1974, but a later legislation marred this situation and led to a litigation. In 1976, the Life Insurance Corporation (Modification of Settlement) Act, 1976 (for short, the 1976 Act) was enacted to abolish the efficacy of the right to bonus under the two settlements of 1974, but the challenge to its constitutionality was upheld. When the parliamentary burial of bonus was stultified by judicial resurrection, other measures to effectuate the same purpose were resorted to, both under the LIC Act and the ID Act. These moves proved to be essays in futility because the High Court held that bonus was still payable, that the ID Act prevailed over the LIC Act in the area of industrial relations, the former being a special law, and that the steps taken both by the Corporation and the Central Government under the LIC Act and Regulations as well as under the ID Act were of legal inconsequence. Against this judgment, the Corporation has come up in appeal and the questions raised are of great moment and of serious portent. If law allows administrative negation of bonus, judges are not to reason why; but whether law does allow nullification of an industrial settlement is for judges to decide, not for the Administration to say, why not? That is Montesquien functionalism of sorts. So, against this backdrop, I will analyse the submissions, scan their substance and pronounce upon their validity. I may as well formulate, in more particularised form, the various contentions urged on either side—not exhaustively though, because that has been done by my learned Brothers. I propose to confine the discussion to the decisive issues. First of all, we have to investigate whether the two settlements of 24 January 1974 and 6 February 1974, arrived at in pursuance of the provisions of Section 18 read with Section 2(p) of the ID Act, have current validity, having regard to the notice given by the Management under Section 19(2) of the ID Act terminating the settlements and under Section 9-A of its intention to vary the conditions of service bearing on bonus. In case the settlements do not survive the notices, the claim to bonus perishes and nothing more remains to be decided. But in case I hold that despite the intention to change the service conditions under Section 9-A and determination under Section 19(2), the terms of the settlements continue to operate until substituted by a new contract arrived at by mutual settlement or by an award, the further issue opens as to whether a settlement under the ID Act cannot be operative since the LIC Act contains provisions vesting power in the Corporation and the Central Government to fix the terms and conditions of service of the Corporation employees and that power has been exercised to extinguish the bonus claim. The question will throw open for consideration which statute prevails, the ID Act or the LIC Act, when there is an apparent conflict between the two. The problem of the prevalence of a special statute as against a general statute and the determination of which, in a given situation, is the special statute will engage my attention at the appropriate state. In the event of my holding that the ID Act prevails, as against the LIC Act, in the given situation, the fate of the steps taken by the Corporation and the Central Government under the LIC Act and the Regulations framed thereunder will be sealed. Of course, if the holding is that the ID Act cannot operate as against the LIC Act and the Regulations framed thereunder, when dealing with the terms and conditions of service of the employees of the Corporation, I may have to venture into the controversy about how effectual are the measures taken by the two statutory authorities, i.e. the Corporation and the Central Government, under the provisions of the LIC Act and the Regulations. Every point has been emphatically contested and argued by both sides with erudite niceties. However, the judicial perspective will be the decisive factor in the ultimate analysis. For, as Brennan, J.60 has observed: The law is not an end in itself, nor does it provide ends. It is pre-eminently a means to serve what we think is right.
Collective Bargaining Agreement Issues 185 Law is here to serve! To serve what? To serve, insofar as law can properly do so, within limits that I have already stressed, the realization of man’s ends, ultimate and mediate… Law cannot stand aside from the social changes around it. Judicial acceptance of social dynamics, as projected by the Constitution, is the crucial factor in this case, if I may anticipate myself. The spinal issue, then, is as to whether the settlements of 1974 are extant even after the notice under Section 9-A and the formal termination under Section 19(2) of the ID Act. Let me go to the basics. Before that, a glance at the nature of the two settlements, their ambit and ambience and their longevity, actual and potential, may be desirable, after sketching the broad basics of the ID Act and its means and ends. The ID Act is a benign measure which seeks to pre-empt industrial tensions, provide the mechanics of dispute resolutions and set up the necessary infra-structure so that the energies of partners in production may not be dissipated in counter-productive battles and assurance of industrial justice may create a climate of goodwill. Industrial peace is a national need and, absent law, order in any field will be absent. Chaos is the enemy of creativity, sans which production will suffer. Thus, the great goal to which the ID Act is geared is legal mechanisms for canalising conflicts along conciliatory or adjudicatory processes. The objective of this legislation and the component of social justice it embodies were understood in the Bangalore Water Supply and Sewerage Board vs Rajappa61 thus: To sum up, the personality of the whole statute, be it remembered, has a welfare basis, it being a beneficial legislation which protects labour, promotes their contentment and regulates situations of crisis and tension where production may be imperiled by untenable strikes and blackmail lock-outs. The mechanism of the Act is geared to conferment of regulated benefits to workmen and resolution, according to a sympathetic rule of law, of the conflicts, actual or potential, between managements and workmen. Its goal is amelioration of the conditions of workers, tempered by a practical sense of peaceful co-existence, to the benefit of both, not a neutral position but restraints on laissez faire and concern for the welfare of the weaker lot. Empathy with the statute is necessary to understand not merely its spirit, but also its sense. The ID Act deals with industrial disputes, provides for conciliation, adjudication and settlements, and regulates the rights of parties and the enforcement of awards and settlements. When a reference is made of a dispute under Section 10 or Section 10-A, the legal process springs into action. Under Section 16, an award is made after a regular hearing if a conciliation under Section 12 does not ripen into a settlement and a failure report is received. The award is published under Section 17(1) and acquires finality by virtue of Section 17(2), unless under Section 17-A(1) the appropriate Government declares that the award shall not be enforceable. Section 17-A(4), which is of significance, reads thus: (4) Subject to the provisions of sub-section (1) and sub-section (3) regarding the enforceability of an award, the award shall come into operation with effect from such date as may be specified therein, but where no date is so specified, it shall come into operation on the date when the award becomes enforceable under sub-section (1) or sub-section (3), as the case may be. It is obvious from Section 18 that a settlement, like an award, is also binding. What I emphasise is that an award, adjudicatory or arbitral, and a settlement during conciliation or by agreement shall be binding because of statutory sanction. Section 19 relates to the period of operation of settlements and awards and here also it is clear that both settlements and awards, as is evident from a reading of Sections 19(2) and (6), stand on the same footing.
186 Social Justice and Labour Jurisprudence Section 19 has a key role to play in the life and death of awards and settlements and so we may read the text here to enable closer comment. Particular attention must be rivetted on Sections 19(2), (3) and (6): 19. (1) A settlement shall come into operation on such date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on the date on which the memorandum of the settlement is signed by the parties to the dispute. (2) Such settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of six months (from the date on which the memorandum of settlement is signed by the parties to the dispute, and shall continue to be binding on the parties after the expiry of the period aforesaid, until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement. (3) An award shall, subject to the provisions of this section, remain in operation for a period of one year from the date on which the award becomes enforceable under Section 17-A: Provided that the appropriate Government may reduce the said period and fix such period as it thinks fit: Provided further that the appropriate Government may, before the expiry of the said period, extend the period of operation by any period not exceeding one year at a time as it thinks fit so, however, that the total period of operation of any award does not exceed three years from the date on which it came into operation. (4) Where the appropriate Government, whether of its own motion or on the application of any party bound by the award, considers that since the award was made, there has been a material change in the circumstances on which it was based, the appropriate Government may refer the award or a part of it to a Labour Court, if the award was that of a Labour Court or to a Tribunal, if the award was that of a Tribunal or of a National Tribunal, for a decision whether the period of operation should not, by reasons of such change, be shortened and the decision of the Labour Court or the Tribunal, as the case may be, on such reference shall be final. (5) Nothing contained in sub-section (3) shall apply to any award which by its nature, terms or other circumstances does not impose, after it has been given effect to, any continuing obligation on the parties bound by the award. (6) Notwithstanding the expiry of the period of operation under sub-section (3), the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party should by the award to the other party or parties intimating its intention to terminate the award. (7) No notice given under sub-section (2) or sub-section (6) shall have effect, unless it is given to a party representing the majority of persons bound by the settlement or award, as the case may be. Section 9-A fetters the Management’s right to change the conditions of service of workmen in respect of certain matters, including wages and allowances. We had better read it here: 9-A. No employer who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule shall effect such change, (a) without giving to the workmen likely to be affected by such change a notice in the prescribed manner of the nature of the change proposed to be effected; or (b) within twenty-one days of giving such notice:
Collective Bargaining Agreement Issues 187 It will be apparent that the ID Act substantially equates an award with a settlement, from the point of view of their legal force. No distinction in regard to the nature and period of their effect can be discerned, especially when we read Sections 19(2) and (6). I highlight this virtual identity of effect to bring home the fact that judicial pronouncements on this aspect, whether rendered in a case of award or settlement, will be a guideline for us and nothing turns on whether the particular is one of an award or settlement. Indeed, there are reported cases on both. The statutory regulation of industrial disputes is comprehensive, as is manifest from the rest of the Act. Chapter V prohibits strikes and lock-outs; Chapter V-A deals with lay-off and retrenchment and Chapter V puts teeth into the provisions by enacting penalties. Importantly, Section 29, which proceeds on the footing of equal sanctity for awards and settlements, punishes breaches: Any person who commits a breach of any term of any settlement or award which is binding on him under this Act shall be punishable with imprisonment for a term which may extend to six months, or with fine, or with both, and where the breach is a continuing one, with a further fine which may extend to two hundred rupees for every day during which the breach continues after the conviction for the first, and the court trying the offence, if it fines the offender, may direct that the whole or any part of the fine realised from him shall be paid, by way of compensation, to any person who, in its opinion has been injured by such breach. There are miscellaneous provisions to take care of other residuary matters and we get the picture of a parliamentary project designed to deal, not piecemeal but wholesale, with a special subject of strategic concern to the nation, viz., ‘the investigation and settlement of industrial disputes’. Let us be perspicacious about the purpose and sensitive about the social focus of ID Act in a development perspective. Parliament has picked out the specific subject of industrial disputes for particularised treatment, whether the industry be in the private or public sector or otherwise. Our country, with so much leeway to make up, cannot afford paralysing process in production of goods and services and whoever be the employer—government, quasi-public, charitable or profit-making private enterprise—both sides, viz., workmen and management shall abide by the discipline, adopting the mechanics and using the machinery under the ID Act. The Bangalore Water Supply and Sewerage Board 62 case has highlighted this core truth. To lose sight of the spinal nature of the legislation, viz., industrial disputes and their settlement through law, and to regard it as a mere enactment bearing on terms and conditions of service in enterprises is to miss the distinctive genre, particular flavour and legislative quintessence of the ID Act: …(Interpretation) involves far more than picking out dictionary definitions of words or expressions used. Consideration of the context and the setting is indispensable properly to ascertain a meaning. In saying that a verbal expression is plain or unambiguous, we mean little more than that we are convinced that virtually anyone competent to understand it, and desiring fairly and impartially to ascertain its signification, would attribute to the expression in its context a meaning such as the one we derive rather than any other; and would consider any different meaning, by comparison, strained, or far-fetched, or unusual, or unlikely. …Implicit in the finding of a plain, clear meaning of an expression in its context is a finding that such meaning is rational and ‘makes sense’ in that context.63 Interpretative insight will suffer, even as the judicial focus will blur, if the legislative target is not sharply perceived. Indeed, I lay so much stress on this facet because brother Koshal’s otherwise faultless logic has, if I may say so with great deference, failed to convince me because of this fundamental mis-focus. To repeat for emphasis, the meat of the statute is industrial dispute, not conditions of employment or contract of service as such. The line of distinction may be fine but is real.
188 Social Justice and Labour Jurisprudence Be that as it may, a bird’s eye view of the ID Act reveals the statutory structure and legal engineering centering round dispute settlement in industries according to the rule of law and away from fight with fists or economic blackmail. This large canvas, once illumined, may illustrate the sweep of awards and settlements by reference to the very agreement of 1974 we have before us. It goes far beyond bonus and embraces a wide range of disputes and rainbow of settlements in a spirit of give and take. One may visualise the bargaining process. Give in a little on bonus and get a better deal on salary scale or promotion prospects; relent a wee-bit on hours of work but bargain better on housing facilities, and so on. The soul of the statute is not contract of employment, uniformity of service conditions or recruitment rules, but conscionable negotiations, conciliations and adjudications of disputes and differences animated by industrial justice, to avoid a collision which may spell chaos and imperil national effort at increasing the tempo of production. If there is no dispute, the ID Act is out of bounds, while the LIC Act applies generally to all employees from the fattest executive to the frailest manual worker and has no concern with industrial disputes. The former is a ‘war measure’ as it were; the latter is a routine power when swords are not drawn, if we may put it metaphorically. When disputes break out or are brewing, a special, sensitive situation fraught with frayed tempers and fighting postures springs into existence, calling for special rules of control, conciliatory machinery, demilitarising strategies and methods of investigation, interim arrangements and final solutions, governed by special criteria for promoting industrial peace and justice. The LIC Act is not a law for employment or disputes arising therefrom, but a nationalisation measure which incidentally, like in any general take over legislation, provides for recruitment, transfers, promotions and the like. It is special vis-a-vis nationalisation of life insurance but general regarding contracts of employment or acquiring office buildings. Emergency measures are special, for sure. Regular nationalisation statutes are general even if they incidentally refer to conditions of service. The anatomy of the 1974 settlements is no more confined to bonus than the physiology of man is limited to bones. It is an integral, holistic and delicately balanced ensemble of clauses, with cute calculations and hard bargaining on many matters. To dissect is to murder, in the art of true poetry as in the craft of settlement in industry; and, therefore, it is impermissible to single out a clause and extinguish it, as the totality is a living entity which does not permit of dismemberment, limb by limb, without doing violence to the wholeness and identity of the settlement. Here, the 1974 settlements have brought about a conflict-resolution on a variety of items including (a) scales of pay, (b) method of fixation in the new scales, (c) dearness allowance, (d) house rent allowance, (e) city compensatory allowance, etc. Thus bonus is but one component of a multi-point agreement. Clause 12 of the Settlement has some significance: 12. Period of Settlement: (1) This Settlement shall be effective from 1 April 1973 and shall be for a period of four years, i.e., from 1 April 1973 to 31 March 1977. (2) The terms of the settlement shall be subject to the approval of the Board of the Corporation and the Central Government. (3) This Settlement disposes of all the demands raised by the workmen for revision of terms and conditions of their service. (4) Except as otherwise provided or modified by this Settlement, the workmen shall continue to be governed by all the terms and conditions of service as set forth and regulated by the Life Insurance Corporation of India (Staff ) Regulations, 1960 as also the administrative instructions issued from time to time and they shall, subject to the provisions thereof, including any period of operation specified therein, be entitled to the benefits thereunder.
Collective Bargaining Agreement Issues 189 Likewise, the Preamble has a purpose: WHEREAS the parties representing the workmen, namely: 1. 2. 3. 4.
All India Insurance Employees Association All India LIC Employees Federation All India Life Insurance Employees Association and National Organisation of Insurance Workers
(hereinafter called the ‘said Associations’) submitted their Charter of Demands to the Life Insurance Corporation of India (hereinafter called ‘the Corporation’) for revision of the scales of pay, allowances and other terms and conditions of service after the expiry of the award of the National Industrial Tribunal New Delhi on 31 March 1973. AND WHEREAS the Corporation has carried on negotiations with the said Associations between the period July 1973 and January 1974, at which there has been free and frank exchange of views in regard to various matters, including the obligations of the Corporation to the policy-holders and the community; AND WHEREAS the said Associations solemnly agree to cooperate with the management in maintaining discipline and in its endeavour to effect utmost economy in administration and to improve efficiency and productivity so as to ensure that the growth in profitability is maintained, which alone will enable the Corporation (i) to safeguard and (ii) to meet the legitimate demands of the employees for wage revision; AND WHEREAS the said Associations further agree that the management may issue administrative instructions in the interest of maintaining discipline and peaceful atmosphere in the office. NOW THEREFORE it is hereby agreed by and between the parties hereto as follows: What stand out prominently in this Memorandum of Settlement are: (a) There was a previous settlement and new negotiations were started in the light of new demands for a substitution of the earlier settlement by a new settlement, without leaving an interregnum of vacuum; (b) There was a plurality of items unconnected with bonus as such and the overall settlement is a composite fabric; and (c) There is specific reference to the LIC (Staff ) Regulations, 1960, and, so far as the Settlement provided, it prevailed over the Regulations and so far as the Settlement did not cover a topic the Regulations governed, thus making it clear that the Settlements did not become subordinate to the Regulations. The core question that first falls for consideration is as to whether the Settlements of 1974 are still in force. There are three stages or phases with different legal effects in the life of an award or settlement. There is a specific period contractually or statutorily fixed as the period of operation. Thereafter, the award or settlement does not become non est but continues to be binding. This is the second chapter of legal efficacy but qualitatively different as we will presently show. Then comes the last phase. If notice of intention to terminate is given under Section 19(2) or 19(6), then the third stage opens, where the award or the settlement does survive and is in force between the parties as a contract which has superseded the earlier contract and subsists until a new award or negotiated settlement takes its place. Like Nature, Law abhors a vacuum and even on the notice of termination under Section 19(2) or (6), the sequence and consequence cannot be just void but a continuance of the earlier terms, but with liberty to both sides to raise
190 Social Justice and Labour Jurisprudence disputes, negotiate settlements or seek a reference and award. Until such a new contract or award replaces the previous one, the former settlement or award will regulate the relations between the parties. Such is the understanding of industrial law at least for 30 years, as precedents of the High Courts and of this Court bear testimony. To hold to the contrary is to invite industrial chaos by an interpretation of the ID Act, whose primary purpose is to obviate such a situation and to provide for industrial peace. To distil from the provisions of Section 19 a conclusion diametrically opposite of the objective, intendment and effect of the section is an interpretative stultification of the statutory ethos and purpose. Industrial law frowns upon a lawless void and under general law, the contract of service created by an award or settlement lives so long as a new lawful contract is brought into being. To argue otherwise is to frustrate the rule of law. If law is a means to an end, order in society, can it commit functional ‘harakiri’ by leaving a conflict situation to lawless void? Now we will move on to the precedents on the point, which have been summed up by Malhotra64 thus: Effect of termination of award under Section 19(6) on rights and obligations of parties— Termination of an award by either party under Section 19(6) does not have the effect of extinguishing the right flowing therefrom. The effect of termination of an award is only to prevent thereafter the enforcement of the obligation under it in the manner prescribed, but the rights and obligations which flow from it are not wiped out. Evidently, by the termination of an award, the contract of employment is not terminated. The obligation created by the award or contract could be altered by a fresh adjudication or fresh contract.65 In Judhisthir Chandra vs Mukherjee66 the position as stated above was accepted as correct by the High Court. A Division Bench of the Bombay High Court in Mangaldas Narandas vs Payment of Wages Authority67 (Shah and Gokhale, JJ.) came to the same conclusion and neatly summed up the sequence of triple stages and the difference in legal consequences, and upheld the contention that even after termination of an award under Section 19(6), the terms incorporated in the award continued as a contract between the parties. So much so, no reversion to the pre-award position was permissible on the part of the employer. The head-note, which is sufficiently lucid and luminous, sums up the ratio thus: Where an award is delivered by the industrial tribunal it has the effect of imposing a statutory contract governing the relations of the employer and the employee. It is true that statutory contract may be terminated in the manner prescribed by Section 19(6) of the Industrial Disputes Act. After the statutory contract is terminated by notice, the employer by failing to abide by the terms of the award does not incur the penalties provided by the Industrial Disputes Act, nor could the award be enforced in the manner prescribed by Section 20 of the Industrial Disputes (Appellate Tribunal) Act, 1950. But the termination of the award has not the effect of extinguishing the rights flowing therefrom. Evidently by the termination of the award the contract of employment is not terminated. The employer and the employee remain master and servant in the industry in which they are employed, unless by notice the employer has also simultaneously with the termination of the award terminated the employment of the employee. If the employment is not terminated, it is difficult to hold that the rights which had been granted under the award automatically cease to be effective from the date on which notice of termination of the award becomes effective. The effect of termination of the award is only to prevent enforcement of the obligations under the award in the manner prescribed, but the rights and obligations which flow from the award are not wiped out. Termination of the award or lapsing of the award has not the effect of wiping out the liabilities flowing under the award.
Collective Bargaining Agreement Issues 191 An award has the effect of imposing fresh terms upon the contract of employment between the employer and the employee to which they have been assented. The termination of such award does not terminate the contract. Even after the award is terminated in the manner provided by Section 19(6) of the Industrial Disputes Act, the obligation created by the award could be altered by a fresh contract or a fresh adjudication under the Industrial Disputes Act, and not otherwise. The Industrial Disputes Act has been enacted with the object of securing harmonious relations in the working of the industry between the employer and the employees by providing a machinery for adjudication of disputes between them; and the object of the legislature would be frustrated if after every few months, by unilateral action, the employer or the employees may be entitled to reopen the dispute and ignore the obligations declared to be binding by the process of adjudication. There is a remarkable continuity in the Bombay High Court (a jurisdiction where industrial unrest is a sensitive issue) because we find that another Division Bench interpreting similar provisions in the Bombay Industrial Relations Act has been persuaded by the same reasoning, well brought out in the head-note which we excerpts:68 The result of the award ceasing to have effect on notice of termination being given under Section 116(1) of the Bombay Industrial Relations Act is that the award ceases to exist. The result of the award ceasing to have effect is that it is open to either party to give a notice of change under Section 42 of the Act and to attempt to bring about a change. Further, it is open to the employer in cases in which he could bring a change without a notice of change, such as matters enumerated in Schedule III to the Act, to bring about the change, because the impediment placed in his way by Section 46(3) is removed. But until a change is brought about by the act either of employer or the employee after following relevant provisions in the Bombay Industrial Relations Act, 1946, the award that exists shall continue to regulate the relations between the employer and the employees. The effect of termination of an award is not that the rights which flow from that award cease to be available to the employees, but the effect of termination is that the award continues to govern the relations between the employer and the employees until such time as a change is effected in accordance with the provisions of the Bombay Industrial Relations Act, 1946. Indeed, the precise submission that upon termination by notice, the award ceased to have effect for all purposes and the employees were not entitled to benefit thereunder was raised and examined as a matter of great importance to industrial relations. The court, in our view rightly, rejected the contention of the employer and with forceful precision argued to reach the conclusion which is the only sensible solution:69 What this sub-section in effect provides is that if a notice of termination is given by either party to the award, then on the expiry of two months from the date of such notice, the registered agreement, settlement or award shall cease to have effect… But the question that we have been called upon to determine goes a little further than that and the question is by what is the relationship between the employers and the employees regulated after an award is terminated? Does termination of the award create a vacuum and leave the employees to the tender mercy of the employer? Does it, by providing that the award shall cease to have effect, get rid of the award so as to bring about the result that any agreement that governed the relations of the parties prior to the date of the award is thereby revived; or does it preserve such rights as the employees have, prior to the date of termination, already enjoyed under the award; or does it preserve the whole of the award until it is changed by the procedure prescribed by the Bombay Industrial Relations Act for a change? Now, quite obviously it would not be
192 Social Justice and Labour Jurisprudence possible for any court to take the view that the termination of the award creates a vacuum in which the employees are at the tender mercy of the employer; nor does it appear to us to be possible to hold that by termination of the award the contract or agreement that governed the relations of the employer and the employees prior to the award is in some manner revived. Initially that contract or agreement had binding effect; but it ceased to have such effect on the award taking effect and the moment the award became binding on the parties, the antecedent contract or agreement was superseded by the award. It is not a case of an antecedent contract or agreement being suspended, because there is no provision for suspension which can even be spelt out from any of the sections of the Bombay Industrial Relations Act. The award, or as the case may be, a registered agreement or a settlement under the Bombay Industrial Relations Act, has obviously the effect of superseding the contract or agreement that existed and that regulated the relations between the employer and the employees prior to the registered agreement, settlement or award taking effect under the provisions of the Act. Then we come to the next possibility; Is only so much of the award preserved as relates to the rights already enjoyed by the employees before the termination of the award? We find it difficult so to hold. There is no principle or logic in dealing with an award in this piecemeal manner and preserving rights that have already been actually enjoyed and destroying those which, although they may have accrued, have to be enjoyed in future in terms of the award. Mr Patel for the petitioners has argued that on the termination of the award, the effect or rather the result that is brought about is that the rights of parties are frozen as of that date. Assuming such a concept of freezing the rights was adopted, even the freezing would be in respect of rights that have already accrued and it is not quite easy to conceive of rights which would not accrue to an employee under an industrial award and which can only be contingent. In any event, if the original contract or agreement has been superseded by the award, holding that the award is no longer what governs the relations between the employer and the employees would necessarily create a vacuum. Trying to save the creation of a vacuum by splitting up the award into two parts, the award under which benefits have already been enjoyed and that part of the award under which benefits have not been enjoyed, is dissecting the award in a manner not justified in law or logic. There appears to be on the scene after the termination of the award only one thing that can govern the relations between the employer and the employees and that undoubtedly can be nothing else than the award itself. The result of [the] award ceasing to have effect is not that the award ceases to exist; the result of the award ceasing to have effect is, as I have already pointed out, that it is open to either party to give a notice of change and to attempt to bring about a change. In the Madras jurisdiction the same view has prevailed, as is apparent from Satya Studios vs Labour Court,70 Narayanaswamy vs Presiding Officer,71 and Sathya Studios vs Labour Court.72 A Division Bench of that Court in Sathya Studios73 case stressed the purpose of the ID Act and the preference for that interpretation which will advance that purpose. The head-note brings out the holding correctly: …a combined reading of Section 18(3), sub-sections (1) to (3), and (6) of Section 19, Section 23 and Section 29 leave no doubt that, having regard to the whole purpose of the Act, to wit, to bring about, conserve and promote industrial peace, the termination of an award under Section 19(6) does not mean that the terms and conditions evolved by it and applied to the industrial relations concerned would be set at large. All that the termination under Section 19(6) would mean is that, thereafter, the parties will be at liberty to raise a fresh industrial dispute if there is a basis therefor. But, so long as the award terminated under Section 19(6) has not been substituted by an award, the industry concerned has to proceed on the basis that the terms and conditions of the award would continue to govern the terms of employment.
Collective Bargaining Agreement Issues 193 We need not labour the point further because we are bound, precedentially speaking, by three decisions of this Court. Chacko case,74 in a clinching passage, settles the proposition and the Indian Oil Corporation case75 adopts a reasoning compelling the same conclusion, even like Md Qasim Larry76 has done. Das Gupta, J., speaking for a bench of three Judges, studied the statutory scheme bearing on the triple periods after an award came into being and indicated, by purposive interpretation of the relevant provisions, the legal stages of the life of an award. After quoting Section 19(6) of the ID Act, the court observed:77 This makes it clear that after the period of operation of an award has expired, the award does not cease to be effective. For, it continues to be binding thereafter on the parties until notice has been given by one of the parties of the intention to terminate it and two months have elapsed from the date of such notice. The effect of Section 4 of the Industrial Disputes (Banking Companies) Decision Act is that the award ceased to be in force after 31 March 1959. That, however, has nothing to do with the question as to the period for which it will remain binding on the parties thereafter. The provision in Section 19(6) as regards the period for which the award shall continue to be binding on the parties is not in any way affected by Section 4 of the Industrial Disputes (Banking Companies) Decision Act, 1955. Quite apart from this, however, it appears to us that even if an award has ceased to be in operation or in force and has ceased to be binding on the parties under the provisions of Section 19(6), it will continue to have its effect as a contract between the parties that has been made by industrial adjudication in place of the old contract. So long as the award remains in operation under Section 19(3), Section 23(c) stands in the way of any strike by the workmen and lock-out by the employer in respect of any matter covered by the award. Again, so long as the award is binding on a party, breach of any of its terms will make the party liable to penalty under Section 29 of the Act, to imprisonment which may extend to six months or with fine or with both. After the period of its operation and also the period for which the award is binding have elapsed, Section 23 and Section 29 can have no operation. We can, however, see nothing in the scheme of [the] Industrial Disputes Act to justify a conclusion that merely because these special provisions as regards prohibition of strikes and lock-outs and of penalties for breach of award cease to be effective the new contract as embodied in the award should also cease to be effective. On the contrary, the very purpose for which industrial adjudication has been given the peculiar authority and right of making new contracts between employers and workmen makes it reasonable to think that even though the period of operation of the award and the period for which it remains binding on the parties may elapse—in respect of both of which special provisions have been made under Sections 23 and 29 respectively—the new contract would continue to govern the relations between the parties till it is displaced by another contract. The objection that no such benefit as claimed could accrue to the respondent after 31 March 1959 must therefore be rejected. The power of reasoning, the purpose of industrial jurisprudence and the logic of the law presented with terse force in this pronouncement cannot be missed. The new contract which is created by an award continues to govern the relations between the parties ‘till it is displaced by another contract’. Another Bench of three judges, speaking through Chief Justice Gajendragadkar, in Md Qasim Larry78 case, has ratiocinated on similar lines: When an award is made and it prescribes a new wage structure, in law the old contractual wage structure becomes inoperative and its place is taken by the wage structure prescribed by the award. In a sense, the latter wage structure must be deemed to be a contract between the parties because that, in substance, is the effect of industrial adjudication. The true legal
194 Social Justice and Labour Jurisprudence position is that when industrial disputes are decided by industrial adjudication and awards are made, the said awards supplant contractual terms in respect of matters covered by them and are substituted for them… In this connection, we may incidentally refer to the decision of this Court in the South Indian Bank Ltd. vs A.R. Chacko,79 where it has been observed by this Court that the very purpose for which industrial adjudication has been given the peculiar authority and right of making new contracts between employers and workmen makes it reasonable to think that even though the period of operation of the award and the period for which it remains binding on the parties may elapse—in respect of both of which special provisions have been made under Sections 23 and 29 respectively—the new contract would continue to govern the relations between the parties till it is replaced by another contract. This observation clearly and emphatically brings out that the terms prescribed by an award, in law, and in substance, constitute a fresh contract between the parties. Again, a Bench of four Judges in the Indian Oil Corporation case80 reiterated the same principle in the context of Section 9-A of the ID Act although the court did not specifically advert to Chacko case81 the Indian Oil Corporation82 case, the question turned on the management seeking to effect changes in the service conditions of the workmen. The court made observations which have pertinence to the non-extinguishment of the contract of service until a negotiated or adjudicated substitution comes into being. Fazal Ali, J. speaking for the Bench observed: In the circumstances, therefore, Section 9-A of the Act was clearly applicable and the noncompliance with the provisions of this section would undoubtedly raise a serious dispute between the parties so as to give jurisdiction to the tribunal to give the award. If the appellant wanted to withdraw the Assam Compensatory Allowance it should have given notice to the workmen, negotiated the matter with them and arrived at some settlement instead of withdrawing the compensatory allowance overnight. This ruling shows (a) that unilateral variation by the management is an exercise in futility, and (b) an award or settlement must take the place of the contract sought to be varied. We have a similar situation in the present case vis-a-vis the notice under Section 9-A and the ruling in The Indian Oil case,83 is a helpful guide. A passing reference was made to a possible difference between an award and a settlement when it comes to termination of the terms. We have indicated already that a closer study of the scheme of the ID Act shows the distinction, if any, to be no more than between Twiddledum and Twiddledee. A Division Bench of the Bombay High Court had occasion to examine the effect of a notice under Section 19(2) of the ID Act in terminating a settlement and that ruling deserves special mention because it deals with the survival beyond the two months’ notice of termination of a settlement (not an award). Tarkunde, J., speaking for the Bench and following Chacko case84 observed in the context of notice to terminate the settlement under Section 19(2):85 Even if a notice of its intention to terminate the settlement was given by either party, the settlement did not automatically cease to be operative on the expiry of two months from the date of the notice. The legal position is that the terms of a settlement continue to govern the relations between the parties after the notice of termination and the expiry of two months thereafter, until the settlement is replaced by a valid contract or award between the parties. This was laid down by the Supreme Court in South Indian Bank Ltd. vs A.R. Chacko,86 while dealing with the binding effect of an award under the provisions contained in sub-section (6) of Section 19 of the Industrial Disputes Act. The authority in the present case was, therefore, not justified in rejecting the workmen’s application on the ground that the settlement on which the workmen relied had ceased to be operative.
Collective Bargaining Agreement Issues 195 A precedent, as Disraeli said, embalms a principle. We have pointed out the principle and cited the precedents. There is more to it than mere wealth of precedents or what Burke called ‘the deep slumber of a decided opinion’. It enlivens industrial peace, avoids labour discontent and helps to set the stage for next negotiations for better terms for workers. Economic freedom of the weaker sections is behind these precedents, almost reminding us of Tennyson: A land of settled government, A land of just and old renown, Where freedom slowly broadens down From precedent to precedent. The law is lucid and the justice manifest on termination notice or notice of change the award or settlement does not perish but survives to bind until reincarnation, in any modified form, in a fresh regulation of conditions of service by a settlement or award. Precedents often broadly guide but when on the same point willy-nilly bind. So here, even if I would, I could not and even if I could, I would not depart from the wisdom in Chacko case87 with consistent case-flow before and after. An aching void, an abhorrent vacuum, a legicidal situation of industrial clash cannot be a judicial bonus when the constitutional command is social justice. The catena of cases we have briefly catalogued discloses an unbroken stream of case-law binding on this Court, the ratio whereof, even otherwise, commends itself to us. The award or settlement under the ID Act replaces the earlier contract of service and is given plenary effect as between the parties. It is not a case of the earlier contract being kept under suspended animation but suffering supersession. Once the earlier contract is extinguished and fresh conditions of services are created by the award or the settlement, the inevitable consequence is that even though the period of operation and the span of binding force expire, on the notice to terminate the contract being given, the said contract continues to govern the relations between the parties until a new agreement by way of settlement or statutory contract by the force of an award takes its place. If notice had not been given, the door for raising an industrial dispute and fresh conditions of service would not have been legally open. With action under Section 9-A, Section 19(2) or (6), the door is ajar for disputes being raised and resolved. This, in short, is the legal effect, not the lethal effect of invitation to industrial trial of strength with no contract of service or reversion to an absolute and long ago ‘dead’ contract of service. It is inconceivable that any other alternative subsists. For instance, imagine a case where for 30 years an award or settlement might have given various benefits to employees and at the end of 30 years a notice terminating the settlement were given by the employer. Does industrial law absurdly condemn the parties to a reversion to what prevailed between them 30 years ago? If the employees were given Rs 100 as salary in 1947 and, thereafter, by awards and settlements the salary scale was raised to Rs 1,000, could it be [the] management might, by unilateral yet disastrous action, give notice under Section 19(2) or (6) terminating the settlement or award, tell the workers that they would be paid Rs 100 which was the original contract although in law that contract had been extinguished totally by a later contract of settlement or by force of an award? The horrendous consequences of such an interpretation may best be left to imagination. Moreover, if industrial peace is the signature tune of industrial law, industrial violence would be the vicious shower of consequences if parties were relegated either to an ancient and obsolete contract or to a state of lawless hiatus. No canon of interpretation of statutes can compel the court to construe a statutory provision in this manner. We have no doubt that the precedents on the point, the principles of industrial law, the constitutional sympathy of Part IV and the sound rules of statutory construction converge to the same point that when a notice intimating termination of an award or settlement is issued, the legal import is merely that the stage is set for fresh negotiations or industrial adjudication and until either effort ripens into a fresh set of conditions of service, the previous award or settlement does regulate the relations
196 Social Justice and Labour Jurisprudence between the employer and the employees. The court never holds justice as hostage with law as janitor. Law, if at all, liberates justice through the judicial process. Fundamental error can be avoided only by remembering fundamental values. At this stage I may record my firm conclusion that for the reasons already given, the settlement under the ID Act does not suffer death merely because of the notice issued under Section 19(2). All that is done is a notice ‘intimating its intention to terminate the award’. The award, even if it ceases to be operative qua award, continues qua contract. Therefore, if the ID Act regulates the jural relations between the LIC and its employees—an ‘if ’ we will presently scan—then the rights under the Settlements of 1974 remain until replaced by a later award or settlement. In my view, to reverse the High Court’s holding will be to disregard the consistent current of case-law—a step I hesitate to take in the sensitive area of labour relations under a Constitution with social justice slant. Lord Herschell, in Russell vs Russell,88 observed: I have no inclination towards a blind adherence to precedents. I am conscious that the law must be moulded by adapting it on established principles to the changing conditions which social development involves. The next logical question then is as to whether the ID Act is a general legislation pushed out of its province because of the LIC Act, a special legislation in relation to the Corporation employees. Immediately, we are confronted with the question as to whether the LIC Act is a special legislation or a general legislation, because the legal maxim generalia specialibus non derogant is ordinarily attracted where there is a conflict between a special and a general statute and an argument of implied repeal is raised. Craise states the law correctly:89 The general rule, that prior statutes are held to be repealed by implication by subsequent statutes if the two are repugnant, is said not to apply if the prior enactment is special and the subsequent enactment is general, the rule of law being, as stated by Lord Selbourne in Seward vs Ver Cruz,90 ‘that where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so. There is a well-known rule which has application to this case, which is that a subsequent general Act does not affect a prior special Act by implication. That this is the law cannot be doubted, and the cases on the subject will be found collected in the third edition of Maxwell is generalia specialibus non derogant—i.e. general provisions will not abrogate special provisions. When the legislature has given its attention to a separate subject and made provision for it, the presumption is that a subsequent general enactment is not intended to interfere with the special provision unless it manifests that intention very clearly. Each enactment must be construed in that respect according to its own subject-matter and its own terms. The crucial question, which demands an answer before we settle the issue, is as to whether the LIC Act is a special statute and the ID Act a general statute so that the latter pro tanto repeals or prevails over the earlier one. What do we mean by a special statute and, in the scheme of the two enactments in question, which can we regard as the special Act and which the general? An implied repeal is the last judicial refuge and, unless driven to that conclusion, is rarely resorted to. The decisive point is as to whether the ID Act can be displaced or dismissed as a general statute. If it can be and if the LIC Act is a special statute, the proposition contended for by the appellant that the settlement depending for its sustenance on the ID Act cannot hold good against Section 11 and Section 49 of the LIC Act, read with Regulation 58 thereunder. This exercise constrains me to study the scheme of the two statutes in the context of the specific controversy I am dealing with.
