Social Justice and Labour Jurisprudence: Justice V.R. Krishna Iyer's Contributions

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

Industrial Jurisprudence 51

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).

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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.

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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.

Threshold Part Issues under the Industrial Disputes Act, 1947 67

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.

Threshold Part Issues under the Industrial Disputes Act, 1947 69

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

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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.

74 Social Justice and Labour Jurisprudence

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

Threshold Part Issues under the Industrial Disputes Act, 1947 87

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

90 Social Justice and Labour Jurisprudence

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?

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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

Threshold Part Issues under the Industrial Disputes Act, 1947 127

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.

Threshold Part Issues under the Industrial Disputes Act, 1947 133

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

Threshold Part Issues under the Industrial Disputes Act, 1947 135

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

Threshold Part Issues under the Industrial Disputes Act, 1947 139

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

140 Social Justice and Labour Jurisprudence

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

142 Social Justice and Labour Jurisprudence

‘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

Threshold Part Issues under the Industrial Disputes Act, 1947 143

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

172 Social Justice and Labour Jurisprudence

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.

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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 is far too long lived to hold any realistic promise of fruits to the parties to the dispute. The Delhi Electric Supply Undertaking employs various workmen under different categories. One of these categories, working in the distribution centres, is known as shift in charge. These workmen by qualification are matriculates with ITI certificates. There are three categories which are more or less similar but graded one above the other, in this Department. The lowest is known as attendants who are incharge of minor distribution centres. The highest are known as substation chargemen who are incharge of very important sub-stations. In between, we have substation shift incharge species with whom we are concerned. Since the subject-matter, financial impact and the number involved are comparatively inconsiderable, no detailed discussion is necessary for a decision. Broad considerations of equity and industrial justice may guide us in reaching a conclusion. The workmen involved, namely shift in-charge employees, have substantially the same qualifications as those who are paid higher. What is more, their salaries are relatively poor. It is significant that a Committee had been appointed by the Undertaking where both sides were represented and the recommendations unanimously made by that Committee have been accepted in all cases except in the case of the shift incharge category. We are far from satisfied that any reasonable justification or understandable classification will validate a differentiation in regard to these employees. Indeed, in the course of the arguments, these striking equities emerged and we did suggest to counsels on both sides that while we are keen on avoiding any consequential upsets in other categories, we regard the implementation of the sub-committee’s recommendations eminently fair. Councils on both sides apparently felt the force of our suggestion and took time for consultation with their respective clients. Nothing has emerged out of such confabulations and so we proceed to decide the case on merits. Industrial justice is not an application of rigid formula but, in consonance with Part IV of the Constitution, award of wages which are substantially just, subject, of course, to well recognised principles evolved by this Court. Bearing in mind all these factors, we direct that the award of the Tribunal be modified and the recommendations of the Sub-Committee where both sides were represented be substituted. Since the period to which the dispute relates is quite long and

Industrial Adjudication 291 many other wage increases have taken place, we do not think any possible repercussions will ensue from such acceptance. We must make it perfectly plain that we treat this dispute as a special case and adopt the course we have done largely influenced by the factor that there are only a few involved and the financial impact is minimal. That is why we wish to emphasise that this decision of ours cannot be the basis for any further claims by the same set of workmen or others in the establishment. Counsel for the appellants assures us on behalf of the Union that no such claim would be made or at all was likely. On this basis we allow the appeal and substitute for the award of the Tribunal the recommendations of the Sub-Committee.

The Findings of the Labour Courts: Validity Ameteep Machine Tools vs Labour Court63 In this case, the Supreme Court examined the correctness of the labour court’s findings in the dismissal of a workman by the management. The appellant management was that of a private limited company employing 250 workmen. Sadhu Singh (the second respondent) was one of the workmen. THE FACTS OF THE CASE Demands by the workmen for an improvement in the conditions of their service led to conciliation proceedings under the Industrial Disputes Act, 1947, and a settlement under Section 12 of the Act in satisfaction of those demands was recorded by the conciliation officer. The settlement included the provision that the workmen would not raise any demands involving further financial burden on the appellant for a period of two years. Before the expiry of the said period, a fresh demand was raised by the general labour union, asking for dearness allowance at 25 per cent. The management objected to this demand. As a result, the workmen resorted to a ‘Sit-down’ strike on 26 August 1970 which continued the next day. According to the appellant, on 27 August 1970, Sadhu Singh instigated the workmen to ‘down’ tools and go on a ‘sitdown’ strike. Successive notices by the management on the same day failed to dissolve the strike. Charges were framed alleging serious misconduct and a domestic enquiry was ordered against Sadhu Singh. It is stated that the workman Sadhu Singh declined to accept the charge sheet and did not participate in the inquiry. The inquiry officer found the strike was illegal, and found Sadhu Singh guilty of instigating the workmen to go on strike; and besides, he was found guilty of loitering in the factory. The appellant accepted the findings and dismissed him from service with immediate effect. Meanwhile, the management had taken action in dismissing other workmen also. The union pressed the management to reinstate the dismissed workmen. Then once again, a fresh settlement was arrived at under Section 12 of the Act on 21 November 1970, and it was agreed that the dismissed workmen, including Sadhu Singh, should be regarded as retrenched from service. The remaining workmen agreed to resume work unconditionally. The memorandum of settlement was signed by the management on the one hand and by the individual workmen on the other hand, but it was not signed by Sadhu Singh. A few days after, Singh wrote to the Labour Commissioner, claiming that he was not a signatory to the settlement and that he would settle his dispute himself with the management. The state government referred the dispute with regard to the termination of Sadhu Singh’s service for adjudication to the labour court. The management took the stand, on the facts found in the domestic inquiry report that the settlement dated 21 November 1970 was binding on Sadhu Singh. Sadhu Singh asserted that he was not guilty of any misconduct on 27 August 1970 and also contended that the charge sheet had never been served on him and therefore the ex parte domestic inquiry was vitiated. The Labour Court found

292 Social Justice and Labour Jurisprudence that Sadhu Singh was not a signatory to the settlement of 21 November 1970, and was, therefore, not bound by it. It found that the domestic inquiry was not proper inasmuch as notice of the inquiry had failed to reach Sadhu Singh because it had been sent to the wrong address, thereby preventing him from participating in the domestic inquiry. On the merits of the dispute, the Labour Court found that Sadhu Singh had been ill from 24 August to 9 September 1970, and that was established by a medical certificate which, on inquiry from the Employees State Insurance Department, was found to be in order, and consequently it could not be believed that the workman had instigated or participated in the ‘tools-down’ and ‘sitdown’ strike. In support of its case that Sadhu Singh was present within the factory premises on 27 August 1970, the management placed its reliance on a document purporting to have been signed by the workman and setting forth the assurance that he would conduct himself properly and be of good behaviour. The Labour Court said that if the document were accepted as genuine, there was sufficient reason for accepting the assurance and refraining from taking any action against the workman. The Labour Court held that the dismissal was not justified and that Sadhu Singh was entitled to reinstatement with continuity of previous service and full back wages. Against this award, the management moved the matter before the High Court, which was also the appeal was dismissed.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY (THEN) JUSTICE R.S. PATHAK The appellant challenged the award of the Labour Court on the ground that the settlement dated 21-11-1970 was binding on Sadhu Singh and it was not open to him to resile from it. In the present case, however, while several workmen signed the memorandum of settlement, Sadhu Singh did not. It is also established that he did not authorise any of the other workmen to sign the memorandum on his behalf. And what is of importance is that, as found by the Labour Court, the demand that the dismissal of Sadhu Singh be set aside and that he should be reinstated was never included in the charter of demands of the workmen which led to the conciliation of such a demand. According to the Labour Court, that was the admitted position. Consequently, the settlement of 21st November, 1970 can on no account be understood as covering and concluding the demand for recalling the order dismissing Sadhu Singh. In the circumstances it was open to Sadhu Singh to assail his dismissal from service and to contend that settlement of 21st November, 1970 did not bind him. The Labour Court was right in adjudicating on the propriety of his dismissal and, having found that the dismissal was not justified, in granting relief. It was contended by the appellants that notice of the domestic inquiry was duly effected on Sadhu Singh and the finding of the Labour Court to the contrary is erroneous. Plainly, the question turns on the evidence on the record and we see no reason why the finding of the Labour Court should not be accepted. Having reached the conclusion that the domestic inquiry, in the circumstances, was improper it was open to the Labour Court to enter into the dispute on its merits and pronounce its award. The finding that Sadhu Singh was ill and could not be said to have instigated or participated in the strike on 27 August 1970 is a finding of fact which proceeds from the material on the record.

Awarding Benefits to Workmen who are not Parties to the Settlement: Validity Certain basic welfare measures which are just and equitable should be made applicable to all the working class working under the same umbrella, notwithstanding the fact that the

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terms of a settlement limit its application only to certain classes of workmen. One can, in the following case, see the reaction of the higher courts in this context to such an attitude held by the rich employer.

Hindustan Construction vs G.K. Patankar and Another 64 In this case, following a settlement with the workers employed in its various branches, the appellant company paid these workers an amount equivalent to 6 per cent of their total earnings for the financial year ending 31 July 1971, in addition to bonus at 4 per cent of the annual earnings. The relevant paragraph of the memorandum of settlement reads: It was decided that although the workers were entitled to 4 per cent bonus under the Bonus Act, it will be necessary to afford some relief to the workers. It was agreed that over and above 4 per cent bonus, the Hindustan Construction Company will pay additional amount of 6 per cent Ex gratia to the workers for the year 1970–71 in the pay packet of June, 1971.

The workmen employed in the head office of the company at Bombay demanded that they should also be paid an amount equivalent to 6 per cent of their total earnings for the financial year ending 31 July 1971, in the addition to bonus at 4 per cent of the annual earnings as had been paid to the other employees of the company. The company, by its notice dated 14 March 1972, had notified that the workmen at the head office would be paid bonus at 4 per cent of their total earnings for the year 1970–71. The dispute arising on this demand by the head-office employees was referred for adjudication to the Industrial Tribunal, Bombay. The tribunal, agreeing with the contention of the workers that what was paid to the employees at the branch offices as an ex gratia amount was in fact nothing but additional bonus for the year 1970–71, held that the demand was legal and proper and directed the payment of bonus to the workers at the head office at the rate at which it had been paid to the workers at the branch offices. The company challenged the award before the High Court of Bombay. The High Court rejected the petition summarily, with the following observations: All contentions of the Company are technical. However, substantial justice has been done in payment to Head Office Workmen in accordance with the application of the principle of uniformity. Hence this does not appear to be a matter for interference.

The company then took its appeal before the Supreme Court. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE GUPTA Mr B. Sen, learned counsel for the appellant, contended that in the face of the clear statement in the memorandum of settlement between the company and the Federation representing the workers at the branches that what was being paid to them was an ex-gratia relief, the Tribunal was wrong in holding that the amount paid was an additional bonus. It was submitted that the Tribunal acted without jurisdiction in extending the benefit under the settlement to the workmen at the head office who were not parties to the settlement. Further it was pointed out that these workmen had no legal right to claim any additional amount as bonus in view of the admitted fact that in the relevant accounting year the company had suffered a loss. It was argued that the

294 Social Justice and Labour Jurisprudence Payment of Bonus Act, 1965 was complete code in regard to the subject of bonus and in terms of Section 10 of the Act the workers were not entitled to any amount as bonus beyond the minimum 4 per cent in the year in question. We do not however consider it necessary to decide whether the Tribunal was right in treating the additional payment made to the workers at the branches as bonus as in our opinion, the award has not occasioned a failure of justice and the High Court was not wrong in declining to interfere on that ground. It appears that the company had spent about Rs 20 lakhs in giving this additional relief to the workers at the branches numbering about 13,000. The workmen at the head office are much fewer in number and the affidavit-in-opposition filed in this court on their behalf states that extending the benefit to them would cost the company only Rs 1 lakh more. The High Court found the extension of the benefit of the workers at the head office justified on the principle of uniformity which in this case serves to maintain industrial peace. In these circumstances if the High Court refused to interfere on the ground that substantial justice had been done, we find no reason to hold that the High Court had exercised its discretion arbitrarily. This Court has refused to interfere in similar circumstances in more than one case, though the order complained of might suffer from some infirmity.65 We are not therefore inclined to disturb the order made by the High Court, which we consider reasonable and proper in the circumstances of the case.

The Role of the Supreme Court in Interfering with Respect to an Appeal against the Award Industrial adjudication in India enjoys the reputation, of rendering precise awards in respect of the industrial disputes referred before it. One can see, however, that in a very limited way, the higher courts have interfered with awards made by industrial adjudication in practice by way of special leave petitions under Article 136 of the Constitution. Where the tribunal, on a consideration of all the materials placed before it and having regard to the overall picture, comes to a conclusion, usually the higher courts have, however, shown restraint in interfering with such awards. Where the Supreme Court interferes with an award made by industrial adjudication, it is only for coherent reasons, involving questions of law and interpretation. Circumspection and circumscription must therefore induce the Supreme Court to interfere with an award under challenge only if extraordinary flaws or grave injustice or other recognised grounds can be made out.

The Statesman Ltd vs its Workmen66 This was a case wherein the workers went on strike while a dispute, pertaining to the issue of bonus, was already pending before the tribunal by raising a set of demands which were purely justified and reasonable. In consequence of this illegal strike, the employer declared a lock-out which was legal.67 But the workers requested the management in writing to lift the lock-out on an assurance of good behaviour on demand. The management continued to drag its feet on the matter, without paying any heed to the reply of the union. Under these circumstances, the industrial tribunal justified the claims of the workers and awarded them half their usual wages for the period of the lock-out. Challenging the award of the industrial tribunal in this context under Article 136 of the Constitution, the employer came before the apex Court.