Collective Bargaining Agreement Issues 197 There is no doubt that the LIC Act, as its long title suggests, is an Act to provide for the nationalisation of life insurance business in India by transferring all such business to a Corporation established for the purpose and to provide for the regulation and control of the business of the Corporation and for matters connected therewith or incidental thereto. Its primary purpose was to nationalise private insurance business and to establish the Life Insurance Corporation of India. Inevitably, the enactment spelt out the functions of the Corporation, provided for the transfer of existing life insurance business to the Corporation and set out in detail how the management, finance, accounts and audit of the Corporation should be conducted. Incidentally, there was provision for transfer of service of existing employees of the insurers to the Corporation and, sub-incidentally, their conditions of service also had to be provided for. The power to make regulations covering all matters of management was also vested in appropriate authorities. It is plain and beyond dispute that so far as nationalisation of insurance business is concerned, the LIC Act is a special legislation, but equally indubitably, is the inference, from a bare perusal of the subject, scheme and sections and understanding of the anatomy of the Act, that it has nothing to do with the particular problem of disputes between employer and employees, or investigation and adjudication of such disputes. It does not deal with workmen and disputes between workmen and employers or with industrial disputes. The Corporation has an army of employees who are not workmen at all. For instance, the higher echelons and other types of employees do not fall within the scope of workmen as defined in Section 2(s) of the ID Act. Nor is the Corporation’s main business investigation and adjudication of labour disputes any more than a motor manufacturer’s chief business is spraying paints. In determining whether a statute is a special or a general one, the focus must be on the principal subject-matter plus the particular perspective. For certain purposes, an Act may be general and for certain other purposes it may be special and we cannot blur distinction when dealing with finer points of law. In law, we have a cosmos of relativity, not absolutes—so too in life. The ID Act is a special statute devoted wholly to investigation and settlement of industrial disputes, which provides definitionally for the nature of industrial disputes coming within its ambit. It creates an infrastructure for investigation into, solution of and adjudication upon industrial disputes. It also provides the necessary machinery for enforcement of awards and settlements. From alpha to omega the ID Act has one special mission—the resolution of industrial disputes through specialised agencies according to specialised procedures and with special reference to the weaker categories of employees coming within the definition of workmen. Therefore, with reference to industrial disputes between employers and workmen, the ID Act is a special statute, and the LIC Act does not speak at all with specific reference to workmen. On the other hand, its powers relate to the general aspects of nationalisation, of management when private businesses are nationalised and a plurality of problems which, incidentally, involve transfer of service of existing employees of insurers. The workmen qua workmen and industrial disputes between workmen and the employer as such are beyond the orbit of and have no specific or special place in the scheme of the LIC Act. And whenever there was a dispute between workmen and management, the ID Act mechanism was resorted to. What are we confronted with in the present case, so that I may determine as between the two enactments which is the special? The only subject which has led to this litigation and which is the bone of contention between the parties is an industrial dispute between the Corporation and its workmen qua workmen. If we refuse to be obfuscated by legal abracadabra and see plainly what is so obvious, the conclusion that flows, in the wake of the study I have made, is that vis-à-vis ‘industrial disputes’ at the termination of the settlement as between the workmen and the Corporation the ID Act is a special legislation and the LIC Act a general legislation. Likewise, when compensation on nationalisation is the question, the LIC Act is the special statute. An application of the generalia maximum as expounded by English textbooks and decisions leaves us in no doubt that the ID Act being special law, prevails over the LIC Act, which is but general law.
198 Social Justice and Labour Jurisprudence I am satisfied in this conclusion by citations but I content myself with a recent case where this Court, tackling a closely allied question, came to the identical conclusion.91 The problem that arose there was as to whether the standing orders under the Industrial Employment (Standing Orders) Act, 1946, prevailed as against Regulations regarding the age of superannuation made by the Electricity Board under the specific power vested by Section 79(c) of the Electricity (Supply) Act, 1948, which was contended to be a special law as against the Industrial Employment (Standing Orders) Act. This Court (a Bench of three Judges) speaking through Chinnappa Reddy, J., observed:92 The maximum ‘generalia specialibus non derogant’ is quite well known. The rule flowing from the maxim has been explained in Mary Seward vs The owner of the ‘Vera Cruz’ 93 as follows: Now if anything be certain it is this, that where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered or derogated from merely by force of such general words, without any indication of a particular intention to do so. In J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs State of U.P.,94 this Court observed: The rule that general provisions should yield to specific provisions is not an arbitrary principle made by lawyers and judges but springs from the common understanding of men and women that when the same person gives two directions, one covering a large number of matters in general and another to only some of them, his intention is that these latter directions should prevail as regards these while as regards all the rest the earlier direction should have effect. We have already shown that the Industrial Employment (Standing Orders) Act is a special Act dealing with a specific subject, namely with conditions of service, enumerated in the Schedule, of workmen in industrial establishments. It is impossible to conceive that Parliament sought to abrogate the provisions of the Industrial Employment (Standing Orders) Act, embodying as they do hardwon and precious rights of workmen and prescribing as they do an elaborate procedure, including a quasi-judicial determination, by a general, incidental provision like Section 79(c) of the Electricity (Supply) Act. It is obvious that Parliament did not have before it the Standing Orders Act when it passed the Electricity (Supply) Act and Parliament never meant that the Standing Orders Act should stand pro tanto repealed by Section 79(c) of the Electricity Supply Act. We are clearly of the view that the provisions of the Standing Orders Act must prevail over Section 79(c) of the Electricity Supply Act, in regard to matters to which the Standing Orders Act applies. I respectfully agree and apply the reasoning and the conclusion to the near-identical situation before me and hold that the ID Act relates specially and specifically to industrial disputes between workmen and employers and the LIC Act, like the Electricity (Supply) Act, 1948, is a general statute which is silent on workmen’s disputes, even though it may be a special legislation regulating the take over of private insurance business. A plausible submission was made by the appellants, which was repelled by the High Court, that the LIC Act contained provisions regarding conditions of service of employees and they would be redundant if the ID Act was held to prevail. This is doubly fallacious. For one thing, the provisions of Sections 11 and 49 are the usual general provisions giving a statutory corporation (like a municipality or university) power to recruit and prescribe conditions of service of its total staff—not anything special regarding ‘workmen’. This Court in Bangalore Water Supply and Sewerage95 case (7 Judges’ Bench) and long ago in D.N. Banerji vs P.R. Mukherjee and Others96 (5 Judges’ Bench) has held that the ID Act applied to workmen employed by those bodies
Collective Bargaining Agreement Issues 199 when disputes arose. The general provision would still apply to other echelons and even to workmen if no industrial dispute was raised. Secondly, no case or redundant words arose because the Corporation, like a university, employed not only workmen but others also and to regulate their conditions of service, power was needed. Again, in situations where no dispute arose, power in the employer to fix the terms of employment had to be vested. This is a common provision of a general sort, not a particularised provision to canalise an industrial dispute. What is special or general is wholly a creature of the subject and context and may vary with situation, circumstances and angle of vision. Law is no abstraction but realises itself in the living setting of actualities. Which is a special provision and which general, depends on the specific problem, the topic for decision, not the broad rubric nor any rule of thumb. The peaceful coexistence of both legislations is best achieved, if that be feasible, by allowing to each its allotted field for play. Sense and sensibility, not mechanical rigidity, gives the flexible solution. It is difficult for me to think that when the entire industrial field, even covering municipalities, universities, research councils and the like, is regulated in the critical area of industrial disputes by the ID Act, Parliament would have provided an oasis for the Corporation where labour demands can be unilaterally ignored. The general words in Sections 11 and 49 must be read contextually as not covering industrial disputes between the workmen and the Corporation. Lord Haldane had, for instance, in Watney Combe Reid & Co. vs Berners,97 observed (Cited in The Political Tradition: The Lord Chancellors, 1912–1940, p. 221) that: General words may in certain cases properly be interpreted as having a meaning or scope other than the literal or usual meaning. They may be so interpreted where the scheme appearing from the language of the legislature, read in its entirety, points to consistency as requiring modification of what would be the meaning apart from any context, or apart from the general law. To avoid absurdity and injustice by judicial servitude to interpretative literality is a function of the court and this leaves me no option but to hold that the ID Act holds where disputes erupt and the LIC Act guides where other matters are concerned. In the field of statutory interpretation there are no inflexible formulae or foolproof mechanisms. The sense and sensibility, the setting and the scheme, the perspective and the purpose—these help the judge navigate towards the harbour of true intendment and meaning. The legal dynamics of social justice also guide the court in statutes of the type we are interpreting. These plural considerations lead me to the conclusion that the ID Act is a special statute when industrial disputes, awards and settlements are the topic of controversy, as here. There may be other matters where the LIC Act vis-à-vis the other statutes will be a special law. I am not concerned with such hypothetical situations now. I have set out, right at the outset, that my perspective must be benign in tune with Part IV of the Constitution. In the U.P. State Electricity Board case98 this Court underscored the same approach: Before examining the rival contentions, we remind ourselves that the Constitution has expressed a deep concern for the welfare of workers and has provided in Article 42 that the State shall make provision for securing just and humane conditions of work and in Article 43 that the State shall endeavour to secure, by suitable legislation or economic organisation or in any other way, to all workers, agricultural, industrial or otherwise, work, a living wage, conditions of work ensuring a decent standard of life and full enjoyment of leisure etc. These are among the ‘directive principles of State policy’. The mandate of Article 37 of the Constitution is that while the directive principles of State policy shall not be enforceable by any court, the principles are ‘nevertheless fundamental in the governance of the country’, and ‘it shall be the duty of the State to apply these principles in making laws’. Addressed to courts, what the injunction means is that while courts are not free to direct the making of legislation, courts are bound to evolve, affirm and adopt principles of interpretation which will further and not
200 Social Justice and Labour Jurisprudence hinder the goals set out in the directive principles of State policy. This command of the Constitution must be ever present in the minds of judges when interpreting statutes which concern themselves directly or indirectly with matters set out in the directive principles of State policy. Whatever be the powers of regulation of conditions of service, including payment or nonpayment of bonus enjoyed by the employees of the Corporation under the LIC Act, subject to the directives of the Central Government, they stem from a general Act and cannot supplant, subvert or substitute the special legislation which specifically deals with industrial disputes between workmen and their employers. In this view, other questions, which have been argued at length and considered by my learned Brother, do not demand my discussion. The High Court was right in its conclusion and I affirm its judgment. I, therefore, direct the Corporation to fulfill its obligations in terms of the 1974 settlements and start negotiations, like a model employer, for a fair settlement of the conditions of service between itself and its employees, having realistic and equitable regard to the prevailing conditions of life, principles of industrial justice and the directive underlying Part IV of the Constitution. Judicial review of administrative action and judicial interpretation of legislative provisions have serious limitations. Nevertheless, that power is a constitutional fundamental which must be exercised circumspectly but without being scared by statutory omnipotence or executive finality. The words of Professor Wade come to one’s mind: The law is still developing, but the important thing is that the courts once again accept, as they had always done except in their period of amnesia, that part of their duty was to require public authorities to respect certain basic rules of fairness in exercising power over the citizen. I dismiss the appeal with costs. This disposes of Transfer Case I of 1979 also, in which the order has to be that a writ will issue to the Corporation compelling it to carry out the terms of the Settlements of 1974 and injuncting it from acting upon or giving effect to the impugned notices, circulars and the said amended Government Order, the said amended Staff Regulations being Annexures F. H. J. K. and L thereto.
EXCERPTS FROM THE SEPARATE JUDGEMENT DELIVERED BY JUSTICE R.S. PATHAK I have read with great respect the separate judgments of my brother Krishna Iyer and my brother Koshal, but in view of the importance of the questions raised, I propose to deliver a separate judgment. The facts of the case have already been set out in the judgments prepared by my learned Brothers. I need mention again a few only. Clause (8) of the two settlements of 24 January 1974 and 6 February 1974 made the following provisions respecting bonus: (i) No profit-sharing bonus shall be paid. However, the Corporation may, subject to such directions as the Central Government may issue from time to time, grant any other kind of bonus to its Class III and IV employees. (ii) An annual cash bonus will be paid to all Class III and Class IV employees at the rate of 15 per cent of the annual salary… actually drawn by an employee in respect of the financial year to which the bonus relates. (iii) Save as provided herein all other terms and conditions attached to the admissibility and payment of bonus shall be as laid down in the settlement on bonus dated 26 June 1972. The settlements were operative from 1 April 1973 to 31 March 1977. On 3 March 1978 the Life Insurance Corporation (the ‘Corporation’) issued a notice, purportedly under Section 19(2),
Collective Bargaining Agreement Issues 201 Industrial Disputes Act, 1947, of its intention to terminate the settlements on the expiry of two months because of economic and other reasons. The notice, however, recited the reservation that the material provisions of the Industrial Disputes Act did not apply to the Corporation and that the notice was not necessary. Another notice, this time under Section 9-A, of the Industrial Disputes Act and issued on the same date, stated that it was intended to effect a change in the conditions of service of the workmen with effect from 1 June 1978. The change notified related to the existing provision for bonus. A new clause was proposed. The Life Insurance Corporation (Alteration of Remuneration and other Terms and Condition of Service of Employees) Order, 1957 (the ‘Standardisation Order’) was amended under Section 111(2), Life Insurance Corporation Act (the ‘Corporation Act’) on 26 May 1978 with effect from 1 June 1978 substituting a new Clause 9 for the original clause in respect of bonus. On the same date, the Corporation acting under clauses (b) and (bb) of Section 49(2) of the same Act amended the Life Insurance Corporation (Staff ) Regulations, also with effect from 1 June 1978 and substituted for the existing provision a new Regulation 58 along the same lines. Clause 9 of the Standardisation Order and Regulation 58 of the Staff Regulations now read as follows: No employee of the Corporation shall be entitled to profit-sharing bonus. However, the Corporation may, having regard to the financial condition of the Corporation, in respect of any year and subject to the previous approval of the Central Government, grant non-profitsharing bonus to its employees in respect of that year at such rates as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility of such bonus. The amendments made in the Standardisation Order and the Staff Regulations, in their application to the workmen of the Corporation, were made for the purpose of nullifying any further claim to annual cash bonus in terms of the Settlements of 1974. The workmen challenged the validity of the amendments insofar as it affected their claim to the bonus, and the Allahabad High Court having found in their favour, the Corporation has appealed to this Court. An identical controversy is the subject-matter of a writ petition filed in the Calcutta High Court and transferred to this Court. The first question is whether the new clause 9 of the Standardisation Order succeeds in defeating the claims of the workmen. To determine that, Section 11 of the Corporation Act must be examined. Sub-section (1) guarantees to the transferred employee the same tenure, at the same remuneration and upon the same terms and conditions on his transfer to the Corporation as he enjoyed on the appointed day under the insurer, and he is entitled to them until they are duly altered by the Corporation or his employment in the Corporation is terminated. The subsection envisages alteration by the Corporation. Sub-section (2) of Section 11, by its first limb, confers power on the Central Government to alter the scales of remuneration and other terms and conditions of service transferred employee. Predictably, when the transferred employees of different insurers were brought together in common employment under the Corporation, they would have been enjoying different scales of remuneration and other terms and conditions of service. The power under this part of subsection (2) is intended for the purpose of securing uniformity among them. The second limb of sub-section (2) is the source of controversy before us. It empowers the Central Government to reduce the remuneration payable or revise the other terms and conditions of service. That power is to be exercised when the Central Government is satisfied that the interests of the Corporation and its policy holders require such reduction or revision. The question is whether the provision is confined to transferred employees only or extends to all employees generally. In my opinion, it is confined to transferred employees. The provision is a part of the scheme enacted in Chapter IV, providing for the transfer of existing life insurance business from the insurers to
202 Social Justice and Labour Jurisprudence the Corporation, and the attendant concomitants of that process. There is provision for the transfer of the assets and liabilities pertaining to the business, of provident funds, superannuation and other like funds, of the services of existing employees of insurers to the Corporation and also of the services of existing employees of chief agents of the insurers to the Corporation, and finally for the payment of compensation to the insurers for the transfer of the business to the Corporation. They are all provisions relating to the process of transfer. Sub-section (2) of Section 11 is a part of that process, involving at it does the integration of the Corporation’s staff and labour force. While the first limb of the sub-section provides for securing uniformity among the transferred employees in regard to their scales of remuneration and other terms and conditions of service, the second limb provides that if after such uniformity has been secured, or even in the process of securing such uniformity, the Central Government finds that the interests of the Corporation and its policy holders require a reduction in the remuneration payable or revision of the other terms and conditions of service applicable to those employees, it may make an order accordingly. It is true that the words ‘employees or any class of them’ in the second limb are not prefaced by the qualifying word ‘transferred’ or ‘such’. But that was hardly necessary when regard is had to the mosaic of sections in which the provision is located. Admittedly, the first limb of sub-section (2) relates to transferred employees only, and it must be held that so does the second limb. Both provisions are intended to constitute a composite process for rationalising the scales of remuneration and other terms and conditions of service of transferred employees with a view not only to effecting a standardisation between the transferred employees, but also to revising their scales of remuneration and terms and conditions of service to a pattern which will enable the newly established Corporation to become a viable and commercially successful enterprise. The standpoint of the second limit of the sub-section, as its language plainly indicates, is provided by the interest of the Corporation and its policy holders. For that reason, it is open to the Central Government under the sub-section to ignore the guarantee contained in sub-section (1) of Section 11 in favour of the employees, or anything contained in the Industrial Disputes Act, 1947, or any other law for the time being in force or any award, settlement or agreement for the time being in force. Benefits conferred thereunder on the employees must yield to the need for ensuring that the Corporation and its policy holders do not suffer unreasonably from the burden of such benefits. The need for such a provision arises because it is a burden by which the Corporation finds itself saddled upon the transfer; a burden not of its own making. Unless the statute provided for such relief, the weight of that burden could conceivably cripple the successful working of the Corporation from its inception as a business organisation. It is a situation to be distinguished from what happens when the Corporation, launched on its normal course, voluntarily assumes, in the course of its working, obligations in respect of its employees or becomes subject to such obligations by reason of subsequent industrial adjudication. Like any other employer, the Corporation is then open to the normal play of industrial relations in contemporary or future time. That the two provisions of sub-section (2) are linked with the process of transfer and integration is further indicated by the circumstance that the power thereunder is vested in the Central Government. The scheme of the sections in Chapter IV indicates generally that Parliament has appointed the Central Government as the effective and direct instrumentality for bringing about the transfer and integration in the different sectors of that process. There is no danger of an order made by the Central Government under the second limb of sub-section (2) in respect of transferred employees being struck down on the ground that it violates the equality provisions of Part III of the Constitution because similar action has not been taken in respect of newly recruited employees. So long as such order is confined to what is necessitated by the process of transfer and integration, the transferred employees constitute a reasonably defined class in themselves and form the common basis with newly recruited employees. I am unable to subscribe to the view that the second limb to sub-section (2) of Section 11 is related to employees generally, that is to say, both transferred and newly recruited employees, of the Corporation.
Collective Bargaining Agreement Issues 203 Another point is whether the power under the second limb of sub-section (2) of Section 11 can be exercised more than once. Clearly, the answer must be in the affirmative. To effectuate the transfer appropriately and completely, it may be necessary to pass through different stages, and at each stage to make a definite order. So long as the complex of orders so made is necessarily linked with the process of transfer and integration, it is immaterial that a succession of orders is made. I am not impressed by the circumstance that the original Bill moved in Parliament for amending sub-section (2) of Section 11 contained the words ‘from time to time’ and that those words were subsequently deleted when enactment took place. The intent of the legislative provision must be discovered primarily from the legislation itself. Now turning to the notification dated 26 May 1978 which inserted the new clause 9 in the Standardisation Order, it is evident from the recital with which it opens that it is intended to apply to transferred employees only. It declares explicitly that the Central Government is satisfied that a revision of the terms and conditions of service of the transferred employees is considered necessary. However, there is nothing to show that the amendment is related to the process of transfer and integration. On the contrary, the circumstance that an identical provision has been made by the Corporation, with the prior approval of the Central Government, in the new Regulation 58 by a notification issued under both clauses (b) and (bb) of Section 49(2), that is to say, in respect of both newly recruited as well as transferred employees, demonstrates that the provision has no particular relationship with that process. Accordingly, I am of opinion that the notification dated 26 May 1978 purporting to amend the Standardisation Order is invalid. It has no effect on the right to bonus claimed by the workmen. That takes us to the question whether the new Regulation 58 inserted in the (Staff ) Regulations by the Life Insurance Corporation of India (Staff ) Second Amendment Regulations, 1978 can be invoked against the workmen of the Corporation. The workmen contend that the Industrial Disputes Act constitutes special legislation for the resolution of industrial disputes and inasmuch as it has been specially enacted for the promotion of harmonious relations between an employer and his workmen all matters concerning the workmen must be regarded as falling within the scope of the Industrial Disputes Act. The Corporation Act, it is said, has a different orientation. It is concerned primarily with the nationalisation of life insurance business; and the employment of a staff, and their terms and conditions of service as well as disputes concerning them, are subsidiary to the main purpose of nationalisation. The workmen, it is urged, are a special category of the total staff employed by the Corporation, and as regards them, it is the Industrial Disputes Act and not the Corporation Act which governs. Accordingly, the argument goes, a settlement effected under Section 18 of the Industrial Disputes Act must continue to have force as determined by Section 19(2) of the Act and even thereafter, and nothing contained in the Corporation Act or the Regulations made thereunder can be permitted to affect the operation of its terms. It is urged that Regulation 58 cannot be applied in the case of those employees of the Corporation who are ‘workmen’ within the meaning of the Industrial Disputes Act. The case of the Corporation and the Union of India is that Regulation 58 was framed when the settlements had ceased to be operative and binding under Section 19(2), Industrial Disputes Act, that even if it be assumed that a contract existed between the parties at the time, it must yield to Regulation 58, which had the force of law. It was contended that as regards the workmen of the Corporation, the Corporation Act is a special law and the Industrial Disputes Act is the general law and, therefore, Regulation 58 must prevail over any transaction under the Industrial Disputes Act. Before anything more, it is necessary to ascertain the true relationship of the parties in respect of the settlements of 1974 at the time when Regulation 58 was framed. The settlements were to remain in operation for a period of four years ending 31st March, 1977. Admittedly, they were settlements reached under the Industrial Disputes Act. There is no dispute that they were settlements governed by Section 19, Industrial Disputes Act. Therefore, by virtue of Section 19(2)
204 Social Justice and Labour Jurisprudence they were binding up to 31 March 1977, the period agreed upon by the parties and they continued to be binding on the parties thereafter until the expiry of two months from the date on which written notice of the intention to terminate the settlement was given by one of the parties to the other. It is desirable to appreciate what is a settlement as understood in the Industrial Disputes Act. In essence, it is a contract between the employer and the workmen prescribing new terms and conditions of service. These constitute a variation of existing terms and conditions. As soon as the settlement is concluded and becomes operative, the contract embodied in it takes effect and the existing terms and conditions of the workmen are modified accordingly. Unless there is something to the contrary in a particular term or condition of the settlement the embodied contract endures indefinitely, continuing to govern the relation between the parties in the future, subject of course to subsequent alteration through a fresh settlement, award or valid legislation. I have said that the transaction is a contract. But it is also something more. Conceptually, it is a ‘settlement’. It concludes or ‘settles’ a dispute. Differences which have arisen and were threatening industrial peace and harmony stand resolved in terms of a new contract. In order that the new contract be afforded a chance of being effectively worked out, a mandate obliging the parties to unreservedly comply with it for a period of time is desirable. It was made ‘binding’ by the statute for such period. Section 19(2) was enacted. The spirit of conciliation, the foundation of the settlement, was required by law to bind the parties for the time prescribed. Immediate registration in respect of matters covered by the settlement was banned. Section 23(c) prohibited strikes by the workmen in breach of the contract and lock-outs by the employer in respect of such matters. A breach of any term was made punishable by Section 29. Certainly industrial relations is essential to industry, and a period of such certainty is ensured by Section 19(2). On the expiry of the period prescribed in the sub-section, the conceptual quality of the transaction as a ‘settlement’ comes to an end. The ban lifts. The parties are no longer bound to maintain the industrial status quo in respect of matters covered by the settlement. They are at liberty to seek an alteration of the contract. But until altered, the contract continues to govern the relations between the parties in respect of the terms and conditions of service. The position seems comparable with what happens in the case of an award. Section 19(2) and Section 19(6) contain similar provisions. In the case of an award, this Court has laid down in South Indian Bank Limited vs A.R. Chacko,99 that after the period of operation of an award has expired, the award does not cease to be effective. It continues to be binding on the parties, by virtue of Section 19(6), until notice has been given by one of the parties of the intention to terminate it and two months have elapsed from the date of such notice. Thereafter,—it will continue to have its effect as a contract between the parties that has been made by industrial adjudication in place of the old contract… the very purpose for which industrial adjudication has been given the peculiar authority and right of making new contracts between employers and workmen makes it reasonable to think that even though the period of operation of the award and the period for which it remains binding on the parties may elapse—in respect of both of which special provisions have been made under Sections 23 and 29 respectively—may expire, the new contract would continue to govern the relations between the parties till it is displaced by another contract. Later in Md. Qasim Larry, Factory Manager, Sasamusa Sugar Works vs Muhammad Samsuddin100 the court held that when an award was made and it prescribed a new wage structure, in law the old contractual wage structure became inoperative and its place was taken by the wage structure prescribed by the award. The court said: In a sense, the latter wage structure must be deemed to be a contract between the parties, because that, in substance, is the effect of industrial adjudication. The true legal position is that when industrial disputes are decided by industrial adjudication and awards are made, the said awards supplant contractual terms in respect of matters covered by them and are substituted for them.
Collective Bargaining Agreement Issues 205 Learned counsel for the Corporation and the Union of India submit that the law declared by this Court in respect of an award does not hold true in the case of a settlement. I am unable to agree. Not only are the statutory provisions pertaining to a settlement and an award comparable in this regard but, if anything, the observations if read in respect of a settlement, which after all is a voluntary agreement between the parties, would seem to hold more strongly. The contract between the parties embodied in the settlement of 1974 set forth the terms and conditions of service when Regulation 58 was substituted in the (Staff ) Regulations under clauses (b) and (bb) of Section 49(2) of the Corporation Act. The question is whether Regulation 58 will prevail over the ‘settlement’ contract. For that purpose, it is necessary to examine the controversy whether the Corporation Act is the general law and the Industrial Disputes Act the special law or vice versa. It will be noticed that the Corporation Act was enacted primarily for effecting the nationalisation of life insurance business by transferring all such business to a Corporation established for the purpose. The principle provision in the Corporation Act is Section 7, which provides for the transfer to, and vesting in, the Corporation of all the assets and liabilities appertaining to the controlled business of the insurers. The central purpose being assured, the concomitant provisions followed. These included making available to the insurers’ employees, under Section 11(1), a continuous and unbroken tenure of employment on terms and conditions to which they would have been entitled on the ‘appointed day’ as if the Corporation Act had not been passed. It was evidently intended that in running the business the Corporation should broadly take off from where the insurers had ceased. For the purpose of enabling it to discharge its functions under the Act, the Corporation has been empowered by Section 23 to employ such number of persons as it thinks fit. The power conferred in clauses (b) and (bb) of Section 49(2) to make regulations prescribing the terms and conditions of service of newly recruited as well as transferred employees has been conferred for the same purpose, that is to say, the purpose, specifically mentioned in Section 49(1), of giving effect to the provisions of the Act. Clearly, the object behind Section 11(1), Section 23 and clauses (b) and (bb) of Section 49(2) is to provide staff and labour for the purpose of the proper management of the nationalised life insurance business. On the other hand, the Industrial Disputes Act deals specifically with a special subject-matter, the investigation and settlement of industrial disputes between an employer and his workmen. An ‘industrial dispute’ as defined by Section 2(k) is a collective dispute. It is a special kind of dispute. Except for a case under Section 2-A, the entire body of workmen or substantial number of them constitutes a party to the dispute. And all the employees of an employer are not ‘workmen’. Those employees are ‘workmen’ who satisfy the definition contained in Section 2(s). A restricted category of employees is contemplated, and in an industrial dispute that category alone of all the employees can be interested. The resolution of industrial disputes under the Act is envisaged through the particular machinery and processes detailed therein. A special jurisdiction is created for the purpose. Industrial disputes, according to the Act, can be resolved by settlement or an award, there are provisions setting forth the consequences of a settlement or an award, and there are also provisions indicating how a change can be initiated in the resulting industrial relations. Other chapters in the Industrial Disputes Act lay down the law in respect of strikes and lock-outs, lay-off, retrenchment and closure and penalties for breach of its provisions. Plainly, if a settlement resolves an industrial dispute under the Industrial Disputes Act, it pertains to the central purpose of that Act. The Act constitutes a special law in respect of a settlement reached under its auspices between an employer and his ‘workmen’ employees. The consequences of such settlement are the product of the special law. The Corporation Act does not possess the features outlined above. It deals only generally in regard to a staff and labour force. They are referred to compendiously as ‘employees’. No special provision exists in regard to industrial disputes and their resolution and the consequences of that resolution. The special jurisdiction created for the purpose under the Industrial Disputes Act is not the subject-matter of the Corporation Act at all. It would be correct to say that no corresponding provision in the
206 Social Justice and Labour Jurisprudence Corporation Act, a subsequent enactment, deals with the subject-matter enacted in the Industrial Disputes Act. Yet Parliament intended to provide for the Corporation’s ‘workmen’ employees the same opportunities as are available under the Industrial Disputes Act to the workmen of other employers. That is demonstrated by Section 2(a)(i) of that Act. The expression ‘appropriate Government’ is specifically defined by it in relation to an industrial dispute concerning the Life Insurance Corporation. Both the Central Government and the Corporation understood the Industrial Disputes Act in that light, for one finds that Regulation 51(2) of the (Staff ) Regulations made by the Corporation under clauses (b) and (bb) of Section 49(2) of the Corporation Act, with the previous approval of the Central Government, speaks of giving effect to a revision of scales of pay, dearness allowance or other allowances ‘in pursuance of any award, agreement or settlement’. In my opinion, it is difficult to resist the conclusion that the Industrial Disputes Act is a special law and must prevail over the Corporation Act, a general law, for the purpose of protecting the sanctity of transactions concluded under the former enactment. It is true that as laid down in L.I.C. of India vs Sunil Kumar Mukherjee101 and reiterated in Sukhdev Singh vs Bhagatram,102 the Regulations framed under the Corporation Act have the force of law. But that is of little moment if no reference is permissible to the Regulations when considering the validity and operation of the ‘settlement’ contract. Accordingly, Regulation 58, a product of the Corporation Act, cannot supersede the contract respecting bonus between the parties resulting from the settlements of 1974. Support is derived for this conclusion from U.P. State Electricity Board vs H.S. Jain,103 where reference has been made to Mary Sewards vs Owner of the ‘Vera Cruz’ 104 and J.K. Cotton Spinning & Weaving Mills Co. Ltd. vs State of U.P.105 At the same time, it is pertinent to note that the ‘workmen’ employees of the Corporation continue to be governed in matters not covered by the settlements by the (Staff ) Regulations, and that position is expressly recognised in clause 12(4) of the settlements of 1974. Clause 12(4) declares: Except as otherwise provided or modified by this settlement, the workmen shall continue to be governed by all the terms and conditions of service as set forth and regulated by the Life Insurance Corporation of India (Staff ) Regulations, 1960… as also the administration instructions… Our attention has been drawn to Section 11(1), Corporation Act, which empowers the Corporation to duly alter the terms and conditions of service of transferred employees. In construing the scope of the Corporation’s powers in that behalf, it seems to me that appropriate importance should be attached to the qualifying word ‘duty’. When the Corporation seeks to alter the terms and conditions of transferred employees, it must do so in accordance with law, and that requires it to pay proper regard to the sanctity of rights acquired by the ‘workmen’ employees under settlements or awards made under the Industrial Disputes Act. The only provision, so far as I can see, where the Corporation Act permits disregard of the Industrial Disputes Act and awards, settlements or agreements is the second limb of Section 11(2). And the scope of that provision, as I have explained, is confined to the peculiar circumstance in which the Corporation, immediately on coming into existence, finds itself saddled with a recurring financial burden, by virtue of the service of the transferred employees, too heavy for its own viability as a business organisation. No such provision is to be found elsewhere in the Corporation Act. It is conspicuous by its absence in clauses (b) and (bb) of Section 49(2). The provision in Section 11(2) has been made for the purpose of protecting the interests of the Corporation and its policy holders. The policy holders constitute an important and significant sector of public interest. Indeed, the avowed object of the entire Corporation Act is to provide absolute security to the policy holders in the matter of their life insurance protection. That is assured by a wise management of the Corporation’s business, and by ensuring that when settlements are negotiated
Collective Bargaining Agreement Issues 207 between the Corporation and its workmen or when industrial adjudication is initiated in labour courts and industrial tribunals, the protection of the policy holders will find appropriately significant emphasis in the deliberations. In the view that the notification dated 26 May 1978 purporting to amend the Standardisation Order by substituting Clause 9 is invalid and the newly enacted Regulation 58 does not affect the contract in respect of bonus embodied in the settlements of 1974 between the Life Insurance Corporation and its ‘workmen’ employees, effect must be given to that contract and this appeal must fail and the writ petition, transferred from the Calcutta High Court, must succeed. If the terms and conditions of service created by the contract need to be reconsidered, recourse must be had to the modes recognised by law—negotiated settlement, industrial adjudication or appropriate legislation. In the result, Civil Appeal 2275 of 1978 is dismissed with costs of the first, second and third respondents. The fourth respondent shall bear its own costs. The Transfer Petition 1 of 1979 is allowed in the terms set out above, costs to be paid to the petitioners by the second respondent.
EXCERPTS FROM THE SEPARATE JUDGEMENT DELIVERED BY JUSTICE KOSHAL By this judgment I shall dispose of Civil Appeal 2275 of 1978 which has been instituted by special leave granted by this Court against a judgment dated 11 August 1978 of a Division Bench of the Allahabad High Court allowing a petition under Article 226 of the Constitution of India and issuing a writ of mandamus to the Life Insurance Corporation of India (hereinafter referred to as ‘the Corporation’) directing it not to give effect to a notice dated 6 May 1978, issued by it under Section 9-A of the Industrial Disputes Act (‘ID Act’ for short) as also to a notification dated the 26 May 1978, issued under sub-section (2) of Section 11 of the Life Insurance Corporation Act, 1956 (hereinafter called ‘the LIC Act’). This judgment shall also cover Transfer Case 1 of 1979 in which another petition under Article 226 aforesaid instituted before the High Court of Calcutta and raising the same questions which fall for decision in the said appeal is awaiting disposal by us as that petition was transferred to this Court by its order dated 10 September 1979. The petition decided by the Allahabad High Court was filed by the Class III and Class IV employees of the Corporation challenging the right of the employer and the Union of India to change to the detriment of the said employees a condition of service regarding the payment to them of bonus to which they had earlier become entitled through a settlement with the Corporation made under Section 18 of the ID Act. The petition last-mentioned arose in circumstances which may be set out in some detail. The Corporation came into existence on 1 September 1956, as a statutory authority established under the LIC Act. As from the said date, all institutions carrying on life insurance business in India were nationalised to the extent of such business and their corresponding assets and liabilities were transferred to the Corporation. Section 11 of the LIC Act provided for the transfer of service of those employees of such institutions who were connected with life insurance business (described in the Act as ‘controlled business’) immediately before the said date to the Corporation and for some other matters. As it is the interpretation of that section which is mainly in controversy before us, it may be set out here in extenso: 11. (1) Every whole-time employee of an insurer whose controlled business has been transferred to and vested in the Corporation and who was employed by the insurer wholly or mainly in connection with his controlled business immediately before the appointed day shall, on and from the appointed day, become an employee of the Corporation, and shall hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same on the appointed day if this Act had not been passed, and shall
208 Social Justice and Labour Jurisprudence continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation: Provided that nothing contained in this sub-section shall apply to any such employee who has, by notice in writing given to the Central Government prior to the appointed day, intimated his intention of not becoming an employee of the Corporation. (2) Where the Central Government is satisfied that for the purpose of securing uniformity in the scals of remuneration and the other terms and conditions of service applicable to employees of insurers whose controlled business has been transferred to, and vested in, the Corporation, it is necessary so to do, or that, in the interests of the Corporation and its policy holders, a reduction in the remuneration payable, or a revision of the other terms and conditions of service applicable, to employees or any class of them is called for, the Central Government may, notwithstanding anything contained in sub-section (1), or in the Industrial Disputes Act, 1947, or in any other law for the time being in force, or in any award, settlement or agreement for the time being in force, alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of service to such extent and in such manner as it thinks fit; and if the alteration is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months’ remuneration unless the contract of service with such employee provides for a shorter notice of termination. Explanation: The compensation payable to an employee under the sub-section shall be in addition to, and shall not affect, any pension, gratuity, provident fund money or any other benefit to which the employee may be entitled under his contract of service. (3) If any question arises as to whether any person was a whole-time employee of an insurer or as to whether any employee was employed wholly or mainly in connection with the controlled business of an insurer immediately before the appointed day the question shall be referred to the Central Government whose decision shall be final. (4) Notwithstanding anything contained in the Industrial Disputes Act, 1947, or in any other law for the time being in force, the transfer of the services of any employee of an insurer to the Corporation shall not entitle any such employee to any compensation under that Act or other law, and no such claim shall be entertained by any court, tribunal or other authority. Section 23 of the LIC Act gives to the Corporation the power to employ such number of persons as it thought fit for the purpose of enabling it to discharge its functions under the Act and declared that every person so employed or whose service stood transferred to the Corporation under Section 11 would be liable to serve anywhere in India. Section 49 conferred on the Corporation the power to make regulations for the purpose of giving effect to the provisions of the Act with the previous approval of the Central Government. Sub-section (2) of that section enumerated various matters in relation to which such power was particularly conferred. Clauses (b) and (bb) of sub-section (2) read thus: (b) the method of recruitment of employees and agents of the Corporation and the terms and conditions of service of such employees or agents; (bb) the terms and conditions of service of persons who have become employees of the Corporation under sub-section (1) of Section 11. On 1 June 1957, the Central Government, in exercise of the powers conferred on it by subsection (2) of Section 11 of the LIC Act, promulgated the Life Insurance Corporation (Alteration of Remuneration and other Terms and Conditions of Service of Employees) Order, 1957 (for short ‘the 1957 Order’) altering the remuneration and other terms and conditions of service of
Collective Bargaining Agreement Issues 209 those employees of the Corporation whose services had been transferred to it under subsection (1) of that section (referred to hereinafter as ‘the transferred employees’). Clause 9 of the 1957 Order declared that no bonus would be paid but directed that the Corporation would set aside an amount every year for expenditure on schemes of general benefit to the employees such as free insurance scheme, medical benefit schemes and on other amenities to them. On 26 June 1959, the Central Government amended Clause 9 of the 1957 Order so as to provide that nonprofit-sharing bonus would be paid to those employees of the Corporation whose salary did not exceed Rs 500 per month. On 2 July 1959 there was a settlement between the Corporation and its employees providing for payment to them of cash bonus at the rate of 1½ months’ basic salary for the period from 1 September 1956 to 31 December 1961. In the year 1960 were framed, under Section 49 of LIC Act, the Life Insurance Corporation of India (Staff ) Regulations, 1960 (the 1960 Regulations, for brevity), whereof Regulation 58 ran thus: The Corporation may, subject to such directions as the Central Government may issue, grant non-profit-sharing bonus to its employees and the payment thereof, including conditions of eligibility for the bonus, shall be regulated by instructions issued by the Chairman from time to time. Orders were again passed on 14 April 1962 and 3 August 1963, the effect of which was to remove the limit of Rs 500 on the basic salary as a condition of eligibility for payment of bonus. The settlement dated 2 July 1959 was followed by three others which were arrived at on 29 January 1963, 20 June 1970 and 26 June 1972, respectively and each one of which provided for payment of bonus at a particular rate. Disputes between the Corporation and its workmen in regard to the latter’s conditions of service persisted nevertheless, but were resolved by two settlements dated 24 January 1974, and 6 February 1974, arrived at in pursuance of the provisions of Section 18 read with Section 2(p) of the ID Act. The Corporation was a party to both the settlements which were identical in terms. However, while four of the five Unions of workmen subscribed to the first settlement, the fifth Union was a signatory to the second. The settlements provided for revised scales of pay, the method of their fixation and dearness and other allowances as well as bonus. Clause 8 of each of the settlements was to the following effect: Bonus (i) No profit-sharing bonus shall be paid. However, the Corporation may, subject to such directions as the Central Government may issue from time to time, grant any other kind of bonus to its Class III and IV employees. (ii) An annual cash bonus will be paid to all Class III and Class IV employees at the rate of 15 per cent of the annual salary (i.e. basic pay inclusive of special pay, if any, and dearness allowance and additional dearness allowance) actually drawn by an employee in respect of the financial year to which the bonus relates. (iii) Save as provided herein all other terms and conditions attached to the admissibility and payment of bonus shall be as laid down in the settlement on bonus dated 26 June 1972. Clause 12 of each settlement provided: (1) This settlement shall be effective from 1 April 1973, and shall be for a period of four years, i.e., from 1 April 1973 to 31 March 1977.