Industrial Adjudication 295

The Supreme Court, while deciding this case, laid down certain clear guidelines as to when to interfere with awards made by industrial adjudication. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER There is a tragic touch in processual protraction as this little lis lasting a whole decade pathetically illustrates. Such lingering legal machinery is bypassed by both sides in practice largely because, by sheer slow motion, it denies relief when needed and drives parties to seek remedies by direct action or political intervention. What elegant alibi can there be for the routine charter of demands put forward in the middle of 1966, ripening into an industrial reference in November, 1966 after a flare-up of illegal strike and failure of conciliation, taking around three years for rendering a short award and a little over five years for reviewing it in this Court? Law-makers whose vocal concern for industrial peace and constitutional promises for the working class is being put to the test by failure in the field will, we hope, alert themselves. Labour litigation can be a curse or dread where one side is weak, as here, and has not been able to hire legal services but has been made good by amicus curiae, and the other side, regardless of cost, is anxious to settle some principle, as Counsel for the appellant impressed on us. We now move into the area of facts which wears a jural apparel. The narrative of necessary facts starts naturally with a bonus dispute in the Statesman Ltd. (a newspaper with editions published in Calcutta and Delhi) which was referred to adjudication in September, 1966 and was, admittedly, pending at a time when the Calcutta workers reportedly resorted to rude tactics to press an earlier charter of demands presented to the management. On 20 September 1966, events reached a crescendo of illegal and disorderly strike at midday with a reprisal of lock-out at midnight so soon as the administrative officer, with police assistance, gained his freedom. Even in human affairs a storm is followed by a calm, may be. For, the two unions, sobered, perhaps by this sudden action of the management, wrote the very next day (September 21) to the employer requesting for lifting the lock-out, preferring peaceful resumption of work and requiring at least an interim relief on the ‘economic’ demands. The letter speaks for itself and may be read presently. The employer was not ready to accept this assurance. The lockout dragged on, despite the seeming offer of the olive branch by labour. Mistrust on both sides is inevitable when estrangement vitiates relations and language is suspect when bitterness is the rule of interpretation. Right or wrong, the management took the view that the offer of good behaviour by the workers was conditional and not convincing, so that the lock-out was not lifted for several days. The Deputy Commissioner of Labour, who had interceded to conciliate, had unavailingly requested the management to lift the lock-out and had found labour insisting on some interim ‘economic’ relief as a ground for withdrawal of the strike. At certain stages of conflict in this world, face-saving becomes more important than heartsearching. Life is not logic and prestige amends propriety. The cold-war correspondence continued for a little while more, each blaming the other, till at last the State, on 4 November 1966, referred six points of dispute to the Fifth Industrial Tribunal, Calcutta, before whom the bonus dispute was already pending. Better sense on both sides resulted in the termination of the strike and the closure, and work was resumed from 8 November 1966. The award that followed upon the dispute was rendered on 2 September 1969, nearly three years after the reference of the dispute. One is led to wonder why there should have been so much delay, but the blame, if any, has to be shared between the State Government and the Tribunal. For, after the Fifth Tribunal started the enquiry and examined a few witnesses, the State Government ordered transfer of the industrial dispute to another tribunal and, not surprisingly, omitted to communicate promptly the factum of such transfer to the affected tribunal. Thus, although the order of transfer was made on 31 March 1967 the enquiry continued upto 22 April 1967. When actual notice of the transfer

296 Social Justice and Labour Jurisprudence was received by the Fifth Tribunal on April 24, representation was made by it about the enquiry having commenced and, naturally, Government retransferred the dispute to the same tribunal. After this minor episode, of transfer and retransfer, the enquiry was continued and the award made. We are now concerned only with three disputes. Of the three issues, two deal with petty items like warm coats for the subordinate staff and canteen allowance for the employees’ canteen staff—financially too negligible to engage the attention of this Court. The other item, which is meaty enough to merit our verdict, relates to the wages during the period of work stoppage from 20 September 1966 to 8 November 1966. The tribunal, considering, in its totality the facts and circumstances of the case, the share of blame on the part of each party, the role of broad justice in producing industrial peace and advertence to the relevant materials on record, held ‘that the company should pay half the wages to the employees during the period from 20 September to 7 November 1966’. The management, disappointed by this direction, as well as the orders regarding warm coats and canteen allowance, has come directly to this Court securing special leave under Article 136. Even though leave has been granted by this Court, the very width of its power under Article 136 is a warning against its freewheeling exercise save in grave situations. In Bengal Chemical 68 Justice Subbarao (as he then was) pointed out that: The same principle should, therefore, be applied in exercising the power of interference with the awards of tribunals irrespective of the fact that the question arises at the time of granting special leave or at the time the appeal is disposed of. It would be illogical to apply two different standards at two different stages of the same case. The same view was expressed by this Court in Pritam Singh vs State of Madras,69 Hem Raj vs State of Ajmer70 and Sadhu Singh vs State of Pepsu.71 From this it follows that when awards of industrial tribunals are challenged in this Court, we have to apply those severe tests which have become part of the self-imposed restraints on its special jurisdiction. What are these self-created trammels upon the exercise of this Court’s power? The answer is furnished by this Court in the Associated Cement Companies Ltd.72 Mathew, J. followed Bengal Chemical (both these cases related to industrial awards challenged in appeal under Article 136 of the Constitution), where this Court had observed: Though Article 136 is couched in widest terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards are made in violation of the principles of natural justice causing substantial and grave injustice to parties or raising an important principle of industrial law requiring elucidation and final decision by this Court or disclosing such other exceptional or special circumstances which merit the consideration of this Court. The learned Judge endorsed the view in these words: The portion of the award with which we are concerned does not raise any important principle of law requiring elucidation and final decision by this Court. Nor does it disclose any exceptional or special circumstances which merit decision by this Court. On a question like this, where the tribunal, on a consideration of all the materials placed before it and having regard to the overall picture came to a conclusion, we do not think this Court should interfere. Circumspection and circumscription must therefore induce us to interfere with the award under challenge only if extraordinary flaws or grave injustice or other recognised grounds are made out. This perspective is sufficient in itself to dispose of the two tiny items of dispute bearing on warm coats and canteen allowance. Even so, we will briefly refer to them.

Industrial Adjudication 297 The canteen staff claimed allowance of 50 paise per working day. There are two canteens, one for officers and the other for the subordinate staff. While the staff of the officers’ canteen are drawing the dietary allowance of 50 paise, the employees of the staff canteen are denied this paltry sum. There is no reasonable basis for this invidious treatment and we find no ground to interfere with the tribunal’s direction that ‘the company should pay tiffin allowance at the rate of 50 paise on working days of the employees in the staff canteen’. Of course, if they take free food from the canteen they will be ineligible for the allowance since they cannot have both. Equally untenable is the grievance against warm coats supplied to the subordinate staff. It is common case that the management does supply warm coats to jamadars, gate-darwans and inspectors but does not extend this warm facility to darwans and delivery peons. Calcutta cold does not spare either category and therefore no climatic distinction can be made between the two. True it is that in the charter of demands warm coats were claimed only for those employees who delivered newspapers. Even so the dispute referred to the tribunal is in wider terms and we are satisfied the award calls for no interference when it states ‘that all the members of the subordinate staff should be supplied with warm coats’. Of course, it need hardly be said that these employees cannot claim warm jerseys over and above coats. The bone of contention between the parties bears upon the wages during the strike period. We have already indicated that the award crystallizes a discretionary conclusion reached after a survey of all the facts and animated by a sense of broad justice. The tribunal had something to say against the workers and the management and felt impelled to state: I find that both the parties were at fault. That being the position I am of opinion that both the parties should be held responsible for the delay in the matter of the withdrawing of the lock-out. In these circumstances, I am of opinion that the company should pay half the wages to the employees during the period from 20 September 1966 to 7 November 1966. Captious criticisms apart, the conspectus of relevant circumstances more or less bears out the propriety of this direction. The crucial issue is as to whether we have any material to castigate this conclusion as unconscionable or unjuristic, involving gross injustice, violating a well-established rule of law or otherwise attracting our special responsibility to declare the law in a twilit area of public importance to industrial life. We will examine the pertinent circumstances from this angle and it will be evident that the more we ponder the subject the more we are satisfied about the legal soundness and practical wisdom of the award, having in mind industrial peace as the goal. The smouldering dispute between the management and the workers apparently burst into flame on 20 September 1966. Going by the tribunal’s reading of the situation there was a strike that day. The pendency of certain types of proceedings before a tribunal stamps a strike or lockout with illegality (Section 24).73 While Section 23 prohibits strikes and lock-outs when proceedings mentioned there are under way, Section 24(3) absolves a lock-out of illegality if it is caused by an illegal strike. There surely was a pending industrial dispute when the unions sprang the strike. Being therefore illegal, the lock-out that followed became a legal defensive measure. So far is smooth sailing. But the management cannot behave unreasonably merely because the lock-out is born lawfully. If by subsequent conduct, imaginatively interpreted, the unions have shown readiness to resume work peacefully, the refusal to restart the industry is not right and the initial legitimacy of the lock-out loses its virtue by this blemished sequel. Nor can any management expect, as feelings run high, charge-sheets in criminal courts are laid against workers and they are otherwise afflicted by the pinch of unemployment, to get proof of good behaviour beyond their written word. Nor can they realistically insist that they abandon their demands for better benefits before the lock-out is lifted. In this hungry world the weaker many cannot afford the luxury of finery in speech which the happier few can afford. In the rough and tumble of industrial disputes conciliation is a necessary grace the stronger party, the socially

298 Social Justice and Labour Jurisprudence conscious management, must cultivate and huff a flaw it must eschew. In the realistic temper of bargaining between two wings of an industry—both managements and workers belong equally to the industry, for if one owns the other produces—a feeling of partnership must prevail to persuade the two sides to trust each rather than rush to find flaws in the language used. Such is the spirit of give and take which must inform industrial negotiation if peace and production are the bona fide end and national development the great concern. This broad philosophical approach amply vindicates the justice of the tribunal’s impugned award. To appreciate this view, a flashback into the events around and after 20 September 1966 is helpful. The backdrop of law may be briefly recapitulated before going into factual details. If the strike is illegal, wages during the period will ordinarily be negatived unless considerate circumstances constrain a different course. Likewise, if the lock-out is illegal full wages for the closure period shall have to be ‘forked out’, if one may use that expression. But in between lies a grey area of twilit law. Strictly speaking, the whole field is left to the judicious discretion of the tribunal. Where the strike is illegal and the sequel of a lock-out legal, we have to view the whole course of developments and not stop with examining the initial legitimacy. If one side or other behaves unreasonably or the overall interests of good industrial relations warrant the tribunal making such directions regarding strike period wages as will meet with justice, fair play and pragmatic wisdom, there is no error in doing so. His power is flexible. We are heartened and strengthened in our approach by the decision in India Marine Service.74 There the Court noted that the attitude of the company was a reasonable one and that it even proposed to the union and through it to its workmen that work should go on, that the dispute should be taken before the Conciliation Officer for conciliation and that in the meanwhile they were prepared to grant some interim relief to the workmen. In our opinion, added the Court: While the strike was unjustifiable, the lock-out when it was ordered on 13 November 1958, was justified. It seems to us, however, that though the lock-out was justified at its commencement its continuance for 53 days was wholly unreasonable and, therefore, unjustified. In a case where a strike is unjustified and is followed by a lock-out which has, because of its long duration, become unjustified it would not be a proper course for an industrial tribunal to direct the payment of the whole of the wages for the period of the lock-out. We would like to make it clear that in a case where the strike is unjustified and the lock-out is justified the workmen would not be entitled to any wages at all. Similarly where the strike is justified and the lockout is unjustified the workmen would be entitled to the entire wages for the period of strike and lock-out. Where, however, a strike is unjustified and is followed by a lock-out which becomes unjustified, a case for apportionment of blame arises. In our opinion in the case before us the blame for the situation which resulted after the strike and the lock-out can be apportioned roughly half and half between the company and its workers. In the circumstances we therefore direct that the workmen should get half their wages from 14 November 1958 to 3 January 1959 (both days inclusive). The factual milieu surrounding the strike-lock-out complex, as neatly presented by Shri Kapil Sibbal, shows how the flow of events exonerated the unions of serious impropriety and the employer was trying to be too clever. When the workers struck, the management put up a notice of closure wherein it was stated: The stay-in-strike resorted to by the workmen is unjustified and illegal in view of the pendency of the proceedings before the Fifth Industrial Tribunal and also violates the Code of Discipline. The representatives of the unions were made aware of this fact when the management met them to discuss their demands today.

Industrial Adjudication 299 In the circumstances, the management has no option but to keep the establishment closed until such time as the workmen assure the management of normal and peaceful resumption of work. The simple insistence of the management in the closure notice was an assurance from the workmen ‘of normal and peaceful resumption of work’. No sooner was this notice put up than the unions responded constructively, moderating the usual tantrums they are given to in an atmosphere of conflict. The very next day after the closure, i.e., on September 21, the Secretary of the union wrote back a letter wherein he stated inter alia: While we deny the various allegations contained in your said Notice and hold you wholly liable for the development on 20 September 1966 in suddenly advising your supervisory staff to stop all processes of work from 12.30 p. m. and creating a confusion amongst the workmen who were working all the time till then, presumably to prepare a ground for the illegal lock-out since some days past as peaceful and constitutional movement of the unions was there to your dislike, we should tell you here and now that no useful purpose will be served by such blackmailing Notice far less the cause of the industrial peace and progress of a reputable concern like ‘The Statesman’... You know more than anybody else that your workmen are all peace-loving people and have cooperated with you all along with respect and affection. You had never any occasion to find fault with them for any indisciplined conduct. Our unions have also a long tradition of faithful cooperation with the management in every hour of crisis and we are proud of our said lofty tradition. There was no obstruction in the movement of anybody at any stage on September 20, 1966 as alleged or at all and the police ought not to have been invited in the office. Considering everything we are of the opinion that no interest of the management or of the workmen will be served by such acrimonious correspondence and any delay in the settlement of the outstanding disputes will make the situation more complex. You are therefore requested to withdraw your aforesaid Notice, arrange an immediate sitting with us and meet the genuine grievances of the employees, if not in full at least as an interim arrangement and note in this context if any assurance is necessary that all along as in the past the workmen will maintain peace and work normally and peacefully unless they are sufficiently provoked from your end. (emphasis added) It is obvious that the tone of this reply is conciliatory and literally conforms to the demand for the assurance from the workmen of peaceful and normal resumption of work. It is fair to infer that the receipt of this letter should have persuaded the management, in a spirit of goodwill, to lift the lock-out and give a trial to the workers’ willingness. Is not a worker’s word, until the contrary is proved, as good as his bond? Moreover, a strike is called off when the strikers agree to come back to work. Curiously enough, the management struck a discordant note in their letter two days later. Instead of a favourable response, the appellant recited the old facts and concluded: We have no intention of keeping the office closed longer than is necessary, and as soon as the management is reasonably convinced that discipline and normal production will be maintained and that there will be no recurrence of the acts of indiscipline which led to the illegal strike and closure, we shall take steps to open the office. The shift in stand is obvious. The first letter merely demanded of the workmen an assurance of normal and peaceful resumption of work. When this was given the management quietly tilted its stance and demanded that it should be ‘reasonably convinced that discipline and normal production will be maintained and that there will be no recurrence of the acts of indiscipline…’

300 Social Justice and Labour Jurisprudence The further letter of 31 October 1966 by the union highlights the anxiety of the workers for resumption of work. Of course, the staying power of the workers is limited and wanes after a time. Naturally, they press the management to withdraw the closure. The language of the letter Exhibit E-7 is tellingly temperate… 31 October 1966 Assuming, though not conceding even by any stretch of imagination that there was an illegal strike as alleged by you and the lock-out for 41 days till date after the unions’ unequivocal assurance of peace and cooperation given to you on behalf of the workmen in their letter dated 21 September 1966 in reply to your notice dated 20 September 1966 where you asked for such an assurance. So far as the unions’ demands are concerned, they are only of incidental nature because of the suffering thrust upon the workers on account of the unproved lockout. We want peace and climate where lock-out and strike will be a matter of the past. In that spirit we have selected the least controversial 11 items out of all the items of demands for immediate settlement. Hope you will appreciate the same by entering into a negotiated settlement and we assure you that if necessary we shall not even fight the bonus case before the tribunal if on that item also you agree to settle. It was mentioned by Shri Sibbal that there were charge-sheets against the workers at the instance of the management which embittered relations. There is also the reference in the evidence of the Deputy Commissioner of Labour that the management was unwilling to lift the lockout when requested and the workers were unwilling to withdraw the strike without settlement of disputes. In an escalating situation of conflict, developments lead to deterioration of industrial quiet and we have to look at the whole picture with realism. There was a minor ripple of disputation as to whether the evidence recorded by the Fifth Industrial Tribunal between the date when the transfer order was passed by the government and the retransfer order made could be read as evidence. The tribunal has come to the same conclusion both by excluding and by including such evidence in his verdict. Shri Kapil Sibbal has fairly taken us through these materials to convince us that the verdict cannot be deflected by eliminating or reading the disputed testimony. We feel satisfied that there is much to be said in favour of the ultimate view taken by the tribunal that blameworthiness may be equally apportioned between the parties. Had the management reacted with goodwill when the workers the very next day offered to be peaceful and resume work, the prolonged situation of cessation of work could have been saved. It is therefore a case which attracts Indian Marine Service.75 In that case also this Court found it fair to direct that the workmen should get half the wages during the strike period. The tribunal’s view is certainly not unreasonable. May be, it is a just solution. We hope that both sides, after these long years, will bury the hatchet and work for the better efficiency and greater status of a leading newspaper of India. Having regard to the circumstances of the case, it is proper to direct that the appeal be dismissed but the parties will bear their respective costs. Before parting with this case we deem it our duty to record our appreciation of the thoroughness of preparation of Shri Kapil Sibbal, a young advocate of promise, who has assisted the Court as amicus curiae with precedential industry and persuasive felicity.

Indeed one may really have to go to the roots of the issue to understand the justifiability of a strike or lock-out despite its legal vice. A lock-out declared in consequence of an illegal strike is legal. But the question is, upto what point is it legal. During the pendency of a lawful lock-out, if illegally striking workers assure resumption of work, can one call the continuance of such a lock-out legal? How does one ascertain the end point of an illegal strike when the employer is unwilling to open up work, since it is his pleasure under the circumstances? Well, it is a question of fact, to be ascertained by examining material

Industrial Adjudication 301

and constructive evidence. Under these circumstances, juridically the illegal strike ceases to be in existence and the curtain is raised instead on an illegal lock-out. And from that point such a lock-out fails to hold the status of a legal lock-out and assumes the status of illegal lock-out, since it has prevailed during the pendency of the proceedings before adjudication.

Illegal Termination: The Remedy If the employer wrongfully interprets the standing orders applicable to his industrial establishment and terminates a workman who has had an unblemished service record for years, the proper remedy is only through adjudication. The industrial tribunal has rightly interpretated the provision and interfered with the powers of the employer in one such case.

Western India Match Company vs Third Industrial Tribunal, West Bengal and Orissa76 In this case, the employer, after unsuccessfully contesting the award twice before the High Court, brought the matter before the Supreme Court. This was an appeal, by special leave, against a judgement of the High Court by way of a writ appeal by a Division Bench which confirmed the judgement of a single judge, who, in turn, refused to interfere with the award of the industrial tribunal. THE FACTS OF THE CASE The second respondent was an employee under the appellant company for a long number of years. There was no blemish in his service, and Sachin Choudhury, counsel for the appellant, has very fairly stated that there was no complaint against the services of the 2nd respondent while he was employed by the company. But the second respondent fell ill and applied for leave. It so happened that his illness persisted for a long time and the management, quite rightly, granted him leave ‘from time to time’. On 4 November 1963, his leave expired and on 5 November 1963, the management, invoking a clause in the contract of employment, terminated his employment. It is that order of termination that was set aside by the industrial tribunal and affirmed from court to court up to now. The particular clause in the contract which was relied on by the management stated that: It was open to the employer to determine the employment at any time without any notice or payment in lieu of notice in the event of . . . you becoming from any cause incapacitated by a longer period than two calendar months from properly discharging your duties.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER The courts below held, and quite rightly in our view, that since the employee was all along on leave granted by the employer no question of incapacity or being incapacitated from properly discharging his duties arose. It is obvious that when an employee is on leave he is not called

302 Social Justice and Labour Jurisprudence upon to discharge any duties and, therefore, the question of the capacity to discharge duties does not fall for consideration. The clause relied upon comes into play only when an employee who has to discharge his duties fails to do so and the employer makes a judgment of the situation and comes to the conclusion that it is on account of an incapacity which will last longer than two months that the failure to discharge his duties has arisen. We are, therefore, satisfied that the clauses could not have been invoked and the termination of service was bad in law. Even so, the further question arises as to whether the employee should be recompensated with full wages and other benefits until the date of reinstatement. We have to be realistic in this jurisdiction although in industrial law when termination of service is found to be illegal, the ordinary rule is reinstatement. We direct reinstatement in affirmance of the order passed by the High Court and the Industrial Tribunal. But the High Court as well as the Industrial Tribunal have also awarded full wages and other benefits during the period the employee’s services had stood terminated. It is right for us to remember and Shri Sen Gupta has reminded us of the proposition that sitting in appeal under Article 136 against an order of the High Court passed under Article 226 we should not lightly interfere with the direction made in the judgment of the High Court unless there is some substantial error, manifest injustice or exceptional circumstance. None having been pointed out, we affirm the finding of the High Court regarding payment of back wages and other benefits up to the date the High Court passed its final order in Division Bench, viz., 30 November 1971. We are not fettered by this constraint in regard to the period since then. We must remember the general principle that the act of the Court should not injure any party. The length of the proceeding in this Court from 1971 to 1977 is the inevitable consequence of the back log in this Court and not blamable on either side. In such a situation we must so mould the relief as not to prejudice either party bearing in mind the equities of the case. We think that it would be fair, having regard to overall circumstances of the case, that till the date of reinstatement, which we fix as 1 December 1971, the management will pay the employee 50% of the wages including the benefits that he may be eligible for had he continued in service from the date of High Court’s judgment on 30 November 1971 with interest at 7% per annum. Pursuant to the interim order of this Court certain sums have been paid by the appellant to the second respondent and while computing the amount that is payable to the 2nd respondent credit shall be given for such payments.

NOTES 1. The State of Bombay is an example in this context. 2. Only in respect of the states of Tamil Nadu, Karnataka and Andhra Pradesh and not in entirety of the country. The state amendments in these states provide that where an industrial dispute is connected with the individual workmen, under Section, 2A of the Industrial Disputes Act, such individual workmen shall make an application in the prescribed manner directly before the Labour Court for the adjudication of the dispute and, on receipt of such application, the Labour Court shall have the jurisdiction to adjudicate upon the matter. And in such cases, it is deemed that the dispute has been referred in accordance with the provisions of Section 10(1) of the Act. 3. Indian Express Newspapers (Bombay) vs Indian Express (Bombay) Employees Union. AIR 1978 SC 1137, at para 3. 4. AIR 1975 SC 661. 5. AIR 1975 at para 23. 6. AIR 1978 SC 481. The facts of this have been dealt with thoroughly in Chapter 3. This case was heard by V.R. Krishna Iyer and Jaswant Singh. 7. 1947 AC 1. 8. AIR 1975 SC 661. This case was heard by V.R. Krishna Iyer, Alagiriswam and R.S. Sarkaria.

Industrial Adjudication 303 9. The Chartered Bank, Bombay, vs The Chartered Bank Employees’ Union. (1960) II LLJ 222:AIR 1960 SC 919. 10. (1965) 2 SCR 148:AIR 1965 SC 1496. 11. (1972) LIC 1262:(1971) 2 LLJ 620. 12. (1972) 3 SCR 605:AIR 1972 SC 1343. 13. (1965) 2 SCR 148:AIR 1965 SC 1496. 14. 1952 LAC 490. 15. (1960) II LLJ 222:AIR 1960 SC 919:(1960) 3 SCR 441. 16. 1962 3 (SCR) 822:AIR 1963 SC 411. 17. (1970) 3 SCR 708. 18. (1972) LIC 1262:(1971) 2 LLJ 620. 19. (1960) II LLJ 222:AIR 1960 SC 919:(1960) 3 SCR 441. 20. (1972) 3 SCR 606:AIR 1972 SC 1343. 21. (1972) 3 SCR 606:AIR 1972 SC 1343. 22. (1970) 2 LLJ 20:(1970) II LLJ 20. 23. (1970) 2 LLJ 20:(1970) II LLJ 20. 24. (1965) 2 SCR 148:AIR 1965 SC 1496. 25. (1965) 2 SCR 148:AIR 1965 SC 1496. 26. AIR 1976 SC 1775. The bench was presided by Justices V.R. Krishna Iyer and N.L. Untwalia. The majority decision was delivered by Justice Untwalia. 27. 1952 2 Lab LJ 37 (L.A.T.I—Cal). 28. The definition of ‘lay-off ’ was inserted into the Act by the Amendment Act of 1953 and the definition of ‘closure’ was inserted through the Amendment Act 46 of 1982. 29. 1 SCR 476:AIR 1959 SC 1342. 30. 3 SCR 448:AIR 1970 SC 1494. 31. AIR 1957 Bom 100:(1956) 1LLJ 547. 32. AIR 1964 SC 1458:(1964) 5 SCR 548. 33. (1969) I SCR 366:AIR 1969 SC 530. 34. (1967) 2 LLJ 761 (All). 35. (1972) 1 LLJ 284:1971 LIC 1356. 36. AIR 1963 Bom 146. 37. AIR SC 2062. The case was heard by H.R. Khanna, V.R. Krishna Iyer and P.K. Goswami, and the majority judgement was delivered by Justice P.K. Goswami. 38. Section 33 of the Act provides that: (1) During the pendency of any conciliation proceeding before a conciliation officer or a Board or of any proceeding before an arbitrator or a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall, (a) in regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceeding; or (b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workmen concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending; (2) During the pendency of any such proceeding in respect of an industrial dispute, the employer may, in accordance with standing orders applicable to a workman concerned in such dispute or, where there are no such standing orders, in accordance with the terms of the contract, whether express or implied, between him and the workman, (a) alter, in regard to any matter not connected with the dispute, the conditions of service applicable to that workman immediately before the commencement of such proceeding; or (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,

304 Social Justice and Labour Jurisprudence 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. (3) Notwithstanding anything contained in sub-section (2), no employer shall, during the pendency of any such proceeding in respect of an industrial dispute, take any action against any protected workman concerned in such dispute, (a) by altering, to the prejudice of such protected workman, the conditions of service applicable to him immediately before the commencement of such proceeding; or (b) by discharging or punishing, whether by dismissal or otherwise, such protected workman, save with the express permission in writing of the authority before which the proceeding is pending. Explanation: For the purposes of this sub-section a ‘protected workman’ in relation to an establishment, means a workman who, being a member of the executive or other office bearer of a registered trade union connected with the establishment, is recognized as such in accordance with rules made in this behalf. (4) In every establishment, the number of workmen to be recognised as protected workmen for the purposes of sub-section (3) shall be one per cent of the total number of workmen employed therein subject to a minimum number of five protected workmen and a maximum number of one hundred protected workmen and for the aforesaid purpose, the appropriate Government may make rules providing for the distribution of such protected workmen among various trade unions, if any, connected with the establishment and the manner in which the workmen may be chosen and recognised as protected workmen. (5) Where an employer makes an application to conciliation officer, Board, an arbitrator, a Labour Court, Tribunal or National Tribunal under the proviso to sub-section (2) for approval of the action taken by him, the authority concerned shall, without delay, hear such application and pass, within a period of three months from the date of receipt of such application, such order in relation thereto as it deems fit: Provided that where any such authority considers it necessary or expedient so to do, it may, for reasons to be recorded in writing, extend such period by such further periods as it may think fit: Provided further that no proceedings before any such authority shall lapse merely on the ground that any period specified in this sub-section had expired without such proceedings being completed. 39. For reasons best known to the party representing the workman, the matter relating to the violation of Section 19 read with Section 29 was not advanced before the industrial tribunal, High Court or Supreme Court. Even the Supreme Court did not touch this aspect, perhaps because the same was not placed before the Court. 40. (1965) 2 SCR 148:AIR 1965 SC 1496. 41. (1966) II LLJ 428 (Mad). 42. (1966) II LLJ 899 (Mad). 43. AIR 1965 SC 1496. 44. AIR 1965 SC 1496. 45. (1972) 3 SCR 606:AIR 1972 SC 1343. 46. AIR 1976 SC 2454. 47. AIR 1978 SC 1004. This case was heard by V.R. Krishna Iyer and Jaswant Singh. 48. (1964) 7 SCR 555:AIR 1965 SC 155. 49. (1963) 1 LLJ 684. 50. (1963) 1 LLJ 684. 51. (1963) 1 LLJ 684. 52. (1961) 3 SCR 204:AIR 1961 SC 860. 53. (1963) I LLJ 697:AIR 1963 SC 1756. 54. AIR 1969 SC 983. 55. (1964) I SCR 709:AIR 1964 SC 486. 56. 1961 1 1LLJ 551. 57. (1965) 2 SCR 83:AIR 1965 SC 917.