210 Social Justice and Labour Jurisprudence (2) The terms of the settlement shall be subject to the approval of the Board of the Corporation and the Central Government. (3) This settlement disposes of all the demands raised by the workmen for revision of terms and conditions of their service. (4) Except as otherwise provided or modified by this settlement, the workmen shall continue to be governed by all the terms and conditions of service as set forth and regulated by the Life Insurance Corporation of India (Staff ) Regulations, 1960 as also the administrative instructions issued from time to time and they shall, subject to the provisions thereof including any period of operation specified therein, be entitled to the benefits thereunder. It is not disputed that the settlements were approved by the Board of the Corporation as also by the Central Government. Under clause 11 of each settlement every employee of the Corporation had the option to elect to be governed either by the new scale of pay applicable to him or the scale which he had been enjoying hitherto. It is common ground between the parties that all the employees of the Corporation opted for the new scales of pay and that bonus was paid in accordance therewith for the years 1973–74 and 1974–75 in April 1974 and April 1975 respectively. On 25 September 1975, the Payment of Bonus (Amendment) Ordinance, 1975 was promulgated by the President of India and was subsequently replaced by the Payment of Bonus (Amendment) Act, 1976 which was brought into force with effect from the date last-mentioned. This amending law considerably curtailed the rights of employees of industrial undertakings to bonus, but was inapplicable to the Corporation by virtue of the provisions of Section 32 of the Payment of Bonus Act. However, the payment of bonus for the year 1975–76 to the employees of the Corporation was stopped under instructions from the Central Government, whose action in that behalf was challenged by the employees through a petition under Article 226 of the Constitution of India in the High Court of Calcutta, a single Judge of which issued a writ of mandamus directing the Corporation to act in accordance with the terms of the settlement dated 24 January 1974. The Corporation preferred a letters patent appeal against the decision of the learned single Judge and that appeal was pending disposal when the Central legislature promulgated the Life Insurance Corporation (Modification of Settlement) Act, 1976 (for short, the 1976 Act) Section 3 of which laid down: Notwithstanding anything contained in the Industrial Disputes Act, 1947, the provisions of each of the settlements, insofar as they relate to the payment of an annual cash bonus to every Class III and Class IV employee of the Corporation at the rate of fifteen per cent of his annual salary, shall not have any force or effect and shall not be deemed to have any force or effect on and from 1st day of April, 1975. The 1976 Act was enacted on 29 May 1976 and was challenged by the workmen in this Court which, on 21 February 1978, declared it to be void as offending Article 31(2) of the Constitution of India through a judgment which is reported as Madan Mohan Pathak vs Union of India,106 and directed the Corporation to forbear from implementing the 1976 Act and to pay to its Class III and Class IV employees bonus for the years 1 April 1975 to 31 March 1976 and 1 April 1976 to 31 March 1977 in accordance with the terms of sub-clause (ii) of clause 8 of each settlement. On 3 March 1978, the Corporation issued to its workmen a notice under sub-section (2) of Section 19 of the ID Act declaring its intention to terminate the settlements on the expiry of a period of two months from the date the notice was served. The notice, however, mentioned in express terms that according to the Corporation no such notice was really necessary for termination of the settlement. On the same date, another notice was issued by the Corporation
Collective Bargaining Agreement Issues 211 under Section 9-A of the ID Act stating that it intended to effect a change in accordance with the contents of the annexure to the notice, as from 1 June 1978, in the conditions of service of its workmen. The said annexure contained the following clause: AND WHEREAS for economic and other reasons it would not be possible for the Life Insurance Corporation of India to continue to pay bonus on the aforesaid basis; Now, therefore, it is our intention to pay bonus to the employees of the Corporation in terms reproduced hereunder: No employee of the Corporation shall be entitled to profit-sharing bonus. However, the Corporation may, having regard to the financial condition of the Corporation in respect of any year and subject to the previous approval of the Central Government, grant non-profitsharing bonus to its employees in respect of that year at such rate as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility of such bonus. The workmen sent a reply to the two notices just above-mentioned and took the stand that the Corporation had no right to render inoperative the clause regarding bonus contained in the two settlements. On 26 May 1978, the Corporation issued a notification under Section 49 of the LIC Act substituting a new regulation for the then existing regulation bearing serial Number 58. The new regulation was to come into force from 1 June 1978, and stated: 58. No employee of the Corporation shall be entitled to profit-sharing bonus. However, the Corporation may, having regard to the financial condition of the Corporation, in respect of any year and subject to the previous approval of the Central Government, grant non-profitsharing bonus to its employees in respect of that year at such rates as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility for such bonus. Simultaneously an amendment on the same lines was made in the 1957 Order (which, as already stated, was restricted in its application to transferred employees only) by the substitution of a new clause for the then existing clause 9 in pursuance of the provisions of sub-section (2) of Section 11 of the LIC Act. The new clause is in the following terms: 9. No employee of the Corporation shall be entitled to profit-sharing bonus. However, the Corporation may, having regard to the financial condition of the Corporation, in respect of any year and subject to the previous approval of the Central Government, grant non-profitsharing bonus to its employees in respect of that year at such rates as the Corporation may think fit and on such terms and conditions as it may specify as regards the eligibility for such bonus. It was the issuance of the two notices by the Corporation on 3 March 1978, under Section 19(2) and 9-A of the ID Act respectively and the action taken by the Central Government on 26 May 1978, by making new provisions in regard to the payment of bonus to the Corporation’s employees, that furnished the cause of action for the latter to petition to the Allahabad High Court under Article 226 of the Constitution of India. After consideration of the various contentions raised before it, the Allahabad High Court arrived at the following conclusions: The ID Act is an ‘independent Act’ which deals with adjudication and settlement of matters in disputes between an employer and his workmen. It is thus a special law which would override the provisions of a general law like the LIC Act.
212 Social Justice and Labour Jurisprudence Three corollaries follow from conclusion I: (a) Section 23 of the LIC Act which envisages employment of persons by the Corporation implies settlement of conditions of service which may legally be superseded (only) by another settlement arrived at under Section 18 of the ID Act. (b) The new Regulation 58 framed under Section 49 of the LIC Act and the notification issued under sub-section (2) of Section 11 thereof substituting a new clause 9 in the 1957 Order are wholly ineffective against the operation of the 1974 settlements which were arrived at in pursuance of the provisions of the ID Act and which, therefore, continue to govern the parties thereto. (c) After the issuance of the notices under Sections 19(2) and 9-A of the ID Act, the Corporation had no power to alter the condition of service of its employees in regard to bonus by a unilateral act as neither of the two sections confers such power on an employer. Corollary (b) in conclusion II is in full accord with the view expressed in Madan Mohan Pathak107 case by the Supreme Court inasmuch as it upheld the two settlements even though it did not advert to Regulation 58 and further ruled that the conditions of service laid down in those settlements could be varied only by a fresh settlement or award made under the provisions of the ID Act and that till then sub-clause (ii) of clause 8 of each settlement [which is independent of clause (i) thereof ] would remain in full force. None of the authorities reported as C. Sankaranarayanan vs State of Kerala,108 Roshan Lal vs Union,109 Sukhdev vs Bhagatram,110 Kalyanmal Bhandari vs State of Rajasthan,111 State of U.P. vs Babu Ram Upadhya112 and I.T.O. vs M.C. Ponnoose113 and cited on behalf of the Corporation lays down any rule to the contrary. In spite of clause 12 of the two settlements they did not cease to be binding on the parties thereto even after the expiry of the period of 4 years mentioned in that clause and the notice under Section 19(2) of the ID Act issued by the Corporation would not terminate the settlements but would have the effect merely of paving the way for fresh negotiations. This proposition follows from South Indian Bank Ltd. vs A.R. Chacko114 and Indian Link Chain Manufacturers Ltd. vs Workmen,115 and is not negatived by the decision in Premier Automobiles Ltd. vs K.S. Wadke.116 Although Chacko case,117 dealt in terms with an award and not a settlement, no distinction exists between the two and they stand on the same footing for the purpose of judging the effect of a notice under Section 19(2) of the ID Act. There is no dispute that no petition under Article 226 of the Constitution of India would lie merely for the enforcement of a contract or for the recovery of an amount payable by the Corporation to its employees where the latter had an alternative remedy under Section 10 or 33-C of the ID Act. However, the relief sought by the workmen in the present case is directed only against the action taken by the Corporation and the Union of India under Sections 19 and 9-A of the ID Act and Sections 11(2) and 49 of the LIC Act a relief similar to that granted by this Court in Madan Mohan Pathak118 case. The contention raised on behalf of the Corporation about the non-maintainability of the petition is therefore without force. It was on the basis of these conclusions that the writ of mandamus mentioned in the opening paragraph of this judgment was issued by the High Court to the Corporation on whose behalf the first four of those conclusions have been impugned before us and I proceed to examine the same in the light of arguments advanced at length by learned counsel for the parties and for the Class II employees of the Corporation who were permitted to intervene in the appeal before us. As conclusion II consists merely of corollaries derived directly from conclusion I and it is the correctness or otherwise of the latter that would determine the sustainability of the former, the two may legitimately be dealt with together, although it is conclusion I on which I would primarily concentrate.
Collective Bargaining Agreement Issues 213 For convenience of examination, conclusion I may be split up into two propositions: (a) The ID Act is a special law because it deals with adjudication and settlement of matters in dispute between an employer and his workmen while the LIC Act is a general law. (b) The ID Act, being a special law, would override a general law like the LIC Act. Now in relation to proposition (a) it cannot be gainsaid that the ID Act deals with the adjudication or settlement of disputes between an employer and his workmen and would, therefore, be a special law vis-a-vis another statute which covers a larger field and may thus be considered ‘general’ as compared to it. It cannot, however, be regarded as a special law in relation to all other laws irrespective of the subject-matter dealt with by them. In fact a law may be special when considered in relation to another piece of legislation but only a general one vis-a-vis still another. An example will help illustrate the point. A law governing matters pertaining to medical education would be a special law in relation to a statute embracing education of all kinds but must be regarded as a general law when preference over it is claimed for what I may call a more special law, such as an Act dealing with only one aspect of medical education, say, instruction in the field of surgery. And even this ‘more special’ law may become general if there is a conflict between it and another operating in a still narrower field, e.g., thoracic surgery. ‘Special’ and ‘general’ used in this context are relative terms and it is the content of one statute as compared to the other that will determine which of the two is to be regarded as special in relation to the other. Viewed in this light proposition (a) cannot stand scrutiny. The ID Act would no doubt be a special Act in relation to a law which makes provision for matters wider than but inclusive of those covered by it, such as the Indian Contract Act, as that is a law relating to contracts generally (including those between an industrial employer and his workmen), but it would lose that categorisation and must be regarded as a general law when its rival is shown to operate in a field narrower than its own. And such a rival is that part of the LIC Act which deals with conditions of service of the employees of the LIC—a single industrial undertaking (of a special type) as opposed to all others of its kind which fall within the ambit of the ID Act. Where the competition is between these two Acts, therefore, the LIC Act must be regarded as a special law and (in comparison thereto) the ID Act as a general law. Proposition (b) is equally insupportable even if the ID Act is regarded as a special law in comparison to the LIC Act. The High Court appears to have somehow tried to apply the maxim generalia specialibus non derogant to the situation with which it was concerned. But does that maxim lead to the proposition under discussion? The general rule to be followed in the case of a conflict between two statutes is that the later abrogates the earlier one (leges posteriores priores contrarias abrogant). To this general rule there is a well known exception, namely, generalia specialibus non derogant (general things do not derogate from special things), the implications of which are thus stated succinctly by Earl Jowitt in ‘The Dictionary of English Law’: Thus a specific enactment is not affected by a subsequent general enactment unless the earlier enactment is inconsistent with the later enactment, or unless there is some express reference in the later enactment to the earlier enactment, in either of which cases the maxim leges posteriores contrarias abrogant applies. In other words a prior special law would yield to a later general law, if either of the following two conditions is satisfied: (i) The two are inconsistent with each other. (ii) There is some express reference in the later to the earlier enactment.
214 Social Justice and Labour Jurisprudence If either of these conditions is fulfilled the later law, even though general, will prevail. The principles enunciated in Chapter 9 of ‘Maxwell’ on the ‘Interpretation of Statutes’ are to the same effect: A later statute may repeal an earlier one either expressly or by implication. But repeal by implication is not favoured by the courts… If, therefore, earlier and later statutes can reasonably be construed in such a way that both can be given effect to, this must be done… If, however, the provisions of a later enactment are so inconsistent with or repugnant to the provisions of an earlier one that the two cannot stand together, the earlier is abrogated by the later… Wherever Parliament in an earlier statute has directed its attention to an individual case and has made provision for it unambiguously, there arises a presumption that if in a subsequent statute the legislature lays down a general principle, that general principle is not to be taken as meant to rip up what the legislature had before provided for individually, unless an intention to do so as is specially declared. The same principles have been thus reiterated in Chapter 15 of ‘Craies on Statute Law’: Parliament, in the exercise of its supreme legislative capacity, can extend, modify, vary, or repeal Acts passed in the same or previous sessions… The provisions of an earlier Act may be revoked or abrogated in particular cases by a subsequent Act, either from the express language used being addressed to the particular point, or from implication or inference from the language used… Where two Acts are inconsistent or repugnant, the latter will be read as having impliedly repealed the earlier. The court leans against implying a repeal, unless two Acts are so plainly repugnant to each other that effect cannot be given to both at the same time, a repeal will not be implied. Special Acts are not repealed by general Acts unless there is a necessary inconsistency in the two Acts standing together. The latest expression of the will of Parliament must always prevail. It does not matter whether the earlier or the latter enactment is public, local and personal, or private, or is penal or deals with civil rights only, and the rule is equally applicable to Orders in Council or Rules of Court if they have statutory force and are made under authority empowering the rule-makers to supersede prior enactments as to procedure. Before coming to the conclusion that there is a repeal by implication the court must be satisfied that the two enactments are so inconsistent or repugnant that they cannot stand together before they can, from the language of the later, imply the repeal of an express prior enactment—i.e., the repeal must, if not express, flow from necessary implication… But the rule must not be pressed too far, for, as Bramwell, L.J. said in Pellas vs Neptune Marine Insurance Co.,119 a ‘general statute may repeal a particular statute’. And if a special enactment, whether it be in a public or a private Act, and a subsequent general Act are absolutely repugnant and inconsistent with one another, the courts have no alternative but to declare the prior special enactment repealed by the subsequent general Act. The criteria deducible from the texts of the three standard works just above-quoted are stated below: (i) The legislature has the undoubted right to alter a law already promulgated by it through subsequent legislation. (ii) A special law may be altered, abrogated or repealed by a later general law through an express provision. (iii) A later general law will override a prior special law if the two are so repugnant to each other that they cannot coexist even though no express provision in that behalf is found in the general law. (iv) It is only in the absence of an express provision to the contrary and of a clear inconsistency that a special law will remain wholly unaffected by a later general law.
Collective Bargaining Agreement Issues 215 So let us see whether proposition (b) forming part of conclusion I arrived at by the High Court conforms to these criteria. As already noticed Section 11 is one of the provisions of the LIC Act which deal with terms and conditions of service of the employees of the Corporation. Sub-section (1) of that section declares that insofar as a transferred employee is concerned, he shall ‘hold his office therein by the same tenure, at the same remuneration and upon the same terms and conditions… as he would have held the same… if this Act had not been passed…’. This provision does certainly not exclude the application of the ID Act and, on the other hand, preserves it insofar as it finds expression in the conditions of service of the concerned transferred employee prior to his absorption in the Corporation. But the sub-section does not stop there and specifically qualifies and limits the provision thus: …unless and until his employment in the Corporation is terminated or until his remuneration, terms and conditions are duly altered by the Corporation. This qualification gives power to the Corporation to ‘duly’ alter the terms and conditions of service of the transferred employees and obviously means that once such power is exercised, ‘the only altered’ terms and conditions of service shall replace those hithertofore governing such employees. That this is what sub-section (1) clearly means was thus stated by Gajendragadkar, J., (as he then was) in LIC of India vs Sunil Kumar Mukherjee:120 The scheme of Section 11(1) is thus clear. With the transfer of the controlled business from the insurer to the Corporation, the employees of the former became the employees of the latter, but they were governed by the same terms and conditions until they were altered by the latter. Now the word ‘duly’ means properly, regularly or in due manner. In the context in which it is used it may legitimately be given even a more restricted meaning, namely, in accordance with law. The case put forward on behalf of the employees is that the only law contemplated here is the ID Act specially because the non obstante clause occurring in sub-section (2) does not govern, and is conspicuous by its absence from, sub-section (1) and that the expression ‘by the Corporation’ does not mean ‘by the Corporation unilaterally’. This contention is devoid of force for the simple reason that if reference to the provisions of the ID Act alone was contemplated and the alterations envisaged were merely such as could be achieved by a settlement or award resulting from a compliance thereof, not only would the expression ‘by the Corporation’ become redundant (which would not be a situation conforming to the well known principle of interpretation of statutes that a construction which leaves without effect any part of the language of a statute will normally be rejected) but the express provisions of clause (bb) of sub-section (2) of Section 49 of the LIC Act, which invest the Corporation with power to make regulations (albeit with the approval of the Central Government) laying down the terms and conditions of service of the transferred employees would also be rendered otiose. To the extent, therefore, that Section 11(1) read with that clause confers on the Corporation the power to alter the terms and conditions in question—a power not enjoyed by it under the provisions of the ID Act—it is inconsistent with the ID Act and being a later law, would override that Act despite the absence of the non obstante clause, the inconsistency having arisen from express language and not from mere implication. But the matter does not end here as sub-sections (2) and (4) of Section 11 and clause (b) of sub-section (2) of Section 49 of the LIC Act pose other insurmountable hurdles in the way of the acceptance of proposition (b). The scope of sub-section (2) of Section 11 was stated in LIC of India vs Sunil Kumar Mukherjee121 by Gajendragadkar, J., in the following terms: Section 11(2) as it originally stood was substantially modified in 1957, and the plain effect of the provisions contained in the said sub-section as modified is that the Central Government
216 Social Justice and Labour Jurisprudence is given the power to alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of service to such extent and in such manner as it thinks fit. It is significant that this power can be exercised by the Central Government notwithstanding anything contained in sub-section (1) or in the Industrial Disputes Act, 1947, or in any other law, or in any award, settlement or agreement for the time being in force. It was thought that for a proper functioning of the Corporation it was essential to confer upon the Central Government an overriding power to change the terms and conditions of employees who were wholly or mainly employed by the insurers prior to the appointed day. Having conferred such wide power on the Central Government, Section 11(2) further provides that if the alteration made by the Central Government in the terms and conditions of his service is not acceptable to any employee, the Corporation may terminate his employment by giving him compensation equivalent to three months’ remuneration unless the contract of service with such employee provides for a shorter notice of termination. It is thus clear that in regard to cases which fall under Section 11(2), if as a result of the alteration made by the Central Government any employee does not want to work with the Corporation, he is given the option to leave its employment on payment of compensation provided by the last part of Section 11(2). Thus, the scheme of the two sub-sections of Section 11 is clear. The employees of the insurers, whose controlled business has been taken over, become the employees of the Corporation, then their terms and conditions of service continue until they are altered by the Central Government, and if the alteration made by the Central Government is not acceptable to them, they are entitled to leave the employment of the Corporation on payment of compensation as provided by Section 11(2). In other words sub-section (2) of Section 11 not only gives to the Central Government the power to alter the terms and conditions of service of the employees of the Corporation in certain situations, and to alter them even to the detriment of such employees, to such extent and in such manner as it thinks fit, but also states in so many words that such power shall be exercisable— Notwithstanding anything contained in sub-section (1) or in the Industrial Disputes Act, 1947 or in any other law for the time being in force, or in any award, settlement or agreement for the time being in force. The mandate of the legislature has been expressed in clear and unambiguous terms in this non obstante clause and is to the effect that the power of the Central Government to alter conditions of service of the employees of the Corporation shall be wholly unfettered and that any provisions to the contrary contained in the ID Act or for that matter, in any other law for the time being in force, or in any award, settlement, or agreement for the time being in force, would not stand in the way of the exercise of that power even if such exercise is to the detriment of the employees of the Corporation. The conferment of the power is thus in express supersession of the ID Act and of any settlement made thereunder. The provisions of that Act and the two settlements of 1974 must, therefore, yield to the dictates of Section 11(2) and to the exercise of the power conferred thereby on the Central Government. Sub-section (4) of Section 11 is again illuminating as in the matter of compensation to be paid to a transferred employee it provides specifically that the provisions of sub-section (2) of that section shall override those of the ID Act and of any other law for the time being in force and that no claim to the contrary shall be entertained by any court, tribunal or other authority. In the face of an express provision like this it is not open to the employees to contend that the law laid down in the ID Act and not sub-section (2) of Section 11 would govern them. The rule-making power conferred on the Corporation by Section 49 of the LIC Act must also be held to be exercisable notwithstanding the provisions of the ID Act. In clause (b) of subsection (2) thereof the method of recruitment of employees and agents of the Corporation and
Collective Bargaining Agreement Issues 217 the terms and conditions of their service are stated to be matters which the Corporation may deal with through regulations subject, however, to the previous approval of the Central Government. This power is expressly conferred on the Corporation in addition to that with which it is invested under clause (bb) of the same sub-section. If these two clauses were not meant to override the provisions of the ID Act on the same subject they would be completely meaningless, and that is a situation, as already pointed out, running directly counter to one of the accepted principles of interpretation of statutes. Besides, these two clauses are not to be read in isolation from Section 11. The subject-matter of the clauses and the section is overlapping and together they form an integrated whole. The clauses must, therefore, be read in the light of Section 11. Sub-section (1) of that section confers power on the Corporation to alter the terms and conditions of service of the transferred employees and by necessary implication gives a go by to the ID Act which is again expressly superseded by sub-section (2) of that section insofar as the Central Government has been invested with the power in certain circumstances to vary the terms and conditions of service of the Corporation’s employees. When the two clauses, therefore, say that the Corporation has the power to frame regulations in regard to the terms and conditions of its employees, including transferred employees, subject, of course, to previous approval of the Central Government, the power may well be exercised in conformity with the provisions of Section 11. And if it is so exercised the resultant regulations cannot be said to go beyond the limits specified in the statute. In this view of the matter Hukam Chand vs Union of India122 and B.S. Vadera vs Union of India123 which lay down that the authority vested with the power of making subordinate legislation must act within the limits of and cannot transgress its power, are of no help to the case of the employees on whose behalf they have been cited. Another proposition put forward by learned counsel for the employees may be noticed here. It was contended that Section 49 confers on the Corporation ‘ordinary’ powers of framing subordinate legislation and that the Corporation has not been invested with any right to unilaterally promulgate a regulation altering the conditions of service of its employees to their detriment and that such regulations cannot override the provisions of the ID Act and the settlements reached thereunder. Reliance for the proposition was placed on U.P. State Electricity Board vs Hari Shankar Jain124 and Bangalore Water Supply and Sewerage Board vs R. Rajappa.125 In the former the case of the employees was that they were governed by the Industrial Employment (Standing Orders) Act which, according to them, was a special Act laying down provisions in relation to their conditions of service and which could not, therefore, be superseded by Section 79 of the Electricity Supply Act, 1948. In holding that the section last-mentioned was a general law which did not override the provisions of the Industrial Employment (Standing Orders) Act, this Court observed: Chapter VII (from Section 70 to Section 83) which is headed ‘Miscellaneous’ contains various miscellaneous provisions amongst which are Section 78 which empowers the Government to make rules and Section 79 which empowers the Board to make regulations in respect of matters specified in clauses (d) to (k) of that section. Clause (c) of Section 79 is ‘the duties of Officers and servants of the Board, and their salaries, allowances and other conditions of service’. This, of course, is no more than the ordinary general power, with which every employer is invested in the first instance, to regulate the conditions of service in his employees. It is an ancillary or incidental power of every employer. The Electricity Supply Act does not presume to be an Act to regulate the conditions of service of the employees of State Electricity Boards. It is an Act to regulate the coordinated development of electricity. It is a special Act in regard to the subject of development of electricity, even as the Industrial Employment (Standing Orders) Act is a special Act in regard to the subject of conditions of service of workmen in industrial establishments. If Section 79(c) of the Electricity Supply Act generally provides for the making of regulations providing for the conditions of service of the employees of the
218 Social Justice and Labour Jurisprudence Board, it can only be regarded as a general provision which must yield to the special provisions of the Industrial Employment (Standing Orders) Act in respect of matters covered by the latter Act. Quite clearly there was no provision in the Electricity Supply Act such as we find in Section 11 of the LIC Act which, as already shown, is a special law in relation to the terms and conditions of service of the employees of the Corporation very much in derogation of what the ID Act lays down and the case cited, therefore, presents no parallel to the case in hand. In Bangalore Water Supply and Sewerage Board vs R. Rajappa126 the question was whether the employees of a statutory Corporation would or would not be governed by the provisions of the ID Act. The question was answered in the affirmative by this Court and Beg, C.J. (as he then was), while concurring with Bhagwati, Krishna Iyer and Desai, JJ., on that point, observed: I am impressed by the argument that certain public utility services which are carried out by governmental agencies or corporation are treated by the Act itself as within the sphere of industry. If express rules under other enactments govern the relationship between the State as an employer and its servants as employees it may be contended, on the strength of such provisions, that a particular set of employees are outside the scope of the Industrial Disputes Act for that reason. The special excludes the applicability of the general. We cannot forget that we have to determine the meaning of the term ‘industry’ in the context of and for the purposes of matters provided for in the Industrial Disputes Act only… Hence, to artificially exclude State-run industries from the sphere of the Act, unless statutory provisions, expressly or by a necessary implication, have that effect, would not be correct. Far from assisting the case of the employees these observations only support the conclusion arrived at by me above inasmuch as they specifically state that if express provision has been made under a particular enactment governing the relationship of an employer and his employees, such special provision would govern those employees in supersession of the dictates of the ID Act. I thus hold that Section 11 and clauses (b) and (bb) of sub-section (2) of Section 49 of the LIC Act were intended to be and do constitute an exhaustive and overriding law governing the conditions of service of all employees of the Corporation including transferred employees. Proposition (b) forming part of conclusion I is consequently found to be incorrect. Conclusion I reached by the High Court being faulty in both its material aspects, the three corollaries flowing from it and set out above as part of conclusion II must also be held to be unsustainable. Section 23 of the LIC Act, which envisages employment of persons by the Corporation no doubt, implies settlement of conditions of service but that does not mean that once a settlement is arrived at the same is not liable to be altered except by another settlement reached under Section 18 of the ID Act. As already pointed out the provisions of sub-sections (1), (2) and (4) of Section 11 of the LIC Act and clauses (b) and (bb) of sub-section (2) of Section 49 thereof have overriding effect and the terms and conditions of service of the employees of the Corporation forming part of a settlement under the ID Act cannot last after they have been altered in exercise of the powers conferred on the Corporation or the Central Government by those provisions, as was done when the new Regulation 58 was framed under Section 49 by the Corporation and the new clause 9 was inserted in the 1957 order by the Central Government. Nor can any action taken under Sections 19(2) and 9-A of the ID Act have any relevance to the exercise of those powers so long as such exercise conforms to the provisions of the LIC Act. Conclusion II is, therefore, held to be erroneous in its entirety. Conclusion III also does not stand scrutiny as the reliance of the High Court on Madan Mohan Pathak127 case for support to proposition (b) stated above is wholly misplaced. That case
Collective Bargaining Agreement Issues 219 was decided by a Bench of seven Judges of this Court before whom were canvassed two main points which were thus crystallized by Bhagwati, J., who delivered the judgment on behalf of himself, Krishna Iyer and Desai, JJ.: A. The right of Class III and Class IV employees to annual cash bonus for the years 1 April 1975 to 31 March 1976 and 1 April 1976 to 31 March 1977, under clause 8(ii) of the Settlement was property and since the impugned Act provided for compulsory acquisition of this property without payment of compensation, the impugned Act was violative of Article 31(2) of the Constitution and was hence null and void. B. The impugned Act deprived Class III and Class IV employees of the right to annual cash bonus for the years 1 April 1975 to 31 March 1976 and 1 April 1976 to 31 March 1977, which was vested in them under clause 8(ii) of the settlement and there was, therefore, clear infringement of their fundamental right under Article 19(1)(f ) and since this deprivation of the right to annual cash bonus, which was secured under a settlement arrived at as a result of collective bargaining and with full and mature deliberation on the part of the Life Insurance Corporation and the Central Government after taking into account the interest of the policy holders and the community and with a view to approximating towards the goal of a living wage as envisaged in Article 43 of the Constitution, amounted to an unreasonable restriction, the impugned Act was not saved by Article 19(5) and hence it was liable to be struck down as invalid. In relation to Point 4 the argument raised on behalf of the Corporation was that under the then existing Regulation 58 the grant of annual cash bonus was subject to such directions as the Central Government might issue and that the right of Class III and Class IV employees to receive such bonus could not therefore be said to be an absolute right which was not liable to be set at naught by any direction that might be issued by the Central Government, Bhagwati, J., appreciated the force of Regulation 58 and remarked: Regulation 58 undoubtedly says that non-profit sharing bonus may be granted by the Life Insurance Corporation to its employees, subject to such directions as the Central Government may issue and, therefore, if the Central Government issues a direction to the contrary, nonprofit sharing bonus cannot be granted by the Life Insurance Corporation to any class of employees. He further observed, however: But here, in the present case, grant of annual cash bonus by the Life Insurance Corporation to Class III and Class IV employees under clause 8(ii) of the settlement was approved by the Central Government as provided in clause 12 and the ‘direction’ contemplated by Regulation 58 was given by the Central Government that annual cash bonus may be granted as provided in clause 8(ii) of the Settlement. It was not competent to the Central Government thereafter to issue another contrary direction which would have the effect of compelling the Life Insurance Corporation to commit a breach of its obligation under Section 18, sub-section (1) of the Industrial Disputes Act, 1947 to pay annual cash bonus in terms of clause 8(ii) of the Settlement. It was further held by Bhagwati, J., that clause 8(ii) was a clause independent of clause 8(i) and was subject only to the approval mentioned in clause 12(2) which, as already pointed out, had been accorded by the Central Government. He went on to hold that the right to bonus for the two years (1 April 1975 to 31 March 1976 and 1 April 1976 to 31 March 1977) was property of which the concerned employees could not be deprived without adequate compensation. Repelling another argument advanced on behalf of the Corporation, Bhagwati, J., held
220 Social Justice and Labour Jurisprudence that the extinguishment of the right to bonus really meant a transfer of ownership to the Corporation of the debt available to the employees under that right and that such extinguishment amounted to acquisition of property without compensation so that is was hit by Article 31(2) of the Constitution of India. In view of this conclusion Bhagwati, J., considered it unnecessary to consider Point B. Chandrachud, Fazal Ali and Shinghal, JJ., agreed with the conclusion arrived at by Bhagwati, J., on Point A. Beg, C.J., however, delivered a separate judgment seriously doubting the correctness of the proposition enunciated by Bhagwati, J., that the extinguishment of the right to bonus amounted to acquisition of property, and deciding Point B in favour of the employees with a finding that in view of the provisions of Article 43 of the Constitution the 1976 Act was vitiated by the provisions of Article 19(1)(f ) of the Constitution and was not saved by clause (6) of that article. Beg, C.J., was further of the opinion that the 1976 Act was violative of Article 14 of the Constitution. These factors are noteworthy: (a) Points A and B detailed above were specifically limited to the duration of the settlements as appearing in clause 12 thereof and the judgment, therefore, does not cover any period subsequent to 31 March 1977, as has been rightly contended by learned counsel for the Corporation. (b) No finding at all was given nor was any observation made by Bhagwati, J., to the effect that Sections 11 and 49 of the LIC Act or the action taken thereunder (the promulgation of the new Regulation 58 and the new clause 9 of the 1957 Order) was ineffective against the operation of provisions of the ID Act or of the 1974 settlements. On the other hand, his judgment very specifically proceeded on the ground that the two settlements had to and did fully conform to the provisions of Regulation 58 inasmuch as the Central Government had accorded its approval to them. The High Court thus not only erred in observing that those settlements had been upheld by this Court ‘even though it did not advert to Regulation 58’, but also failed to take notice of the clearly expressed opinion of Bhagwati, J., that bonus under the two settlements could not have been paid if they had run counter to the requirements of Regulation 58. Far from supporting corollary (b) of conclusion II, therefore, Madan Mohan Pathak128 case rules to an opposite effect. (c) Although Bhagwati, J., did hold clearly (and, if I may say so with all respect, quite correctly) that sub-clause (ii) of clause 8 of the 1974 settlements stood independently of sub-clause (i) thereof, his judgment contains no finding whatsoever to the effect that the conditions of service laid down in those settlements could be varied only by a fresh settlement or award made under the provisions of the ID Act and that till then sub-clause (ii) aforesaid would remain in full force. The High Court clearly erred in observing that such a finding formed part of the majority judgment in Madan Mohan Pathak129 case. Conclusion III also, therefore, is negatived. We now take up for consideration the High Court’s conclusion IV which is based on the interpretation of Section 19 of the ID Act by this Court in South Indian Bank Ltd. vs A.R. Chacko.130 That section may with advantage be extracted here in extenso for facility of reference: 19.(1) A settlement shall come into operation on such date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on the date on which the memorandum of the settlement is signed by the parties to the dispute. (2) Such settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of six months from the date on which the
Collective Bargaining Agreement Issues 221 memorandum of settlement is signed by the parties to the dispute, and shall continue to be binding on the parties after the expiry of the period aforesaid, until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement. (3) An award shall, subject to the provisions of this section, remain in operation for a period of one year from the date on which the award period enforceable under Section 17-A: Provided that the appropriate Government may reduce the said period and fix such period as it thinks fit: Provided further that the appropriate Government may, before the expiry of the said period, extend the period of operation by any period not exceeding one year at a time as it thinks fit so, however, that the total period of operation of any award does not exceed three years from the date on which it came into operation. (4) Where the appropriate Government, whether of its own motion or on the application of any party bound by the award, considers that since the award was made, there has been a material change in the circumstances on which it was based, the appropriate Government may refer the award or a part of it to a Labour Court, if the award was that of a Labour Court or to a Tribunal, if the award was that of a Tribunal or of a National Tribunal for decision whether the period of operation should not, by reason of such change, be shortened and the decision of Labour Court or the Tribunal, as the case may be, on such reference shall, be final. (5) Nothing contained in sub-section (3) shall apply to any award which by its nature, terms or other circumstances does not impose, after it has been given effect to, any continuing obligation on the parties bound by the award. (6) Notwithstanding the expiry of the period of operation under sub-section (3), the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award. (7) No notice given under sub-section (2) or sub-section (6) shall have effect, unless it is given by a party representing the majority of persons bound by the settlement or award, as the case may be. Sub-section (2) of the section makes it clear that a settlement reached under the ID Act shall be binding on the parties thereto— (a) For the period agreed upon, and if no such period is agreed upon, for a period of six months from the date on which the memorandum of settlement is signed by the parties; and (b) for a further period ending with a span of two months reckoned from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties thereto to the others. Sub-sections (3), (4) and (5) provide for the period of operation of an award and its extension and reduction, while sub-section (6) lays down that after such period has expired the award shall continue to be binding on the parties to it for a further period ending with a span of two months reckoned in the same manner as the span mentioned earlier. Insofar as the explicit language of the section is concerned there is no ambiguity involved. The difficulty arises regarding the period (hereinafter called the 3rd period) subsequent to the date on which the said span of two months expires in either case, because the ID Act is silent about it and it is that difficulty which this Court resolved in Chacko’s case. The parties before the court in that case were the South Indian Bank Ltd. and one of its clerks named A.R. Chacko
222 Social Justice and Labour Jurisprudence who had been promoted as an accountant with effect from 13 July 1959 and claimed certain allowances for periods subsequent to that date in terms of what is called the Sastry Award. On behalf of the bank reliance was placed on Section 4 of the Industrial Disputes (Banking Companies) Decision Act, 1955 which runs thus: Notwithstanding anything contained in the Industrial Disputes Act, 1947, or the Industrial Disputes (Appellate Tribunal) Act, 1950, the award as now modified by the decision of the Labour Appellate Tribunal in the manner referred to in Section 3 shall remain in force until 31 March 1959. A contention was raised that the non obstante clause contained in this section made the provisions of Section 19(6) of the ID Act inapplicable to the Sastry Award which, therefore, became dead for all purposes after 31 March 1959. Repelling the contention this Court observed: The effect of Section 4 of the Industrial Disputes (Banking Companies) Decision Act is that the award ceased to be in force after 31 March 1959. That however has nothing to do with the question as to the period for which it will remain binding on the parties thereafter. The provision in Section 19(6) as regards the period for which the award shall continue to be binding on the parties is not in any way affected by Section 4 of the Industrial Disputes (Banking Companies) Decision Act, 1955. The court then proceeded to consider specifically the situation that would obtain in the 3rd period in relation to an award and held: Quite apart from this, however, it appears to us that even if an award has ceased to be in operation or in force and has ceased to be binding on the parties under the provisions of Section 19(6) it will continue to have its effect as a contract between the parties that has been made by industrial adjudication in place of the old contract. So long as the award remains in operation under Section 19(3), Section 23(c) stands in the way of any strike by the workmen and lock-out by the employer in respect of any matter covered by the award. Again, so long as the award is binding on a party, breach of any of its terms will make the party liable to penalty under Section 29 of the Act, to imprisonment which may extend to six months or with fine or with both. After the period of its operation and also the period for which the award is binding have elapsed Section 23 and Section 29 can have no operation. We can however see nothing in the scheme of the Industrial Disputes Act to justify a conclusion that merely because these special provisions as regards prohibition of strikes and lock-outs and of penalties for breach of award cease to be effective the new contract as embodied in the award should also cease to be effective. On the contrary, the very purpose for which industrial adjudication has been given the peculiar authority and right of making new contracts between employers and workmen makes it reasonable to think that even though the period of operation of the award and the period for which it remains binding on the parties—in respect of both of which special provisions have been made under Sections 23 and 29 respectively—may expire, the new contract would continue to govern the relations between the parties till it is displaced by another contract. The objection that no such benefit as claimed could accrue to the respondent after 31 March 1959 must therefore be rejected. It is the underlined portion of this paragraph which impelled the High Court to come to the conclusion that even a notice under Section 19(6) of the ID Act would not terminate a settlement (which, according to the High Court, stands on the same footing as an award and, in fact, is
Collective Bargaining Agreement Issues 223 indistinguishable therefrom for the purpose of Section 19) but would have the effect of merely paving the way for fresh negotiations resulting ultimately in a new settlement—a conclusion which has been seriously challenged on behalf of the Corporation with the submission that Chacko’s131 case has no application whatsoever to the present controversy inasmuch as the special law comprised of Sections 11 and 49 of the LIC Act fully covers the situation in the 3rd period following the expiry of the 1974 settlements. The submission is well based. In Chacko132 case this Court was dealing with the provisions of the ID Act alone when it made the observations last extracted and was not concerned with a situation which would cover the 3rd period in relation to an award (or for that matter a settlement) in accordance with a specific mandate from Parliament. The only available course for filling the void created by the Sastry Award was a continuation of its terms till they were replaced by something else legally enforceable which, in the circumstances before the court, could only be another contract (in the shape of an award or a settlement), there being no legal provision requiring the void to be filled otherwise. In the present case the law intervenes to indicate how the void which obtains in the 3rd period shall be filled and, if it has been so filled, there is no question of its being filled in the manner indicated in Chacko’s133 case wherein, as already pointed out, no such law was available. The observations in that case must thus be taken to mean that the expired award would continue to govern the parties till it is displaced by another contract or by relationship otherwise substituted for it in accordance with law. Indian Link Chain Manufactures Ltd. vs Workmen,134 which also the High Court pressed into service in arriving at conclusion IV is really not relevant for the present discussion as it deals only with the two periods expressly covered by sub-sections (2) and (6) of Section 19 of the ID Act and not at all with the 3rd period. The same is true of Shukla Manseta Industries Pvt. Ltd. vs Workmen135 employed under it, in which the only question canvassed before the court and answered by it was whether the law required that notice of termination under Section 19(2) had to be given only after the date of expiry of a settlement. However, it may be pointed out that in both those cases as also in Haribhau Shinde vs F.H. Lala Industrial Tribunal,136 Bombay, which has been relied upon by learned counsel for the employees, this Court was not concerned with any special law as I find in a combined reading of Sections 11 and 49 of the LIC Act; and for that reason also none of these three decisions is of any assistance for the determination of the point in controversy before us. Some arguments were addressed to us on proposition advanced by learned counsel for the Corporation to the effect that a settlement could not be treated at par with an award for the purpose of the ID Act and that Chacko’s137 case, therefore, could furnish no proper basis for the High Court’s conclusion IV. I do not propose to deal with that proposition which is merely of academic interest in view of the material distinction already pointed out, namely, that in the present case there is a special mandate by Parliament to fill the void of the 3rd period which did not obtain in Chacko’s case. However, I may briefly dwell on another aspect of the same distinction and that consists of the circumstance that while in Chacko’s case the employer was the South Indian Bank Ltd.—a non-statutory banking company—the employer before us now is the creation of the LIC Act itself and therefore a statutory corporation. This circumstance coupled with the contents of the LIC Act leads to the following deductions, as laid down in Sukhdev Singh vs Bhagatram Sardar Singh Raghuvanshi:138 (a) The Corporation carries on the exclusive business of life insurance as an agency of the Government by which it is managed and which alone can dissolve it. It is, therefore, an authority within the meaning of Article 12 of the Constitution of India. The status of persons serving the Corporation thus carries with it the element of public employment. (b) The LIC Act enables the Corporation to make regulations which may provide, inter alia, for the terms and conditions of service of its employees. Such regulations cannot be
224 Social Justice and Labour Jurisprudence equated with those framed by a company incorporated under the Companies Act and, on the other hand, have the force of law which must be followed both by the Corporation and those who deal with it. It is obvious that an application of those deductions to the situation prevailing in the present case would rule out the relevance of Chacko’s case because Regulation 58 framed under Section 49 of the LIC Act specifically governs the 3rd period following the expiry of the 1974 settlements. I need not go into the correctness or otherwise of conclusion V reached by the High Court as no arguments in relation thereto were addressed to us. I shall now proceed, however, to discuss certain other contentions raised before us on behalf of the employees although the same were not canvassed before the High Court. It was argued that both sub-sections (1) and (2) of Section 11 of the LIC Act relate exclusively to the transferred employees and that sub-section (2) does not embrace the case of employees recruited under Section 23. In this connection an analysis of Section 11 would be helpful. Insofar as sub-section (1) is concerned it is quite clear that it cannot be extended to cover employees recruited under Section 23, and that it is restricted in its operation only to the transferred employees. This follows from the clear language used. Sub-section (2), however, is differently worded. It may be split up as follows: (a) The Central Government may alter (whether by way of reduction or otherwise) the remuneration and the other terms and conditions of service (of...) to such extent and in such manner as it thinks fit. (b) The Central Government may take the action detailed in (a) above notwithstanding anything contained in sub-section (1), or the ID Act, or in any other law for the time being in force or in any award, settlement or agreement for the time being in force. (c) The action detailed in (a) can be taken only if the Central Government is satisfied (i) that for the purpose of securing uniformity in the scales of remuneration and the other terms and conditions of service applicable to transferred employees, it is necessary so to do; or (ii) that, in the interests of the Corporation and its policy holders, a reduction in the remuneration payable or a revision of the other terms and conditions of service applicable to employees or any class of them is called for. According to learned counsel for the employees the expression ‘employees or any class of them’ occurring in sub-clause (ii) of the above analysis must be interpreted to mean transferred employees or any class thereof and the expression does not cover the employees recruited under Section 23. Support for the contention is sought from the circumstance that the section is not only a part of Chapter IV of the LIC Act, which is headed ‘Transfer of Existing Life Insurance Business to the Corporation’ but also carries the marginal note ‘Transfer of service of existing employees of insurers to the Corporation’. This circumstance is wholly immaterial not only for the reason that headings of chapters and marginal notes cannot be looked into for the purpose of ascertaining the intention of the legislature unless the language employed by it is ambiguous but also because the absorption of the transferred employees into the Corporation may itself necessitate a change in the conditions of service of the employees recruited under Section 23. It is not disputed that transferred employees, amongst themselves, were governed by widely different conditions of service and that was so far the simple reason that they had come from different companies, each having its own scales of pay applicable to its servants. When the Corporation came into existence, recruitment under Section 23 need not have waited for action under Section 11(2) and the process of examination of different scales of pay of the transferred
Collective Bargaining Agreement Issues 225 employees as compared to those pertaining to hands recruited under Section 23, as also the appropriate action which should have been taken as a result of such examination, was bound to be time-consuming; and the result may well have entailed a decision to equalise the scales of pay not only by raising or reducing those of the transferred employees but also those of the employees recruited under Section 23. And that appears to be the only reason why the legislature chose the comprehensive expression ‘employees or any class of them’ in sub-section (2) in spite of the fact that not only in sub-sections (1) and (4) but also in sub-section (2) itself the detailed description ‘employees of an insurer whose controlled business has been transferred to and vested in the Corporation’ or words to that effect have been used to denote a transferred employee. Again, wherever a transferred employee was meant but a detailed description in relation to him was not given, the expression ‘such employee’ was used with reference to that description. Examples in point are the proviso to sub-section (1) and the latter part of sub-section (4). If the expression ‘employees or any class of them’ was intended to be restricted to transferred employees, it would certainly have been preceded by the word ‘such’ so that it could be referable to the detailed description of employees of that kind occurring in an earlier part of the sub-section. From the circumstance that no such device was pressed into service the conclusion is irresistible that the expression last-mentioned was intended to convey a meaning different from that which was deducible from the detailed description otherwise employed in the section—a conclusion based on the well known principle of interpretation of statute thus stated by Maxwell in Chapter 12 of his celebrated work earlier cited: From the general presumption that the same expression is presumed to be used in the same sense throughout an Act or a series of cognate Acts, there follows the further presumption that a change of wording denotes a change in meaning. The matter may also be looked at from another angle. As stated in clause (c) of the above analysis the Central Government is empowered to take action under sub-section (2) of Section 11 if it is satisfied about the existence of either of two conditions. It may take such action if it is satisfied that for the purpose of securing uniformity in the scales of remuneration, etc., applicable to transferred employees it is necessary to do so. But then if no action is intended to be taken for that purpose it may still be taken provided the Central Government is satisfied that it is in the interests of the Corporation and its policy holders to make a reduction in the remuneration payable or a revision of the other terms and conditions applicable to its employees. Now the first condition which envisages the securing of uniformity in the scales of remuneration clearly applies to transferred employees only but the same is not true of the second condition. At a particular juncture in the life of the Corporation it may become necessary to make a reduction in the remuneration payable to its employees or a revision of the other terms and conditions of service applicable to them. But then this must follow from the satisfaction of the government that it is in the interest of the Corporation and its policy holders to do so. It is obvious that this condition envisages the change in conditions of service, etc., of all the employees of the Corporation and not only the transferred employees. If it were otherwise the sub-section may well lead to discrimination and render the provision unconstitutional. Even if, therefore, the expression ‘employees or any class of them’ occurring in sub-section (2) was capable of being regarded as ambiguous, the court would choose that interpretation which would conform to the constitutionality of the provision. This well known principle of statutory construction was made use of by a learned single Judge of the Calcutta High Court in Himangsu Chakraborty vs LIC of India139 wherein he dealt with sub-section (2) of Section 11 thus: According to Mr Chatterjee, Section 11(2) of the Act contains two limbs. The first limb confers power on the Central Government to revise the terms and conditions of service of the
226 Social Justice and Labour Jurisprudence employees of the Corporation. Its power is, however, confined only to those employees whose services have been transferred to and vested in the Corporation by reason of the commencement of the Act. The second limb confers power on the Central Government to alter the terms and conditions of the service applicable to all employees of the Corporation irrespective of whether they are transferred employees or are directly recruited after the inception of the Corporation. Strong emphasis is placed on the expression ‘terms and conditions of service applicable to employees of insurers whose controlled business has been transferred to and vested in the Corporation’ and ‘terms and conditions of service applicable to employees or any class of them’. Mr Chatterjee submits that the latter clause does not contain the expression ‘such employees’ and therefore should be construed to confer a power on the Central Government to alter the conditions of service of all employees... In my view, this contention of Mr Chatterjee is sound and should be accepted. On a plain reading of Section 11(2) of the Act it seems to contain two distinct and separate powers. The first part relates to the power of the Central Government in relation to ‘transferred employees’ whereas the second part appears to apply to all employees of the Corporation irrespective of whether they are transferred or directly recruited. I find myself in complete agreement with this view for the reasons already stated. In order to steer clear of the above interpretation of Section 11(2) learned counsel for the employees put forward the argument that the word ‘or’ occurring in the section should not be read as a disjunctive and should be given the meaning ‘and’ so that the two clauses forming the conditions about which the Central Government has to be satisfied before it can act under the section are taken to be one single whole; but we do not see any reason why the plain meaning of the word should be destroyed to suit the convenience or the cause of the employees. It is no doubt true that the word ‘or’ may be interpreted as ‘and’ in certain extraordinary circumstances such as in a situation where its use as a disjunctive could obviously not have been intended (see Mazagaon Dock Ltd. vs Commissioner of Income Tax and Excess Profits Tax).140 Where no compelling reason for the adopting of such a course is, however, available, the word ‘or’ must be given its ordinary meaning, that is, as a disjunctive. This rule was thus applied to the interpretation of clause (c) of Section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act, 1974 in Babu Manmohan Das Shah vs Bishun Das141 by Shelat, J: The clause is couched in single and unambiguous language and in its plain meaning provides that it would be a good ground enabling a landlord to sue for eviction without the permission of the District Magistrate if the tenant has made or has permitted to be made without the landlord’s consent in writing such construction which materially alters the accommodation or is likely substantially to diminish its value. The language of the clause makes it clear that the legislature wanted to lay down two alternatives which would furnish a ground to the landlord to sue without the District Magistrate’s permission, that is, where the tenant has made such construction which would materially alter the accommodation or which would be likely to substantially diminish its value. The ordinary rule of construction is that a provision of a statute must be constructed in accordance with the language used therein unless there are compelling reasons, such as where a literal construction would reduce the provision to absurdity or prevent the manifest intention of the legislature from being carried out. There is no reason why the word ‘or’ should be construed otherwise than in its ordinary meaning. In my view this reasoning is fully applicable to the case in hand and there is every reason why the word ‘or’ should be given its ordinary meaning. This was also the view taken by a learned single Judge of the Madras High Court in K.S. Ramaswamy vs Union of India,142 of which I fully approve.
Collective Bargaining Agreement Issues 227 Still another argument calculated to mould the interpretation of Section 11(2) in favour of the employees was that the power conferred on the Central Government by it was intended to be used only once and that too for one purpose, namely, to achieve uniformity in the scales of pay, etc. In this connection our attention was drawn to two factors, namely, that the words ‘from time to time’ forming part of the section as it originally stood were deleted therefrom when it was amended in 1957 and that while the amendment of the section at that time was under consideration of Parliament the then Finance Minister had given an assurance in that behalf. The argument is wholly unacceptable to me. One good reason is available in the provisions of Section 14 of the General Clauses Act which runs thus: 14. (1) Where, by any Central Act or Regulation made after the commencement of this Act, any power is conferred, then unless a different intention appears, that power may be exercised from time to time as occasion requires. (2) This section applies also to all Central Acts and Regulations made on or after the fourteenth day of January, 1887. In view of the clear language of the section, no Central law, while conferring a power, need say in so many words that such power may be exercised from time to time; and if a law does make use of such an expression that would not change the position. The deletion of such an expression by the legislature at a given point of time may, therefore, follow the detection of the superfluity and that would not mean, all by itself, that the legislature intended to limit the exercise of such power to a single occasion. This is precisely the view that was taken by this Court in a similar situation in Vasantlal Maganbhai Sanjanwala vs State of Bombay.143 In that case the court was dealing with Section 6(2) of the Bombay Tenancy and Agricultural Lands Act, 1948, which ran thus: The provincial Government may by notification in the official Gazette, fix a lower rate of the maximum rent payable by the tenants of lands situate in any particular area or may fix such rate on any other suitable basis as it thinks fit. It was pointed out to the court that in this section the words ‘from time to time’ which found a place in the corresponding section of the earlier tenancy legislation were missing although the expression ‘from time to time’ was retained in Section 8(1) of the Act. The contention raised was that the power delegated under Section 6(2) was intended to be used only once but was rejected as fallacious with the following observations: Why the legislature did not use the words ‘from time to time’ in Section 6(2) when it used them in Section 8(1) it is difficult to understand; but in construing Section 6(2) it is obviously necessary to apply the provisions of Section 14 of the Bombay General Clauses Act, 1904 (1 of 1904). Section 14 provides that whereby any Bombay Act made after the commencement of this Act any power is conferred on any government then that power may be exercised from time to time as occasion requires. Quite clearly if Section 6(2) is read in the light of Section 14 of the Bombay General Clauses Act it must follow that the power to issue a notification can be exercised from time to time as occasion requires. It is true that Section 14 of the General Clauses Act, 1897 (10 of 1897), provides that where any power is conferred by any Central Act or Regulation then, unless a different intention appears, that power may be exercised from time to time requires. Since there is a specific provision of the Bombay General Clauses Act relevant on the point it is unnecessary to take recourse to Section 14 of the Central General Clauses Act; but even if we were to assume that the power in question can be exercised from
228 Social Justice and Labour Jurisprudence time to time unless a different intention appears we would feel no difficulty in holding that no such different intention can be attributed to the legislature when it enacted Section 6(2). It is obvious that having prescribed for a maximum by Section 6(1) the legislature has deliberately provided for a modification of the said maximum rent and that itself shows that the fixation of any maximum rent was not treated as immutable. If it was necessary to issue one notification under Section 6(2) it would follow by force of the same logic that circumstances may require the issue of a further notification. The fixation of agricultural rent depends upon so many uncertain factors which may vary from time to time and from place to place that it would be idle to contend that the legislature wanted to fix the maximum only once, or, as Mr Limaye concedes, twice. Therefore the argument that the power to issue a notification has been exhausted cannot be sustained. The language of Section 14 of the General Clauses Act being identical with that of the Bombay General Clauses Act this reasoning is fully applicable to the interpretation of Section 11(2) of the LIC Act. The same view was taken by a Division Bench of the Gujarat High Court in Hariwadan K. Desai vs LIC of India144 in the following words: While construing a statutory provision, it is not permissible to traverse beyond the language of the provision unless the legislative intent cannot be gathered from the clear and definite language of the provision. It is true that often courts do look into the debates in the legislature and also the marginal notes to ascertain the scope of a particular provision of the statute. But that is only in exceptional cases. The language of Section 11(2) is very clear. There is nothing to indicate or suggest even remotely that the power vested in the Central Government under Section 11(2) get exhausted when once the Central Government exercise that power. Section 14 of the General Clauses Act, 1897 further strengthens our view. Section 14 lays down that where by a Central Act or Regulation made after the commencement of the Act, any power is conferred, then unless a different intention appears, that power may be exercised from time to time as occasion requires. We are unable to gather any different intention from Section 11(2) so as to injunct the government from exercising their power after the issuance of the Blue Order; in other words, after they once exercised that power. I may further point out that part of the power to alter the terms and conditions of service of the Corporation’s employees which the Central Government is authorised to exercise in the interests of the Corporation and its policy holders must of necessity be a power which can be exercised as and when occasion so requires. A contrary view would lead to absurd results in certain given situations. Let us assume that the affairs of the Corporation did not present a rosy picture to begin with and that therefore, a drastic reduction in the scales of pay of its employees was called for and was achieved by an order made by the Central Government in exercise of its power under Section 11(2). Does that mean that if later on Corporation develops its business and makes sizable progress in the way of earning profits, the power conferred on the Central Government would not be exercisable to give better pay scales to the employees? An answer to this question in the negative would obviously not meet the exigencies of the situation and in my opinion leads to an absurdity. Again, if the scales of remuneration of the transferred employees are adjusted by the Central Government so as to smooth out anomalies and discrepancies, would that put an end to the exercise of the power so that it cannot be used subsequently for the amelioration of the service conditions of the employees when the affairs of the Corporation so warrant? To put such a restricted meaning on the language used does not appear to be warranted for any reason whatsoever.
Collective Bargaining Agreement Issues 229 Insofar as the proceedings of Parliament and speeches made during the course thereof are concerned, they are not admissible for the purpose of interpretation of the resultant statute unless the language used therein is ambiguous and impels the court to resort to factors outside the statute for the purpose of ascertaining the intention of the law-makers. This is what was clearly held by this Court in Anandji Haridas & Co. Pvt. Ltd. vs Engineering Mazdoor Sangh145 by Sarkaria, J., who delivered the judgment on behalf of himself and Alagiriswami, J., and the observations made therein are worth repetition: As a general principle of interpretation, where the words of a statute are plain, precise and unambiguous, the intention of the legislature is to be gathered from the language of the statute itself and no external evidence such as parliamentary debates, reports of the committees of the legislature or even the statement made by the minister on the introduction of a measure or by the framers of the Act is admissible to construe those words. It is only where a statute is not exhaustive or where its language is ambiguous, uncertain, clouded or susceptible of more than one meaning or shades of meaning, that external evidence as to the evils, if any, which the statute was intended to remedy, or of the circumstances which led to the passing of the statute may be looked into for the purpose of ascertaining the object which the legislature had in view in using the words in question. These observations amply cover the situation in hand. Section 11(2) suffers from no ambiguity either by reason of the omission therefrom of the expression ‘from time to time’ or otherwise and it is, therefore, not permissible for a reference to be made to the speech of the then Finance Minister in the matter of interpretation of the section. The next contention for the employees which raises a question of the vires of Clause 9 of the 1957 Order and of Regulation 58 is based on the following passage in the judgment of Beg, C.J., in M.M. Pathak case He submits that Article 43 casts an obligation on the State to secure a living wage for the workers and is part of the principles declared fundamental in the governance of the country. In other words, he would have us use Article 43 as conferring practically a fundamental right which can be enforced. I do not think that we can go so far as that because, even though the directive principles of State policy, including the very important general ones contained in Articles 38 and 39 of the Constitution, give the direction in which the fundamental policies of the State must be oriented, yet, we cannot direct either the Central Government or Parliament to proceed in that direction. Article 37 says that they shall not be enforceable by any court, but the principles therein laid down are nevertheless fundamental in the governance of the country and it shall be the duty of the state to apply these principles in making laws. Thus even if they are not directly enforceable by a court they cannot be declared ineffective. They have the life and force of fundamentals. The best way in which they can be, without being directly enforced, given vitality and effect in courts of law is to use them as criteria of reasonableness, and therefore, of validity, as we have been doing. Thus, if progress towards goals found in Articles 38, 39 and 43 is desired, there should not be any curtailment of wage rates arbitrarily without disclosing any valid reason for it as is the case here. It is quite reasonable, in my opinion, to submit that the measure which seeks to deprive workers of the benefits of a settlement arrived at and assented to by the Central Government, under the provisions of the Industrial Disputes Act, should not be set at naught by an Act designed to defeat a particular settlement. If this be the purpose of the Act, as it evidently is, it could very well be said to be contrary to public interest, and therefore, not protected by Article 19(6) of the Constitution.
230 Social Justice and Labour Jurisprudence These observations are of no help to the case of the employees as they were made in relation to the change of conditions of service of employees in an industrial establishment under a settlement which was then in operation and, therefore, covered only the first period mentioned in Section 19(2) of the ID Act—a period with which we are not concerned. As pointed out by Bhagwati, J., in his separate judgment, the bonus for the period up to 31 March 1977 had actually vested in the employees and had become a debt due to them and that was why the majority of six held that the 1976 Act was violative of Article 31, a view which Beg, C.J., doubted. Besides, the opinion expressed in the observations just above-extracted, was perhaps not shared by the other six judges who chose not to decide the question as to whether the 1976 Act was or was not hit by Articles 14 and 19 of the Constitution of India. In these premises the employees cannot draw any benefit from Beg, C.J.’s observations. On the other hand, no challenge to the vires of Section 11(2) was made from either side and so long as the section itself is good the exercise of the power conferred by it cannot be attacked unless such exercise goes beyond the limits of the section, either in its content or manner. If the legislature was competent to confer a power on the central Government to alter the conditions of service of the employees of the Corporation to their detriment or otherwise, the fact that the power was exercised only to cut down bonus would furnish no reason for striking down Clause 9 of the 1957 Order or Regulation 58 as being violative of Article 14 or 19. Clause 9 of the 1957 order was also attacked as contravening Articles 14 and 16 of the Constitution of India for the reason that it applied only to transferred employees who were discriminated against in the matter of equality before the law and of opportunity of employment. That clause no doubt takes within its sweep only transferred employees because clause 2 of the 1957 order specifically states that the order is restricted in its operation to employees of that category; but then no question of any dissemination whatsoever is involved inasmuch as the transferred employees have not only not been treated differently from other employees of the Corporation but by reason of Regulation 58 they been placed fully at par with the latter. The argument would have had plausibility only in the absence of Regulation 58 (which applies to all employees of the Corporation) and is wholly devoid of force. Another attack levelled against Clause 9 was that it suffered from a contravention of the well known maxim delegatus non potest delegaro. It was urged that the Central Government having been invested with the power of altering the terms and conditions of service of the employees of the Corporation, it was bound in law to exercise that power itself and that it could not delegate that power to the Corporation as it has done in clause 9. This argument is again without substance. The clause itself states in unmistakable terms that the Corporation may grant non-profit sharing bonus to its employees in respect of any particular year subject to the previous approval of the Central Government, and so the real bonus-granting authority is the Central Government and not Corporation. There is thus no delegation of any real power to the Corporation through the promulgation of clause 9. Clause 9 was also challenged on the ground that although the notification promulgating it began with the preamble ‘whereas the Central Government is satisfied that in the interests of the Corporation and its policy holders it is necessary to revise the terms and conditions of service...’, there is nothing to show that the Central Government was actually so satisfied. This is a stand which cannot be allowed to be raised at this late stage inasmuch as it involves questions of fact which cannot be determined without the Central Government being given a full opportunity to rebut it. Had the contention been raised before the High Court, documentary evidence could have been produced to establish that the requirement of the section had been fully met in regard to the relevant satisfaction of the Central Government. Again, in the absence of any evidence to the contrary, it is permissible to presume that official acts have been regularly performed and that the preamble to the notification, therefore, is in accord with facts.
Collective Bargaining Agreement Issues 231 Another contention raised on behalf of the employees was that the new clause 9 and the new Regulation 58 were both hit by the provisions of Articles 14 and 19 of the Constitution of India inasmuch as they singled out the employees of only one statutory corporation for a special rule regarding bonus in derogation of the terms hithertofore prevailing, no other Corporation in the public sector having been so touched. The contention cannot prevail in the absence of evidence that the total emoluments of any employee to be affected by the new clause and the new regulation (regardless of bonus) would be less than those of his counterpart in any other statutory corporation. In this connection also I may point out that the contention was not raised before the High Court and no foundation was laid for it at any stage. The only other contention raised on behalf of the employees was that Regulation 58 could not operate to make inapplicable the 1974 settlements to the 3rd period inasmuch as all settlements reached under the ID Act were protected by the provisions of Regulation 2 which thus specified the employees of Corporation to whom the 1960 regulations apply: 2. They shall apply to every wholetime salaried employee of the Corporation in India unless otherwise provided by the terms of any contract, agreement or letter of appointment. It is impossible to accept the argument under examination in view of the language of Regulation 2 which merely signifies the persons to whom the regulations are to apply. When it says that it shall apply to every wholetime employee of the Corporation ‘unless otherwise provided by the terms of any contract, agreement or letter of appointment’, all that it means is that if a contract, agreement or letter of appointment contains a term stating that the concerned employee or employees shall not be governed by the regulations, then such employee or employees shall not be so governed. Regulation 2 is definitely not susceptible of the interpretation that if a settlement has been reached between the Corporation and its employees, the regulations shall not apply to them even though the settlement makes no provision in that behalf. It is nobody’s case that the 1974 settlements contain any such provision and Regulation 2, therefore, does not come into play at all. In the result Appeal 2275 of 1978 succeeds and is accepted. The impugned judgment is set aside and the petition under Article 226 of the Constitution of India decided thereby is dismissed along with Transfer Case 1 of 1979. In the circumstances of the case, however, the parties are left to bear their own costs. In view of the opinion expressed by the majority, the appeal is dismissed with costs to the first, second and third respondents, and the Transfer Petition No. 1 of 1979 stands allowed insofar that a writ will issue to the Life Insurance Corporation directing it to give effect to the terms of the settlements of 1974 relating to bonus until superseded by a fresh settlement, an industrial award or relevant legislation. Costs in respect of the transfer petition will be paid to the petitioners by the second respondent.
Termination of Settlements: The Legality Workmen of the Rajasthan Atomic Power Project vs the Management of the Rajasthan Atomic Power Project146 In this case, the issue relating to the termination of a settlement during its period of operation on the grounds of mistaken belief figured before the Court.147
232 Social Justice and Labour Jurisprudence
THE FACTS OF THE CASE The following dispute was referred under Section 10(2) of the Industrial Disputes Act, 1947, for adjudication to the Central Government Industrial Tribunal-cum-Labour Court, Jabalpur: Whether the action of the management of Rajasthan Atomic Power Project, Post Office Anushakti, via Kota in giving a notice of change dated 20 March 1973 under Section 9A of the Industrial Disputes Act, 1947, in so far as payment of overtime allowance to staff car drivers is concerned, is justified? If not, to what relief are they entitled? The dispute arose in the following manner. Prior to 1 August 1971, the motor vehicle drivers employed in the Rajasthan Atomic Power Project, hereafter called the ‘Project’, were being paid overtime allowance in accordance with the Staff Car Rules. The Rajasthan Anushakti Pariyojana Karamchari Sangh, which was the recognised union of the employees of the project, referred to hereafter as ‘the union’, claimed that the overtime allowance paid to the drivers should be fixed at the rates at which the other employees of the project were being paid. This claim gave rise to a dispute, which was settled after protracted discussions on certain terms and a memorandum of settlement was signed by the representatives of the parties concerned before the Assistant Labour Commissioner (Central), Kota, on 17 November 1971. The memorandum of settlement reads as follows: It is agreed that: The Motor Vehicle Drivers and Bus Helpers shall be paid overtime in accordance with the provision of the Motor Transport Workers Act, 1961 and the rules framed thereunder by the Government of Rajasthan with effect from 1 August 1971. The arrears accruing in regard to clause (1) above shall be paid to all the entitled workers by 31 December 1971. The parties shall furnish their implementation report to the Assistant Labour Commissioner (C), Kota, on or before 15 January 1972. On 12 December 1972, the management of the project gave notice to the general secretary of the union under Section 19(2) of the Industrial Disputes Act, conveying their intention to terminate the settlement dated 17 November 1971 in so far as the staff-car drivers were concerned. On the expiry of two months from the serving of this notice, the management served on the union a notice under Section 9A of the Industrial Disputes Act, proposing to effect a change in the conditions of service of the staff-car drivers, as indicated in the notice under Section 19(2). The notice under Section 9A stated that with effect from 12 April 1973, the staff-car drivers would be entitled to overtime allowance as admissible to them under the Staff Car Rules and not under the Motor Transport Workers Act, 1961. This gave rise to the dispute, which, as stated earlier, was referred for adjudication to the Central Government Industrial Tribunalcum-Labour Court, Jabalpur. Before the tribunal, it was contended on behalf of the management that they had entered into the settlement dated 17 November 1971 under a mistaken belief that the staff-car drivers were covered by the provisions of the Motor Transport Workers Act, 1961, but they found later that the definition of ‘motor transport workers’ in Section 2(h) of the Motor Transport Workers Act, 1961, did not include the staff-car drivers of the project. The tribunal agreed that the staff-car drivers were not motor transport workers within the meaning of Section 2(h) and held that there was force in the contention of the management that they were wrongly included in the settlement and that the termination of the settlement in so far as
Collective Bargaining Agreement Issues 233 it concerned the staff-car drivers was therefore justified. The tribunal found that the staff-car drivers were not entitled to any relief and made its award accordingly. The workmen of the project represented by their union preferred this appeal by special leave, challenging the validity of the award.
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE A.C. GUPTA It seems to us that the question whether the staff car drivers of the project were motor transport workers as defined in the Motor Transport Workers Act, 1961 was not relevant to the issue before the tribunal. The workmen were not seeking to enforce their right to overtime allowance under the Motor Transport Workers Act. The settlement dated 17 November 1971 resolved the existing dispute as to the rate of overtime allowance payable to the motor vehicle drivers by providing in one of the terms that they should be paid overtime in accordance with the provisions of the Motor Transport Workers Act, 1961. The agreement making the provisions as to overtime in the Motor Transport Workers Act, 1961 applicable to the motor vehicle drivers employed in the project itself suggests that the parties were aware that the Act by its own force did not apply to the motor vehicle drivers. If these motor vehicle drivers were governed by the provisions of the Motor Transport Workers Act, then no question of applying that Act for a settlement between the parties could possibly arise. It is not disputed that motor vehicle drivers include staff car drivers. The right asserted by the staff car drivers arise on the settlement and does not flow out of the Motor Transport Workers Act, 1961, and it appears from the memorandum of settlement that it was arrived at ‘after protracted discussions’. In these circumstances we do not think that it could be said that the management of the project entered into the settlement on a mistaken belief. As the award proceeds on the management’s case of ‘mistaken belief ’ which we do not consider acceptable, we allow the appeal and set aside the award. The appellants will be entitled to the costs of this appeal.
NOTES 1. The settlements under Section 18 of the Act at times go beyond the scope of the general principles of a valid contract under the Indian Contract Act, 1872. See also Herbertsons vs Their Workmen. 1977 LIC 162. 2. Rohtas Industries vs Its Union. AIR 1976 SC 425. para 19. 3. AIR 1975 SC 2057. The case was heard by Chief Justice A.N. Ray, V.R. Krishna Iyer, S. Murtaza Fazl Ali, and K.K. Mathew, JJ. 4. This provision existed originally in the Act from the very date of its enactment. 5. (1970) 1 SCR 457: AIR 1970 SC 150. 6. 1970 I SCR 457: AIR 1970 SC 150. 7. 1970 I SCR 457: AIR 1970 SC 150. 8. 1970 I SCR 457: AIR 1970 SC 150. 9. 1 SCR 791: AIR 1971 SC 40. 10. 2 SCR 625: AIR 1967 SC 1269. 11. (1970) 3 SCR 370:(AIR 1970 SC 1205). 12. Section 2(rr) of the Act defines ‘wages’ to mean all remuneration capable of being expressed in terms of money, which would—if the terms of employment, express or implied, were fulfilled—be payable to a workman in respect of his employment, or of work done in such employment, and includes 1. such allowances (including dearness allowance) as the workman is for the time being entitled to; 2. the value of any house, accommodation, or of supply of light, water, medical attendance or other amenity or of any service or of any concessional supply of food grains or other articles; 3. any travelling concession; 4. any commission payable on the promotion of sales or business or both.
234 Social Justice and Labour Jurisprudence But does not include 1. any bonus; 2. any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the workman under any law for the time being in force; 3. any gratuity payable on the termination of his service. 13. AIR 1978 SC 1489. The case was heard by V.R. Krishna Iyer and Jaswant Singh. 14. Section 26 of the Act provides that (1) any workman who commences, continues or otherwise acts in furtherance of a strike which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to fifty rupees or with both. (2) Any employer who commences, continues, or otherwise acts in furtherance of a lock-out which is illegal under this Act, shall be punishable with imprisonment for a term which may extend to one month, or with fine which may extend to one thousand rupees, or with both. Further, Section 34 of the Act provides that (1) no court shall take cognizance of any offence punishable under this Act or of the abetment of any such offence, save on compliant made by or under the authority of the appropriate government. (2) No court inferior to that of a metropolitan magistrate or a Judicial Magistrate of the first class shall try any offence punishable under this Act. 15. Section 18(2) of the Trade Unions Act, 1926, provides that a registered trade union shall not be liable in any suit or other legal proceeding in any civil court in respect of any tortuous act done in contemplation or furtherance of a trade dispute by an agent of the trade union if it is proved that such a person acted without the knowledge of, or contrary to express instructions given by, the executive of the trade union. 16. AIR 1976 SC 425. 17. Article 226 of the Constitution of India provides: (1) Not withstanding anything in article 32, every High Court shall have powers, throughout the territories in relation to which it exercises jurisdiction, to issue to any person or authority, including in appropriate cases, any Government, within those territories directions, orders or writs, including writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari, or any of them, for the enforcement of any of the rights conferred by Part III and for any other purpose. (2) The power conferred by clause (1) to issue directions, orders or writs to any Government, authority or person may also be exercised by any High Court exercising jurisdiction in relation to the territories within which the cause of action wholly or in part, arises for the exercise of such power, notwithstanding that the seat of such Government or authority or the residence of such person is not within those territories. (3) Where any party against whom an interim order, whether by way of injunction or stay or in any other manner, is made on, or in any proceedings relating to, a petition under clause (1), without a) Furnishing to such party copies of such petition and all documents in support of the pleas for such interim order; and b) Giving such party an opportunity of being heard, Makes an application to the High Court for the vacation of such order and furnishes a copy of such application to the party in whose favour such order has been made or the counsel of such party, the High Court shall dispose of the application within a period of two weeks from the date on which it is received or from the date on which the copy of such application is so furnished, whichever is later, or where the High Court is closed on the last day of that period, before the expiry of the next day afterwards on which the High Court is open; and if the application is not so disposed of, the interim order shall on the expiry of that period, or, as the case may be, the expiry of the said next day, stand vacated. (4) The power conferred on a High Court by this article shall not be in derogation of the power conferred on the Supreme Court by clause (2) of Article 32. 18. Engineering Mazdoor Sabha vs Hind Cycles. (1962) 2 LLJ 760, 796 (SC):(1963) Supp. I.S.C.R 625.
Collective Bargaining Agreement Issues 235 19. Section 18 of the Industrial Disputes Act, 1947, provides that: (1) A settlement arrived at by agreement between the employer and workman other wise than in the course of conciliation proceeding shall be binding on the parties to the agreement (2) Subject to the provisions of sub-section (3), an arbitration award which has become enforceable shall be binding on the parties to the agreement who referred the dispute to arbitration. (3) A settlement arrived at in the course of conciliation proceedings under this Act or an arbitration award in a case where notification has been issued under sub-section (3A) of Section 10A or an award of a Labour Court, Tribunal or National Tribunal which has become enforceable shall be binding on— a) All parties to the industrial dispute; b) All other parties summoned to appear in the proceedings as parties to the dispute, unless the Board (arbitrator) Labour Court, Tribunal or National Tribunal, as the case may be, records the opinion that they were so summoned without proper cause; c) Where a party referred to in clause (a) or clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates; d) Where a party referred to in clause (a) or in clause (b) is composed of workman, all persons who were employed in the establishment or part of the establishment., as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40.