Industrial Adjudication 305 58. 59. 60. 61. 62. 63. 64. 65.

66. 67. 68. 69. 70. 71. 72. 73.

(1973) 3 SCR 587:AIR 1973 SC 1227. 1975 LIC 1435:AIR 1975 SC 1892. (1969) 2 LLJ 799. (1962) 2 LLJ 772. AIR 1980 SC 511. This case was heard by V.R. Krishna Iyer and R.S. Pathak. AIR 1980 SC 2135. This case heard by V.R. Krishna Iyer and R.S. Pathak. The majority judgement was delivered by Justice R.S. Pathak. AIR 1976 SC 907. The case was heard by Y.V. Chandrachud, V.R. Krishna Iyer and A.C. Gupta. The majority decision was delivered by Justice A.C. Gupta. See the case of Balvantrai Chimanlal Trivede vs M.N. Nagrashna, C.A. No. 38 of 1958 decided on 29 October 1959 before the Supreme Court and that of A.M. Allison vs B.L. Sen. 1957 SCR 359:AIR 1957 SC 227. AIR 1976 SC 758. This case was heard by V.R. Krishna Iyer, A.C. Gupta and N.L. Untwalia. Under Section 24(3) of the Industrial Disputes Act, 1947, a lock-out declared in consequence of an illegal strike shall not be deemed to be illegal. (1959) Suppl. 2 SCR 136, at p. 141:AIR 1959 SC 633 at p. 635. (1950) SCR 453:AIR 1950 SC 169. (1954) SCR 1133:AIR 1954 SC 462. AIR 1954 SC 271. AIR 1972 SC 1552. p. 1554. Section 22 of the Act provides that: (1) No person employed in a public utility service shall go on strike in breach of contract— (a) without giving to the employer notice of strike, as hereinafter provided, within six weeks before striking; or (b) within fourteen days of giving such notice; or (c) before the expiry of the date of strike specified in any such notice as aforesaid; or (d) during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings. (2) No employer carrying on any public utility service shall lock-out any of his workmen— (a) without giving them notice of lock-out as hereinafter provided, within six weeks before lockingout; or (b) within fourteen days of giving such notice; or (c) before the expiry of the date of lock-out specified in any such notice as aforesaid; or (d) during the pendency of any conciliation proceedings before a conciliation officer and seven days after the conclusion of such proceedings. (3) The notice of lock-out or strike under this section shall not be necessary where there is already in existence a strike or, as the case may be, lock-out in the public utility service, but the employer shall send intimation of such lock-out or strike on the day on which it is declared, to such authority as may be specified by the appropriate government either generally or for a particular area or for a particular class of public utility services. (4) The notice of strike referred to in sub-section (l) shall be given by such number of persons to such person or persons and in such manner as may be prescribed. (5) The notice of lock-out referred to in sub-section (2) shall be given in such manner as may be prescribed. (6) If on any day an employer receives from any person employed by him any such notices as are referred to in sub-section (1) or gives to any person employed by him any such notices as are referred to in sub-section (2), he shall within five days thereof report to the appropriate government or to such authority as that government may prescribe, the number of such notices received or given on that day. Section 23 of the Act on general prohibition of strikes and lock-outs states: No workman who is employed in any industrial establishment shall go on strike in breach of contract and no employer of any such workman shall declare a lock-out—

306 Social Justice and Labour Jurisprudence (a) during the pendency of conciliation proceedings before a Board and seven days after the conclusion of such proceedings; (b) during the pendency of proceedings before (a Labour Court, Tribunal or National Tribunal) and two months, after the conclusion of such proceedings; ([bb] during the pendency of arbitration proceedings before an arbitrator and two months after the conclusion of such proceedings, where a notification has been issued under sub-section [3A] of Section l0A; or) (c) during any period in which a settlement or award is in operation, in respect of any of the matters covered by the settlement or award. Section 24 of the Act on illegal strikes and lock-outs states: (1) A strike or lock-out shall be illegal if— (i) it is commenced or declared in contravention of Section 22 or Section 23; or (ii) it is continued in contravention of an order made under sub-section (3) of Section 10 (or subsection [4A] of Section 10A). (2) Where a strike or lock-out in pursuance of an industrial dispute has already commenced and is in existence at the time of the reference of the dispute to a Board, an arbitrator, a Labour Court, Tribunal or National Tribunal, the continuance of such strike or lock-out shall not be deemed to be illegal, provided that such strike or lock-out was not at its commencement in contravention of the provisions of this Act or the continuance thereof was not prohibited under sub-section (3) of Section 10 or sub-section (4A) of Section 10A. (3) A lock-out declared in consequence of an illegal strike or a strike declared in consequence of an illegal lock-out shall not be deemed to be illegal. 74. (1963) 3 SCR 575:AIR 1963 SC 528. 75. AIR 1963 SC 528. 76. AIR 1978 SC 311.

Chapter 8

Voluntary Arbitration as a Mechanism for Dispute Settlement The provisions relating to voluntary arbitration as a mechanism for dispute settlement were not originally contained in the Industrial Disputes Act, 1947, when the law was brought into force. They were introduced by the Amendment Act of 1957 because adjudication fell into disrepute as a mechanism for settling disputes due to the reasons of cost and delay in rendering the justice to the parties. The fundamental theme for this new mechanism put forward was that the parties could, at any time before the dispute was referred to any authorities provided under the Act by the appropriate government under Section 10(1), refer the dispute in writing to an arbitrator or arbitrators themselves. Since the parties themselves voluntarily choose a person in whom they were assumed to have trust and faith, his decision would be held satisfactory to both parties, so that there could be a complete end and resolution of the dispute. Unfortunately, in respect of certain major industrial disputes wherein the Arbitrators were voluntarily called upon by the parties to resolve the matter, it has been proved that the decisions rendered by the arbitrators were wrong. In both the cases discussed in this chapter, the arbitrators had to face the wrath of the Supreme Court over their very approach in resolving the industrial disputes. Of course, there are inherent vices in the very mechanism as provided in Section 10A, but those issues have not figured before the apex Court in these two cases.

When Can an Arbitration Award be Set Aside? Rohtas Industries vs Its Union1 In this case, Justice V.R. Krishna Iyer, speaking for the majority, dealt with the question of an award made by an arbitrator under Section 10A became amenable to writ jurisdiction under Article 226 of the Constitution. 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

308 Social Justice and Labour Jurisprudence 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 process have promises to keep if 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 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

Voluntary Arbitration as a Mechanism for Dispute Settlement 309 losses flowing from the strike. The Board 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 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 2262 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 Article 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

310 Social Justice and Labour Jurisprudence 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 that an award under S. 10A of the Act is insulated from interference under the Art. 226 but we respectfully agree with the observations of Justice Gagendragadkar (as he then was) in Engineering Mazdoor Sabha,3 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 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.4 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.

Voluntary Arbitration as a Mechanism for Dispute Settlement 311 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 arbitrators 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. (Para 623, p. 334, Vol. 2, Fourth Edn.) 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 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. Indeed, this Court has relied on the leading English decisions in several cases. We may content ourselves with adverting to Bungo Steel Furniture,5 and to the unreported decision Babu Ram.6 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. [Justice] Bhargava, 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. (pp. 640–41) In Bharat Barrel & Drum Manufacturing Co.7 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.8 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. [Justice] Williams, in the case of Hookinsons vs Feraie 9 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

312 Social Justice and Labour Jurisprudence 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. Justice Tucker in James Clark10 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,11 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 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 its 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 partitions 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

Voluntary Arbitration as a Mechanism for Dispute Settlement 313 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 Dispute 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;12 Alien vs Flood ;13 Quinn vs Leathem14 and Sorrel vs Smith.15 These decisions of the English Courts are response to the societal requirements 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 torts as ‘conspiracy’. Salmond thought that there was not (see Salmond, Law of Torts, p. 505, 15th Edn.). It is interesting that in that edition of Salmond, Mogul16 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 pre-dominant purpose is to advance their own lawful

314 Social Justice and Labour Jurisprudence 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. (pp. 508–9, 15th Edn., Sweet and Maxwell) 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. (p. 513, 15th Edn., Sweet and Maxwell) 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 case, 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 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 caused. Sabotage is no weapon in workers’ legal armoury. The leading case of Sorrel vs Smith17 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:18 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

Voluntary Arbitration as a Mechanism for Dispute Settlement 315 that even in England considerable criticism is mounting on the confused state of the law of conspiracy. J.T. Cameron has argued (in 1965, Vol. 28, Modern Law Review, p. 448) 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 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., and 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 Automobiles19 case settles the legal issue involved in the above argument. The Industrial Disputes Act is a comprehensive and self-contained code so for as 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. [Justice] Untwalia, speaking for an unanimous court, has, in Premier Automobiles 20 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

316 Social Justice and Labour Jurisprudence 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. ∗

∗

In Doe vs Bridges 21 are the famous and oft quoted words of [Chief Justice] Lord Tenterden, 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,22 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:23 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. 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

Voluntary Arbitration as a Mechanism for Dispute Settlement 317 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.24 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 their favour. The new light shed by the benign clauses of Part IV must illumine even pre-Independence 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.

Arbitrator’s Ruling over the Justifiability of Mass Termination by the Employer on Account of Illegal Strike: Interference when Justified Are we right in supporting the absolute freedom of the employer in terminating the services of hundreds of workmen who have gone on illegal strike in respect of their reasonable demands from the unwilling, profitable and sound employer? No doubt it is the employer’s prerogative, which the industrial law in India itself approves. But he can do so

318 Social Justice and Labour Jurisprudence

only by complying with the cardinal principles of natural justice as recognised in the realm of industrial jurisprudence.

Gujarat Steel Tubes vs Its Mazdoor Sabha25 This was a case that came before the Supreme Court for consideration of the scope of the powers of the arbitrator in exercising jurisdiction within the framework of the provisions of Section 10A of the Industrial Disputes Act, 1947, and the prerogative of the employer to do away with the services of workers in legitimate employment under the guise of discharge simpliciter, when the case falls clearly under ‘discharge for misconduct’. Also, the Court had to consider whether the arbitrator is empowered to discharge the powers provided under Section 11A of the Act. THE FACTS OF THE CASE An affluent management and an indigent workforce were the two wings of Gujarat Steel Tubes, which manufactured steel tubes in the outskirts of Ahmedabad city and was scarred by an industrial dispute, which resulted in these appeals. This company, started in 1960, went into production in 1964 and waddled from infancy to adulthood with smiling profits and growling workers, punctuated by smouldering demands, strikes and settlements, until there brewed a confrontation culminating in a head-on collision following upon certain unhappy events. A total strike ensued, setting off a chain reaction that ended in a wholesale termination of service of all the employees, followed by the recruitment of fresh workmen, a de facto breakdown of the strike, and a dispute over the restoration to service of the workmen removed. This cataclysmic episode and its sequel formed the basis of arbitration and award under Section 10A, a writ petition and judgement, inevitably spiralling up to the Supreme Court in two appeals—one by the management and the other by the union—which were heard together and disposed of by a common judgement. The arbitrator held the action of the management to be warranted, while the High Court reversed the award and substantially directed reinstatement. The following was the Supreme Court’s decision. THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Every litigation has a moral, and these appeals have many, the foremost being that the economics of law is the essence of labour jurisprudence. A few fundamental issues, factual and legal, on which bitter controversy raged at the bar, settle the decisional fate of this case. A plethora of precedents has been cited and volumes of evidence read for our consideration by both sides. But the jural resolution of labour disputes must be sought in the law-life complex, beyond the factual blinkers of decided cases, beneath the lexical littleness of statutory texts, in the economic basics of industrial justice which must enliven the consciousness of the court and the corpus juris. This Court has developed labour law on this broad basis and what this Court has declared holds good for the country. We must first fix the founding faith in this juristic branch before unravelling the details of the particular case. Viewing from this vantage point, it is relevant to note that the ethical roots of jurisprudence, with economic overtones, are the elan vital of any country’s legal system. So it is that we begin with two quotations—one from the Old Testament and the other from Gandhiji, the Indian New Testament—as perspective-setters. After all, industrial law must set the moral-legal norms