(1967) 1 SCR 633:AIR 1967 SC 378. C.A. No. 107 of 1966 decided on 27 November 1968 (S.C.). AIR 1967 SC 361. 50 I.A. 324. (1857) 3 C.B. (N.S.) 189. (1944) 1 K.B. 566. (1944) I KB 566. 1892 A.C. 25. 1898 A.C. 1. 1901 A.C. 495. 1925 A.C. 700. 1892 A.C. 25. 1925 A.C. 700. 1925 A.C. 700. AIR 1975 SC 2238. AIR 1975 SC 2238. (1831) 1 B & Ad 847 (2), 859:9 LJ OS KB 113:199 ER 100 (1). 1897 A.C. 615. AIR 1975 SC 2238. (1949) 1 LLJ 245. Section 12 of the Act provides that (1) ‘where any industrial dispute exists or is apprehended, the conciliation officer may, or where the dispute relates to a public utility service and a notice under section 22 has been given, shall, hold conciliation proceedings in the prescribed manner. (2) The Conciliation Officer shall, for the purpose of bringing about a settlement of the dispute without delay, investigate the dispute and all matters affecting the merits and right settlement thereof and may do all such things as he thinks for for the purpose of inducing the parties to come to a fair and amicable settlement of the dispute. (3) If a settlement of the dispute or of any of the matters in dispute is arrived at in the course of the conciliation proceedings, the conciliation officer shall send a report thereof to the appropriate Government or an officer authorized in this behalf by the appropriate Government together with a memorandum of the settlement signed by the parties to the dispute… 41. Section 18: Persons on whom settlements and awards are binding— (1) A settlement arrived at by agreement between the employer and workman otherwise than in the course of conciliation proceeding will be binding on the parties to the agreement.
236 Social Justice and Labour Jurisprudence (2) Subject to the provisions of sub-section (3), an arbitration award which has become enforceable shall be binding on the parties to the agreement who referred the dispute to arbitration. (3) A settlement arrived at in the course of conciliation proceedings under this Act or an arbitration award in a case where a notification has been issued under sub-section (3-A) of section 10A or an award of a Labour Court, Tribunal or National Tribunal which has become enforceable shall be binding on— (a) all parties to the industrial dispute; (b) all other parties summoned to appear in the proceedings as parties to the dispute, unless the Board, arbitrator, Labour Court, Tribunal or National Tribunal, as the case may be, records the opinion that they were so summoned without proper cause; (c) where a party referred to in clause (a) or clause (b) is an employer, his heirs, successors or assigns in respect of the establishment to which the dispute relates; (d) where a party referred to in clause (a) or clause (b) is composed of workmen, all persons who were employed in the establishment or part of the establishment, as the case may be, to which the dispute relates on the date of the dispute and all persons who subsequently become employed in that establishment or part. 42. Section 17A of the Act provides that an award (including an arbitration award) shall become enforceable on the expiry of thirty days from the date of its publication under Section 17: PROVIDED that— (a) if the appropriate government is of opinion, in any case where the award has been given by a Labour Court or tribunal in relation to an industrial dispute to which it is a party; or (b) if the Central Government is of opinion, in any case where the award has been given by a National Tribunal, that it will be inexpedient on public grounds affecting national economy or social justice to give effect to the whole or any part of the award, the appropriate government, or as the case may be, the Central Government may, by notification in the Official Gazette, declare that the award shall not become enforceable on the expiry of the said period of thirty days. (2) Where any declaration has been made in relation to an award under the proviso to sub-section (1), the appropriate government or the Central Government may, within ninety days from the date of publication of the award under Section 17, make an order rejecting or modifying the award, and shall, on the first available opportunity, lay the award together with a copy of the order before the Legislature of the State, if the order has been made by a State Government, or before parliament, if the order has been made by the Central Government. (3) Where any award as rejected or modified by an order made under sub-section (2) is laid before the Legislature of a State or before parliament, such award shall become enforceable on the expiry of fifteen days from the date on which it is so laid; and where no order under sub-section (2) is made in pursuance of a declaration under the proviso to sub-section (1), the award shall become enforceable on the expiry of the period of ninety days referred to in sub-section (2). (4) Subject to the provisions of sub-section (1) and sub-section (3) regarding the enforceability of an award, the award shall come into operation with effect from such date as may be specified therein but where no date is so specified, it shall come into operation on the date when the award becomes enforceable under sub-section (1) or sub-section (3), as the case may be. 43. Section 9A. No employer who proposes to effect any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change– (a) without giving to the workmen likely to the affected by such change a notice in the prescribed manner of the nature of change proposed to be effected; or (b) within twenty-one days of giving such notice. PROVIDED that no notice shall be required for effecting any such change— 44. See Section 29 of the Act. 45. AIR 1978 SC 828. The case was heard by V.R. Krishna Iyer and Jaswant Singh. The majority decision was delivered by Justice Jaswant Singh.
Collective Bargaining Agreement Issues 237 46. AIR 1977 SC 322. The case was heard by Y.V. Chandrachud, P.K. Goswami and S. Murtaza Fazal Ali, and the majority decision was delivered by Justice Goswami. 47. AIR 1977 SC 828. 48. For the purpose of this chapter, only first three questions are dealt with. The remaining questions are dealt with in Chapter XIV, Wages and Monetary Benefits. 49. 1961 (2) FLR 183. 50. 1960 (1) FLR 411:(1950–67) SCLJ 2369:(1960) 3 SCR 968. 51. 1975 (30) FLR/175 (SC). 52. (1965) 3 SCR 394. 53. 1975 (30) FLR SC 175. 54. AIR 1980 SC 2181:1980 LIC 1218:1981 LLJ 1. 55. Earl Warren, 1955. ‘The Law and Future’, Fortune, November. 56. Life Insurance Corporation of India. 57. L. Fuller, 1958. ‘Positivism and Fidelity to Law: A Reply to Prof. Hart’, 71 Harv. L Rev, pp. 665, 666, 669. 58. Reed Dickerson, 1975. The Interpretation and Application of Statutes. Boston: Little Brown, pp. 236–37. 59. (1978) 3 SCR 334. 60. William J. Brennan, Jr. opinion in Roth vs United States. 354 US 476 (1958). 61. 1978 (36) FLR 266 = (1978) 2 SCC 213 at 232. 62. Supra. 63. Hutton vs Phillips, 45 Del 156, 160:70A 2d 15, 17 (1949). Also Reed Dickerson, Interpretation and Application of Statutes, p. 231 64. (Malhotra: THE LAW OF INDUSTRIAL DISPUTES, 2nd edn., Vol. I, p. 656). 65. Workmen vs New Elphinstone Theatre. (1961) 1 LLJ 105, 119 (Mad HC): Mangaldas Narandas vs Payment of Wages Authority. (1957) 2 LLJ 256 (Bom HC): Yamuna Mills vs Majdoor Mahajan Mandal. (1957) 1 LLJ 620 (Bom HC). 66. AIR 1950 Cal. 577. 67. (1957) 2 LLJ 256. 68. Yamuna Mills vs Majdoor Mahajan Mandal, Baroda, and Others. 1957 (I) LLJ 620. 69. 1957 (I) LLJ 620. 623–624. 70. (1961) 1 LLJ 105. 71. (1971) 1 LLJ 310 (Mad). 72. (1978) 1 LLJ 227 (Mad HC). 73. Sathya Studios vs Labour Court. (1978) 1 LLJ 227 (Mad HC). 74. South India Bank vs A.R. Chacko. 1964 (8) FLR 128. 75. Management Indian Oil Corporation vs Its Workmen. 1960 (12) FLR 45. 76. Md Qasim Larry, factory manager, Sasamusa Sugar Works vs Md Samsuddin and Another. 1964 (9) FLR 115. 77. 1964 4 SCR 625. at 630–631. 78. Md Qasim Larry, factory manager, Sasamusa Sugar Works vs Md Samsuddin and Another. 1964 (9) FLR 115. 79. 1964 (8) FLR 128. 80. Management Indian Oil Corporation vs its workmen. 1976 1 SCR 110. 81. 1964 (8) FLR 128. 82. 1976 I SCR 110. 83. 1976 I SCR 110. 84. 1964 (8) FLR 128. 85. Maruti Mahipati Mullick vs Polson. 1970 Lab IC 308, 310:71 Bom LR 655 (Bom HC). 86. 1964 (8) FLR 128. 87. 1964 (8) FLR 128. 88. 1987 AC 395. Robert Stevens : Law and Politics, p. 92, f.n. 83. 89. Craies on Statute Law, 1963 Edn., pp. 376–77. 90. Mary Sewards vs Owner of the ‘Vera Cruz’. (1884) 10 AC 59, 68. 91. U.P. State Electricity Board vs H.S. Jain. 1978 (37) FLR 280.
238 Social Justice and Labour Jurisprudence 92. Ibid., at 365–66. 93. (1884) 10 AC 59 at 68. 94. 1961 (2) FLR 529. 95. Bangalore Water Supply and Sewerage Board vs Rajappa. 1978 (36) FLR 266. 96. 1953 SCR 302. 97. 1915 AC 885 (at 891). 98. (1970) I SCR 355 at 362. 99. 1964 (8) FLR 128. 100. 1964 (9) FLR 115. 101. 1964 (8) FLR 158. 102. 1975 (30) FLR 283 (SC). 103. 1978 (37) FLR 280. 104. (1884) 10 AC 59 at 68. 105. 1961 (2) FLR 529. 106. 1978 3 SCR 334. 107. (1978) 3 SCR 334. 108. AIR 1971 SC 1997. 109. 1968 1 SCR 185. 110. 1975 3 SCR 619. 111. (1975) 2 SLR 36:1975 Lab IC 790 (Raj HC). 112. (1961) 2 SCR 679. 113. (1970) 1 SCR 678. 114. 1964 (8) FLR 128. 115. 1972 (24) FLR 321. 116. (1976) 1 SCR 427. 117. 1964 (8) FLR 128. 118. (1978) 3 SCR 334. 119. (1980) 5 CPD 34, 40. 120. 1964 (8) FLR 158. 121. 1964 (8) FLR 158. 122. AIR 1972 SC 2427. 123. 1968 2 SCR 575. 124. 1978 (37) FLR 280 (SC). 125. 1978 (36) FLR 266 (SC). 126. Supra. 127. (1978) 3 SCR 334. 128. (1978) 3 SCR 334. 129. (1978) 3 SCR 334. 130. 1964 (8) FLR 128. 131. 1964 (8) FLR 128. 132. 1964 (8) FLR 128. 133. 1964 (8) FLR 128. 134. 1970 (24) FLR 32: (1972) I SCR 790. 135. 1977 (55) FLR 246. 136. AIR 1970 Bom. 213. 137. 1964 (8) FLR 128. 138. 1975 (30) FLR 283 = (1975) 3 SCR 619.0 139. (1977 Lab IC 622 (Cal HC)). 140. 1951 SCR 848. 141. 1967 1 SCR 856. 142. 1977 1 LLJ 211:1978 Lab IC 46 (Mad HC). 143. 1961 1 SCR 341. 144. 1977 Lab IC 1072. 145. 1975 (30) FLR 133:(1975) 3 SCR 542.
Collective Bargaining Agreement Issues 239 146. AIR 1976 SC 441:1976 (32) FLR 90:1976 LIC 315. The case was heard by Y.V. Chandrachud, V.R. Krishna Iyer and A.C. Gupta. 147. Under Section 18(1) of the Industrial Disputes Act, 1947, a settlement arrived at by agreement between the employer and workmen otherwise than in the course of conciliation proceedings shall be binding on the parties to the agreement. Further, Section 19(1) provides that a settlement shall come into operation on such a date as is agreed upon by the parties to the dispute and if no date is agreed upon, on the date on which the memorandum of settlement is signed by the parties to the dispute. Sub-section (2) of the same section provides that such a settlement shall be binding for such a period as is agreed upon by the parties, and if no such period is agreed upon, for a period of six months from the date on which the memorandum of settlement is signed by the parties to the dispute, and shall continue to be binding on the parties after the expiry of the period aforesaid until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement.
Chapter 5
Maharashtra (Recognition of Trade Unions and Prevention of Unfair Labour Practices) Act, 1972 The Recognition of Trade Unions: Procedural Requirements During his tenure as a judge of the apex Court, Justice. Krishna Iyer had a single occasion to deal with a labour legislation that applied only to a single Indian state. On that occasion his judgement put an end to certain controversies of long standing surmounted by High Court decisions after the enactment of the Maharashtra (Recognition of Trade Unions and Prevention of Unfair Labour Practices) Act, 1972. This legislation provides certain privileges for a trade union once it is adjudged a recognised trade union under the Act. The process of acquiescence of recognition by a trade union involves procedural as well as substantive requirements under the Act.
Forbes Forbes Campbell vs Engineering Mazdoor Sabha1 In this case, Justice V.R. Krishna Iyer, speaking for the majority, laid down certain norms regarding compliance with procedural requirements. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Brevity is a necessity in a judgment which proceeds substantially on a consensus among counsels as regards the manner of disposal. Therefore we will be brief in narrating a few facts stating a little law and proceeding straight to the directions to be issued in the light of the controversy arising herein. However, we may indicate even here that there is one question of law which is contentious on which we propose to indicate our view in a general way. This we do because counsels on both sides have pressed that it will be helpful since the High Court has laid down its interpretation with which we do not agree. The Maharashtra (Recognition of Trade Unions and Prevention of Unfair Labour Practices) Act, 1971, (for short, the ‘Act’) although passed by the Legislature in 1971, was, for inscrutable reasons, brought into force on 8 September 1975. Whether this can be called laws delay or implementation gap is a matter of phraseology but the fact is that when the Legislature makes a law (especially, welfare law for the weaker section of the community) it is implicit that the benefits of the legislation to the consumers therefore shall not be delayed by the Executive by bringing it into force long years later. This is another dimension of laws delays not fully known to the public.
Recognition of Trade Unions and Prevention of Unfair Labour Practices 241 The respondent union applied for recognition under the Act, on 15 December 1975, to the appropriate authority, viz., the Industrial Court. Admittedly the union then commanded the requisite qualification of 30 per cent membership. But then there are other conditions also necessary before an application for recognition can be accorded. At this stage, we may express our pensive reflection on the fact that notwithstanding the direction in Section 11(2) that an application for recognition shall be disposed of, as far as possible, within three months from the date of receipt of the application this particular proceeding has been pending well beyond one year for reasons which we need not investigate here. It is a bad omen for industrial processual justice. When the application for recognition was pending, the employer moved the High Court for issuance of an appropriate writ questioning the competence of the union to get recognition. Two grounds were urged without success. The first was that the requirements of Form ‘A’ read with rule 4 promulgated in exercise of the powers conferred by Section 61 had not been complied with and for that reason alone the application was bound to be dismissed. By way of aside we may mention that Section 12 provides that when an application from a union for recognition is made notice thereof shall be given in the specified manner and it is open to any other union or unions to raise objections and claim recognition provided the union or unions could claim membership of employees in the concerned undertaking. In the present case another such union appears to have raised such an objection and is represented before us by Mr K. P. V. Menon. The core of the dispute is as to whether Form ‘A’ should be so read as to insist upon the rejection of the application for recognition if the conditions contained in Columns 7 and 11(2) therein are not complied with. We may read those conditions in Form ‘A’: Condition 7:
The constitution of the applicant union provides for the matters mentioned in Section 19 of the Act. A copy of the constitution is attached. Condition 11(2): The Executive Committee of the applicant union met on the following dates during the twelve months preceding the date of the application. Section 19 makes it obligatory upon a union seeking recognition under the Act to provide for a few matters one of which is that: An auditor appointed by the State Government may audit its account at least once in each financial year. All the points mentioned above have to be provided in the constitution of the applicant union. So far as we are concerned, the applicant union i.e. the respondent before us, has amended its constitution in terms of Section 19(4) although it is pointed out that there is some other litigation bearing on this question. For the purpose of this case, however, we take it that the constitution of the applicant union conforms to Section 19(4) of the Act and proceed on that footing. Although there may be technical merit in the plea that until the Registrar of Trade Unions formally approves this amendment of the union and registers it, it does not become part of the constitution. Shri F. S. Nariman, appearing for the employer, has for the purpose of this case agreed that this time infirmity need not stand in the way of the applicant union being qualified for recognition, if, otherwise, it is eligible. This takes us to a consideration of the other two questions we have already indicated. Thus, has the union conformed to the requirements set out in clause 11(2) of Form ‘A’? Secondly, is this conformance mandatory before an applicant can seek recognition? The High Court has taken the view that it is not as if the union should have held the requisite meetings of the Executive Committee as stipulated in clause 11(2) before the date of filing the application for recognition. According to the High Court, Section 19(2) providing that the Executive Committee of the union shall meet at intervals of not more than 3 months is not something to be fulfilled anterior to the
242 Social Justice and Labour Jurisprudence date of the application and therefore it is not proper to reject an application made by the union merely because its Executive Committee has not met at intervals of not more than 3 months during the 12 months preceding the date of the application. Section 19(2), read with clause 11(2) of Form ‘A’, prima facie suggests that any union which seeks recognition under this Act must observe the conditions necessary therefor. One of the conditions necessary is, according to Form A, the holding, within the 12 months preceding the date of the application, of meetings of the Executive Committee in terms of Section 19(2). Shri Damania argues that the situation would become unworkable if the construction that is suggested by the appellant’s counsel were adopted. Form A cannot be given the status of a provision in the Act itself and, in any case, applicants who have moved the Industrial Court within 12 months of the coming into force of the Act cannot, ordinarily, be expected to comply with the provisions of Section 19(2) and clause 11(2) of Form A. It is plausible to contend that Section 11(1) insists that the applicant union should apply in the prescribed form for being registered as a recognised union, which takes us to the prescribed form, i.e. Form A. Moreover, the expression ‘union which seeks recognition’ has also been emphasised before us. Taking an overall view of the provisions of law, viz., Sections 11, 12 and 19 and rule 4 and Form A, which must all be read together, we are satisfied that any union which seeks recognition and applies in that behalf must, when it applies, be able to convince the Industrial Court that it is qualified for recognition. This means that on or about the date on which it seeks recognition, that is the date of the application or at least the time when notice is served under Section 12, it possesses the percentage of members required and has its constitution in conformity with Section 19 and rule 4 and otherwise has complied with the requirements of Form A, in this particular case clause 11(2) of Form A. Of course, we agree that Form A has to be read not rigidly but flexibly and with an amount of latitude. In that sense, substantial compliance will be sufficient. To make our point we may illustrate: supposing within 12 months prior to the application, meetings have been held as required by Section 19(2) but a day or two this side or that, it has tripped that does not disqualify. It is also possible to conceive of other inconsequential deviations. Such minor departures cannot have an invalidatory effect. However, the requirements we are concerned with in the present case are different. The constitution must provide for Government audit. This is mandatory. Likewise, the rules of the union must provide for periodical meeting of the Executive Committee in terms of Section 19(2), not meticulously but substantially in terms thereof. The hardship that is pointed out by counsel for the respondent, at the most, operates for one year from the date of the coming into force of the Act, and more than that period has already elapsed, So much so we are not impressed that many unions are likely to be handicapped by such a construction as has appealed to us. The law as laid down by the High Court does not appear to us to be correct. We make it clear that an applicant union must at the time of its application or within the period when Section 12 comes into play a constitution which is in accord with rule 4 and it must qualify as required under Section 19(2). It must substantially fulfill the needs of clause 11(2) of Form A. Technicalities, however, should be overlooked in this area and the substance of the matter alone should be focussed upon by the Tribunal. Counsel for the respondent rightly pointed out that if applications made by the unions for recognition within one year of the coming into force of the Act are rejected on the ground that they have not complied with Form A as we have interpreted it there may be a bar for a fresh application until the lapse of another year. We are clear in our minds that the proviso to Section 14(1) shall not operate as a bar because the application for registration in not being considered on merits and the bar is not attracted. Therefore, the apprehension of counsel for the respondent is misplaced. We may mention that counsel for both the unions assured the Court that there may not be any disturbance to the industrial peace in the factory concerned. We need hardly say that the
Recognition of Trade Unions and Prevention of Unfair Labour Practices 243 Management will also benefit by keeping, on its side, exercise of a similar restraint. We are not implying by these observations one way or the other that either party has violated industrial peace. That is a matter for separate investigation. Now that we have stated the law governing the situation, we proceed, by consent of both sides, to issues certain directions in this case. We are grateful to counsel that they have been able to reach a consensus on the course of action to be adopted. In that light, we are updating the situation, as it were, and the requirements expected of the applicant union will be related to 26 February 1977. It is agreed by both sides and Shri K.P.V. Menon, appearing for the other union, that the Industrial Court be directed to make a report to this Court on certain specified matters. The Industrial Court will direct the Investigating Officer (specified in Section 9) to enquire and make a report to it as to which of the two unions has the majority of members on its rolls for the period of six months preceding 26 February 1977. The membership, of course, will depend on the prescriptions in the law, such as regarding payment of subscription, etc. The Investigating Officer will satisfy himself about the free choice of the members regarding their steady allegiance to one union or the other. Secondly, the Industrial Court will also make a report to this Court about the points mentioned in Sections 13(5) and (6). The respondent union, as well as the F.F.C. Union and the employer, shall be heard by the Industrial Court briefly before a report is made to this Court. We clarify that while considering the question covered by Section 12(6) of the Act the Industrial Court will confine itself to the period of 6 months immediately preceding 28 February 1977. The Industrial Court will make this report within two months from the date of receipt of the order of this Court. The Investigating Officer’s report will also be forwarded by the Industrial Court along with its report, together with any comments it wishes to make. For the purpose of this case, the Industrial Court will proceed on the assumption that the amendment of the respondent’s constitution regarding Government audit is already part of the constitution.
NOTE 1. AIR 1978 SC 340. The case was heard by V.R. Krishna Iyer, R.S. Sarkaria and Jaswant Singh.
Chapter 6
The Government’s Power of Reference of Industrial Disputes One of the most controversial areas of the Industrial Disputes Act, 1947, is the area relating to the government’s power of reference of industrial disputes. The appropriate government is vested with a discretionary power, which is purely administrative in nature. The appropriate government is the sole arbiter in referring the disputes to various authorities under Section 10(1) of the Act.1 In this context the labour jurisprudence differs from the general jurisprudence. The power of reference specified under Section 10 has undergone a number of amendments since the date of its enactment. In fact, this is another critical area under the Industrial Disputes Act, 1947. Justice V.R. Krishna Iyer had opportunities either to speak for the majority or to coordinate the majority decisions in resolving many ticklish issues under this provision.
When is the Second Reference Valid? Cox and Kings (Agents) vs Their Workmen and Others 2 In this case, the appellants dismissed from service three of their workmen after a domestic enquiry conducted against them on certain charges. In May 1967, the Lieutenent Governor of Delhi referred the case to the Labour Court, Delhi, under Section 10, read with Section 12(5), of the ID Act, to determine: Whether the termination of services of the three workmen shown in the order were unlawful and unjustified, and if so, to what relief are these workmen entitled?
By an amendment of their written statement in February 1969, augmented by an application dated 17 March 1971, the management raised a preliminary objection that since no demand notice had been served on the management, no industrial dispute had legally come into existence, and as such the reference was invalid and the labour court had no jurisdiction to adjudicate it. By an order dated 27 September 1972, the labour court accepted the objection, holding: …that no industrial dispute came into existence before this reference, as the workmen have failed to establish serving of demand on the management prior to this reference. The effect of
Government’s Power of Reference of Industrial Disputes 245 this finding is that the reference could not have been made for adjudication and the same is accordingly invalid and hence the question of deciding the issue as in the reference or other issues does not arise as the industrial dispute under reference did not come into existence in accordance with law before this reference. The award is made accordingly.
Thereafter the workmen, on 25 October 1972, raised a dispute by serving demand notices on the management. By his order dated 2 May 1973, the Lieutenent Governor, Delhi, again made a reference to the labour court under the Act for adjudication of the same matter relating to the termination of the services of the aforesaid workmen. The management raised, inter alia, a preliminary objection that a second reference within one year of the first ‘award’ dated 27 September 1972 was not competent in view of what is contained in Section 19 of the Act. By an order dated 2 May 1973, the labour court dismissed the preliminary objection. After recording the evidence produced by the parties, the court held on the merits of the case that the termination of the services of the three workmen was illegal and unjustified. This award was made by the labour court on 1 May 1975. The management impugned this award by filing a writ petition under Article 226 of the Constitution in the High Court of Delhi. Only three contentions were canvassed by the management at the preliminary hearing before the High Court: (a) The determination dated 27 September 1972, by the labour court was an ‘award’ as defined in Section 2(b) of the Act, and in view of subsections (3) of Section 19, it had to be in operation for a period of one year. It could be terminated only by a notice given under subsections (4) and (6) of Section 19. Since no such notice was given, the award continued to be in operation. It was contended that the second award, dated 1 May 1975, could not have been validly made during the period that the first award was in operation. (b) The demand for reinstatement was not made by the workmen till 1972 and the labour court was not justified in awarding them the relief of reinstatement together with compensation for back wages from 1966 onwards. (c) The onus to show that the workmen had not obtained alternative employment after their dismissal was on the workmen and this had not been discharged. On the other hand, the labour court wrongfully disallowed the management from adducing additional evidence to show that the workmen had obtained alternative employment and, in consequence, were not entitled to back wages. Regarding (a), the High Court held that since the ‘award’ dated 27 September 1972 was not one that imposed any continuing obligation on the parties, but had ended with its pronouncement, nothing in sub-sections (3) and (6) of Section 19 was applicable to it. As regards (b), the High Court held that once the dismissal of the workmen was found illegal, it was inevitable to award the compensation from the dates of dismissal till they found alternative employment or till the date of the award, as the case may be. With regard to (c), the High Court said that the question of burden of proof as to who is to prove whether the workmen did not get alternative employment for the period for which back wages had been awarded to them could arise only if no evidence was given by either party or if the evidence given by them was evenly balanced. Neither of these circumstances was present before the labour court and there was no good reason to disturb the finding of facts recorded by the labour court on this point. The High Court thus rejected all the three contentions and, in the result, dismissed the writ petition in limine, with a speaking order.
246 Social Justice and Labour Jurisprudence
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE SARKARIA Shri G.B. Pai has reagitated all the three points before us. He assails the findings of the High Court, thereon. Regarding point No. (i) Mr Pai’s argument is that the determination dated 27-9-1972, also, was an ‘award’ within the second part of the definition of the term in Section 2(b) of the Act, inasmuch as it determined question relating to an industrial dispute. Emphasis has also been laid on the point that this ‘award’ dated 27-9-1972 was duly published by the Government under Section 17(1) and had assumed finality under sub-section (2) of the same section. This award dated 27-9-1972—proceeds the argument—had to remain operative under sub section (3) of Section 19 for a period of one year from the date on which it became enforceable under Section 17 A, i.e., a date one month after its publication. It is submitted that no second Reference could be validly made by the Government during the period the first award remained operative, and since the second Reference, dated 2-5-1973 was made before the expiry of such period of the first award (which had been not terminated in the manner laid down in Section 19) it was invalid and the consequential adjudication by the Labour Court on its basis was null and void. In this connection, Counsel has relied upon a judgment of this Court in Management of Bangalore, Woollen, Cotton & Silk Mills Co. Ltd vs The Workmen 3 wherein it was held that when there is a subsisting award binding on the parties, the Tribunal has no jurisdiction to consider the same points in a fresh reference. In that case the earlier award had not been terminated and the Reference was therefore, held to be incompetent. Reference has also been made to a single Bench judgment of the Allahabad High Court in Workmen of Swadeshi Cotton Mills Co. Ltd vs Swadeshi Cotton Mills Co. Ltd., Kanpur.4 As against this, Shri M. K. Ramamurthi maintains that the Labour Court’s order, dated 1 May 1972, was not an ‘award’ within the definition of the term in Section 2(b) inasmuch as it was not a determination, on merits, of any industrial dispute or of any question relating to an industrial dispute. In this connection reliance has been placed on a judgment of this Court in Civil Appeal No. 241 of 1964 Technological Institute of Textiles vs Its Workmen.5 Before dealing with the contentions canvassed, it will be worth while to notice the relevant statutory provisions. The terms ‘award’ and ‘industrial dispute’ have been defined in the Act as follows: ‘Award’ means an interim or a final determination of any industrial dispute or of any question relating thereto by any Labour Court, Industrial Tribunal or National Industrial Tribunal and includes an arbitration award made under Section 10A’ (vide Section 2[b]). ‘Industrial dispute’ means ‘any dispute or difference between employers and employers, 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’ (vide Section 2[k]). Section 10 describes the matters which can be referred to Boards, Courts or Tribunals for adjudication. Only clause (c) of sub-section (1) is material for our purpose. It provides: Where the appropriate Government is of opinion that any industrial dispute exists or is apprehended. It may at any time by order in writing— (a) …………. …………….. (b) …………. …………….. (c) refer the dispute or any matter appearing to be connected with, or relevant to the dispute, if it relates to any matter specified in the Second Schedule to a Labour Court for adjudication’.
Government’s Power of Reference of Industrial Disputes 247 Sub-section (4) requires the Labour Court to confine its adjudication to those points of dispute and matters incidental thereto which the appropriate Government has referred to it for adjudicaton. The material part of Section 19 reads as under: (1) …………. …………….. (2) …………. …………….. (3) An award shall subject to the provisions of this section, remain in operation for a period of one year from the date on which the award becomes enforceable under Section 17A; Provided that the appropriate Government may reduce the said period and fix such period as it thinks fit: Provided further that the appropriate Government may, before the expiry of the said period, extend the period of operation by any period not exceeding one year at a time as it thinks fit so, however, that the total period of operation of any award does not exceed three years from the date on which it came into operation. Where the appropriate Government, whether of its own motion or on the application of any party bound by the award, considers that since the award was made, there has been a material change in the circumstances on which it was based, the appropriate Government may refer the award or a part of it to a Labour Court or to a tribunal, if the award was that of the tribunal or of a National Tribunal for decision whether the period of operation should not, by reason of such change, be shortened and the decision of the Labour Court or the Tribunal, as the case may be, on such reference shall be final. Nothing contained in subsection (3) shall apply to any award which by its nature, terms or other circumstances does not impose after it has been given effect to, any continuing obligation on the parties bound by the award. Not withstanding the expiry of the period of operation under subsection (3) the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its intention to terminate the award. No notice given under subsection (2) or subsection (6) shall have effect unless it is given by a party representing the majority of persons bound by the settlement or award, as the case may be. There is no dispute that the order on the earlier Reference was made by the Labour Court on 27-9-1972, while the second Reference with the same terms of Reference to that Court was made by the Government on 2-5-1973, i.e., within one year of the earlier order. It is common ground that the period of one year for which an award normally remains in operation under sub section (3) was not reduced or curtailed by the Government under Section 19 or under any other provisions of the Act. It is further admitted between the parties that no notice was given by any party of its intention to terminate the order dated 27-9-1972. The controversy with regard to the first point therefore narrows down into the issue: ‘Whether the determination dated 27-9-1972 of the Labour Court was an award as defined in Section 2(b) of the Act?’ The definition of ‘award’ in Section 2(b) falls in two parts. The first part covers a determination, final or interim, of any industrial dispute. The second part takes in a determination of any question relating to an industrial dispute. But the basic postulate common to both the parts of the definition is the existence of an industrial dispute, actual or apprehended. The ‘determination’ contemplated by the definitions of the industrial dispute or a question relating thereto, on merits. It is to be noted further that Section 2 itself, expressly makes the definition subject to ‘anything repugnant in the subject or context’. We have therefore to consider this definition in the context of Section 19 and other related provisions of the Act.
248 Social Justice and Labour Jurisprudence Mr Pai concedes that the order dated 27-9-1972 is not a determination of any industrial dispute, as such, falling under the first part of the definition. However, his argument is that the expression ‘or any question relating thereto’ in the second part of the definition is of wide amplitude and should be spaciously construed. It is maintained that a question, whether or not an industrial dispute exists, will itself be a question relating to an industrial dispute within the intendment of the second part of the definition. The contention appears to be attractive but does not stand a close examination. Sub-section (1) of Section 10 indicates when and what matters can be referred to the Labour Court for adjudication. The sub section expressly makes formation of opinion by the appropriate Government ‘that any industrial dispute exists or apprehended’ a condition precedent to the exercise of the power of making a Reference. Sub-section (4) gives a mandate to the Labour Court to confine its adjudication to those points of dispute which have been specified in the Order of Reference, or are incidental thereto. From a conjoint reading of clause (b) of Section 2 and sub-sections (1) and (4) of Section 10, it is clear that in order to be an ‘award’ within the second part of the definition, a determination must be (i) an adjudication of a question or point relating to an industrial dispute, which has been specified in the Order of Reference or is incidental thereto, and (ii) such adjudication must be one on merits. Now, let us test the Labour Court’s order, dated 27-9-1972 in the light of the above enunciation. That Order did not satisfy any of the criteria indicated above. It did not determine the questions or points specified in the Government’s Order of Reference. Nor was it an adjudication on merits of any industrial dispute or a question relating thereof. The only question determined by the Order dated 27-9-1972, was about the existence of a preliminary fact viz. existence of an industrial dispute which in the Labour Court’s opinion was a sine qua non for the validity of the reference and exercise of further jurisdiction by the Court. Rightly or wrongly, the Court found that this preliminary jurisdictional fact did not exist, because ‘no industrial dispute had come into existence in accordance with the law’, and, in consequence, the Reference was in-valid and the Court was not competent to enter upon the reference and determine the matter referred to it. With this finding, the Court refused to go into the merits of the question referred to it. There was no determination on merits of an industrial dispute or a question relating thereto. We are therefore of opinion that the Labour Court’s determination dated 27-9-1972 did not possess the attributes essential to bring it within the definition of an ‘award’. The mere fact that this order was published by the Government under Section 17(1) of the Act did not confer that status on it. In the view we take we are fortified by the principle laid down by this Court in Technological Institute of Textiles vs Its Workmen.6 In that case, there was a settlement which, in the absence of necessary formalities, was not binding on the parties. Certain items of dispute were not pressed and withdrawn under the terms of such settlement. In the subsequent Reference before the Industrial Tribunal, some of the items of dispute were withdrawn and no award was made in respect thereto. Thereafter, these items were referred for adjudication along with certain other matters to the Tribunal. It was contended on behalf of the Management that subsequent Reference with regard to the items which had been withdrawn and not pressed in the earlier award had not been terminated in full. [Justice] Ramaswamy speaking for the Court, repelled this contention, with these observations: It is manifest in the present case that there has been no adjudication on merits by the industrial tribunal in the previous reference with regards to the matters covered by items (1) and (3) of the present reference because the workman had withdrawn those matters from the purview of the dispute. There was also no settlement, in Exhibit R. 4 because the demands in question had been withdrawn by the workmen and there was no agreement between the parties in
Government’s Power of Reference of Industrial Disputes 249 regard thereto. Our conclusion, therefore, is that the bar of Section 19 of the Industrial Disputes Act does not operate with regard to the matters covered by items (1) and (3) of the present reference and the argument put forward by the appellant on this aspect of the case must be rejected. Although the facts of the case before us are different, yet the principle enunciated therein viz. that the bar of Section 19 operates only with regard to a determination made on merits is fully applicable. By any reckoning, the decision dated 27-9-1972, of the Labour Court by its very nature did not impose any continuing obligation on the parties bound by it. This was an additional reason for holding that the second reference was not barred by anything contained in sub-section (3) or other provisions of Section 19. We have gone through the single Bench decision of the Allahabad High Court in Workmen of Swadeshi Cotton Mills Co. Ltd.’s7 case. That decision is to the effect that the finding recorded by the Labour Court that the matter referred to it for adjudication was not an industrial dispute as defined in the Act, is itself a determination of a question relating to an industrial dispute and would fall within the definition of the term ‘award’ under the Act. In our opinion, this is not a correct statement of the Law on the point. The next submission of Mr Pai is that since the demand for reinstatement was not duly made by the workmen before 25-10-1972, the Courts below were not justified in awarding to the workmen compensation for back wages from 1966 onwards. On the other hand, Mr Ramamurthi maintains that such a claim was presumably agitated by the workmen in proceedings before the Conciliation Officer in 1966. While conceding that technically no demand notice for reinstatement was served by the workmen on the Management before 25-10-1972, Counsel submits that the Management were aware of the workmen’s claim to reinstatement since 1966, and in these circumstances, the Management should not be allowed to take shelter behind this technical flaw, and deny just compensation to them from the date of wrongful dismissal. We have carefully considered the contentions advanced on both sides. After taking into consideration all the circumstances of the case, we are of opinion that the Labour Court was not justified in awarding compensation to the workmen, for wages relating to the period prior to 25-10-1972, i.e., the date on which the demand notices for reinstatement were served on the Management. To this extent, we would accept the contention of the appellants. The third contention of the appellants is that the onus of proving that they had not obtained alternative employment elsewhere after the termination of their services was on the workmen, and they had failed to discharge that onus. We find no merits in this contention. The question of onus oft loses its importance when both the parties adduce whatever evidence they had to produce. In the instant case, both the parties led their evidence and closed their respective cases. Subsequently, at a late stage, the Management made an application for adducing additional evidence. The Labour Court declined that application. The High Court found—and we think rightly, no good reason to interfere with the discretion of the Labour Court. It may be remembered further, that this appeal arises out of a petition under Article 226 of the Constitution, and in the exercise of that special jurisdiction, the High Court does not reopen a finding of fact based on legal evidence. The finding of the Labour Court to the effect, that after their dismissal, Ram Swarup Gupta was unable to find any alternative employment elsewhere, while Rawat was able to find only intermittent employment elsewhere were based on evidence produced by the parties. The High Court was therefore right in not interfering with those findings of fact. It may be recalled that the Special leave to appeal in this case, was granted on the condition that the appellants shall pay the costs of this appeal to the respondents in any events. We order accordingly. Appeal dismissed.
250 Social Justice and Labour Jurisprudence
The Nature of Power Conferred on the Appropriate Government under Section 10(1) of the Act Two years after deciding the Cox and Kings case,8 the bench coordinated by Justice V.R. Krishna Iyer had occasion to deal exhaustively with the nature and scope of the powers of the appropriate government under Section 10 of the Act in the following case.