Voluntary Arbitration as a Mechanism for Dispute Settlement 319 for the modus vivendi between the partners in management, namely, Capital and Labour. Cain retorted, when asked by God about his brother Abel, in the Old Testament, ‘Am I my brother’s keeper?’ ‘Yes’ was the implicit answer in God’s curse of Cain. In the fraternal economics of national production, worker is partner in this biblical spirit. In our society, Capital shall be the brother and keeper of Labour and cannot disown this obligation, especially because Social Justice and Articles 43 and 43A are constitutional mandates. Gandhiji, to whom the Arbitrator has adverted in passing in his award, way back in March 1946, wrote on Capitalism and Strikes in the Harijan: How should capital behave when labour strikes? This question is in the air and has great importance at the present moment. One way is that of suppression named or nicknamed ‘American’. It consists in suppression of labour through organised goondaism. Everybody would consider this as wrong and destructive. The other way, right and honourable, consists in considering every strike on its merits and giving labour its due not what capital considers as due, but what labour itself would so consider and enlightened public opinion acclaims as just. Socialism of my Conception (M.K. Gandhi) by Anand T. Hingorani, Bhartiya Vidya Bhavan. In my opinion, employers and employed are equal partners, even if employees are not considered superior. But what we see today is the reverse. The reason is that the employers harness intelligence on their side. They have the superior advantage which concentration of capital brings with it, and they know how to make use of it... Whilst capital in India is fairly organised, labour is still in a more or less disorganised condition in spite of Unions and Federation. Therefore, it lacks the power that true combination gives (Ibid.). Hence, my advice to the employers would be that they should willingly regard workers as the real owners of the concerns which they fancy they have created...(Ibid.). Tuned to these values are the policy directives in Articles 39, 41, 42, 43 and 43A. They speak of the right to an adequate means of livelihood, the right to work, humane conditions of work, living wage ensuring a decent standard of life and enjoyment of leisure and participation of workers in management of industries. Dehors these mandates, law will fail functionally. Such is the value-vision of Indian Industrial Jurisprudence, The matrix of facts—A pre-view: The nidus of facts which enwomb the issues of law may be elaborated a little more at this stage. In the vicinity of Ahmedabad city, the appellant is a prosperous engineering enterprise which enjoys entrepreneurial excellence and employs over 800 workmen knit together into the respondent Union called the Gujarat Steel Tubes Mazdoor Sabha (The Sabha, for short). Fortunately, the industry has had an innings of escalating profits but the workmen have had a running complaint of a raw deal. Frequent demands for better conditions, followed by negotiated settlements, have been a lovely feature of this establishment, although the poignant fact remains that till the dawn of the seventies, the gross wages of the workmen have hovered around a harrowing hundred rupees or more in this thriving Ahmedabad industry. The course of this precarious coexistence was often ruffled, and there was, now and then, some flare-up leading to strike, conciliation and even reference under Section 10. When one such reference was pending, another unconnected dispute arose which, after some twists and turns, led to an industrial break-down and a total strike. The episodic stages of this bitter battle will have to be narrated at length a little later. Suffice it to say that the Management jettisoned all the 853 workmen and recruited some freshers to take their place and to keep the wheels of production moving. In the war of attrition that ensued, Labour lost and capitulated to Capital. At long last, between the two, a reference to arbitration of the disputes was agreed upon under Section 10A of the Industrial Disputes Act, 1947 (the Act for short). The highlight of the dispute referred for arbitration was whether the termination orders issued by the Management against the workmen whose names were set out in the annexure to the reference were ‘legal, proper and justified’; if not, whether the workmen were entitled to any reliefs including the relief of

320 Social Justice and Labour Jurisprudence reinstatement with continuity of service and full back wages’. The arbitrator’s decision went against the Sabha while, on a challenge under Article 226, the High Court’s judgment virtually vindicated its stand. This is the hang of the case. The substantial appeal is by the Management while the Sabha has a marginal quarrel over a portion of the judgment as disclosed in its appeal. The ‘jetsam’ workmen, a few hundred in number, have been directed to be reinstated with full or partial back pay and this is the bitter bone of contention. A stage-by-stage recapitulation of the developments is important to get to grips with the core controversy. Shri Ashoke Sen, for the appellant-Management and Shri Tarkunde for the respondent— Sabha, have extensively presented their rival versions with forceful erudition. Shri R.K. Garg— of course—for some workmen—has invoked with passion the socialist thrust of the Constitution as a substantive submission and, as justificatory of the workmen’s demands, relied on the glaring contrast between the soaring profits and the sagging wages, while Shri Bhandare has pressed the lachrymose case of the several hundreds of ‘interregnal’ employees whose removal from service, on re-instatement of the old, might spell iniquity. Olive Branch Approach: At this stage we must disclose an effort at settlement we made with the hearty participation of Sri Asoke Sen and Sri Tarkunde at the early stages of the hearing. The golden rule for the judicial resolution of an industrial dispute is first to persuade fighting parties, by judicious suggestions, into the peace-making zone, disentangle the differences, narrow the mistrust gap and convert them, through consensual steps, into negotiated justice. Law is not the last word in justice, especially social justice. Moreover, in our hierarchical court system, the little man lives in the short run but most litigation lives in the long run. So it is that negotiation first and adjudication next is a welcome formula for the Bench and the Bar, Management and Union. This ‘olive branch’ approach brought the parties closer in our court and gave us a better understanding of the problem, although we could not clinch a settlement. So we heard the case in depth and felt that some of the legal issues did merit this court’s declaratory pronouncement, settlement or no settlement. Mercifully counsel abbreviated their oral arguments into an eight-day exercise, sparing us the sparring marathon of 28 laborious days through which the case stretched out in the High Court. Orality ad libitum may be the genius of Victorian era advocacy but in our ‘needy’ Republic with crowded dockets, forensic brevity is a necessity. The Bench and the Bar must fabricate a new Shorthand form of court methodology which will do justice to the pockets of the poor who seek right and justice and to the limited judicial hours humanly available to the court if the delivery system of justice is not to suffer obsolescence. Proof of the ‘efficient’ management of the Gujarat Steel Tubes Ltd., is afforded by the testimony of larger turnover and profits, year after year, from the beginning down to date. The mill was commissioned in January 1964 but by the accounting year 1971–72 the turnover had leapt to Rs 560 lakhs. It soared to Rupees 680 lakhs the next year, to Rs 1,136 lakhs the year after and to Rs 20 crores in 1974–75: This enterprise entered the export trade and otherwise established itself as a premier manufactory in the line. Steel shortage is the only shackle which hampers its higher productivity. But its increasing shower of prosperity was a sharp contrast, according to Sri Garg, to the share of the wage bill. The Worker started on a magnificent sum per mensem of Rs 100 in toto even as late as 1970, although some workmen, with more service, were paid somewhat higher. The extenuatory plea of the Management, justificatory of this parsimony, was that other mill-hands were receiving more niggardly wages in comparable enterprises. Probably, unionisation, under these luridly low-paid circumstances, caught on and a workers’ union was born somewhere around 1966. A sensible stroke of enlightened capitalism persuaded the

Voluntary Arbitration as a Mechanism for Dispute Settlement 321 Management to enter into agreements with the Unions, somewhat improving emoluments and ameliorating conditions. By 1968, the Sabha, a later union, came into being and commanded the backing of all or most of the mill hands. By March 1969, the Sabha presented a charter of demands, followed by resistance from the Management and strike by the workers. By July 1969, a settlement with the Sabha was reached. Agreements relating to the various demands brought quiet and respite to the industry although it proved temporary. A vivid close-up of the sequence and consequence of the dramatic and traumatic events culminating in the reference to arbitration and the impugned award is essential as factual foundation for the decision of the issues. Even so, we must condense, since labyrinthine details are not needed in a third tier judgment. Broad lines with the brush bring out the effect not minute etches which encumber the picture. An agreement of futuristic import with which we may begin the confrontational chronicle is that of April 1970. Clause 6 thereof runs thus: Management of the Company agrees to implement recommendations of the Central Wage Board for Engineering Industries as and when finally declared and all the increments granted to workmen from time to time under this agreement shall be adjusted with those recommendations provided that such adjustment shall not adversely affect the wages of workmen. The engineering industry, where India is forging ahead, was apparently exploitative towards labour, and to make amends for this unhealthy position, the Central Wage Board was appointed in 1964 although it took six long years to recommend revision of wages to be implemented with effect from 1-1-1969. Meanwhile, the masses of workers were living ‘below the bread line’. Saintly patience in such a milieu was too much to expect from hungry demands and pressing for the recommendations of the Wage Board to be converted into immediate cash. But, as we will presently unravel, ‘Wage Board expectations’ were proving teasing illusions and premises of unreality because of non-implementation, viewed from the Sabha’s angle. The Management, on the other hand, had a contrary version which we will briefly consider. Luckily, agreed miniincreases in wages were taking place during the years 1970, 1971 and 1972. Likewise, bonus was also the subject of bargain and agreement. But in September 1971, an allegedly violent episode broke up the truce between the two, spawned criminal cases against workers, led to charges of go-slow tactics and lock-outs and burst into suspension, discharge and dismissal of workmen. The crisis was tided over by continued conciliations and two settlements. We are not directly concerned with the cluster of clauses therein save one 64 workmen had been discharged or dismissed, of whom half the number were agreed to be reinstated. The fate of the other half (32 workers) was left for arbitration by the Industrial Tribunal. The dark clouds cleared for a while but the sky turned murky over again, although the previous agreement had promised a long spell of normalcy. The Sabha, in October 1972, met and resolved to raise demands of which the principal ones were non-implementation of the Wage Board recommendations, bonus for 1971 and wages during the lock-out period. The primary pathology of industrial friction is attitudinal. The Management could have (and, indeed, did, with a new Union) solved these problems had they regarded the Sabha as partner, not saboteur. Had the bitter combativeness of the Sabha been moderated, may be the showdown could have been averted. Apportioning blame does not help now, but we refer to it here because Sri Ashoke Sen with feeling fury fell foul of the criticism by the High Court that the Management had acted improperly in insisting on arbitration, and argued that when parties disagreed, arbitral reference was the only answer and the workers’ fanatical rejection of arbitration made no sense. We need not delve into the details of the correspondence relied on by either side to reach the truth. For, the Union’s case is that in the prior settlement between the two parties arbitral reference came only after negotiations failed. That was why they pressed the Management to reason together, avoiding wrestling with each other before a slow-moving umpire.

322 Social Justice and Labour Jurisprudence Sri Tarkunde, for the Sabha, urged that the workmen were not intransigent but impatient and pleaded for a negotiated settlement since the main point in dispute, namely, the implementation of the Central Engineering Wage Board’s recommendations, was too plain to admit of difference, given good faith on both sides. We will examine the substance of this submission later but it needs to be emphasised that workmen, surviving on starving wages and with notoriously fragile staying power, are in no mood for adjudicatory procedures, arbitral or other, if the doors of negotiation are still ajar. The obvious reason for this attitude is that the litigative length of the adjudicatory apparatus, be it the tribunal, the court or the arbitrator, is too lethargic and long-winded for workmen without the wherewithal to survive and is beset with protracted challenges either by way of appeal upon appeal or in the shape of writ petitions and, thereafter, appeals upon appeals. The present case illustrates the point. Where workmen on hundred rupees a month demand immediate negotiation the reason is that privations have no patience beyond a point. Now and here, by negotiation, is the shop-floor clamour. In this very matter, although the controversy before the arbitrator fell within a small compass, he took a year and ninety printed pages to decide, inevitably followed by a few years and hundred and thirty printed pages of judgment in the High Court and a longer spell in this Court with slightly lesser length of judgment. Which workman under Third World conditions can withstand this wasting disease while hunger leaves no option save to do or die? Raw life, not rigid logic, is the mother of law. After the demands were raised by the Union, the main issue being implementation of the Wage Board recommendations, a stream of correspondence, meetings and inchoate settlements ensued, but the crucial question, which would have meant ‘cash and carry’ for the workman, baffled solution. Do negotiate since the application of the Wage Board recommendations are beyond ambiguity, was the Sabha’s peremptory plea. We differ; therefore, go to arbitration, was the Management’s firm response. A stalemate descended on the scene. No breakthrough being visible, the Sabha charged the Management by its letter of 25 January 1973 with breach of Clause 6 of the Agreement of 4 August 1972 which ran thus: That the parties agree that for a period of 5 years from the date of this settlement all disputes will be solved by mutual negotiations or, failing that, by joint arbitration under Section 10A of the Industrial Disputes Act, 1947. Neither party shall take any direct action including goslow, strike and lock-out for a period of 5 years from the date of this settlement. Various aspersions of anti-labour tactics were included in the Sabha’s letter but the most moneyloaded item was the grievance about the Wage Board recommendations. The temper, by now, was tense. The Management, on the same day (25 January 1973), set out its version on the notice board and the High Court’s summary of it runs thus: The notice stated that during the course of the meeting with the representatives of the Sabha held on 20 January 1973 the Company had expressed its willingness to implement the Wage Board recommendations according to its interpretation on and with effect from 1 January 1969 without prejudice to the rights and contentions of the workmen and leaving it open to the parties to take the matter to arbitration for resolution of the points of dispute. The Sabha, however, had turned down this suggestion and it came to the notice of the Company that workmen were being instigated by making false representations. The Company clarified that on and with effect from 1 January 1972 every workman would be entitled to the benefits of Wage Board recommendations, irrespective of whether the concerned workman had put in 240 days attendance. The Sabha’s answer was a strike two days later. This event of January 27 was countered quickly by the Management restating its attitude on the Wage Board recommendations, asserting

Voluntary Arbitration as a Mechanism for Dispute Settlement 323 that the strike was illegal and in breach of the settlement of 4 August 1972 and wholly unjustified because the offer of reference to arbitration, negotiations failing, had been spurned by the Sabha. The notice wound up with a command and a caveat: If the workmen do not immediately resume duty, the Company would not be under any obligation to continue in service those 32 workmen who have been taken back in service pursuant to the settlement dated 4 August 1972. Besides, if (the workmen) continue causing loss to the Company from time to time in this manner, the Company will not also be bound to implement the Wage Board recommendations on and with effect from 1 January 1969, which may also be noted. The Company hereby withdraws all its proposals unless the workmen withdraw the strike and resume work within two days. This threat was dismissed by the workmen as a brutum fulmen and the strike continued. The Management, therefore, came up on the notice board castigating the Sabha with irresponsible obduracy in waging an illegal and unjustified strike. A warning of the shape of things to come was given in this notice; the High Court has summed it up thus: The Company gave intimation that in view of such obstinate attitude on the part of the Sabha and the Workmen, it had decided to withdraw its earlier offer to implement the Wage Board recommendations on and with effect from 1 January 1969 as already cautioned in the notice dated 27 January 1973. The said decision must be taken to have been thereby communicated to the workmen and Sabha. The notice further stated that having regard to the obdurate, unreasonable and illegal attitude adopted by the workmen and Sabha, the Company had decided to take disciplinary proceedings against the defaulting workmen. In this connection, the attention of the workmen was drawn to the fact that the strike was illegal not only because of the terms of the settlement dated 4 August 1972 but also because of the pendency of the reference relating to reinstatement of 32 workmen before the Industrial Court, and that, therefore, the Company was entitled to take disciplinary action against them. Finally, the Company appealed to the workmen to withdraw their illegal and unjustified strike forthwith and to resume work. These exercises notwithstanding, the strike raged undaunted, the production was paralysed and the Management retaliated by an elaborate notice which dilated on its preparedness to negotiate or arbitrate and the Sabha’s unreason in rejecting this gesture and persisting on the war path. The stern economic sanction was brought home in a critical paragraph: By this final notice the workmen are informed that they should withdraw the strike and resume work before Thursday, 15 February 1973. If the workmen resume duty accordingly, the management would be still willing to pay salary according to the recommendations of the Wage Board on and with effect from 1 January 1969. Furthermore, the management is ready and willing to refer to the arbitration of the Industrial Tribunal the question as to whether the management has implemented the settlement dated 4 August 1972 and all other labour problems. In spite of this, if the workmen do not resume duty before Thursday, 15 February 1973, then the Company will terminate the services of all workmen who are on strike and there-after it will run the factory by employing new workmen. All workmen may take note of this fact. The count-down thus began. 15 February 1973 arrived, and the Management struck the fatal blow of discharging the strikers—all the labour force, 853 strong—and recruiting fresh hands unless work was resumed by 19 February 1973.

324 Social Justice and Labour Jurisprudence This public notice was allegedly sent to the Sabha and circulated to such workmen as hovered around the factory. It is common case that the notice of 15 February 1973, was not sent to individual workmen but was a signal for action. The drastic consequence of disobedience was spelt out in no uncertain terms: The workmen are hereby informed that they should resume duty on or before Monday, 19 February 1973 failing which the Management will presume that the workmen want to continue their strike and do not wish to resume work until their demands as aforesaid are accepted by the management. Parallel negotiations were going on even while mailed fist manoeuvres were being played up—thanks to the basic goodwill and tradition of dispute settlements that existed in this company. Even amidst the clash of arms, bilateral diplomacy has a place in successful industrial relations. The Management and the Sabha allowed the talks to continue which, at any rate, clarified the area of discord. One thing that stood out of these palavers was that both sides affirmed the precondition of negotiations before arbitration over differences although the content, accent and connotation of ‘negotiations’ varied with each side. No tangible results flowed from these exercises and the inevitable happened on 21 February 1973 when the Management blotted out the entire lot of 853 workmen from the roster, by separate orders of discharge from service, couched in identical terms. The essential terms read thus: Your services are hereby terminated by giving you one month’s salary in lieu of one month’s notice and accordingly you are discharged from service. You should collect immediately from the cashier of the factory your one month’s notice-pay and due pay, leave entitlements and gratuity, if you are entitled to the same. The payment will be made between 12 noon and 5 p.m. If and when you desire to be employed, you may apply in writing to the Company in that behalf and on receipt of the application, a reply will be sent to you in the matter. Casual workmen were issued separate but similar orders. The Management did record its reasons for the action taken on 20 February 1973, and forwarded them to the Sabha and to the individual workmen on request. The anatomy of this proceeding is of critical importance in deciding the character of the action. Was it a harmless farewell to the workmen who were unwilling to rejoin or a condign punishment of delinquent workmen? The separate memorandum of reasons refers to the strike as illegal and unjustified and narrates the hostile history of assault by workmen of the officers, their go-slow tactics and sabotage activities, their contumacious conduct and a host of other perversities vindicating the drastic action of determining the services of all the employees. The concluding portion reads partly stern and partly non committal: In the interest of the Company it is decided to terminate the services of all the workmen who are on illegal and unjustified strike since 27 January 1973. Under the circumstances, it is decided that the services of all the workmen who are on illegal and unjustified strike should be terminated by way of discharge simpliciter. These workmen, however, may be given opportunity to apply for employment in the Company and in case applications are received for employment from such employees, such applications may be considered on their merits later on. It may be mentioned here that while arriving at the aforesaid decision to terminate the services of the workmen, various documents, notices, correspondence with the Union and others, records of production, etc. have been considered and therefore the same are treated as part of the relevant evidence to come to the conclusion as aforesaid.

Voluntary Arbitration as a Mechanism for Dispute Settlement 325 Final Conclusion: The services of all the workmen who are on illegal and unjustified strike since 27-1-1973 should be terminated by way of discharge simpliciter and they should be offered all their legal dues immediately. The Administrative Manager is hereby directed to pass orders on individual workers as per draft attached. We thus reach the tragic crescendo when the Management and the workmen fell apart and all the workmen’s services were severed. Whether each of these orders using, in the contemporaneous reasons, the vocabulary of misconduct but, in the formal part, the expression ‘discharge simpliciter’, should be read softly as innocent termination or sternly as penal action is one of the principal disputes demanding decision. We may as well complete the procession of events before taking up the major controversies decisive of the case. The total termination of the entire work force of 853 employees was undoubtedly a calamity of the first magnitude in a country of chronic unemployment and starving wages. Nevertheless, under certain circumstances, discharge of employees may well be within the powers of the Management subject to the provisions of the Act. With all the strikers struck off the rolls there was for a time the silence of the grave. The conditional invitation to the employees to seek de novo employment by fresh applications which would be considered on their merits, left the workers cold. So the factory remained closed until 28 April 1973 when, with new workers recruited from the open market, production recommenced. Among the militants, the morale which kept the strike going remained intact, but among the others the pressure to report for employment became strong. Re-employment of discharged workmen began and slowly snowballed, so that by 31 July 1973 a substantial number of 419 returned to the factory. The crack of workmen’s morale was accelerated by escalating re-employment and the Management’s restoration of continuity of service and other benefits for re-employed hands. The employer relied on this gesture as proof of his bona fides. Meanwhile, there were exchanges of letters between and ‘trading’ of charges against each other. The Management alleged that the strikers were violent and prevented loyalists’ return while the Sabha was bitter that goondas were hired to break the strike and promote blacklegs. These imputations have a familiar ring and their impact on the legality of the discharge of workmen falls for consideration a little later. The stream of events flowed on. The Sabha protested that the Management was terrorising workmen, exploiting their sagging spirit and illegally insisting on fresh applications for employment while they were in law continuing in services. With more ‘old workers’ trickling back for work and their discharge orders being cancelled, the strike became counter-productive. Many overtures on both sides were made through letters but this epistolary futility failed to end the embroglio and brought no bread. The worker wanted bread, job, and no pyrrhic victory. A crescent of hope appeared on the industrial sky. The Management put out a ‘final offer’ on 31 May 1973, calling on all workmen to rejoin lest the remaining vacancies also should be filled by fresh recruits. The Sabha responded with readiness to settle and sought some clarifications and assurances. The employer informed: Our offer is open till 10-6-1973. From 11-6-1973 we shall recruit new hands to the extent necessary. Thereafter workers who will not have reported for work shall have no chance left for re-employment with us. We repeat that those workers who will report for work will be taken back in employment with continuity of their services, that the orders of discharge passed against them on 21-2-1973 shall be treated as cancelled and they will also be paid the difference in wages from 1969 as per the recommendations of the Wage Board.

326 Social Justice and Labour Jurisprudence The Sabha was willing and wrote back on 8-6-73 but sought details about the attitude of the Management to the many pending demands. Meanwhile, the sands of time were running out and so the Sabha telegraphed on 9th June that the workers were willing to report for work but were being refused work. They demanded the presence of an impartial observer. The reply by the Management repelled these charges, but there was some thaw in the estrangement, since the time for return to work of the strikers was extended up to 16-6-73. An apparent end to a long strike was seemingly in sight with the Sabha sore but driven to surrender. On 13-6-73 the Sabha Secretary wrote back: This is a further opportunity to you even now to show your bona fides. If you confirm to take all the workmen discharged on 21-2-1973 as stated in your various letters and to give them intimation and reasonable time to join, I will see that your offer is accepted by the workmen. Here, at long last, was the Management willing to ‘welcome’ back all the former employees and the Sabha limping back to the old wheels of work. Was the curtain being finally drawn on the feud? Not so soon, in a world of bad blood and bad faith; or may be, new developments make old offers obsolete and the expected end proves an illusion. Anyway, the victor was the Management and the vanquished the Sabha and the re-employment proffered was watered down. In our materialist cosmos, often Might is Right and victory dictates morality! Hot upon the receipt of the Sabha’s letter accepting the offer the Management back-tracked or had second thoughts on full re-employment. For, they replied with a long catalogue of the Sabha’s sins, set out the story of compulsion to keep the production going and explained that since new hands had come on the scene full re-employment was beyond them. In its new mood of victorious righteousness, the Management modified the terms of intake of strikers and saddled choosy conditions on such absorption suggestive of breaking the Sabha’s solidarity: As on the present working of the Company, the Company may still need about 250 more workers including those to be on the casual list as per the employment position prior to the start of the strike. You may, therefore, send to us immediately per return of post the list of the workers who can and are willing to join duty immediately so as to enable us to select and employ the workmen as per the requirement of the Company. Further, it would also be necessary for you to state in your reply that you have called off the strike and have advised the workers to resume the work as otherwise it is not clear from your letter as to whether you are still advocating the continuance of the strike or that you have called off the strike. Therefore, unless we have a very definite stand known from you on this issue, it may not be even now possible for us to enter into any correspondence with you. We may again stress that if your tactics of prolonging the issue by correspondence are continued the management would be constrained to take new recruits and in that case, at a later date it may not be even possible to employ as many workmen as may be possible to employ now. Nothing is more galling, says Sri Tarkunde, than for a Union which has lost the battle and offered to go back to work to be told that it should further humiliate itself by formally declaring the calling off of the strike. Sentiment apart, the Sabha had agreed to go back, but then the management cut down the number to be re-employed to 250 and, even this, on a selective basis. This selection could well be to weed out Union activists or to drive a wedge among the Union members. These sensitive thoughts and hard bargains kept the two apart. The Sabha, wounded but not wiped out, did not eat the humble pie. The Management, on account of the intervening recruitments and injuries inflicted by the strike, did not budge either. At this point we find that out of 853 employees who had been sacked 419 had wandered back by July 31, leaving 434 workmen as flotsam. Their reinstatement became the focus of an

Voluntary Arbitration as a Mechanism for Dispute Settlement 327 industrial dispute raised by the Sabha. A few more were left out of this jobless mass, and through the intercession of the Commissioner of Labour both sides agreed to resolve their disagreement by arbitral reference under Section 10A of the Act, confining the dispute to reinstatement of 400 workmen discharged on 21 February 1973. A reference under Section 10A materialised. The ‘Labour litigation’ began in May 1975 and becoming ‘at each remove a lengthening chain’ laboured from deck to deck and is coming to a close, hopefully, by this decision. Is legal justice at such expensive length worth the candle or counterproductive of social justice? Is a streamlined alternative beyond the creative genius of Law India? An aside: As urgent as an industrial revolution is an industrial law revolution, if the rule of law were at all to serve as social engineering. The current forensic process needs thorough overhaul because it is over-judicialised and under-professionalised, lacking in social orientation and shop-floor knowhow and, by its sheer slow motion and high price, defeats effective and equitable solution leaving both Managements and Unions unhappy. If Parliament would heed, we stress this need. Industrial justice desiderates specialised processual expertise and agencies. This factual panorama, omitting a welter of debatable details and wealth of exciting embellishments, being not germane to the essential issues, leads us to a formulation of the decisive questions which alone need engage our discussion. The Management might have been right in its version or the Sabha might have been wronged as it wails, but an objective assessment of the proven facts and unbiased application of the declared law will yield the broad basis for working out a just and legal solution. Here, it must be noticed that a new Union now exists even though its numerical following is perhaps slender. We are not concerned whether it is the favoured child of the Management, although it has received soft treatment in several settlements which have somewhat benefited the whole work force and suggests a syndrome not unfamiliar among some industrial bosses allergic to strong unions. The central problem on the answer to which either the award of the arbitrator or the judgment of the High Court can be sustained as sound is whether the discharge of the workmen en masse was an innocuous termination or a disciplinary action. If the latter, the High Court’s reasoning may broadly be invulnerable. Secondly, what has been mooted before us is a question as to whether the evidence before the Arbitrator, even if accepted at its face value, establishes any misconduct of any discharged workman and further whether the misconduct, if any, made out is of such degree as to warrant punitive discharge. Of course, the scope of Section 11A as including arbitrators, the power of arbitrators, given sufficiently wide terms of reference, to examine the correctness and propriety of the punishment, inter alia, deserve examination. Likewise the rules regarding reinstatement, retrenchment, back wages, and the like fall for subsidiary consideration. Prefatory to this discussion is the appreciation of the constitutional consciousness with regard to Labour Law. The Constitution of India is not a non-aligned parchment but a partisan of social justice with a direction and destination which it sets in the Preamble and Article 38, and so, when we read the evidence, the rulings, the statute and the rival pleas, we must be guided by the value set of the Constitution. We not only appraise Industrial Law from this perspective in the disputes before us but also realise that ours is a mixed economy with capitalist mores, only slowly wobbling towards a socialist order, notwithstanding Sri Garg’s thoughts. And, 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’. The new jurisprudence in industrial relations must prudently be tuned to the wave-length of our constitutional values whose emphatic expression is found in a passage quoted by Chief Justice Rajamannar of the Madras High Court. The learned Judge observed: (Law and the People—A Collection of Essays by V. R. Krishna Iyer, p. 36).