Avon Services Production Agencies vs Industrial Tribunal 9 THE FACTS OF THE CASE The appellant company had set up two factories, one at Bombay and the other at Ballabhgarh. The industrial dispute which was the subject matter of appeal related to the Ballabhgarh factory. According to the appellant this factory, when commissioned in 1962, was divided into two sections, now styled as two separate undertakings: (a) manufacturing section; and (b) packing material making section. The manufacturing section comprised two sub-sections—the chemical section i.e. Foam Compound manufacturing section, and the boiler section. The packing material section was again composed of two sub-sections, one manufacturing containers and the other painting the containers. Respondents 3 and 4, according to the appellant, were employed in the painting section. Around 1964, the appellant decided to buy containers from the market and consequently closed down its packing material making section but continued the painting subsection. On 13 July 1971, the appellant purportedly served notice on respondents 3 and 4 and others, intimating them that the management had decided to close the painting section effective 13 July due to unavoidable circumstances and hence the services of the three workmen would no longer be required and, therefore, they were retrenched. Even though it is alleged that the notice was served upon the three workmen, the tribunal found that the notice never reached respondents 3 and 4. According to the notice, the workmen concerned were also informed that they should collect their dues under Section 25FFF of the Industrial Disputes Act, 1947, from the office of the company. Subsequently, the trade union of the employees served a notice of demand on 16 July 1971, inter alia, calling upon the appellants to reinstate respondents 3 and 4 and the third workman, and also to pay them full back wages. Subsequently, the Government of Haryana referred the demands 2 to 9 to the industrial tribunal for adjudication. In respect of demand No. 1, relating to the reinstatement of the three workmen in the painting section, the reference was refused on the ground that there was no work for painting in the factory where these two workmen were working as per the order dated 19 February 1972. The Government of Haryana then, by its order dated 23 November 1972, referred the following dispute to the industrial tribunal for adjudication: Whether the retrenchment of respondents 3 and 4 was justified and in order? If not, to what relief they are entitled? The tribunal framed the following three issues: 1. Whether the present reference is bad in law for the reasons given in para No. 1 of the preliminary objection in the written statement? (On management) 2. Whether the statement of claim filed on behalf of the workmen is not in order? (On management)
Government’s Power of Reference of Industrial Disputes 251 3. Whether the retrenchment of respondents 3 and 4 was justified and in order? If not, to what relief they are entitled? The management, in support of its contention covered by issue no. 1 urging that once the government declined to make a reference in respect of termination of services of respondents 3 and 4, the government was not competent to refer the dispute for adjudication at a later date. The tribunal negatived the contention, observing that there is abundant authority in support of the proposition that the government, having once declined to make a reference, is not rendered incompetent from making a reference of the same dispute at a later date.
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE D.A. DESAI Socio-economic justice, the corner-stone of industrial jurisprudence to be achieved by the process of give and take, concessions and adjustments of conflicting claims would hardly advance if the industrial dispute involved in this appeal by special leave brought by the appellant M/s. Avon Services (Production Agencies) Pvt. Ltd., canvassing some technical legal nicety, rendering the two employees jobless for more than seven years, is encouraged. Mr O.P. Malhotra, learned counsel for the appellant, canvassed two contentions before us. He submitted that the Government having declined to make a reference under Section 10(1) of the Act in respect of termination of service of respondents 3 and 4 as per its order dated 19th February 1972, Annexure P-2, the Government was not competent or had no power or authority to make a reference in respect of the same dispute unless the Government must have come up with some fresh or additional material which, when the validity of the reference was challenged, must be disclosed or it must appear on the face of the reference itself. Alternatively it was contended that after having declined to make a reference in respect of termination of service of respondents 3 and 4, the Government was not competent to make a reference of an entirely different dispute touching the question of reinstatement of respondents 3 and 4 which was materially different dispute from the one raised by the Union as per its charter of demands Annexure P-1 dated 15th July 1971 because the demand as it now referred to the tribunal was never raised before the management and, therefore, no such demand existed which the Government could have referred to the Tribunal under Section 10(1) of the Act. The refusal to refer the demand concerning respondents 3 and 4 has been the subject matter of very serious submission on behalf of the company that the reference subsequently made by the Government was invalid. Section 10(1) of the Act confers power on the appropriate Government to refer at any time any industrial dispute, which exists or is apprehended to the authorities mentioned in the section for adjudication. The opinion which the appropriate Government is required to form before referring the dispute to the appropriate authority is about the existence of a dispute or even if the dispute has not arisen, it is apprehended as imminent and requires resolution in the interest of industrial peace and harmony. Section 10(1) confers a discretionary power and this discretionary power can be exercised on being satisfied that an industrial dispute exists or is apprehended. There must be some material before the Government on the basis of which it forms an opinion that an industrial dispute exists or is apprehended. The power conferred on the appropriate Government is an administrative power and the action of the Government in making the reference is an administrative act. The formation of an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. Thus the jurisdictional facts on which the appropriate Government may act are the formation of an opinion that an industrial dispute exists or is apprehended, which undoubtedly is a subjective one, the next step of making reference is an administrative act. The adequacy or sufficiency of the material on which the opinion was formed is beyond the pale of judicial scrutiny. If the action of the Government in making the reference is impugned
252 Social Justice and Labour Jurisprudence by a party it would be open to such a party to show that what was referred was not an industrial dispute and that the tribunal had no jurisdiction to make the award but if the dispute was an industrial dispute, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no subsequent material before Government on which it could have come to an affirmative conclusion on those matters (see State of Madras vs C. P. Sarathy10). The contention, however, is that once the appropriate Government applies its mind to the question of referring an industrial dispute to the appropriate authority and declines to make a reference, it cannot subsequently change its mind and make the reference of the dispute unless there is some fresh or additional material before it. It was said that once an industrial dispute is raised and the government declines to make a reference, the opposite party is entitled to act on the supposition that the dispute in question was not worth referring and such a dispute would no more be in existence between the employee and the concerned employer and that the Government cannot spring a surprise by subsequently unilaterally making the reference without any fresh or additional material being brought to its notice. Section 10(1) enables the appropriate Government to make reference of an industrial dispute, which exists or is apprehended at any time to one of the authorities mentioned in the section. How and in what manner or through what machinery the Government is appraised of the dispute is hardly relevant. Section 12 casts a duty upon the Conciliation Officer to hold conciliation proceedings in respect of the industrial dispute that exists or is apprehended. It is mandatory for the Conciliation Officer to so hold the conciliation proceedings where dispute relates to a public utility service and a strike notice has been served under Section 22. The Conciliation officer must try to promote a settlement between the parties and either he succeeds in bringing the parties to a settlement or fails in his attempt, he must submit a report to the appropriate Government, but this procedure for promoting settlement cannot come in the way of the appropriate Government making a reference even before such a report is received. The only requirement for taking action under Section 10(1) is that there must be some material before the Government which will enable the appropriate Government to form an opinion that an industrial dispute exists or is apprehended. This is an administrative function of the Government as the expression is understood in contradistinction to judicial or quasi-judicial function. Merely because the Government rejects a request for a reference or declines to make a reference, it cannot be said that the industrial dispute has ceased to exist, nor could it be said to be a review of any judicial or quasi-judicial order or determination. The industrial disputes may nonetheless continue to remain in existence and if at a subsequent stage the appropriate Government is satisfied that in the interest of industrial peace and for promoting industrial harmony it is desirable to make a reference, the appropriate Government does not lack power to do so under Section 10(1), nor is it precluded from making the reference on the only ground that on an earlier occasion it had declined to make the reference. The expression ‘at any time’ in Section 10(1) will clearly negative the contention that once the Government declines to make a reference the power to make a reference under Section 10(1) in respect of the same dispute gets exhausted. Such a construction would denude a very vital power conferred on the Government in the interest of industrial peace and harmony and it need not be whittled down by interpretative process. In Western India Match Co. Ltd vs Western India Match Co. Workers Union11 an identical contention was raised in respect of a reference made under Section 4(k) of the U.P. Industrial Disputes Act which is in pari material with Section 10(1) of the Act. Negativing this contention, the Court observed as under: In the light of the nature of the function of the Government and object for which the power is conferred on it, it would be difficult to hold that once the Government has refused to refer,
Government’s Power of Reference of Industrial Disputes 253 it cannot change its mind on a reconsideration of the matter either because new facts have come to light or because it had misunderstood the existing facts or for any other relevant consideration and decide to make the reference. But where it reconsiders its earlier decision it can make the reference only if the dispute is an industrial one and either exists at that stage or is apprehended and the reference it makes must be with regard to that and no other industrial dispute. It follows that the Government does not lack the power to make the reference in respect of the same industrial dispute which it once declined to refer. But it was urged that the ratio of the decision would show that the Government must have some fresh material made available to it, subsequent to its refusal to make a reference for the formation of a fresh opinion, for making the reference. It is not absolutely necessary that there ought to be some fresh material before the government for reconsideration of its earlier decision. The Government may reconsider its decision on account of some new facts brought to its notice or for any other relevant consideration and such other relevant consideration may include the threat to industrial peace by the continued existence of the industrial dispute without any attempt at resolving it and that a reference would at least bring the parties to the talking table. A refusal of the appropriate Government to make a reference is not indicative of an exercise of power under Section 10(1), the exercise of the power would be a positive act of making a reference. Therefore, when the Government declines to make a reference the source of power is neither dried up nor exhausted. It only indicates that the Government for the time being refused to exercise the power but that does not denude the power. The power to make the reference remains intact and can be exercised if the material and relevant considerations for exercise of power are available; they being the continued existence of the dispute and the wisdom of referring it, in the larger interest of industrial peace and harmony. Refusal to make the reference does not tantamount to saying that the dispute, if it at all existed, stands resolved. On the contrary the refusal to make a reference not compelling the parties to come to a talking table or before a quasi-judicial Tribunal would further accentuate the feelings and a threat to direct action may become imminent and the Government may as well reconsider the decision and make the reference. It is, therefore not possible to accept the submission that if the Government had on an earlier occasion declined to make a reference unless it be shown that there was some fresh or additional material before the Government the second reference would be incompetent. It has not been shown that the dispute had ceased to exist and the very existence of the dispute enables the Government to exercise the power under Section 10(1) and it has been rightly exercised. The view which we are taking is in accordance with the decision of this Court in Binny Ltd vs Their Workmen12 wherein it was found that the Government had declined to make a reference of the dispute on two previous occasions on the basis of which it was contended that the reference was invalid. The contention was negatived observing that the mere fact that on two occasions the Government had taken the view that no reference was called for does not entitle the Court to conclude that there could be no cause for a reference at a later date. Alternatively it was contended that even if the appropriate Government has power to make a reference after having once declined to make the reference, it can only refer that industrial dispute which it had once declined to refer and no other dispute and that in this case the Government has referred an entirely different dispute than the one raised by the Union and that in respect of the referred dispute the demand having not been made from the employer was no such dispute in existence and therefore, the reference was invalid. The contention in the form in which it is now canvassed was not raised before the Industrial Tribunal and even before the High Court. However, as we find no substance in the contention we would not reject it on the technical ground that it was not raised before industrial Tribunal or the High Court.
254 Social Justice and Labour Jurisprudence The Avon Employees Union by its notice of demand requested the appellant Company to consider the demands set out in the notice. The relevant demand in the context is re-produced below: That our three companions Mohamed Yamin and Mohammed Yasin who had been working in the above mentioned factory for the last 15/15 years and 8 years, their termination of service and denying their gate-passes are illegal and against the principle of justice, therefore, they be reinstated to their jobs and by giving back the full wages from the date of their termination injustice be ended. The substance of the matter is that the Union complained about the termination of service of the two named workmen who are the respondents 3 and 4 and one other whose services were terminated by the appellant and which termination was styled as illegal and the crucial industrial dispute was to reinstate them with full back wages and continuity of service. There were seven other demands which we are not concerned. The appropriate Government while making the reference, informed the Union that the demands 2 to 9 have been referred to Industrial Tribunal and in respect of demand No. 1, the Government, while declining to make the reference, stated its reasons as under: There is no work for painting in the factory where these two workmen were working. Subsequently the appropriate Government by its order dated 23-11-1972, referred the following dispute to the Industrial Tribunal for adjudication: Whether the retrenchment of Sarvashri Mohamad Yamin and Mohamad Yasin was justified and in order? If not, to what relief they are entitled? The submission is that the Union espoused the cause of the aforementioned two workmen respondents 3 and 4 complaining that the termination of their services is illegal and for reinstatement and that demand made by the Union was not referred to the Industrial Tribunal by the Government and subsequent to the decision of the Government respondents 3 and 4 did not make any demand from the employer nor did they raise an industrial dispute with regard to termination of their services and, therefore, the Government could not have referred an entirely different demand in respect of respondents 3 and 4 and the reference was invalid. A mere comparison of the demand raised by the union and the demand subsequently referred to the Industrial Tribunal would clearly negative the contention. The dispute arose from the termination of services of respondents 3 and 4 and one other workman. In this case the union complained about illegal termination of service and demanded reinstatement with back wages. The Government subsequently made a reference about the validity of the retrenchment and the relief to which the workmen would be entitled. It is thus crystal clear that there was a demand about reinstatement, complaining about the illegality of termination of service and the same has been referred to the tribunal. Therefore it is not possible to accept the contention that on this account the reference is incompetent.
The Scope of the Power of Reference under Section 10(1) The Indian Express Newspapers (Bombay) and another vs The Indian Express Newspapers (Bombay) Employees’ Union and Others13 In this case, the Supreme Court considered the very competency of the appropriate government in referring an issue relating to a wage structure that includes gratuity on the ground
Government’s Power of Reference of Industrial Disputes 255
that it was beyond the jurisdiction of the tribunal due to the lack of precision in the terms of the order of reference. THE FACTS OF THE CASE In this case, the reference to the National Tribunal under the Industrial Disputes Act, 1947, was made in the following terms: Whether the recommendations of the Wage Board for non-journalist employees as accepted by the Government by its resolution No. WB-17 (7)/67, dated the 18th Nov. 1967, are unfair or unreasonable and if so, what modifications are required therein to ensure a fair and just wage structure for the non-journalist, having due regard to the paying capacity of the respective news paper establishments of employees engaged in comparable establishments.
The preamble to the reference stated that an industrial dispute existed with regard to the implementation of the recommendations of the Wage Board for non-journalist employees mentioned in the schedule. The importance of this ratio lies in Justice V.R. Krishna Iyer’s art of interpretative presentation of the issue within the framework of the principles of statutory interpretation while speaking for the majority, which ultimately rendered the crux of the matter so simple and understandable. This aspect should be recognised as a principle in dealing with situations involving labour interests. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER A free press can summon its flaming vigour only if its journalistic and non-journalistic wings go into full swing with courage and contentment to make the printed end-product that issues daily from the machine, so that the office of education and information the Fourth Estate must perform does not suffer. The community itself has vital concern in the working conditions of the dual human groups whose invisible work is crystallised daily and moved into mass circulation. In a democracy, news media and the men behind have a special value. Therefore, a few legislative and non-legislative measures have taken care of the working conditions of the journalists and the non-journalists. We are concerned here with non-journalists and that portion of an award which has conferred standardised gratuity benefit on them. The importance of the enthusiasm, integrity and thoroughness of the silent army, which speaks daily in every issue of a newspaper, once underscored, the necessity for a square economic deal to these hands argues itself. A Free Press serves the nation successfully when it serves its family fairly. Even an army marches on its stomach. And retirement benefits bear upon anxiety for the aging future in this mortal world and impact upon contentment in working life. Such is the law of the tenses and human lot. Pressmen are no exception. This national concern quickened the Government to make a reference to the Industrial Tribunal of certain questions of economic justice concerning non-journalist employees. The issues between leading members of the Press Proprietariat and the non-journalist Proletariat were spelt out for adjudication in a Reference and lack of clarity in its drafting has led to the bone of contention in this appeal. Perfunctory draftmanship has a great potential for creating disputes even where there are none! This is Government’s unwitting contribution to the present litigation! The National Tribunal, assisted by considerable submissions from learned counsel, produced a massive award covering many topics, including gratuity, and all but one establishment viz the appellant, have fallen in line and left the award unchallenged. The broad approach of the Tribunal vis-a-vis gratuity is coloured by social justice and informed by indicia gathered from this
256 Social Justice and Labour Jurisprudence Court’s dicta. Industrial jurisprudence is not static, rigid or textually cold but dynamic, burgeoning and warm with life. It answers in emphatic negative the biblical interrogation: What man is there of you, whom if his son ask bread, will give him a stone? The Industrial Tribunals of India, in areas unoccupied by precise block letter law, go by the Constitutional mandate of social justice in the claims of the ‘little people’. That touchstone led to the award which, inter alia, granted gratuity to non-journalists altho’ the positive evidence was little and the guidelines faint. The compass of the acute dispute in this appeal is the very jurisdiction of the tribunal to pronounce upon ‘gratuity’ the ground urged being that it falls outside the reference itself. We may now set out the relevant reference to the National Tribunal: Whether the recommendations of the Wage Board for non-journalist employees as accepted by Government by its resolution No. WB-17 (7)/67, dated the 18th Nov. 1967, are unfair or unreasonable and if so, what modifications are required therein to ensure a fair and just wage structure for the non-journalists, having due regard to the paying capacity of the respective newspaper establishment, the employers agreement and the emoluments of employees engaged in comparable establishments. Mr G.B. Pai in his very persuasive and pointed submission, rightly stressed that the Tribunal had only a limited jurisdiction, trammelled by the terms of reference-not beyond, and in his view the question of gratuity was outside the reference altogether. Were it so, that part of the award was an exercise in gratuitous futility, being an ultra-jurisdictional generosity. Notwithstanding Sri M.K. Ramamurthy’s assertion that this Court shall not go back upon what was throughout understood by all before the Tribunal, we have to find jurisdictional justification in the Reference itself, not in the brooding, perhaps blundering, consciousness of litigants. But we agree with Sri Ramamurthy that liberality, not pedantry, must guide the construction of the language of the reference (vide Express Newspapers Ltd. vs Workmen14). Once the real controversy is clear, the verbal walls cannot narrow the natural ambit of the subject-matter; especially in an equitable jurisdiction unbound by processual blinkers and niceties of pleading. Let us therefore face the only issue in the appeal—no other argument was urged—whether the reference embraces gratuity. If it does not, no more arguments can salvage; if it does, no more submission can scuttle. So the forensic focus must turn on the first term of reference which, on a closer look, falls into three parts. This trichotomy once grasped the riddle of the case stands resolved. The preamble to the Reference sets the tone and lends the key and so a relevant excerpt may lead kindly light: Whereas the Central Government is of the opinion that an industrial dispute exists between the employers and workmen in the newspaper establishments mentioned in the Annexure, in respect of the implementation of the recommendations of the Wage Board for non-journalist employees, as accepted by the Central Government by the Resolution No. WB-17(7)/67, dated 18 November 1967, in regard to the matters mentioned in the Schedule. It is plain that the Central Government was anxious to have the industrial dispute between the employers and non-journalist employees settled. What the industrial dispute that existed and needed solution was, could be dimly gathered from the ‘Whereas’ clause extracted above. The dispute was ‘in respect of the implementation of the recommendations of the Wage Board for nonjournalist employees’ as accepted by the Central Government by its resolution of 18 November 1967, ‘in regard to matters mentioned in the Schedule’. So, the area of the dispute is prima facie, co-extensive with the recommendations of the Wage Board for non-journalist employees
Government’s Power of Reference of Industrial Disputes 257 and the topics covered thereby, particularised in the Schedule to the Reference. It is common ground that the recommendations of the Wage Board for non-journalist employees did cover gratuity. Of course, the ‘Whereas’ clause is not conclusive but suggestive. We have actually to go to the Schedule which specificates the actual dispute referred for adjudication. The anatomy of item 1 of the Schedule has now to be X-rayed. We have earlier quoted it, and its triple components may now be separated. The first and the second parts are substantive and read thus: (a) Whether the recommendations of the Wage Board for non-journalist employees as accepted by Government by its Resolution... are unfair or unreasonable; and (b) If so, what modifications are required therein? The third part is not a point for adjudication but a goal-setter, a delineation of the overall objective or rather the parameter which must be kept in view. That is to say, the Tribunal must first adjudicate on the unfairness or unreasonableness of the recommendations of the Wage Board, as accepted by the Government. It must further adjudicate on what modifications are required in these recommendations, if it holds them unfair or unreasonable. To sum up the essentials of the first term of reference and its scope, we think that the jurisdictional sweep of the Tribunal is governed by the two parts we have set out. The recommendations made by the Wage Board and accepted by the Government admittedly include gratuity. The Tribunal has, ex necessitate, to decide whether this recommendation on gratuity is unjust or unreasonable. This is what it has done. Secondly, it has to examine what modifications, if any, are justly necessary therein, i.e., in the Wage Board gratuity. This again is what has been undertaken by the Tribunal. In this view the next question is, what the purpose of the third limb of the reference can be. This is the bone of contention, in one sense, between the two advocates. Certainly, it is not otiose and has a role. In our view, it merely supplies the social objective of the adjudication on parts 1 and 2. It surely obligates the Tribunal, while deciding points 1 and 2, to have a specific perspective. That perspective is that the non-journalist employees must be ensured a fair and just wage structure, having due regard to the paying capacity of the establishment, the emoluments of employees in comparable concerns, etc. ‘A fair and just wage structure’ is not what the Tribunal is asked to decide under the first term of reference. Under this head it is called upon to decide only two matters, namely, the fairness/reasonableness or otherwise of the Wage Board’s recommendations regarding gratuity, and, in the event of those recommendations being found to be unfair or unreasonable, to decide what modifications are required ‘therein’? These modifications are geared to a certain goal, are calculated to subserve a certain purpose, are intended to be oriented on a certain welfare ground norm. What is that goal, that objective, that perspective? This is supplied by the last part of reference No. 1. That is to say, the Tribunal will adjudicate on the first two items, remembering that the end is the securing of a fair and just wage structure. Indeed, gratuity and its quantum like other retirement benefits, has a bearing on the wage structure and vice versa. It is true that the wage structure relates to the emoluments during service, while gratuity is a terminal benefit or, rather, a retirement benefit. Although these two fall into different compartments, they are inter-connected. A heavy wage scale may have some impact on the gratuity rate and a large provision for gratuity may have its retroactive effect upon the wage structure. It is composite equity writ on the economic life of the worker. We have said enough to indicate that the Tribunal was well within its jurisdiction in deciding on ‘gratuity’, the function of the last limb, ‘a fair and just wage structure’, being to shape the size of the gratuity, not to exclude gratuity from adjudication, to tailor it, not to throw it out. This construction receives considerable confirmation from certain other aspects of the case. For instance, the Wage Board has made recommendations on gratuity (paragraph 4. 28). Indeed, item 2 of the reference to the Wage Board which covers non-journalist employees involves gratuity.
258 Social Justice and Labour Jurisprudence The vital documents which impregnate the reference with content and meaning are the reference to the Wage Board and the recommendations that followed, and both of them deal with gratuity. We have more internal evidence to substantiate the soundness of our conclusion. The management, in its Written Statement before the Tribunal, has contended that: There was no justification for the Wage Board to apply the gratuity scheme as applicable to working journalists, to all the non-journalist employees. The special benefits conferred upon the Working Journalists under Act 45 of 1955 are highly excessive and unreasonable and in fact, the Working Journalists have been treated as a favoured class. There is no other class of employees in the country for whom such a Legislation has been enacted. It should have been left to each newspaper establishment to evolve its own scheme of gratuity, if the circumstances so permit and in accordance with its financial position and a scheme of gratuity applicable to a particular highly paid class of employees should not have been extended to all non-journalist employees. Why did the management contend before the Tribunal that the Wage Board recommendation of a gratuity scheme for non-journalist employees was unjustified? Why did they plead that those special benefits were excessive and unreasonable? Why should they have urged that it should have been left to each newspaper establishment to evolve its own scheme of gratuity and that such a scheme should not have been extended to non-journalist employees since they were highly paid? There is no explanation for this stance except that the management was trying to convince the Tribunal that the Wage Board recommendation of gratuity was ‘unjust’ and ‘unreasonable’, which means that they also understood that the scheme of gratuity recommended by the Wage Board was before the Tribunal for revision or modification. Shri G. B. Pai urged that the workmen’s statement contained no reference to gratuity. May be, they did not separately set up such a plea because others of their ilk in other newspaper establishments had pleaded it. The Tribunal’s duty to decide a matter referred to it could not be repelled merely because there was no separate plea by one or the many workmen’s groups about gratuity. There is other telling testimony that all the parties had proceeded on the clear footing that gratuity was covered by the terms of reference. Shri M. K. Ramamurthy took us meticulously through the bulky award which covered six leading newspaper establishments of India and the workmen under them. Paragraph 16, for example, while quoting the Wage Board recommendations, refers to gratuity to non-journalist employees. Similarly, we find in paragraph 95, a specific plea by the workmen, represented by the Hindustan Times Employees’ Union, having a bearing on the gratuity scheme. Again in paragraph 114 the Tribunal refers to the contention of Mr Sen, representing one of the newspaper establishments, criticising the gratuity recommendation of the Wage Board as unfair and Mr Ramamurthy’s contrary stand that the gratuity scheme should apply to journalists and non-journalists alike. Many other such references to arguments by counsel before the Tribunal, with pointed references to the application of gratuity scheme to non-journalist employees were spotlighted. We may mention a few illustratively. Paragraph 121 refers to the Written Statement of certain newspaper establishments giving reasons why payment of gratuity should not be made applicable to non-journalist employees. Kindly look likewise at para 140. It is interesting that on behalf of the workmen i.e. Indian Express Employees’ Union, it is stated: Moreover, no fringe benefits are also available to the workmen of the Indian Express in Delhi. Even gratuity, which has been unanimously recommendable by the Wage Board and was never a point of dispute, is being denied to the workmen. The award in paragraph 163 and in paragraph 170, proceeds on the footing that the management also made common cause against the gratuity scheme for non-journalist employees.
Government’s Power of Reference of Industrial Disputes 259 Such doubts as may exist on this question are cleared by the Tribunal in paragraph 186, which reads thus: Having thus cleared the grounds of the preliminary objections, I now proceed to deliver my award on merits. I first take up for consideration the first item of dispute in the reference dated 17 September 1968, which again is the first item of dispute in the schedule of the Reference, dated 7 October 1968, and also the first item of dispute in the schedule to the order of reference dated 7 March 1969. The following may be taken to be the broad lines of criticism by the management against the recommendations of the Wage Board: (i) (ii) (iii) (iv) (v) (vi) (vii)
………….…………….. ………….…………….. ………….…………….. ………….…………….. ………….…………….. ………….…………….. Gratuity should not been left to the decision of the Supreme Court in the pending appeal regarding gratuity scheme applicable to working journalists, as per the provisions contained in the Working Journalists (Condition of Service) and Miscellaneous Provisions Act, 1955, because in that appeal the present disputants are not parties.
So no remonstrance against consideration of the issue of gratuity as a jurisdictional issue is raised there. Having discussed the arguments of counsel on both sides and having dealt with various points of reference, the learned Presiding Officer went on to consider the scheme of gratuity. Of course, he mentioned the lack of evidence for a precise judgment and the absence of help from either side to reach a reasoned conclusion: My task is made more difficult because little evidence was led as to what should be the gratuity scheme for non-journalist workmen. It was not to the interest of the management to lead evidence because they would like very much to await final decision of the Supreme Court on the point. The workmen had no concrete suggestion to offer. I have therefore, to essay into unsurveyed expanse with neither a compass nor a guide. All that I can do is to bear in mind the observations by the Supreme Court, on this topic, from time to time made and to attempt a gratuity scheme within the framework of these observations. Naturally, and, if we may say so, rightly, the Tribunal sought guidance from the principles laid down by this Court on a blue-print for gratuity. This longish discussion on gratuity could not have been a fruitless excursion and proves beyond reasonable doubt that the parties on both sides, at the level of pleadings, at the stage of arguments and in the rival processes of contest, desiderated a decision on a gratuity scheme for non-journalists. This bone of contention was included in the terms of reference (item 1). The long submissions by many counsels on behalf of the employers and employees were not idle debate. The plea for a full scheme of gratuity by the advocate for the workmen under the various other newspaper establishments was not submissions in supererogation. There is no hint in the Tribunal proceedings that a scheme of gratuity was outside the pale of the Tribunal. No such objection was ever raised. Indeed, a tired Tribunal, confronted by enormous evidence and marathon arguments, would not have painstakingly sifted the grounds, sorted the evidence, cited the rulings and recorded the verdicts without being sure that all parties concerned and he himself understood the reference to include the matters contested before him, discussed by him and decided in his award. The gratuity scheme for non-journalist workmen was one such and it is bafflement to accept the submission that the learned Tribunal, a retired Judge of the High Court, had ventured into an irrelevant terrain.
260 Social Justice and Labour Jurisprudence Thus, our understanding of item I in the Schedule of Reference, our study of the proceedings before the Tribunal and the reasoning in the Award converge to the only conclusion reasonably available that the gratuity scheme for non-journalist workmen was covered by the reference. No other point on the merits was argued although there was a feeble suggestion that the Award was more liberal than should reasonably have been. In fairness, we must state that barring a passing reference to this aspect, no serious contention was raised or, indeed, could be raised on the merits of the matter. This Court lends no countenance to submissions on the merits in the absence of flagrant violation of principles, gross travesty of justice and like extreme grounds, especially when the appeal is against an Award by an Industrial Tribunal. In short, G. B. Pai would not and could not canvass the factual finding. The appeals are dismissed.
The Precise Scope of Section 10(3) Sub-section (3) of Section 10 of the Industrial Disputes Act empowers the appropriate government to prohibit by order the continuance of any strike or lock-out in connection with a dispute under reference to a board, labour court, tribunal or national tribunal that was in existence on the date of the reference. An industrial dispute espoused by trade unions or workmen may consist of a number of demands. If the appropriate government refers only a few of the demands and leaves out the other demands, then the operation of an order issued under Section 10(3) needs a clear interpretation so as to avoid the clutches of Section 24 of the Act. The words ‘which may be in existence on the date of reference’ refer to the strike or lock-out that was in existence on the date of reference of the dispute with which it is connected. The Dvision Bench of the Delhi High Court, in the case of the Workmen of Edward Keventers vs the Delhi Administration15 took the view that if out of a number of demands, only some are referred for adjudication, the continuance of the strike can be prohibited only with reference to the disputes that have been referred for adjudication; the prohibition of the continuance of a strike with respect to the matters that have not been referred to adjudication was not warranted by sub-section (3) of Section 10 of the Act. However, the Division Bench of the same High Court, in the case of the Keventers Karmachari Sangh vs the Lieutenant Governor, Delhi,16 observed: If even one of the demands has been referred as industrial dispute, the strike will be in connection with such dispute and the power to prohibit the continuance of the strike can be exercised. Any other interpretation is likely to lead to absurd results. Take a case where the notice of strike contains demands only some of which can be referred as industrial disputes and others not. It cannot be suggested that if the demands which cannot be referred as industrial disputes are not referred, an order for prohibiting the continuance of the strike cannot be passed. Reference of one demand as an industrial dispute makes the strike in connection with such dispute within the meaning of the said sub-section.
Delhi Administration, Delhi vs the Workmen of Edward Keventers and Another 17 Justice V.R. Krishna Iyer, speaking for the majority in the case, put a halt to this controversy by projecting the true purpose of the provision here.
Government’s Power of Reference of Industrial Disputes 261
THE FACTS OF THE CASE This was an appeal against the decision of the Division Bench of the Delhi High Court in the case of Workmen of Edward Keventers vs the Delhi administration.18 The appellant, the Delhi administration, was faced with the question of referring several disputes—16 in number—for adjudication, although many of them were perhaps covered by an earlier settlement.
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER A very short question as to the scope of Section 10(3) of the Industrial Disputes Act, 1947, arises for consideration in this appeal by special leave. The appellant, Delhi Administration, was faced with the question of referring several disputes, 16 in number, for adjudication under Section 10(1) of the Act. The workmen had raised all these disputes although many of them were perhaps covered by an earlier settlement. We are not concerned with the facts of this particular case which have been set out at some length by the High Court in its judgment, but with a narrow issue as to when the power to prohibit a strike, with which the State/appropriate Government is armed under Section 10(3) of the Act, can be put into operation. This turns on a reasonable construction of the provision itself and the best beginning is to quote the section itself. Section 10(3) runs thus: Where an industrial dispute has been referred to a Board, (Labour Court, Tribunal or National Tribunal) under this section, the appropriate Government may by order prohibit the continuance of any strike or lock-out in connection with such dispute which may be in existence on the date of the reference. A plain reading of the sub-section leaves no room for doubt in our mind that the High Court has correctly interpreted it. Indeed, the learned Judges have gone into details, although we in this affirming judgment desire to express ourselves only briefly. Two conditions are necessary to make Section 10(3) applicable. There must be an industrial dispute existing and such existing dispute must have been referred to a Board, Labour Court, Tribunal or National Tribunal under this section, namely, Section 10(1). Section 10 stands as a self-contained Code, as it were, as far as this subject-matter is concerned. The prohibitory power springs into existence only when such dispute has been made the subject of reference under Section 10(1). What then is such dispute? The suchness of the dispute is abundantly brought out in the preceding portion of the sub-section. Clearly, there must be an industrial dispute in existence. Secondly, such dispute must have been already referred for adjudication. Then, and then alone, the power to prohibit in respect of such referred dispute can be exercised. There is a distinction between strikes being illegal under other sections of the Act and penalties being available against such illegal strikes on the one hand and strikes being contrary to Section 10(3) of the Act and liable to be prohibited thereunder. This distinction once grasped, the baselessness of the submission on behalf of the appellant necessarily follows. Shri Aggarwal pressed before us a ruling reported in Keventers Karmachari Sangh vs Lt. Governor of Delhi,19 decided by the Delhi High Court. Although the ratio there is contrary to the same High Court’s ruling which is the subject-matter of the present appeal, we are obviously inclined to adopt the reasoning of the judgment under appeal. Imagine twenty good grounds of dispute being raised in a charter of demands by the workmen and the appropriate Government unilaterally and subjectively deciding against the workmen on nineteen of them and referring only one for adjudication. How can this result in the anomalous situation of the workmen being deprived of their basic right to go on strike in support of those nineteen demands? This would be productive not of industrial peace, which is the objective of the Industrial Disputes Act, but counter-productive of such a purpose. If Government feels that it should prohibit a strike under Section 10(3) it
262 Social Justice and Labour Jurisprudence must give scope for the merits of such a dispute or demand being gone into by some other adjudicatory body by making a reference of all those demands under Section 10(1) as disputes. In regard to such disputes as are not referred under Section 10(1), Section 10(3) cannot operate. This stands to reason and justice and a demand which is suppressed by a prohibitory order and is not allowed to be ventilated for adjudication before a Tribunal will explode into industrial unrest and run contrary to the policy of industrial jurisprudence. Thus, on principle and the text of the law, we are convinced that Section 10(3) comes into play when the basis of the strike is covered by Section 10(1). Reference of a dispute and prohibition of a strike on other demands is impermissible. While we appreciate the strenuous efforts made by Shri Agarwal to support the judgment and perhaps sympathize with him on the particular facts of this case, we cannot agree that hard cases can be permitted to make bad law. The appeal is dismissed, but since the workmen for obvious reasons have not been able to represent themselves in this Court, the normal penalty of costs against the appellant who loses cannot follow. The appeal is dismissed, but for the reasons above stated, there will be no order as to costs.
NOTES 1. A few states, such as Uttar Pradesh, Karnataka and Tamil Nadu, have gone in for amendments to the effect that in the case of individual disputes covered under Section 2A of the Industrial Disputes Act, 1947, no such reference will be required. 2. AIR 1977 SC 1666. This case was heard by V.R. Krishna Iyer, R.S. Sarkaria and Jaswant Singh and the majority decision was delivered by Justice R.S. Sarkaria. 3. (1968) I SCR 581:AIR 1968 SC 585. 4. (1972) (42) FJR 255:1973 LIC 711 (All). 5. 1965 II LLJ 149 (SC). 6. 1965 II LLJ 149 SC. 7. (1972) (42) FJR 255:1973 LIC 711 (All). 8. AIR 1977 SC 1666. This case was heard by V.R. Krishna Iyer and D.A. Desai, and the majority decision was delivered by Justice D.A. Desai. 9. AIR 1979 SC 176. 10. (1953) SCR 334. 11. AIR 1970 SC 1205. 12. AIR 1972 SC 1975. 13. AIR 1978 SC 1137. This case was heard by V.R. Krishna Iyer and Jaswant Singh. 14. AIR 1963 SC 569. p. 576. 15. 1969 ILR Del 767 (DB). 16. (1971) 2 LLJ 375 (Delhi) (DB). 17. AIR 1978 SC 976. This case was heard by V.R. Krishna Iyer and D.A. Desai. 18. 1969 ILR Del 767 (DB). 19. (1971) II LL J 375.
Chapter 7
Industrial Adjudication: The Concept The Industrial Disputes Act, 1947, is a special legislation aimed at resolving the industrial conflicts between labour and capital. Industrial adjudication is a process or method by which the Labour Court or Industrial Tribunal formulates its decisions for resolution industrial disputes referred to it. It is pertinent to note that many of the most precious rights of labour and capital owe their origin to industrial adjudication—namely—the right of the labour to claim bonus, the right of dismissed or discharged workmen to reinstatement, the right of employer to retrench or close the industry. Historically, the immediate post-enactment regime indicates the immense contribution of industrial adjudication to the growth of labour jurisprudence in India. The Industrial Disputes Act, 1947, leaves every matter that affects labour-management relations in the event of failure of collective negotiations to the realm of industrial adjudication for its resolution. Except in cases of individual1 and other disputes,2 the jurisdiction of industrial adjudication stems from the Order of Reference made by the appropriate Government under Section 10(1) of the Act. In this context, whenever matters reach the apex Court on appeal of the awards of the industrial tribunals, the Supreme Court carefully examined the crucial and critical issues involved therein and cautiously interfered with the awards of the industrial tribunal. However, Justice V.R. Krishna Iyer did have, on some occasions, to interfere with the awards made by the industrial tribunals. Indeed, even in cases where Justice V.R. Krishna Iyer disagrees with the award of the industrial tribunal, it is only with pertinent legal reasoning and despite the fact that such an award would be favourable to the workman.