328 Social Justice and Labour Jurisprudence The doctrine of ‘laissez faire’ which held sway in the world since the time of Adam Smith has practically given place to a doctrine which emphasises the duty of the State to interfere in the affairs of individuals in the interests of the social well-being of the entire community. As Julian Huxley remarks in his essay on ‘Economic Man and Social Man’, ‘Many of our old ideas must be retranslated, so to speak, into a new language. The democratic idea of freedom, for instance, must lose its nineteenth century meaning of individual liberty in the economic sphere, and become adjusted to new conception of social duties and responsibilities. When a big employer talks about his democratic rights to individual freedom, meaning thereby a claim to socially irresponsible control over a huge industrial concern and over the lives of tens of thousands of human beings whom it happens to employ, he is talking in a dying language’. Homo economicus can no longer warp the social order. Even so the Constitution is ambitiously called socialist but realists will agree that a socialist transformation of the law of labour relations is a slow though steady judicial desideratum. Until specific legislative mandates emerge from Parliament the court may mould the old but not make the new law. ‘Interstitially, from the molar to the molecular’ is the limited legislative role of the court; as Justice Holmes said and Mr Justice Mathew quoted. The Core question: Right at the forefront falls the issue whether the orders of discharge are, as contended by Sri Tarkunde, de facto dismissals, punitive in impact and, therefore, liable to be voided if the procedural imperatives for such disciplinary action are not complied with, even though draped in silken phrases like ‘termination simpliciter’. It is common case that none of the processes implicit in natural justice and mandated by the relevant standing orders have been complied with, were we to construe the orders impugned as punishment by way of discharge or dismissal. But Sri Asoke Sen impressively insists that the orders here are simple terminations with no punitive component, as, on their face, the orders read. To interpret otherwise is to deny to the employer the right not to dismiss but to discharge, when the law gives him the option. An analysis of the standing orders in the background of disciplinary jurisprudence is necessitous at this point of the case. The Model Standing Orders prescribed under Section 15 of the Industrial Employment (Standing Orders) Act, 1946 apply to this factory. Order 23, clauses (1) and (4), relate to termination of employment of permanent workmen. Termination of their services on giving the prescribed notice or wages in lieu of such notice is provided for. But clause (4A) requires reasons for such termination of service of permanent workmen to be recorded and, if asked for, communicated. This is obviously intended to discover the real reason for the discharge so that remedies available may not be defeated by clever phraseology of orders of termination. Clause (7) permits the services of non-permanent workmen to be terminated without notice except when such temporary workmen are discharged by way of punishment. Punitive discharge is prohibited unless opportunity to show cause against charges of misconduct is afforded (Standing Order 25). Orders of termination of service have to be by the Manager and in writing and copies of Orders shall be furnished to the workmen concerned. Standing Order 24 itemises the acts and omissions which amount to misconduct: According to clause (b) of the said Standing Order, going on an illegal strike or abetting, inciting, instigating or acting in furtherance thereof amount to misconduct. Standing Order 25 provides for penalty imposable on a workman guilty of misconduct. Accordingly amongst other punishments, a workman could be visited with the penalty of discharge under Order 23 or dismissal without notice for a misconduct (see sub-clauses [f ] and [g] of clause [1]). Clause (3) provides that no order of dismissal under sub-clause (g) of clause (1) shall be made

Voluntary Arbitration as a Mechanism for Dispute Settlement 329 except after holding an enquiry against the workmen concerned in respect of the alleged misconduct in the manner set forth in clause (4). Clause (4) provides for giving to the concerned workman a charge-sheet and an opportunity to answer the charge and the right to be defended by a workman working in the same department as himself and production of witnesses and cross-examination of witnesses on whom the charge rests. Under clause (6), in awarding punishment the Manager has to take into account the gravity of the misconduct, the previous record, if any, of the workman, and any other extenuating or aggravating circumstances. The finding of the arbitrator that the workmen went on a strike which was illegal and in which they had participated is not disputed. [Against] this background, the application of the procedural imperatives before termination of services of the workmen, in the circumstances of the present case, has to be judged. This, in turn, depends on the key finding as to whether the discharge orders issued by the management were punitive or non-penal. The anatomy of a dismissal order is not a mystery, once we agree that substance, not semblance, governs the decision. Legal criteria are not so slippery that verbal manipulations may outwit the court. Broadly stated, the face is the index to the mind and an order fair on its face may be taken at its face value. But there is more to it than that, because sometimes words are designed to conceal deeds by linguistic engineering. So it is beyond dispute that the form of the order, or the language in which it is couched is not conclusive. The court will lift the veil to see the true nature of the order. Many situations arise where courts have been puzzled because the manifest language of the termination order is equivocal or misleading and dismissals have been dressed up as simple termination. And so, judges have delved into distinctions between the motive and the foundation of the order and a variety of other variations to discover the true effect of an order of termination. Rulings are a maze on this question but, in sum, the conclusion is clear. If two factors co-exist, an inference of punishment is reasonable though not inevitable. What are they? If the severance of service is effected, the first condition is fulfilled and if the foundation or causa causans of such severance is the servant’s misconduct, the second is fulfilled. If the basis or foundation for the order of termination is clearly not turpitudinous or stigmatic or rooted in misconduct or visited with evil pecuniary effects, then the inference of dismissal stands negated and vice versa. These canons run right through the disciplinary branch of master and servant jurisprudence, both under Article 311 and in other cases including workmen under managements. The law cannot be stultified by verbal haberdashery because the court will lift the mask and discover the true face. It is true that decisions of this court and of the High Courts since Dhingra’s 26 case have been at times obscure, if cited dehors the full facts. In Samsher Singh’s 27 case the unsatisfactory state of the law was commented upon by one of us, per [Justice] Krishna Iyer, quoting Dr Tripathi for support: In some cases, the rule of guidance has been stated to be ‘the substance of the matter’ and the ‘foundation’ of the order. When does ‘motive’ trespass into ‘foundation’. When do we lift the veil of form to touch the ‘substance’? When the Court says so. These ‘Freudian’ frontiers obviously fail in the work-a-day world and Dr Tripathi’s observations in this context are not without force. He says: As already explained, in a situation where the order of termination purports to be a mere order of discharge without stating the stigmatizing results of the departmental enquiry a search for the ‘substance of the matter’ will be indistinguishable from a search for the motive (real unrevealed object) of the order. Failure to appreciate this relationship between motive (the real, but unrevealed object) and form (the apparent; or officially revealed object) in the present context has led to an unreal inter-play of words and phrases wherein symbols like ‘motive’, ‘substance’, ‘form’ or ‘direct’ parade in different combinations without communicating precise situations or entities in the world of facts.

330 Social Justice and Labour Jurisprudence The need, in this branch of jurisprudence, is not so much to reach perfect justice but to lay down a plain test which the administrator and civil servant can understand without subtlety and apply without difficulty. After all, between ‘unsuitability’ and ‘misconduct’, ‘thin partitions do their bounds divide’. And over the years, in the rulings of this Court the accent has shifted, the canons have varied and predictability has proved difficult because the play of legal light and shade has been baffling. The learned Chief Justice has in his judgment, tackled this problem and explained the rule which must govern the determination of the question as to when termination of service of a probationer can be said to amount to discharge simpliciter and when it can be said to amount to punishment so as to attract the inhibition of Article 311. Masters and servants cannot be permitted to play hide and seek with the law of dismissals and the plain and proper criteria are not to be misdirected by terminological cover-ups or by appeal to psychic processes but must be grounded on the substantive reason for the order, whether disclosed or undisclosed. The Court will find out from other proceedings or documents connected with the formal order of termination what the true ground for the termination is. If, thus scrutinised, the order has a punitive flavour in cause or consequence, it is dismissal. If it falls short of this test, it cannot be called a punishment. To put it slightly differently, a termination effected because the master is satisfied of the misconduct and of the consequent desirability of terminating the service of the delinquent servant, it is a dismissal, even if he had the right in law to terminate with an innocent order under the standing order or otherwise. Whether, in such a case the grounds are recorded in a different proceeding from the formal order does not detract from its nature. Nor the fact that, after being satisfied of the guilt, the master abandons the enquiry and proceeds to terminate. Given an alleged misconduct and a live nexus between it and the termination of service the conclusion is dismissal, even if full benefits as on simple termination, are given and non-injurious terminology is used. On the contrary, even if there is suspicion of misconduct the master may say that he does not wish to bother about it and may not go into his guilt but may feel like not keeping a man he is not happy with. He may not like to investigate nor take the risk of continuing a dubious servant. Then it is not dismissal but termination simpliciter, if no injurious record of reasons or punitive pecuniary cut-back on his full terminal benefits is found. For, in fact, misconduct is not then the moving factor in the discharge. We need not chase other hypothetical situations here. What is decisive is the plain reason for the discharge, not the strategy of a non-enquiry or clever avoidance of stigmatising epithets. If the basis is not misconduct, the order is saved. In Murugan Mills28 this Court observed: 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 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 Carnatic Co. Ltd. vs Workers of the Co.29 The matter then came up before this Court also in Chartered Bank vs Chartered Bank Employees’ Union30 and The Management of U.B. Dutt and Co. vs Workmen of U.B. Dutt and Co.,31 wherein the view taken by 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 the power or as a result of victimisation or unfair 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 the power or was a result of victimisation or 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.

Voluntary Arbitration as a Mechanism for Dispute Settlement 331 Again, in Chartered Bank vs Employees’ Union32 this Court emphasised: ...The form of the order of termination is not conclusive of the true nature of the order, for it is possible that the form may be merely a camouflage for an order of misconduct. It is, therefore, always open to the Tribunal to go behind the form and look at the substance and if it comes to the conclusion, for example, that though in form the order amounts to termination simpliciter, it in reality cloaks a dismissal for misconduct, it will be open to it to set it aside as a colourable exercise of the power. A rain of rulings merely adds to the volume, not to the weight of the proposition, and so we desist from citing all of them. A Bench of seven judges of this Court considered this precise point in Shamshar Singh’s33 case, and Chief Justice Ray ruled: The form of the order is not decisive as to whether the order is by way of punishment. Even an innocuously worded order terminating the service may in the facts and circumstances of the case establish that an enquiry into allegations of serious and grave character of misconduct involving stigma has been made in infraction of the provision of Article 811. In such a case the simplicity of the form of the order will not give any sanctity. That is exactly what has happened in the case of Ishwar Chand Agarwal. The order of termination is illegal and must be set aside. Simple Termination or Punitive Discharge? We must scan the present order of discharge of 853 workmen and ask the right questions to decide whether they are punishments or innocent terminations. Neither judicial naiveté nor managerial ingenuity will put the court off the track of truth. What, then, are the diagnostic factors in the orders under study? An isolated reading of the formal notices terminating their services reveals no stigma, no penalty, and no misconduct. They have just been told off. But the Management admits that as required by the Standing Orders it has recorded reasons for the discharge. There, several pages of damnatory conduct have been heaped on the workers collectively accounting for the resort of the Management to the extreme step of discharging the whole lot, there being no alternative. Sri A. K. Sen took us through the various appeals made by the Management, the losses sustained, the many offers to negotiate and arbitrate, the Sabha’s deaf obduracy and resort to sudden strike and violent tactics and, worst of all, its attempts to persuade the Central Government to take over the factory as a ‘sick’ mill. These ordeals were described by Sri Asoke Sen graphically to justify the submission that the Management had no choice, caught between Scylla of strike and Charybdis of take over, but to get rid of the strikers and recruit new workers. If the employer did not discharge the strikers they were adamant and would not return to work, and the very closure compelled by the Sabha was being abused by it to tell the Central Government that for three months there had been no production and so the mill qualified to be taken over as ‘sick’ under the Industries (Development and Regulation) Act. If the Management discharged the workers to facilitate fresh recruitment and save the factory from statutory takeover the cry was raised that the action was dismissal because an elaborate enquiry was not held. The Management had avoided injury to the workmen, argued Sri Sen, by merely terminating their services without resort to disciplinary action and recording the uncomplimentary grounds in a separate invisible order. He also underscored the fact that the strike was illegal and unjustified, as concurrently held by the Arbitrator and the High Court. We agree that industrial law promotes industrial life, not industrial death, and realism is the soul of legal dynamics. Any doctrine that destroys industrial progress interlaced with social justice is lethal juristic and cannot be accepted. Each side has its own version of the role of the

332 Social Justice and Labour Jurisprudence other which we must consider before holding either guilty. Sri Tarkunde told us the tale of woe of the workmen. In a country where the despair of Government is appalling unemployment it is a terrible tragedy to put to economic death 853 workmen. And for what? For insisting that the pittance of Rs 100/- per month be raised in terms of the Central Wage Board recommendations, as long ago agreed to by the Management but put off by the tantalising but treacherous offer of arbitration when the point admitted of easy negotiated solution. Arbitration looks nice, but, since 1969, the hungry families have been yearning for a morsel more, he urged. Blood, toil, sweat and tears for the workers and all the profits and production for the Management was the industrial irony! Knowing that every arbitral or other adjudicatory agency in India, especially when weak Labour is pitted against strong Capital in the sophisticated processual system, consumes considerable time, the lowly working class is allergic to this dilatory offer of arbitration. They just don’t survive to eat the fruits. Such was his case. The story of violence was also refuted by Sri Tarkunde, since the boot was on the other leg. Goondas were hired by the Management to sabotage the fundamental right to strike and with broken hearts several of [the workers] surrendered. When at last the Sabha agreed to see that all workmen reported for work within the extended time, the Management took to the typical tactics of victimisation, of refusing work for all, as first offered, and of picking and choosing even for the 250 vacancies. Moreover, other conditions were put upon the Sabha calculated to break unionism which those familiar with trade union movements would painfully appreciate. This insult and injury apart, the orders of termination were plainly dismissals for a series of alleged misconducts which were chronicled in separate proceedings. The formal order was like a decree, the grounds recorded contemporaneously were like the judgment, to use court vocabulary. It was obvious that the foundation for the termination was the catena of charges set out by the Management. The true character of the order could not be hidden by the unfair device of keeping a separate record and omitting it from the formal communication. Law is not such an ass as yet and if the intent and effect is damnatory the action is disciplinary. Between these two competing cases, presented by counsel, we have to gravitate towards the correct factual-legal conclusion. A number of peripheral controversies have been omitted from this statement, for brevity’s sake. When two high tribunals have spread out the pros and cons it is supererogation for this court to essay likewise, and miniaturization is a wise husbandry of judicial resources. First, we must decide whether the order of termination was a punitive discharge or a simple discharge. Here we reach the dilemma of the law for discovering unfailing guidelines to distinguish between discharge simpliciter and dismissal sinister. The search for infallible formulae is vain and only pragmatic humanism can help navigate towards just solutions. We have earlier explained that from Dhingra’s34 case to Shamsher Singh’s35 case, the law has been dithering but some rough and ready rules can be decocted to serve in most situations. Law, in this area, is a pragmatist, not a philologist, and we have set out the dual diagnostic tests applicable in such cases. It was not retrenchment, according to the Management. Then what was it? If there was work to be done, why terminate services of workmen except as punishment? Because, argued Sri Sen, the workers did not work, being on strike and the Management, bent on keeping the factory going, needed workmen who work. To recruit fresh hands into the lists and to keep the old hands on the roster was double burden, and, therefore, the strikers had to be eased out to yield place to new recruits. The object was not to punish the workmen but to keep the factory working. Accepting this plea, as it were, the award of the arbitrator has exonerated the Management of the charge of dismissal while the High Court has held the action to be dismissal for misconduct and therefore bad in law. In our opinion, the facts of the case before us speak for themselves. Here are workmen, on strike. The strike is illegal. The Management is hurt because production is paralysed. The strikers allegedly indulge in objectionable activities. The exasperated Management hits back by ordering