The Concept of ‘Tribunal’ The industrial tribunals of India, in areas unoccupied by precise block letter law, go by the Constitutional mandate of social justice on the claims of the ‘little people’.3 A ‘tribunal’ literally means a seat of justice. It may be that said justice is dispensed by a quasi-judicial body, an arbitrator, a commission, a court or other adjudicatory organs created by the State. The tribunal has the power and, indeed, the duty to X-ray the order of reference and to discover its true nature, if the object and effect, if the attendant circumstances and the ulterior purpose be to dismiss the employee because he is an evil to be eliminated.4
Interference with the Tribunal’s Award The Supreme Court, when sitting on appeal, as a rule of practice is loath to interfere with a finding of fact recorded by the trial court. But when such a finding is based on no
264 Social Justice and Labour Jurisprudence
evidence, or is the result of a misreading of the material evidence, or is so unreasonable or grossly unjust that no reasonable person would judicially arrive at that conclusion, it is the duty of the Supreme Court to interfere and set matters right.5
The Employers in Relation to Punjab National Bank vs Ghulam Dastagir 6 In this case the industrial dispute was between an individual driver (the respondent) and the management of the Punjab National Bank, Calcutta Branch, and the reference was as to the justifiability of the termination of the services of the respondent. The reference assumed that the most contested point in the case was really whether the respondent was employed by the said bank. By definition, a ‘workman’ means ‘any person employed in any industry’ and hence the basic jurisdictional issue as to whether the respondent workman was a person employed by the bank. If he was, his termination was illegal. If he was not, the reference to the industrial tribunal was outside jurisdiction. The industrial tribunal examined the matter at some length and came to the conclusion that the driver was employed by the bank. Consequentially, a direction for his reinstatement together with back wages was made. The Bank appealed to the Supreme Court against this decision. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER It is clear that the direction and control are the telling factors to decide as to whether the driver in the present case is the employee of the Bank. This test does not include other factors also, and indeed as Lord Macmillan in Mersey Docks and Harbour Board vs Coggins & Griffith Ltd,7 rightly stressed, the question in each case turns on its own circumstances and decisions in other cases are rather illustrative and not determinative. To crystallise critically and conclusively is baffling but broad indications may be available from decisions. The ‘beedi cases’ turn on the reality of ‘independent contractors’ standing in between the management and the beedi workers. The Court in many such cases discovered that there was a common practice of using deceptive devices and the so called independent contractors were really agents or workers of the management posing as independent contractors for the purpose of circumventing the Factories Act and like statute which compel managements to meet certain economic and social obligations towards the workers. We have no doubt that if in this case there is evidence to show colourable device resorted to by bank, our conclusion would have been adverse to the Management. On the other hand, the evidence adduced before the Tribunal, oral and documentary, lead only to one conclusion, that the Bank made available a certain allowance to facilitate the Area Manager privately to engage a driver. Of course the jeep which he was to drive, its petrol and oil requirements and maintenance all fell within the financial responsibility of the Bank. There is nothing on record to make out a nexus between the Bank and the driver. There is nothing on record to indicate that the control and direction of the driver vested in the Bank. After all, the evidence is clearly to the contrary. In the absence of material to make out that the driver was employed by the Bank, was under its direction and control, was paid his salary by the Bank and otherwise was included in the army of employees in the establishment of the Bank, we cannot assume the crucial point, which remains to be proved. We must remember that there is no case of camouflage or circumvention of any statute. It is not unusual for public sector industry or a nationalised banking institution to give allowances to its high level officers, leaving it to them to engage the services of drivers or others for fulfilling the needs for which the allowances are meant. In this view, we are clear that the award fails as it is unsupportable. We, therefore, reverse the award.
Industrial Adjudication 265
Powers of the Labour Court to Give Appropriate Relief to a Dismissed Workman under Schedule II, Item I of the Act The employer in many cases tries to remove under the pretext of valid grounds, the workmen who are actively involved in trade-union activities. On many occasions, the employer terminates the services of workmen under the guise of discharge simpliciter, when in fact such termination is coloured by ulterior motives. But the industrial tribunals in a majority of cases examine such actions initiated by the employer carefully to uncover the hidden motives of the employer. Here is a case that is typical of such veiled motives.
Michael and Another vs Johnson Pumps 8 In this case, the appellant, Michael, a permanent employee of proved efficiency and six years’ standing, was given two ‘merit’ increments in appreciation of his service. But a letter dated 2 September 1970 dismissed him from service, giving him one month’s pay in lieu of notice and discharging him with a damning record as distinguished from simply dismissing him for misconduct. The rival versions illumine the factual confrontation, the resolution of which is no easy legal assay. The worker Michael, through his union, protested against the ‘sack’ order as being a victimisation of a trade-union activist; but the management remained heedless, conciliation attempts were fruitless and the dispute between the union and the management was eventually referred by the Delhi administration to the Labour Court for adjudication. The reference ran thus: Whether the termination of services of Shri L. Michael is illegal and/or unjustified and, if so, to what relief is he entitled and what directions are necessary in this respect?
Both sides stated their cases in their pleadings and the true nature of the conflict emerged from these. The story set out by the employee in his statement before the Labour Court was that although he was efficient, appreciated and awarded merit increments, the management was antagonised by his active part in the formation of an employees’ union, especially because verbal warnings by the regional manager against his unionist proclivities were ignored. Michael became the treasurer of the union. This union chapter claimed its price, for the management quietly terminated his services by a simple letter, which read: We are sorry to advise that your services are no longer required by the Company. As such, this letter may be treated as a notice for the termination of your services with immediate effect. As for the terms of your employment letter, on termination of services you will be paid one month’s salary extra. You may please call on the undersigned and have your accounts settled.
This act, claims the worker, was in flagrant violation of the elementary principles of natural justice, since he was dismissed without assigning any reason and without giving him an opportunity to defend himself. Thus, in his statement, he challenged the termination as ‘wrongful, malafide, illegal, and an act of victimisation’. The case of the management, as set up in its statement and as apparent from the discharge order, was that no dismissal was involved, hence no enquiry necessary and no illegality ensued.
266 Social Justice and Labour Jurisprudence
The management claimed that its alleged annoyance with the workman over union activities was a concoction by the workman in self-defence, as the management had not even knowledge of the formation of the union. (This latter limb of the plea was, of course, a little too naïve.) The warning by the regional manager was denied and the reference to trade union activities by the worker was more ‘to create a ground for the workman’s claim and has been levelled as a matter of habit and routine’. The basic plea of the management was that the action being a simple termination without a ‘sting’, the process and consequence of disciplinary action were not attracted. The management, however, explained to the Court why the employee was discharged. Michael had been employed as a receipt and despatch clerk in the office until 10 March 1970. As an insider with access to office correspondence, the employee—the management claimed—misused his position by passing on ‘very important and secret information about the affairs of the company to certain outsiders’. He was consequentially shifted to the post of clerk handling posting of bills and collection of payments; but the workman, although denied direct access to correspondence in the receipt and despatch section, made attempt ‘to elicit information from the section with a view to pass it on to outsiders’. The upshot of these activities, of which the management was alerted, was a loss of confidence in the employee. This unreliability was addressed with non-injurious termination of service by a bona fide order. Therefore, the action was claimed to be legal and immune to judicial interference. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Industrial law in India has many twilight patches, illustrated by the present appeal which projects the problem of an employee whose services have been terminated simpliciter by the Management, a pump manufacturing enterprise, issuing a notice ending the employment and offering one month’s pay as authorised by the relevant Standing Orders. The thorny legal issue is whether the ipse dixit of the employer that sufficient justification to jettison the latter without levelling and proving the objectionable conduct, which has undermined his confidence, so that the tribunal may be satisfied about the bona fides of the ‘firing’ as contrasted with the colourable exercise of power hiding a not-so-innocuous purpose. Two socially vital factors must inform the understanding and application of Industrial Jurisprudence. The first is the Constitutional mandate of Part IV obligating the State to make provision for securing just and humane conditions of work. Security of employment is the first requisite of a worker’s life. The second, equally axiomatic consideration is that a worker who wilfully or anti-socially holds up the wheels of production or undermines the success of the business is a high risk and deserves, in industrial interest, to be removed without tears. Legislation and judicial interpretation have woven the legal fabric. We have to see whether on the facts of the present case what the relevant law is, whether it has been applied by the Labour Court rightly and whether the appellant has merit on his side, judged by the social conscience and judicial construction of the law in this branch of discharge simpliciter versus disguised dismissal. A few salient facts need emphasis before the principles of law are applied. The workman in his statement stressed the case of malus animus due to his union activities, although he did vaguely refer to the termination of service as wrongful and malafide. From this it cannot be argued, as the Management sought to make out, that his denial of leaking out office secrets was an after thought pleaded only in the rejoinder and therefore liable to be discredited. How could the worker have a hunch about the management’s undisclosed ground for dismissal? When the latter stated the reason which prompted this action for the first time before the Labour Court,
Industrial Adjudication 267 the workman in his reply refuted this case. It is noteworthy that there is no speck of record or any hint of written material in support of the story that the management had credible information of the appellant betraying sensitive secrets of business. The letters sent by the union, and the worker, requesting for reinstatement, were being ignored. The management could well have disclosed their suspicion in reply and told the Union and the workman that they resorted to an innocuous discharge to avoid punitive trauma. The management could have divulged in writing to the Conciliation Officer their legitimate fears about the worker’s integrity and their considerate action of simple termination. This too they failed to do. In their written statement, the management asserted for the first time that the employee was an intractable smuggler of inside information. The statement winds up with the legalistic plea: ‘the management had, in the meanwhile, lost confidence in the workman’. This culminating collapse of trust is alleged to be the primary cause for the discharge from employment. At the time of evidence, the management led the evidence to the effect that the workman joined as a pump operator in 1963, was promoted as clerk in 1967, that the suspicion of disloyal communication arose for the first time in 1968 and yet ‘thereafter he was given two increments extra in addition to normal increments’. He was a hard working man and has a very good memory but the suspicion was there. These are the facts and the evidence in the case and it has been fairly conceded before the Labour Court by the management that were the action regarded as punitive, it was bad, there having been no enquiry whatever with liberty to the employee to meet the charge. But the single slender stand on which the discharge was suspended was ‘loss of confidence’ of the management in the employee. The Labour Court argued: According to the management, as there was no proof with it for this suspicion, it could not proceed against him departmentally and, in the circumstances, it was considered desirable to terminate his services by passing an order of discharge without any stigma attached to it. While on all hands it was agreed that the employee was efficient, the court took the view that the motivation for the termination was the ‘suspicion which lurked in the mind of the Regional Manager that information regarding tenders was being passed on by the workman’. We have to find out whether the holding in the award that, on the materials above placed, the action could be called colourable or saved as bona fide, could be castigated as achieving an illegitimate end or supported as a premature but straightforward and harmless farewell. In short, was loss of confidence a legal label affixed by the management to eject the workman, there being no other legal method of accomplishing their wish to remove him for misconduct? Two questions, therefore, fall for decision. Can a person, reasonably instructed in the law and scrutinising with critical faculties the facts on record, come to the conclusion that the snapping of the tie of master and servant in the present case was innocuous and bona fide or oblique circumvention of the processual protection the law provides before a workman is dismissed for misconduct? We can discern harmony and consistency in case law from Chartered Bank9 and Murugan10 through Sudder Office11 and Air India Corporation.12 The social justice perspective and particular facts are important, though. The plethora of precedents need not be covered in extenso as the law laid down is the same except that judicial response to each case situation leads to emphasis on different facets of the principle. Even so, some milestone decisions, if we may say so, may be considered. In Murugan Mills13 Justice Wanchoo, speaking for the Court, made the following observations: The right of the employer to terminate the services of his workman under a standing order like clause 17(a) in the present case, which amounts to a claim to hire and fire an employee as
268 Social Justice and Labour Jurisprudence the employer pleases and thus completely negatives security of service which has been secured to industrial employees through industrial adjudication, came up for consideration before the Labour Appellate Tribunal in Buckingham and Carnatic Co. Ltd vs Workers of the Company.14 The matter then came up before this Court also in Chartered Bank vs Chartered Bank Employees Union15 and the Management of U.B. Dutt and Co. vs Workmen of U.B. Dutt and Co,16 wherein the view taken by the Labour Appellate Tribunal was approved and it was held that even in a case like the present, the requirement of bona fides was essential and if the termination of service was a colourable exercise of power or as a result of victimisation or un-fair labour practice, the industrial tribunal would have the jurisdiction to intervene and set aside such termination. The form of the order in such a case is not conclusive and the Tribunal can go behind the order to find the reasons which led to the order and then consider for itself whether the termination was a colourable exercise of unfair labour practice. If it came to the conclusion that the termination was a colourable exercise of the power or was a result of victimisation or unfair labour practice, it would have the jurisdiction to intervene and set aside such termination. In that case the form of the order had no foul trace, but before the Tribunal, dereliction of duty and go-slow tactics were disclosed as the inarticulate reasons. This Court ruled: This clearly amounted to punishment for misconduct and therefore to pass an order under Cl. 17(a) of the Standing Orders in such circumstances was clearly a colourable exercise of the power to terminate the service of a workman under the provisions of the Standing Orders. The appellant contended that for the proposition that even where a management had the power to terminate the services of its employee without reasons but with notice pay, only the colourable exercise of that power invalidated it, and the Court could probe beneath the surface to check upon the bona fides behind the exercise of the power. If the reasons, including the termination, were victimisation, unfair labour practice or misconduct, it was foul play to avoid a fair enquiry and fall back upon the power to terminate simpliciter. There are myriad situations where an employer may, in good faith, have to reduce his staff, even though he may have only a good word for his employee. Simple termination is a weapon useable on such occasions and not when the master is willing to strike but afraid to wound. We have been referred to the Bihar State Road Transport Corporation case.17 The power of the Court to go behind language of the order is reaffirmed there. In Sudder Office18 the Court apparently laid stress on the Management’s right to terminate the services simpliciter under the terms of contract, where there was no lack of bonafides, unfair labour practice or victimisation. It is significant that this Court used language and laid down law very much like in the earlier cases and did refer to the precedents on the point. For instance, Justice Vaidialingam there observed: It is needless to point out that it has been held by this Court in The Chartered Bank, Bombay vs The Chartered Bank Employees Union19 that if the termination of service is a colourable exercise of the power vested in the management or as a result of victimisation or unfair labour practice, the Industrial Tribunal would have jurisdiction to intervene and set aside such termination. In order to find out whether the order of termination is one of termination simpliciter under the provisions of contract or of standing orders, the tribunal has ample jurisdiction to go into all the circumstances which led to the termination simpliciter. The manner of dressing up an order does not matter. The Court will lift the veil to view the reality or substance of the order. The Court, in that case, examined the circumstances in detail
Industrial Adjudication 269 to see whether a dismissal for misconduct was being masked as a simple send off with a month’s pay, and held ultimately: We are satisfied that the Management has passed the order of termination simpliciter and the order does not amount to one of dismissal as and by way of punishment. Of course, loss of confidence in the workmen was alleged by the management and the Court found that it was not a camouflage. It may be noticed that in that case the workman was being entrusted with stores worth several lakhs of rupees, some goods were lost from the stores and the Union was informed by the Management that it had lost confidence in the workmen. In the written statement before the Labour Court, the management alleged that the workman was the head godown-clerk who was the custodian of the company’s property, the post being one of trust and confidence. It is noteworthy that in the High Court the workman did not even file a counter-affidavit and the counsel for union and the workman agreed that the order of termination was not a camouflage to cover up what really was an order of dismissal. He merely urged that the termination of the services was really by way of dismissal. In this conspectus of circumstances, this Court found that the Head Clerk, in charge of the engineering godown and responsible for the maintenance of considerable stores, held a sensitive position. This Court observed: The entire basis of the Labour Court’s award for holding that the order is one of dismissal is its view that the management has invoked clause 9 to camouflage its action. When that approach has been given up on behalf of the workman before the High Court, the reasoning of the Labour Court falls to the ground and the High Court has acted within the jurisdiction under Article 226 when it set aside the order of the Labour Court, especially when there has been no finding of victimisation, unfair labour practices or mala fides recorded against the management. To conclude, we are satisfied that the High Court was justified in setting aside the order of the Labour Court. We have gone into this decision at length to disabuse the impression that a new defence mechanism to protect termination of service simpliciter, viz. loss of confidence, had been propounded in this ruling. We do not agree that any such innovation has been made. The Air India Corporation case20 may seem to support the ‘no confidence’ doctrine, but a closer study contradicts any such view. Of course, the management placed great reliance on this ruling. Needless to say, this recognised the power of the Tribunal to go behind the form of the order, look at the substance and set aside what may masquerade as termination simpliciter, if in reality it cloaked a dismissal for misconduct as ‘a colourable exercise of power by the management’. The Court repeated that an industrial employer cannot ‘hire and fire’ his workmen on the basis of an unfettered right under the contract of employment. On the facts of the Air India case 21 the Court concluded that it was ‘not possible to hold this order to be based on any conceivable misconduct’. Special reference was made to the grave suspicion regarding the complainant’s private conduct with airhostesses. Where no misconduct spurs the action and a delicate unsuitability for the job vis-à-vis the young woman in employment in the same firm is strongly suspected, resort to termination simpliciter cannot be criticised as a mala fide machination. In that background, the action was held to be bona fide and the overall unsuitability led to a loss of confidence in the employee. Not that the loss of confidence was exalted as a ground, but the special circumstances of the case exonerated bad faith in discharge simpliciter. Before concluding the discussion, we may refer to the case of Delhi Transport Undertaking vs Goel 22 adverted to by the Labour Court. Indeed, that decision turned on Regulation framed under the Delhi Transport Authority Act, 1950 and not on pure industrial law or construction of the Standing orders. Moreover, the Court, in that case, appears to have discussed rulings under Article 311 also. However, on the facts of that case, the court was satisfied that the order of termination was not a disguise or cloak for dismissing the employee and the ground given
270 Social Justice and Labour Jurisprudence that he was a cantankerous person undesirable to be retained was good. We do not read the Delhi Transport case 23 to depart from Murugan Mills24 case. Indeed, the latter did not, and maybe could not, overhaul the former. The above study of the chain of rulings brings out the futility of the contention that subsequent to Murugan Mills25 case, colourable exercise of power has lost validity and loss of confidence has gained ground. The law is simply this: The Tribunal has the power and, indeed, the duty to X-ray the order and discover its true nature, if the object and effect, if the attendant circumstances and the ulterior purpose be to dismiss the employee because he is an evil to be eliminated. But if the management, to cover up the inability to establish by an enquiry, illegitimately but ingeniously passes an innocent looking order of termination simpliciter, such action is bad and is liable to be set aside. Loss of confidence is no new armour for the management, otherwise security of tenure, ensured by the new industrial jurisprudence and authenticated by a catena of cases of this Court, can be subverted by this neo-formula. Loss of confidence in the Law will be the consequence of the loss of confidence doctrine. In the light of what we have indicated, it is clear that loss of confidence is often a subjective feeling or individual reaction to an objective set of facts and motivations. The Court is concerned with the latter and not with the former, although circumstances may exist which justify a genuine exercise of the power of simple termination. In a reasonable case of a confidential or responsible post being misused or a sensitive or strategic position being abused, it may be a high risk to keep the employee, once suspicion has started and a disciplinary enquiry cannot be forced on the master. There, a termination simpliciter may be bona fide, not colourable, and loss of confidence may be evidentiary of good faith of the employer. In the present case, the catalogue of circumstances set out in the earlier part of the judgment strikes a contrary note. The worker was not told when he wrote; the Union was not disclosed when they demanded; the Labour Court was treated to verbal statements like very reliable sources and other credulous phrases without a medium of evidence to prove bona fides. Some testimony of unseemly attempts by the workman to get secrets outside his orbit, some indication of the source of suspicion, some proof of the sensitive or strategic role of the employee, should and would have been forthcoming had the case been bona fide. How contradictory that even when a strong suspicion of leaking out sensitive secrets was being entertained about the employee, he was being given special ipse loquitur. Circumstances militate against the ‘I say so’ of M.W. 1 that the management had suffered an ineffable loss of confidence. To hit below the belt by trading legal phrases is not Industrial Law. We are constrained to express ourselves unmistakably lest industrial unrest induced by wrongful termination based on convenient loss of confidence should be generated. Before we conclude we would like to add that an employer who believes or suspects that his employee, particularly one holding a position of confidence, can, if the confidence and terms of the employment permit, terminate his employment and discharge him without any stigma attaching to the discharge. But such belief or suspicion of the employer should not be a mere whim or fancy. It should be bona fide and reasonable. It must rest on some tangible basis and the power has to be exercised by the employer objectively, in good faith, which means honestly, with due care and prudence. If the exercise of such power is challenged on the ground of being colourable or mala fide or an act of victimisation or unfair labour practice, the employer must disclose to the Court the ground of his impugned action so that the same may be tested judicially. In the instant case, this has not been done. There is only the ipso dixit of the employer that he was suspecting since 1968 that the appellant was divulging secrets relating to his business. The employer has not disclosed the grounds on which this suspicion arose in 1968. Further, after 1968, the appellant was given two extra increments, in addition to his normal increments, as stated already, in appreciation of his hard work. This circumstance completely demolishes even the whimsical and tenuous stand taken by the employer. It was manifest therefore that the impugned action was not bona fide.
Industrial Adjudication 271 It was urged by the counsel for the employer that the question whether or not the employer had lost confidence in the employee was essentially one of fact, that this Court should not disturb the finding of fact. This Court, in appeal, as a rule of practice, is loath to interfere with a finding of fact recorded by that trial Court. But if such a finding is based on no evidence, or is so unreasonable or grossly unjust that no reasonable person would judicially arrive at that conclusion, it is the duty of this Court to interfere and set matters right. The case before us is one such instance, where we are called upon to do so. The Labour Court has misled itself on the law and we set aside its order. The workman will be reinstated with back wages. However, the management will be free, if it has sufficient material and it so advised, to proceed against the workman for misconduct or on other grounds valid in law.
The merit of this case lies in understanding the reasoning involved in the decision, since an employer may adopt this type of action under the specified guise to dispense with the services of an employee in an easy manner. But the jurisprudence that was laid down in this case would stand like a rock in resisting the prerogative of an employer’s freedom to ‘hire and fire’ his workmen if undertaken without good faith.
Powers of the Labour Court to Give Appropriate Relief to Laid-off Workmen where Chapters VA and VB of the Industrial Disputes Act, 1947, Have No Application We are highly appreciative of the opportunity to learn from the concurring view of Justice V.R. Krishna Iyer that relate to the interpretation of the legislative framework of the Industrial Disputes Act, 1947, especially Chapters VA and VB. In fact, his assertion was that in cases where Chapters VA and VB of the Act are applicable, the law is restrictive in providing the social security measures by way of compensation. But in cases, where these chapters have no application, it is open for the labour courts or tribunals to award full wages as compensation, in the absence of any agreement contrary to it in the standing orders of the establishment.
The Workmen of the Firestone Tyre and Rubber Company of India, vs the Firestone Tyre and Rubber Company 26 In this case, the Supreme Court considered the entitlement of workmen who were not governed by the provisions of the Industrial Disputes Act, 1947, to lay-off compensation. THE FACTS OF THE CASE The respondent company in this appeal has its head office at Bombay. It manufactures tyres at its Bombay factory and sells the tyres and other accessories in markets throughout the country. The company has a distribution office at Nicholson Road, Delhi. There was a strike in the Bombay factory from 3 March 1967 to 16 May 1967, and again from 4 October 1967. As a result of the strike, there was a short supply of tyres etc. to the distribution office. In the Delhi
272 Social Justice and Labour Jurisprudence office, there were 30 employees at the time. Of these, 17 workmen were laid off by the management as per their notice dated 3 February 1968, which was to the following effect: Management is unable to give employment to the following workmen due to much reduced production in the company’s factory resulting from strike in one of the factory departments. These workmen are, therefore, laid off in accordance with law with effect from 5 February 1968. The lay-off of the 17 workmen whose names were mentioned in the notice was recalled by the management on 22 April 1968. The workmen were not given wages or compensation for the period of lay-off. An industrial dispute was raised and referred by the Delhi administration on 17 April 1968, even when the lay-off was in oper-ation. The reference was in the following terms: Whether the action of the management to ‘lay off ’ 17 workmen with effect from 5 February 1968 is illegal and/or unjustified, and if so, to what relief are these workmen entitled? The presiding officer of tribunal held that the workmen were not entitled to any lay-off compensation. This is an appeal by their union.
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE UNTWALIA We were informed at the Bar that some of the workmen out of the batch of 17 have settled their disputes with the management and their cases were not represented by the union in this appeal. Hence this judgment will not affect the compromise or the settlement arrived at between the management and some of the workmen. The question which falls for our determination is whether the management had a right to lay off their workmen and whether the workmen are entitled to claim wages or compensation. The simple dictionary meaning according to the Concise Oxford Dictionary of the term ‘layoff ’ is ‘period during which a workman is temporarily discharged’. The term ‘lay-off ’ has been well-known in the industrial arena. Disputes were often raised in relation to the ‘lay-off ’ of the workmen in various industries. Sometimes compensation was awarded for the period of lay-off but many a time when the lay-off was found to be justified workmen were not found entitled to any wages or compensation. In Gaya Cotton & Jute Mills Ltd. vs Gaya Cotton & Jute Mills Labour Union27 the standing orders of the company provided that the company could under certain circumstances ‘stop any machine or machines or department or departments, wholly or partially for any period or periods without notice or without compensation in lieu of notice’. In such a situation for the closure of the factory for a certain period, no claim for compensation was allowed by the Labour Appellate Tribunal of India. We are aware of the distinction between a layoff and a closure. But just to point out the history of the law we have referred to this case.28 Then came an amendment in the Industrial Disputes Act, 1947—hereinafter referred to as the Act—by Act 43 of 1953. In Section 2, clause (kkk) was added to say: ‘Lay-off ’ (with its grammatical variations and cognate expressions) means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or for any other reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched.
Industrial Adjudication 273 Explanation:- Every workman whose name is borne on the muster rolls of the industrial establishment and who presents himself for work at the establishment at the time appointed for the purpose during normal working hours on any day and is not given employment by the employer within two hours of his so presenting himself shall be deemed to have been laid off for that day within the meaning of this clause: Provided that if the workman, instead of being given employment at the commencement of any shift for any day is asked to present himself for the purpose during the second half of the shift for the day and is given employment then, he shall be deemed to have been laid off only for one-half of that day: Provided further that if he is not given any such employment even after so presenting himself, he shall not be deemed to have been laid off for the second half of the shift for the day and shall be entitled to full basic wages and dearness allowance for that part of the day. By the same Amending Act, Chapter VA was introduced in the Act to provide for lay-off and retrenchment compensation. Section 25A excluded the industrial establishments in which less than 50 workmen on an average per working day had been employed in the preceding calendar month from the application of Sections 25C to 25E. Section 25C provides for the right of laidoff workmen for compensation and broadly speaking compensation allowable is 50 per cent of the total of the basic wages and dearness allowance that would have been payable to the workman had he not been laid off. It would be noticed that the sections dealing with the matters of lay-off in Chapter VA are not applicable to certain types of industrial establishments. The respondent is one such establishment because it employed only 30 workmen at its Delhi office at the relevant time. In such a situation the question beset with difficulty of solution is whether the laidoff workmen were entitled to any compensation, if so, what? We shall now read Section 25J. It says: (1) The provisions of this Chapter shall have effect notwithstanding anything inconsistent therewith contained in any other law including standing orders made under the Industrial Employment (Standing Orders) Act, 1946: Provided that where, under the provisions of any other Act or Rules, orders or notifications issued thereunder or under any standing orders or under any award, contract of service or otherwise, a workman is entitled to benefits in respect of any matter which are more favourable to him than those to which he would be entitled under this Act, the workman shall continue to be entitled to the more favourable benefits in respect of that matter, notwithstanding that he receives benefits in respect of other matters under this Act. (2) For the removal of doubts, it is hereby declared that nothing contained in this Chapter shall be deemed to affect the provisions of any other law for the time being in force in any State in so far as that law provides for the settlement of industrial disputes, but the rights and liabilities of employers and workmen in so for as they relate to lay-off and retrenchment shall be determined in accordance with the provisions of this Chapter. The effect of the provisions aforesaid is that for the period of lay-off in an industrial establishment to which the said provisions apply, compensation will have to be paid in accordance with Section 25C. But if a workman is entitled to benefits which are more favourable to him than those provided in the Act, he shall continue to be entitled to the more favourable benefits. The rights and liabilities of employers and workmen in so far as it relate to lay-off and retrenchment, except as provided in Section 25J, have got to be determined in accordance with the provisions of Chapter VA. The ticklish question which does not admit of an easy answer is as to the source of the power of management to lay off a workman. The employer has a right to terminate the services of a workman. Therefore, his power to retrench presents no difficulty as retrenchment means the termination by the employer of the service of a workman for any reason whatsoever as mentioned
274 Social Justice and Labour Jurisprudence in clause (00) of Section 2 of the Act. But lay-off means the failure, refusal or inability of employer on account of contingencies mentioned in clause (kkk) to give employment to a workman whose name is borne on the muster rolls of his industrial establishment. It has been called a temporary discharge of the workman or a temporary suspension of his contract of service. Strictly speaking, it is not so. It is merely a fact of temporary unemployment of the workman in the work of the industrial establishment. Mr S.N. Andley submitted with reference to the explanation and the provisos appended to clause (kkk) that the power to lay-off a workman is inherent in the definition. We do not find any words in the definition clause to indicate the conferment of any power on the employer to lay off a workman. His failure or inability to give employment by itself militates against the theory of conferment of power. The power to lay off for the failure or inability to give employment has to be searched somewhere else. No section in the Act confers this power. There are two small matters which present some difficulty in the solution of the problem. In clause (i) of the explanation appended to sub-section (2) of Section 25B the words used are: ‘he has been laid off under an agreement or as permitted by standing orders made under the Industrial Employment (Standing Orders) Act, 1946, or under this Act or under any other law applicable to the industrial establishment’ indicating that a workman can be laid off under the Industrial Disputes Act also. But it is strange to find that no section in Chapter VA in express language or by necessary implication confers any power, even on the management of the industrial establishment to which the relevant provisions are applicable, to lay off a workman. Clause (ii) of Section 25E says: No compensation shall be paid to a workman who has been laid off— If he does not present himself for work at the establishment at the appointed time during normal working hours at least once a day. This indicates that there is neither a temporary discharge of the workman nor a temporary suspension of his contract of service. Under the general law of master and servant, an employer may discharge an employee either temporarily or permanently but that cannot be without adequate notice. Mere refusal or inability to give employment to the workman when he reports for duty on one or more grounds mentioned in clause (kkk) of Section 2 is not a temporary discharge of the workman. Such a power, therefore, must be found out from the terms of contract of service or the standing orders governing the establishment. In the instant case the number of workmen being only 30, there were no standing orders certified under the Industrial Employment (Standing Orders) Act, 1946. Nor was there any term of contract of service conferring any such right of lay-off. In such a situation the conclusions seem to be inescapable that the workmen were laid off without any authority of law or the power in the management under the contract of service. In industrial establishments where there is a power in the management to lay off a workman and to which the provisions of Chapter VA apply, the question of payment of compensation will be governed and determined by the said provisions. Otherwise Chapter VA is not a complete Code as was argued on behalf of the respondent company in the matter of payment of lay-off compensation. This case, therefore, goes out of Chapter VA. Ordinarily and generally the workmen would be entitled to their full wages but in a reference made under Section 10(1) of the Act, it is open to the tribunal or the court to award a lesser sum finding the justifiability of the lay-off. In Management of Hotel Imperial, New Delhi vs Hotel Workers’ Union29 in a case of suspension of a workman it was said by Justice Wanchoo, as he then was, delivering the judgment on behalf of the Court at page 482 (of SCR): (at p. 1345 of AIR): Ordinarily, therefore, the absence of such power either as an express term in the contract or in the rules framed under some statute would mean that the master would have no power to
Industrial Adjudication 275 suspend a workman and even if he does so in the sense that he forbids the employee to work, he will have to pay wages during the so-called period of suspension. Where, however, there is power to suspend either in the contract of employment or in the statute or the rules framed thereunder, the suspension has the effect of temporarily suspending the relation of master and servant with the consequence that the servant is not bound to render service and the master is not bound to pay. The same principle was reiterated in V. P. Gindroniya vs State of Madhya Pradesh.30 We have referred to the suspension cases because in our opinion the principles governing the case of lay-off are very akin to those applicable to a suspension case. In Veiyra (M.A.) vs Fernandez31 a Bench of the Bombay High Court opined that under the general law the employer was free to dispense with the services of a workman, but under the Industrial Disputes Act he was under an obligation to lay him off; that being so, the action of layoff by the employer could not be questioned as being ultra vires. We do not think that the view expressed by the Bombay High Court is correct. There is an important decision of this Court in Workmen of Dewan Tea Estate vs Management32 on which reliance was placed heavily by Mr M.K. Ramamurthi appearing for the appellant and also by Mr Andley for the respondent. One of the questions for consideration was whether Section 25C of the Act recognises the common law right of the management to declare a lay-off for reasons other than those specified in the relevant clause of the standing order. While considering this question, Justice Gajendragadkar, as he then was, said at page 554 (of SCR): (at p. 1461 of AIR) The question which we are concerned with at this stage is whether it can be said that Section 25C recognises a common law right of the industrial employer to lay off his workmen. This question must, in our opinion, be answered in the negative. When the laying off of the workmen is referred to in Section 25C, it is the laying off as defined by Section 2(kkk) and so, workmen who can claim the benefit of Section 25C must be workmen who are laid off and laid off for reasons contemplated by Section 2(kkk); that is all that Section 25C means. Then follows a sentence which was pressed into service by the respondent. It says: If any case is not covered by the standing orders, it will necessarily be governed by the provisions of the Act, and lay-off would be permissible only where one or the other of the factors mentioned by Section 2(kkk) is present, and for such lay-off compensation would be awarded under Section 25C. In our opinion, in the context, the sentence aforesaid means that if the power of lay-off is there in the standing orders but the grounds of lay-off are not covered by them, rather, are governed by the provisions of the Act, then lay-off would be permissible only on one or the other of the factors mentioned in clause (kkk). Subsequent discussions at pages 558 and 559 (of SCR): (at p. 1463 of AIR) lend ample support to the appellant’s argument that there is no provision in the Act specifically providing that an employer would be entitled to lay off his workmen for the reasons prescribed by Section 2 (kkk). Mr Andley placed strong reliance upon the decision of this Court in Sanghi Jeevaraj Ghewar Chand vs Secretary, Madras Chillies, Grain Kirana Merchants Workers’ Union.33 The statute under consideration in this case was the Payment of Bonus Act, 1965 and it was held that the Act was intended to be a comprehensive and exhaustive law dealing with the entire subject of bonus of the persons to whom it should apply. The Bonus Act was not to apply to certain establishments. Argument before the Court was that bonus was payable de hors the Act in such
276 Social Justice and Labour Jurisprudence establishments also. This argument was repelled and in that connection it was observed at page 381 (of SCR): (at p. 540 of AIR): It will be noticed that though the Industrial Disputes Act confers substantive rights on workmen with regard to lay-off, retrenchment compensation, etc., it does not create or confer any such statutory right as to payment of bonus. Bonus was so far the creature of industrial adjudication and was made payable by the employers under the machinery provided under that Act and other corresponding Acts enacted for investigation and settlement of disputes rose thereunder. There was, therefore, no question of Parliament having to delete or modify item 5 in the Third Schedule to Industrial Disputes Act or any such provision in any corresponding Act or its having to exclude any right to bonus thereunder by any categorical exclusion in the present case. And finally it was held at page 385 (of SCR): (at p. 543 of AIR): Considering the history of the legislation, the background and the circumstances in which the Act was enacted, the object of the Act and its scheme, it is not possible to accept the construction suggested on behalf of the respondents that the Act is not an exhaustive Act dealing comprehensively with the subject-matter of bonus in all its aspects or that Parliament still left it open to those to whom the Act does not apply by reason of its provisions either as to exclusion or exemption to raise a dispute with regard to bonus through industrial adjudication under the Industrial Disputes Act or other corresponding law. In a case of compensation for lay-off the position is quite distinct and different. If the term of contract of service or the statutory terms engrafted in the standing orders do not give the power of lay-off to the employer, the employer will be bound to pay compensation for the period of lay-off which ordinarily and generally would be equal to the full wages of the concerned workmen. If, however, the terms of employment confer a right of lay-off on the management, then, in the case of an industrial establishment which is governed by Chapter VA, compensation will be payable in accordance with the provisions contained therein. But compensation or no compensation will be payable in the case of an industrial establishment to which the provisions of Chapter VA do not apply, and it will be so as per the terms of the employment. In Kanhaiya Lal Gupta vs Ajeet Kumar Dey,34 a learned Single Judge of the Allahabad High Court seems to have rightly held that in the absence of any term in the contract of service or in the statute or in the statutory rules or standing orders an employer has no right to lay off a workman without paying him wages. A learned Single Judge of the Punjab and Haryana High Court took an identical view in the case of Steel and General Mills Co. Ltd. vs Additional District Judge, Rohtak.35 The majority view of the Bombay High Court in K.T. Rolling Mills Private Ltd. vs M.R. Meher,36 that it is not open to the industrial tribunal under the Act to award lay-off compensation to workmen employed in an ‘industrial establishment’ to which Section 25-C does not apply, is not correct. The source of the power of the employer to lay off workmen does not seem to have been canvassed or discussed by the Bombay High Court in the said judgment. In the case of the Delhi office of the respondent the tribunal has held that the lay-off was justified. It was open to the tribunal to award a lesser amount of compensation than the full wages. Instead of sending back the case to the tribunal, we direct that 75 per cent of the basic wages and dearness allowance would be paid to the workmen concerned for the period of layoff. As we have said above this will not cover the case of those workmen who have settled or compromised their disputes with the management. Civil Appeal Nos. 1857–1859 (NL) of 1970 In these appeals the facts are identical to those in the other appeal. There were only 33 employees in the Madras office of the respondent company. Certain workmen were laid off for identical
Industrial Adjudication 277 reasons from 5 February 1968. The lay-off was lifted on 29 April 1968. The concerned workmen filed petitions under Section 33C(2) of the Act for computation of their wages for the period of lay-off. Holding that the lay-off was justified and valid the Presiding Officer of the Additional Labour Court, Madras had dismissed their applications for salary and allowances for the period of lay-off. Hence these appeals. In a reference under Section 10(1) of the Act is open to the tribunal or the court to award compensation which may not be equal to the full amount of basic wages and dearness allowance. But no such power exists in the Labour Court under Section 33C(2) of the Act. Only the money due has got to be quantified. If the lay-off could be held to be in accordance with the terms of the contract of service, no compensation at all could be allowed under Section 33C(2) of the Act, while, in the reference some compensation could be allowed. Similarly on the view expressed above that the respondent company had no power to lay off any workmen, there is no escape from the position that the entire sum payable to the laid-off workmen except the workmen who have settled or compromised, has got to be computed and quantified under Section 33C(2) of the Act for the period of lay-off. For the reasons stated above all the appeals are allowed. In Civil Appeal No. 2307/1969 in place of the order of the Tribunal, an order is made on the lines indicated above. And in Civil Appeals 1857 to 1858/1970 the orders of the Labour Court are set aside and the cases of the appellants are remitted back to that Court for computation and quantification of the sums payable to the concerned workmen for the period of lay-off.
The Power of Tribunals to Scrutinise the Employer’s Action under Section 33(2) The insertion of Section 33 was by the Amendment Act of 1956. This section provides basic protection to workers in the circumstances of their collective bargaining efforts with the employer. The service conditions pertaining to workmen in an industry are a gradual bargaining process. Workers are often very precariously placed when disputes pertaining to the service conditions are admitted for adjudication. In the circumstances, it is natural to assume that the employer may be prejudiced and may go to the extent of denuding the workers of the opportunity to fight their case effectively. In this context, the protection provided in Section 33 of the Act is significant.
Mahendra Singh Dhantwal vs Hindustan Motors 37 In this case, the Supreme Court considered the precise scope of Section 33 2(b) of the Industrial Disputes Act, 1947.38 In view of the series of amendments to Section 33, the Supreme Court had to consider precisely the scope of the powers of a tribunal in entertaining an application under Section 33 of the Act. This matter has much importance as far as the interpretation is concerned. THE FACTS OF THE CASE This is an appeal at the instance of the workman on a certificate of the Calcutta High Court from the decision of the Division Bench, reversing the earlier judgement and order of the
278 Social Justice and Labour Jurisprudence learned single judge against the award of the industrial tribunal, made under Section 33A of the Industrial Disputes Act. The appellant was employed in the company since 3 August 1949. On 3 August 1956, the workman entered into an agreement of service with the company, wherein the first clause reads as follows: The Employer agrees to and does hereby engage the services of the employee for a period of 5 years beginning with dated 1-6-1956 and thereafter until this agreement shall be determined by either party hereto giving to the other 3 months’ notice in writing of such intended termination. Provided that in case employer finds the employee’s work satisfactory, employer shall have the option to extend the period of service by a further term of 3 years. The workman went on two months’ leave to Banaras for a change some time in 1960. He requested for extension of leave for one month on medical grounds. He actually sent an application on 8 August 1960, along with a medical certificate, praying for extension of his leave. The company asked the workman to get himself examined by the company’s medical officer within ten days. As the workman was lying ill at Banaras, he could not comply with the directions of the company. On 5 September 1960, he sent another telegram, followed by a formal application enclosing a medical certificate, for extension of his leave. On 15 September 1960, the company sent a letter to him terminating his services on the ground of habitual absence, which is misconduct under the company’s standing orders. At the time of this termination, there was an industrial dispute pending between the company and its workmen. Since the company did not ask for approval of its order from the industrial tribunal, the workman made a complaint to the tribunal under Section 33A of the Act. The company contested the application. The Tribunal made its award on 27 September 1962, ordering restatement of the workman with 50 per cent of his back wages for the period of his forced unemployment as compensation, with a direction that the award should be given effect to not later than one month from the publication of the award, which was on 26 October 1962. After a little over two months of the publication of the award—to be precise, on 4 February 1963—the company intimated to the workman to rejoin his service. The workman reported for duty the following day, on 5 February 1963. On 16 February 1963, the company invoked clause (1) of the agreement and terminated the services of the workman by paying three months’ salary in lieu of notice. This is the second round of litigation with which the Court was concerned in this appeal. Since an industrial dispute was pending even on the date of termination of his services and the company did not apply to the tribunal for approval of the order, the workman again made a complaint to the tribunal, as on the previous occasion, under Section 33A of the Act. The tribunal accepted the complaint and held as follows: In my opinion, the company has really dismissed the petitioner for a piece of conduct which must have appeared as misconduct in the eye of the company. The tribunal observed that the company, in substance, dismissed the workman for misconduct since the workman became ‘odious to the company’ on account of his earlier success before the tribunal in his application under Section 33A of the Act. The tribunal, therefore, ordered his reinstatement, with full back wages for the period of his forced unemployment as compensation. This time the company did not accept the award, although on the earlier occasion the company did not choose to litigate and reinstated him as ordered by the tribunal. The company moved the Calcutta High Court to quash the award. The learned single judge refused to interfere with the award holding that ‘the reason might have been the old reason of
Industrial Adjudication 279 dismissal’. Further, he observed that ‘the circumstances relied on by the Tribunal are not wholly irrelevant and the inference drawn by the Tribunal cannot be characterised as unreasonable’. The company appealed to the Division Bench of the High Court and the appeal was accepted. It is very much relevant to have a look at the holding of the Division Bench, is very relevant, which is as follows: It may be that having regard to the sequence of events that took place in this case the termination of service of the respondent No. 1 by the letter of 16th February 1963 may be regarded as a colourable exercise of the power under the contract of employment or may even be regarded as one of unfair labour practice or mala fide, but the discharge cannot be said to be for any misconduct. There is no evidence for discharge on any specific misconduct. The definite case of respondent No. 1 has been that it was by way of retaliatory measure that his services were terminated. This may be true and may show that the action on the part of the appellant company was mala fide. But until it is established that there has been a contravention of Section 33 of the Act which would create jurisdiction in the Industrial Tribunal to entertain an application under Section 33A, or in other words, unless it is established that there has been discharge for misconduct, the tribunal had no jurisdiction to set aside the order of termination in an application under Section 33A. On the application by the workman under Article 133(1) of the Constitution, the matter reached the Supreme Court.
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE P.K. GOSWAMI We should at the outset observe that this is not an appeal against the award of the Industrial Tribunal but is only directed against the judgment of the High Court under Article 226 of the Constitution. In an application under Article 226 of the Constitution the High Court was concerned only with the question of jurisdiction of the Tribunal in entertaining the application under Section 33A of the Act. The question of jurisdiction again was intimately connected with the question whether the termination of service was for misconduct of the workman. The learned single Judge accepted the finding of the Tribunal when it held that the discharge was nothing but dismissal for misconduct and in that view of the matter did not find any justification for interfering with the award. According to the learned Judge, therefore, no question of lack of jurisdiction of the Tribunal arose to merit interference with the award under Article 226 of the Constitution. The Division Bench, however, looked at the matter from a different view point. It assumed that the action of the management was even mala fide and so it could be wrongful and in an appropriate reference under Section 10 of the Act the workman might be able to get proper relief. The High Court, however, came to the conclusion that since clause (1) of the agreement was invoked by the employer it was not a case of discharge for misconduct and that being the position the Tribunal had no jurisdiction to entertain the complaint under Section 33A even though the action of the company might be as a result of unfair labour practice. Mr Navnit Lal on behalf of the workman has assailed the conclusion of the Division Bench while Mr Sen submits that the decision is legally unquestionable. The question that arises for consideration relates to the applicability of the proviso to Section 33(2)(b) of the Act as amended in 1956.39 Section 33(2)(b) at the material time reads as follows: 33(2) During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with the standing orders applicable to a workman concerned in such dispute.
280 Social Justice and Labour Jurisprudence (b) for any misconduct not connected with the dispute, discharge or punish, whether by dismissal or otherwise, that workman: Provided that no such workman shall be discharged or dismissed, unless he has been paid wages for one month and an application has been made by the employer to the authority before which the proceeding is pending for approval of the action taken by the employer. We may also read Section 33A of the act as that is the section under which the complaint was originally made by the workman to the Industrial Tribunal. 33A: Where an employer contravenes the provisions of Section 33 during the pendency of proceedings before a Labour Court, Tribunal or National Tribunal any employee aggrieved by such contravention, may make a complaint in writing in the prescribed manner to such Labour Court, Tribunal or National Tribunal and on receipt of such complaint that Labour Court, Tribunal or National Tribunal shall adjudicate upon the complaint as if it were a dispute referred to or pending before it, in accordance with the provisions of this Act and shall submit its award to the appropriate Government and the provisions of this Act shall apply accordingly. It is clear that the foundation of jurisdiction of the Tribunal to entertain a complaint under Section 33A is the contravention of Section 33 of the Act. Section 33 may be contravened in a variety of ways. We are concerned in this appeal only with one type of contravention, namely, that the employer did not make any application to the Tribunal for approval of the order of termination of service of the workman. There is no dispute between the parties in this appeal that there was an industrial dispute pending before the Tribunal in which the workman was concerned and that the particular termination had nothing to do with that dispute. The only point on which the parties differ is as to the nature of the order of termination of service. The employer claims it to be a termination simpliciter in exercise of its right under the contract. The workman on the other hand contends that termination of his service was meted out as a punishment for avenging the defeat of the employer in an earlier litigation under Section 33A at the instance of the workman. In other words the workman contends that the order, although purported, ex facie, to be a termination under the terms of the agreement, is in truth and reality an order of dismissal of misconduct. From the provisions of Section 33 it is manifest that punitive action by the employer in whatever form it may be passed is permissible against an ordinary workman, even during the pendency of proceedings before the Tribunal provided that the employer pays one month’s wages and also applies to the concerned Tribunal for approval of his action. Since the action is punitive, namely, dismissal or discharge for misconduct, the Tribunal has to oversee the action to guarantee that no unfair labour practice or victimisation has been practised thereby. If the procedure of fair hearing has been observed the Tribunal has to find in an application under Section 33 that a prima facie case is made out for dismissal. If, on the other hand, there is violation of the principles of natural justice in the enquiry, the Tribunal can go into the whole question relating to the misconduct and come to its own conclusion whether the same is established. The employer has submitted that since the termination of the workman was in exercise of the right under the written agreement it was not a case of discharge or dismissal for misconduct and there was, therefore, no obligation on the employer to make an application under Section 33 of the Act and hence Section 33 has not been contravened and the application under Section 33A is not maintainable. The question that arises for decision in this appeal is whether if a particular order of termination of service is not on account of misconduct and is merely a termination simpliciter the employer is still required to make an application under Section 33 of the Act.
Industrial Adjudication 281 We have no doubt in our mind that Section 33(2)(b) makes it obligatory upon the employer to make an application to the Tribunal under the proviso only when he discharges or dismisses a workman for misconduct. It is submitted by Mr Sen that misconduct contemplated in Section 33(2)(b) must be a misconduct enumerated in the standing orders of the company. We are unable to accept this submission. Standing orders of a company only describe certain cases of misconduct and the same cannot be exhaustive of all the species of misconduct which a workman may commit. Even though a given conduct may not come within the specific terms of misconduct described in the standing orders, it may still be a misconduct in the special facts of a case, which it may not be possible to condone and for which the employer may take appropriate action. Ordinarily, the standing orders may limit the concept but not invariably so. When, therefore, the Tribunal has found as a fact after taking note of the history and the entire circumstances of the case that the termination was on account of misconduct of the employee it is difficult to hold that there is any manifest error of law committed by the Tribunal in reaching that conclusion only because the misconduct, as found, is not within the four corners of the description of the various misconducts mentioned in the company’s standing orders. It is not possible, therefore, to accept the submission that the Tribunal committed an error of law or of jurisdiction in entertaining the application under Section 33A. Termination simpliciter or automatic termination of service under the conditions of service or under the standing orders is outside the scope of Section 33 of the Act. This does not mean that the employer has the last word about the termination of service of an employee and can get away with it by describing it to be a simple termination in his letter of discharge addressed to the employee. It is also not a correct proposition of law that in case of a complaint under Section 33A the tribunal would be debarred from going into the question whether, notwithstanding the form of the order, in substance, it is an action of dismissal for misconduct and not termination simpliciter. The possibility that in an appeal against the award of the Tribunal this Court may have taken a different view about the termination does not affect the present case. Mr Navnit Lal relied on a decision of the Supreme Court in the Management of Murugan Mills Ltd. vs Industrial Tribunal Madras40 in support of his contention that even termination simpliciter is within the sweep of Section 33. That was a case where the workman’s services were terminated ‘because he deliberately adopted go-slow and was negligent in the discharge of his duty’. The Supreme Court in that case observed thus: His services were therefore terminated for dereliction of duty and go-slow in his work. This clearly amounted to punishment for misconduct and therefore to pass an order under the standing orders in such circumstances was clearly a colourable exercise of the power to terminate the services of a workman under the provision of the Standing Orders. Further the Court in the same case observed: In these circumstances the case was clearly covered by Cl. (b) of Sec. 33(2) of the Act as the services of the respondent were dispensed with during the pendency of a dispute by meting out the punishment of discharge to him for misconduct. The decision is, therefore, not an authority for the extreme proposition advanced by the appellant. Mr Navnit Lal also drew our attention to two decisions of the Madras High Court in Shyamala Studios vs Kannu Devar41 and Sri Rama Machinery Corporation (P) Ltd. Madras vs N.R. Murthi,42
282 Social Justice and Labour Jurisprudence in support of the above submission. Although the decision of the Supreme Court in Murugan Mills,43 case was noticed by the Madras High Court it does not appear to have correctly appreciated the ratio decidendi of that judgment. We are unable to hold that the Supreme Court in Murugan Mills44 case went to the extent of re-writing Section 33 by completely obliterating the concept of misconduct of a workman for which alone in a limited way the right of action for the employer is preserved during the span of pendency of proceedings before the Tribunal in the interest of discipline. To the extent the Madras decisions state that termination of services need not be for misconduct of the workman in order to attract Section 33(2)(b), we cannot agree. If the Tribunal finds that a particular termination of service of a workman is in truth and substance innocuous or in exercise of a bona fide right under the contract, Sction 33(2)(b) will not be applicable and necessarily there will be no contravention of Section 33A of the Act. In Air India Corporation, Bombay vs V. A. Rebello,45 this Court had to deal with the validity of an award made under Section 33A although the Labour Court in that case had held that the workman was guilty of misconduct and that his services were terminated for that reason. This Court did not agree with the aforesaid conclusion and dismissed the workman’s petition under Section 33A of the Act. In doing so this Court observed as follows: It is noteworthy that the ban is imposed only in regard to action taken for misconduct, whether connected or unconnected with the dispute. The employer is, therefore, free to take action against his workmen if it is not based on any misconduct on their part. We are, therefore, clearly of opinion that the single Judge is right in not interfering with the award under Article 226 of the Constitution and the Division Bench is wrong in doing so. It is true that on the face of the order of termination the company invoked clause (1) of the agreement and even so it was open to the Tribunal to pierce the veil of the order and have a close look at all the circumstances and come to a decision whether the order was passed on account of certain misconduct. This is a finding of fact which could not be interfered with under Article 226 of the Constitution unless the conclusion is perverse, that is to say, based on no evidence whatsoever. We are, however, unable to say so having regard to the facts and circumstances described by the Tribunal in its order. It is, however, unexceptionable that if an employer passes an order of termination of service in exercise of his right under a contract or in accordance with the provision of the standing orders and the Tribunal finds that the order is not on account of any misconduct, the question of violation of Sec. 33 would not arise. There remains, however, another aspect to which the Tribunal did not properly address. The workman in this case had a contract of employment only for 8 years at the most. The reinstatement in his case, therefore, cannot extend beyond a period of eight years from 1 June 1956 and the contract of employment would have automatically terminated on 31 May 1964. The Tribunal awarded reinstatement on 24 March 1964, when even the employer did not bring it to its notice that the contract of employment would terminate in May 1964. We cannot be oblivious to the plight of this workman in his unequal fight with a big company. He was serving the company since 1949 for about eleven years when he was first dismissed in 1960. He has been involved in litigation since 1960 up-till today except for a lull for eleven days on his reinstatement after the first award. Eleven years in actual service and sixteen years in litigation is a doleful tale by itself. We, therefore, feel that, in the interest of industrial peace and above all to draw a final curtain to this unhappy litigation, we would be justified in quantifying the compensation payable to the workman in this case to a sum of Rs 20,000 only in lieu of reinstatement with full back wages as ordered by the Tribunal, which we accordingly order. We may also observe that Mr Sen,
Industrial Adjudication 283 fairly enough, had made it clear before us in the course of hearing that even if the company succeeded in this Court it would be prepared to pay to the workman a sum of Rs 10,000 on compassionate grounds.
The Discharge of a Workman during the Pendency of the Proceedings and the Powers of the Labour Court to Provide Appropriate Relief The public sector undertakings are the instrumentalities of the state under Article 12 of the Constitution. The employment under the public undertakings is public employment and public property. It is not only the undertakings but also the society which has a stake in their proper and efficient working. Both discipline and devotion are necessary for efficiency. To ensure both, the service conditions of those who work for them must be encouraging, certain and secured but not vague and whimsical.
Municipal Corporation of Delhi vs Rasal Singh and others 46 In this case, the tribunal was so harsh towards the conduct of the corporation that Justice V.R. Krishna Iyer, speaking for the majority, went to the extent of diluting its observations while upholding its award. Here, Justice Iyer clearly exhibits the trend of judicial restraint on the part of the highest court of the land, in spite of the fact that the corporation’s oblique motives are very clear. THE FACTS OF THE CASE The appellant is a public sector corporation which is supposedly a model employer. The appellees are petty workers who have not been confirmed in the registers, but are on the payroll as casual, though continuous, workers. The break is for a few days and the financial burden cast by the award is around Rs 5,000. And yet, the ‘model employer’ has lavished on these hundred appeals to the Supreme Court of India supposedly on principle.
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Poor reflection on ‘principles’ prompting public sector undertakings and on prudence in litigation policy and outlay and the scant regard for the Supreme Court being approached only on supreme issues. These observations are an expression of this court’s allergy to the frequency with which, in the name of ‘principle’, the State and public sector institutions spiral up the litigation ladder and spend considerable sums of public money in cases which should have been adjusted by imaginative, conciliatory and wise attitudes, while professing profound concern for the welfare of labour. An aware employer should be the last litigant, costs in court being unproductive and even counter-productive. The facts in the single dispute spread out into a hundred appeals are that the workers were jettisoned for a few days and, later, re-adsorbed, thus depriving the workers of the small wages for short spells. An industrial dispute was pending at this time relating to the status of the workers as regular employees or only casual workers though ‘continuously on the muster rolls’. Discharge of these workers during the pendency of the dispute before the Tribunal attracted Section 33 of
284 Social Justice and Labour Jurisprudence the Act which was invoked by the affected workmen. The plea of the Municipal Corporation of budgetary provision having petered out as justifying the non-employment was disbelieved by the Tribunal. Oblique motives such as a clever move to avoid a continuous run of 240 days of work which entails certain responsibilities were alleged by the workmen and upheld by the Tribunal. But, having heard counsel on both sides, we are happy to hold that since the award is essentially just it must stand and, while the Municipal Corporation has erred in refusing, from whatever motive work for a few days, the Tribunal had read more into the mind of the Commissioner than was warranted by the record. We are not satisfied that the appellant acted out of improper objects and, to that extent, undo the damaging remarks in the award under appeal. The workmen have since been held in the Industrial Dispute to be only casual labourers although we hope this will be no weapon in the hands of the employer to breach fair norms. The wages for the broken period will be paid by the appellant within one month; the injurious imputations in the award against the Corporation are unnecessary for reaching the conclusion and we do not regard it as fair to stamp the Corporation with unfair labour practice. These conclusions are mutually satisfactory as attested by counsel on both sides and we too share in the happy ending to a forensic saga of misfortune. We affirm the award subject to the dilution of observations about the motives of the Corporation, and further direct payment of the sums directed by the award, together with costs.
Findings of the Labour Court with Respect to Relief for a Dismissed Workman A Labour Court or industrial tribunal, while dealing with the propriety of an employer in initiating of disciplinary proceedings against a workman in respect of an act of misconduct, is authorised to either sit in appeal over the findings of the enquiry committee, or to examine the propriety of the ultimate order of dismissal passed by the employer. This was addressed by the Supreme Court in the following case. While deciding this matter, the Supreme Court based its decision by confining itself exclusively to the scope of the act of ‘misconduct’.
Lalla Ram vs the Management of DCM Chemical Works47 This appeal by special leave was directed against the judgement and order dated 19 November 1970 of the High Court of Delhi, setting aside the order dated 23 April 1969 of the Additional Industrial Tribunal, Delhi, rejecting the first respondent’s application under Section 33(2) of the Industrial Disputes Act, 1947, seeking approval of its order of the appellant’s dismissal from service, passed during the pendency of an industrial dispute. THE FACTS OF THE CASE Behind the premises situated on Najafgarh Road, Delhi, of respondent No. 1, which is a unit of the Delhi Cloth and General Mills Company Ltd, there on a plot of land admeasuring 181 acres, ownership whereof was transferred in favour of the company by the erstwhile Delhi Improvement Trust. The plot being adjacent to the premises of respondent 1, the same was being looked after
Industrial Adjudication 285 by the management of the respondent, which also constructed some quarters there for the use of its employees. There are also some jhuggies (hutments) standing on the land, in which live 172 families, out of which 70 are of the employees of respondent 1 and the rest are of some outsiders. After taking over the watch and ward of the plot, the management of Respondent 1 posted sentries to prevent encroachment and unauthorised construction on it. On the company’s taking up construction of a boundary wall on the aforesaid plot in April or May 1967, the appellant, who was the president (pradhan) of the Jhuggi Joupari Sudhar Sabha, and a few other jhuggi dwellers brought a suit, being Suit 418 of 1967 in the court of the Sub-Judge, First Class, Delhi, for restraining the company and respondent 1 from constructing the boundary wall and from evicting the jhuggies. On the basis of the voluntary statement made on behalf of the company to the effect that it would not evict the appellant and his co-plaintiffs except by a due process of law, the subjudge issued a temporary injunction restraining the company and respondent 1 from evicting the appellant and his co-plaintiffs except by a due process of law but refused their prayer for the injunction restraining the company and respondent 1 from building the boundary wall. The subjudge, however, directed the company and respondent 1 to leave a 10-feet wide gate for the passage of the appellant and his co-plaintiffs. Aggrieved by the rejection of their prayer for an injunction regarding construction of the boundary wall, the appellant and his co-plaintiffs preferred an appeal to the Senior Sub-Judge, Delhi, who dismissed the same. On the evening of 2 March 1968, Shyam Singh, Assistant Security Officer in the employ of Respondent 1, received a report that one Sheo Ram had started making an unauthorised construction on the aforesaid plot. In the discharge of his official duties of preventing encroachment and unauthorised construction on the immovable property belonging to the company, he proceeded to the spot accompanied by two members of his staff to investigate the matter. On reaching the spot and finding Sheo Ram constructing a new jhuggi in front of his existing jhuggi, Shyam Singh pleaded with the former and asked him to desist from constructing the new jhuggi. While he was so engaged, the appellant, who was also an employee of respondent 1, made his appearance along with 8–10 jhuggi dwellers and, adopting a very aggressive attitude, intervened on behalf of Sheo Ram and questioned the authority of Shyam Singh, who was senior to him, to make inquiries in regard to the construction during the pendency of the aforesaid litigation. He also manhandled Shyam Singh, hurled highly provocative invectives at him and his companions, and made them to quit on pain of dire consequences. Unnerved by the threats held out by the appellant, Shyam Singh left the place along with his security personnel and hastened to make a report of the incident to his immediate superior, which led to the suspension of the appellant and the issuing of a notice to him by the general manager of Respondent 1, calling upon him to show cause as to why he should not be dismissed for his aforesaid misbehaviour towards and attempt to assault Shyam Singh, who was discharging his official duties, which were acts subversive of discipline within the meaning of Standing Order 27(i), applicable to him. The appellant submitted his explanation, denying the charges levelled against him and questioning the authority of the respondent to charge-sheet him in respect of an incident which was purely private. Not satisfied with the explanation tendered by the appellant, the management detailed two of its officers to inquire into the aforesaid charges against the appellant. On completion of the inquiry in accordance with the standing orders, the enquiry officers submitted a unanimous report, observing therein that it was not the appellant’s case that either Sheo Ram or any other person was being evicted from any of the jhuggies standing on the area which was admittedly known as ‘D.C.M. Chemical Works Jhuggi Area’; that it was clear that Dharam Singh, a member of the watch and ward staff placed on duty to protect the property of the company, had noticed Sheo Ram constructing new walls in front of his jhuggi; that on reaching the spot on the evening of 2 March 1968, Shyam Singh saw the freshly constructed walls of height about 5 feet and some building material lying in front of Sheo Ram’s jhuggi and was accordingly
286 Social Justice and Labour Jurisprudence justified in investigating the matter; that when Shyam Singh was telling Sheo Ram that he should not construct a new jhuggi or extend the jhuggi, the appellant questioned the authority of Shyam Singh and abused and manhandled him, and in so doing was guilty of mis-conduct within the meaning of Standing Order 27(i). It would be profitable to refer to the concluding portion of the report, which reads thus: Shri Shyam Singh is a member of the Security Staff and a responsible officer of the Company. Shri Shyam Singh is an officer of the Company and is senior to Shri Lalla Ram. In the discharge of official duties of protecting the property of the Company and preventing its misuse, if Shri Shyam Singh wanted to investigate into the matter reported to him by Shri Dharam Singh he was perfectly within his rights. The action of Shri Lalla Ram is certainly not justified in so far as he intervened and obstructed Shri Shyam and other security staff; and in the process Shri Lalla Ram questioned the authority of a superior officer/security staff, called him and his sepoys ‘goondas’, caught hold of him by his hand and pushed him and threatened him... Shri Lalla Ram also said that they were not afraid of the uniform i.e. security staff, who are meant for safeguarding the property of the Company and enforcing the discipline. Under the circumstances, we conclude that Shri Lalla Ram committed the acts alleged against him, namely, obstructing the assistant security officer in the discharge of official duties, and threatening him and catching hold of him by hand and thereby committed acts subversive of discipline, a misconduct under the Standing Order 27(i). We find Shri Lalla Ram guilty of the charge. Agreeing with the findings of the enquiry officers that the aforesaid acts committed by the appellant were subversive of discipline and constituted misconduct as contemplated by Standing Order 27(i), the general manager passed an order, on 2 May 1968, dismissing the appellant from service. Since, however, an industrial dispute was pending, the general manager directed the appellant to take his final dues together with one mouth’s pay in lieu of notice and made an application on the same day to the Industrial Tribunal, Delhi, seeking its approval of the order of the appellant’s dismissal, as required by Section 33(2)(b) of the Act. While holding that the enquiry officers were not biased against the appellant; that there was no violation of the principles of natural justice; and that it could not be said that the findings of the enquiry officers were not based upon any evidence or that the same were perverse, the Additional Industrial Tribunal, Delhi, refused—by its order dated 23 April 1969—to accord its approval to the appellant’s dismissal on the grounds that the disciplinary action taken against the appellant was misconceived; and that since there was no rational connection between the employment of the appellant and Shyam Singh in regard to the affairs of D.C.M. Chemical Works, Standing Order 27(i) was not attracted in the present case, which ‘was really a case of civil dispute between the Company and Jhuggi dwellers who were long being pressurised to surrender possession of the area to the Company and the machinery of security staff of D.C.M. Chemical Works was pressed into service for that purpose’. Aggrieved by the aforesaid order of the Additional Industrial Tribunal, respondent 1 moved the High Court of Delhi under Article 226 of the Constitution. The High Court allowed the petition, holding that since there was a clear finding by the enquiry officers about the existence of a rational connection between the aforesaid incident and the duties of the appellant herein and Shyam Singh, and there was nothing in the order of the tribunal to show that the enquiry officers had arrived at that finding without any evidence, it was not open to the tribunal to come to a different conclusion on the facts or to hold that the present was a case of victimisation and then to refuse its approval. In view of this, the High Court quashed the order of the Additional Industrial Tribunal and directed it to consider the aforesaid application of respondent 1 in the light of its judgement. Not satisfied with this order, the appellant has come up in appeal to this Court under Article 136 of the Constitution.
Industrial Adjudication 287
EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE JASWANT SINGH Appearing for the appellant, Mr S.C. Agarwala has urged that since the quarrel between the appellant and Shyam Singh was purely private and the misconduct attributed to the appellant had no rational connection with his employment and that of Shyam Singh, the dismissal of the appellant under Standing Order 27(i) was not valid and legal; that the additional Tribunal was well within its authority to refuse to accord its approval to the action taken by the management of Respondent 1 in dismissing the appellant and that the order under appeal which is erroneous cannot be sustained. He has, in support of his contentions referred us to two decisions of this Court in Tata Oil Mills Co. Ltd. vs Its Workmen48 and W.M. Agnani vs Badri Das.49 In Agnani’s50 case, this Court held as under: It is true that if a domestic enquiry is properly held and the employer terminates the services of his employee, the industrial tribunal dealing the industrial disputes arising out of such dismissal is not authorized to sit in appeal over the findings of the enquiry committee, or to examine the propriety of the ultimate order of dismissal passed by the employer. Though it is true that private quarrel between an employee and a stranger with which the employer is not concerned as in Agnani’s51 case falls outside the categories of misconduct, it cannot be reasonably disputed that acts which are subversive of discipline amongst employees or misconduct or misbehaviour by an employee which is directed against another employee of the concern may in certain circumstances constitute misconduct so as to form the basis of an order of dismissal or discharge. It cannot also be disputed that the extent of jurisdiction exercisable by an approving authority under Section 33(2)(b) of the Act is very limited as has been clearly and succinctly pointed out by this Court in a number of decisions. In The Lord Krishna Textile Mills vs Its Workmen,52 this Court after referring to its earlier decisions and explaining the distinction between ‘permission’ and ‘approval’ observed as follows…: Therefore, putting it negatively the jurisdiction of the appropriate industrial authority in holding an enquiry under Section 33(2)(b) cannot be wider and is, if at all, more limited, than that permitted under Section 33(1) and in exercising its powers under Section 33(2) the appropriate authority must bear in mind the departure deliberately made by the Legislature in separating the two classes of cases falling under the two sub-sections, and in providing for express permission in one case and only approval in the other. It is true that it would be competent to the authority in a proper case to refuse to give approval, for Section 33(5) expressly empowers the authority to pass such order in relation to the application made before it under the proviso to Section 33(2)(b) as it may deem fit; it may either approve or refuse to approve; it can, however, impose no conditions and pass no conditional order. In view of the limited nature and extent of the enquiry permissible under Section 33(2)(b) all that the authority can do in dealing with an employer’s application is to consider whether a prima facie case for according approval is made out by him or not. If before dismissing an employee the employer had held a proper domestic enquiry and has proceeded to pass the impugned order as a result of the said enquiry, all that the authority can do is to enquire whether the conditions prescribed by Section 33(2)(b) and the proviso are satisfied or not. Do the standing orders justify the order of dismissal? Has an enquiry been held as provided by the Standing Orders? Have the wages for the month been paid as required by the proviso?; and, has an application been made as prescribed by the proviso? In another case between P.H. Kalyani vs M/s. Air France, Calcutta,53 Justice Wanchoo… (as he then was) speaking for a Bench of five Judges of this Court said:
288 Social Justice and Labour Jurisprudence If the enquiry is not defective, the Labour Court has only to see whether there was a prima facie case for dismissal, and whether the employer had come to the bona fide conclusion that the employee was guilty of misconduct. Thereafter, on coming to the conclusion that the employer has bona fide come to the conclusion that the employee was guilty, i.e. there was no unfair labour practice and no victimization, the Labour Court would grant the approval which would relate back to the date from which the employer had ordered the dismissal. If the enquiry is defective for any reason, the Labour Court would also have to consider for itself on the evidence adduced before it whether the dismissal was justified. However on coming to the conclusion on its own appraisal of evidence adduced before it that the dismissal was justified, its approval of the order of dismissal made by the employer in a defective enquiry would still relate back to the date when the order was made. In Central Bank of India Ltd., New Delhi vs Shri Prakash Chand Jain,54 this Court laid down: These decisions of this Court make it clear that when an industrial tribunal is asked to give its approval to an order of dismissal under Section 33(2)(b) of the Act, it can disregard the findings given by the Enquiry Officer only if the findings are perverse. The test of perversity that is indicated in these cases is that the findings may not be supported by any legal evidence at all… a finding by a domestic tribunal like an Enquiry Officer can be held to be perverse in those cases also where the finding arrived at by the domestic tribunal is one at which no reasonable person could have arrived on the material before it. The position that emerges from the above quoted decisions of this Court may be stated thus: In proceedings under Section 33(2)(b) of the Act, the jurisdiction of the Industrial Tribunal is confined to the enquiry as to (i) whether a proper domestic enquiry in accordance with the relevant rules/Standing Orders and Principles of natural justice has been held; (ii) whether a prima facie case for dismissal based on legal evidence adduced before the domestic tribunal is made out; (iii) whether the employer had come to a bona fide conclusion that the employee was guilty and the dismissal did not amount to unfair labour practice and was not intended to victimise the employee, regard being had to the position settled by the decisions of this Court in Bengal Bhatdee Coal Co. vs Ram Prabesh Singh,55 Titaghur Paper Mills Co. Ltd. vs Ram Naresh Kumar,56 Hind Construction & Engineering Co. Ltd. vs Their Workmen,57 Workmen of Messrs. Firestone Tyre & Rubber Company of India (P) Ltd. vs Management58 and Eastern Electric & Trading Co. vs Baldev Lal,59 that though generally speaking the award of punishment for misconduct under the Standing Orders is a matter for the management to decide and the Tribunal is not required to consider the propriety or adequacy of the punishment or whether it is excessive or too severe yet an inference of mala fides may in certain cases be drawn from the imposition of unduly harsh, severe, unconscionable or shockingly disproportionate punishment; (iv) whether the employer has paid or offered to pay wages for one month to the employee and (v) whether the employer has simultaneously or within such reasonably short time as to form part of the same transaction applied to the authority before which the main industrial dispute is pending for approval of the action taken by him. If these conditions are satisfied, the Industrial Tribunal would grant the approval which would relate back to the date from which the employer had ordered the dismissal. If however, the domestic enquiry suffers from any defect or infirmity, the labour authority will have to find out on its own assessment of the evidence adduced before it whether there was justification for dismissal and if it so finds it will grant approval of the order of dismissal which would also relate back to the date when the order was passed provided the employer had paid or offered to pay wages for one month to the employee and the employer had within the time indicated above, applied to the authority before which the main industrial dispute is pending for approval of the action taken by him.
Industrial Adjudication 289 Let us now see whether the aforesaid requirements are satisfied in the present case or not. As stated earlier the Enquiry Officers had after a regular enquiry properly made according to the requirements of the Standing Orders and principles of natural justice, come to a categoric and bona fide conclusion that the appellant obstructed Shyam Singh in the execution of his legitimate official duties (of protecting the immovable property of the company and preventing its improper and unauthorised use) by abusing, threatening and roughly handling him and thereby committed misconduct as contemplated by Standing Order 27(i). The Industrial Tribunal had itself also clearly found that the Enquiry officers were not biased against the appellant; that the domestic enquiry held against the appellant was not violative of the principles of natural justice and that it could not be said that the findings of Enquiry Officers were not based upon evidence or were perverse. The material on record also disclosed that the employer paid one month’s wages to the appellant and simultaneously made an application to the specified authority before which the main industrial dispute was pending for grant of approval of the dismissal of the appellant. Further the misconduct for which the disciplinary action was taken against the appellant was undoubtedly directed against Shyam Singh to prevent him from investigating into a matter relating to immovable property belonging to the Company which he was bound to protect in discharge of the duties which devolved upon him as a security officer. In face of all the aforesaid factors which make out a strong prima facie case against the appellant, it is difficult to understand how the Additional Industrial Tribunal could legitimately ignore the bona fide findings of the Enquiry Officers which it had itself endorsed by holding that there was no rational nexus between the appellant’s misconduct and his employment and that of Shyam Singh and withhold its approval of the action taken by the management of Respondent 1. On a careful consideration of the entire facts and circumstances of the case, we are therefore clearly of the view that the requisite nexus was there and the Industrial Tribunal unauthorisedly assumed the role of an appellate authority and exceeded the well-defined limits of its jurisdiction in refusing to accord its approval of the action taken against the appellant by holding not on the basis of any legal evidence but purely on the basis of conjectures and surmises that the present was a case of victimisation. We would like to call attention at this stage to the decisions of this court in Tata Engineering & Locomotive Co. Ltd. vs S.C. Prasad 60 and Hamdard Dawakhana Wakf vs Its Workmen,61 and reiterate and reemphasize that no question of victimisation or management having a bias against the appellant can arise once it is held that the findings of misconduct alleged against the workman were properly arrived at and the domestic enquiry was in no way vitiated. We would also like to emphasize that it is not necessary as stressed by the learned Counsel for the appellant that both the victim and the delinquent workman should be engaged in the performance of their official duties when the act which is the subject-matter of misconduct is said to have been committed. It is sufficient if the victim and the delinquent workman are both employees of the same concern and the misconduct is directed against the former while he is acting in the discharge of the duties imposed on him by virtue of his office. Thus the jurisdiction of the Industrial Tribunal being a limited one, as stated above and all the essential requisites of the proviso to Section 33(2)(b) of the act being present in the instant case, the Industrial Tribunal was not, in our opinion, justified in withholding its approval and the High Court was perfectly right in passing the impugned judgment and order. We have disallowed costs to express our thought that notwithstanding the gravity of the misconduct the management could be a little magnanimous while awarding punishment. The broad guideline which persuaded us not to interfere was the reluctance of this court to demolish a finding by the High Court unless there was something seriously wrong with it and our further view that unless there is a serious error or infirmity, as we have indicated earlier, with the enquiry or the order by the disciplinary authority, the Tribunal should not interfere.
290 Social Justice and Labour Jurisprudence
The Rigidity of the Tribunals in Extending Equal Benefits to the Same Class of Workmen: Validity The Workmen Shift Incharge Sub-Station vs the Presiding Officer, Additional Industrial Tribunal Delhi 62 In this case, Justice V.R. Krishna Iyer elaborated on the Constitutional philosophy enshrined in Part IV of the Constitution, when the industrial tribunal failed to adjudicate the reasonable claim of a particular class of workmen who were placed in similar position to that of the workmen who are better privileged with a caution to not have any pervading application of this judgement in any further claims of these workers. The effort was only to resolve the issue in a just way, without adding too much to it. THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER This Civil Appeal springs from an award by the Delhi Industrial Tribunal which was challenged by a small category of workmen who are 200 in number, the only financial impact whereof would be around Rs 6,000. The industrial dispute which led to the award related to the year 1967 and it is unfortunate that the final adjudication of this dispute is being rendered as late as 1979. This provokes the comment that litigation i