Voluntary Arbitration as a Mechanism for Dispute Settlement 333 their discharge for reasons set out in several pages in the appropriate contemporaneous proceeding. Misconduct after misconduct is flung on the workers to justify the drastic action. In all conscience and common sense, the discharge is the punishment for the misconduct. The Management minces no words. What is explicitly stated, is not a colourless farewell to make way for fresh hands to work the factory until the strike is settled but a hard hitting order with grounds of guilt and penalty of removal. The inference is inevitable, however ingenious the contrary argument, that precisely because the Management found the workmen refractory in their misconduct they were sacked. Maybe the Management had no other way of working the factory but that did not change the character of the action taken. Once we hold the discharge punitive the necessary consequence is that enquiry before punishment was admittedly obligatory and confessedly not undertaken. The orders were bad on this score alone. Sri A.K. Sen urged that in a dismissal the employee is denied some of the retiral and other benefits which he gets in a simple discharge, and here all the employees were offered their full monetary benefits, so that it was wrong to classify the orders of discharge as punitive. Maybe, a dismissed servant may well be disentitled to some, at least, of the financial benefits which his counterpart who is simply discharged may draw. But that is not a conclusive test. Otherwise, the master may ‘cashier’ his servant and camouflage it by offering full retiral benefits. Dismissal is not discharge plus a price. The substance of the action is the litmus test. In the present case, the penal core, ‘tied in tooth and claw’, shows up once we probe: and the non-committal frame of the formal order is a disguise. For a poor workman loss of his job is a heavy penalty when inflicted for alleged misconduct, for he is so hungry that, in Gandhiji’s expressive words, he sees God Himself in a loaf of bread. Before we leave this part of the case, a reference to some industrial law aspects and cases may be apposite though a little repetitive. Standing orders certified for an industrial undertaking or the Model Standing Orders framed under the Industrial Employment Standing Orders Act provide for discharge simpliciter, a term understood in contradistinction to punitive discharge or discharge by way of penalty. It is not unknown that an employer resorts to camouflage by garbing or cloaking a punitive discharge in the innocuous words of discharge simpliciter. Courts have to interpose in order to ascertain whether the discharge is one simpliciter or a punitive discharge, and in doing so, the veil of language is lifted and the realities perceived. In the initial stages the controversy raised was whether the court/tribunal had any jurisdiction to lift such a veil. Probe and penetrate so as to reveal the reality, but this controversy has been set at rest by the decision in Western India Automobile Association vs Industrial Tribunal, Bombay.36 The wide scope of the jurisdiction of industrial tribunal/court in this behalf is now well established. If standing orders or the terms of contract permit the employer to terminate the services of his employee by discharge simpliciter without assigning reasons, it would be open to him to take recourse to the said term or condition and terminate the services of his employee but when the validity of such termination is challenged in industrial adjudication it would be competent to the industrial tribunal to enquire whether the impugned discharge has been effected in the bona fide exercise of the power conferred by the terms of employment. If the discharge has been ordered by the employer in bona fide exercise of his power, then the industrial tribunal may not interfere with it; but the words used in the order of discharge and the form which it may have taken are not conclusive in the matter and the industrial tribunal would be entitled to go behind the words and form and decide whether the discharge is a discharge simpliciter or not. If it appears that the purported exercise of power to terminate the services of the employee was in fact the result of the misconduct alleged against him, then the tribunal would be justified in dealing with the dispute on the basis that, despite its appearance to the contrary, the order of discharge is in effect an order of dismissal. In the exercise of this power, the court/tribunal would be entitled to interfere with the order in question (see Assam Oil Co. vs Its Workmen).37 In the

334 Social Justice and Labour Jurisprudence matter of an order of discharge of an employee as understood within the meaning of the Industrial Disputes Act the form of the order and the language in which it is couched are not decisive. If the industrial court is satisfied that the order of discharge is punitive or that it amounts to victimisation or unfair labour practice it is competent to the court/tribunal to set aside the order in a proper case and direct reinstatement of the employee (see Tata Oil Mills Co. Ltd. vs Workmen).38 The form used for terminating the service is not conclusive and the tribunal has jurisdiction to enquire into the reasons which led to such termination. In the facts of the case it was found that Standing Orders provided that an employee could ask for reasons for discharge in the case of discharge simpliciter. Those reasons were given before the tribunal by the appellant, viz., that the respondent’s services were terminated because he deliberately resorted to go-slow and was negligent in the discharge of his duty. It was accordingly held that the services of the employee were terminated for dereliction of duty and go-slow in his work which clearly amounted to punishment for misconduct and, therefore, to pass an order under clause 17(a) of the Standing Orders permitting discharge simpliciter in such circumstances was clearly a colourable exercise of power to terminate services of a workman under the provisions of the Standing Orders. In these circumstances, the tribunal would be justified in going behind the order and deciding for itself whether the termination of the respondent’s services could be sustained vide Management of Murugan Mills Ltd. vs Industrial Tribunal, Madras.39 This view was affirmed in Tata Engineering and Locomotive Co. Ltd. vs S. C. Prasad.40 After approving the ratio in Murugan Mills41 case, this Court in L. Michael vs Johnson Pumps India Ltd.42 observed that the manner of dressing up an order did not matter. The slightly different observation in Workmen of Sudder Office Cinnamare vs Management,43 was explained by the Court and it was further affirmed that since the decision of this Court in Chartered Bank vs Chartered Bank Employees’ Union,44 it has taken the consistent view that if the termination of service is a colourable exercise of power vested in the management or is a result of victimisation or unfair labour practice, the court/tribunal would have jurisdiction to intervene and set aside such termination. It was urged that a different view was taken by this Court in Municipal Corporation of Greater Bombay vs P.S. Malvenkar.45 The employee in that case was discharged from service by paying one month’s wages in lieu of notice. This action was challenged by the employee before the Labour Court and it was contended that it was a punitive discharge. The Corporation contended that under Standing Order No. 26 the Corporation had the power to discharge but there was an obligation to give reasons if so demanded by the employee. The Corporation had also the power to discharge by way of punishment. The Court in this connection observed as under: Now one thing must be borne in mind that these are two distinct and independent powers and as far as possible neither should be construed so as to emasculate the other or to render it ineffective. One is the power to punish an employee for misconduct while the other is the power to terminate simpliciter the service of an employee without any other adverse consequence. Now, proviso (i) to clause (1) of Standing Order 26 requires that the reason for termination of the employment should be given in writing to the employee when exercising the power of termination of service of the employee under Standing Order 26. Therefore, when the service of an employee is terminated simpliciter under Standing Order 26, the reason for such termination has to be given to the employee and this provision has been made in the Standing Order with a view to ensuring that the management does not act in an arbitrary manner. The management is required to articulate the reason which operated on its mind in terminating the service of the employee. But merely because the reason for terminating the service of the employee is required to be given and the reason must obviously not be arbitrary, capricious or irrelevant—it would not necessarily in every case make the order of termination punitive in character so as to require compliance with the requirement of clause (2) of Standing Order 21 read with Standing Order 23. Otherwise, the power of termination of service of an employee under Standing Order 26 would be rendered meaningless and futile, for in no case

Voluntary Arbitration as a Mechanism for Dispute Settlement 335 it would be possible to exercise it. Of course if misconduct of the employee constitutes the foundation for terminating his service, then even if the order of termination is purported to be made under Standing Order 26, it may be liable to be regarded as punitive in character attracting the procedure of clause (2) of Standing Order 21 read with Standing Order 23, though even in such a case it may be argued that the management has not punished the employee but has merely terminated his service under Standing Order 26. It does not purport to run counter to the established ratio that the form of the order is not decisive and the Court can lift the veil. However, it may be noted that there was an alternative contention before the Court that even if the order of discharge was considered punitive in character, the employer corporation had led evidence before the labour court to substantiate the charge of misconduct and that finding was also affirmed. We are satisfied that the Management, whatever its motives vis-a-vis keeping the stream of production flowing, did remove from service, on punitive grounds, all the 853 workmen. The law is trite that the Management may still ask for an opportunity to make out a case for dismissal before the Tribunal. The refinements of industrial law in this branch need not detain us because the arbitrator did investigate and hold that the workmen were guilty of misconduct and the ‘sentence’ of dismissal was merited, even as the High Court did reappraise and reach, on both counts, the reverse conclusion. The Sweep of Article 226: Once we assume that the jurisdiction of the arbitrator to enquire into the alleged misconduct was exercised, was there any ground under Article 226 of the Constitution to demolish that holding? Every wrong order cannot be righted merely because it is wrong. It can be quashed only if it is vitiated by the fundamental flaws of gross miscarriage of justice, absence of legal evidence, perverse misreading of facts, serious errors of law on the face of the order, jurisdictional failure and the like. 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 but the lancet operates where injustice suppurates. While traditional restraints like availability of alternative remedy hold back the court, and judicial power should not ordinarily rush in where the other two branches fear to tread, judicial daring is not daunted where glaring injustice demands even affirmative action. The wide words of Article 226 are designed for service of the lowly numbers in their grievances if the subject belongs to the court’s province and the remedy is 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 in not overstepping as if Article 226 were as large as an appeal and not failing to intervene where a grave error has crept in. Moreover, we sit here in appeal over the High Court’s judgment. And an appellate power interferes when the order appealed is not right but only when it is clearly wrong. The difference is real, though fine. What are the primary facts which have entered the Tribunal’s verdict in holding the strikers guilty of misconduct meriting dismissal? We must pause to remove a confusion and emphasise that the dismissal order is not against the Union but the individual workers. What did each one do? Did his conduct, when sifted and scrutinised, have any exculpation or extenuation? Not strikers in the mass, but each worker separately, must be regarded as the unit of disciplinary action. Each one’s role and the degree of turpitude, his defence on guilt and punishment, must be adjudged before economic death sentence is inflicted. A typical trial process instance will illumine the point. Suppose there is case of arson and murder in a village because of communal factions and a hundred men from the aggressive community are charged in court with serious offences. Suppose further that convincing testimony of the provocation and aggression by that community is produced. Can any single member of the violent community be convicted on

336 Social Justice and Labour Jurisprudence ‘mass’ evidence, without specific charges of participation or clear proof of constructive involvement? Judicial perspicacity clears this common fallacy. It is dangerous to mass-convict on the theory of community guilt. Anger sometimes brings in this error. In our assessment, the arbitrator has been swayed by generalities where particularities alone would have sufficed. A long story may be made short by skipping the details and focussing on essentials. We must, in fairness, state that the arbitrator, an experienced and accepted tribunal in labour disputes, has exhaustively brought into the Award all available details pro and con with over-emphasis here and there. There are only a few confusions in his long award but, regrettably, they happen to be on a few fundamentals. The foremost, of course, is a mix-up between mob-misconduct and individual guilt. The next is getting lost in the oceanic evidence while navigating towards a specified port. The High Court too has excelled in marshalling the details and handling the legal issues, although, even there, shortcomings on basic issues have been pointed out by Sri A.K. Sen. We too are apt to err and reverse ourselves although we try our best to avoid error. The Supreme Court is final not because it is infallible; it is infallible because it is final. We propose to examine the essential issues from the perspective we have set out and in their proper jurisprudential bearings. If misconduct was basic to the discharge and no enquiry precedent to the dismissal was made the story did not end there in favour of the workmen. The law is well settled that the Management may still satisfy the tribunal about the misconduct. As a fact the arbitrator held misconduct proved. He further found that the circumstances justified dismissal though he decided the order to mean discharge simpliciter. Was misconduct proved against each discharged worker at least before the arbitrator? If it was, did every worker deserve punitive discharge? Dual jurisdictional issues arise here which have been argued at some length before us. The position taken up by Sri Sen was that the High Court could not, under Article 226, direct reinstatement, and even if it felt that the arbitrator had gone wrong in refusing reinstatement, the court could only demolish the order and direct the arbitrator to reconsider the issue. What belonged, as a discretionary power, to a tribunal or other adjudicatory body, could not be wrested by the writ court. To put it pithily, regarding the relief of reinstatement, the arbitrator could but would not and the High Court would but could not. (We will deal later with the point that the arbitrator had himself no power under Section 11A of the Act but did have it in view of the wide terms of reference.) The basis of this submission, as we conceive it, is the traditional limitations woven around high prerogative writs. Without examining the correctness of this limitation, we disregard it because while Article 226 has been inspired by the royal writs its sweep and scope exceed hidebound British processes of yore. We are what we are because our Constitution framers have felt the need for a pervasive reserve power in the higher judiciary to right wrongs under our conditions. Heritage cannot hamstring nor custom constrict where the language used is wisely wide. The British paradigms are not necessarily models in the Indian Republic. So broad are the expressive expressions designedly used in Article 226 that any order which should have been made by the lower authority could be made 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. We may dilate a little more on Article 226 vis-à-vis awards of arbitrators. The first limb of the argument is that when there is a voluntary joint submission of an industrial dispute to an arbitrator named by them under Section 10A of the Industrial Disputes Act, he does not function as a Tribunal and is not amenable to the jurisdiction of that Court under Article 227 or under Article 226. Without further elaboration this contention can be negatived on a decision of this Court in Rohtas Industries Ltd. vs Rohtas Industries Staff Union.46 This Court observed that as the arbitrator under Section 10A has the 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

Voluntary Arbitration as a Mechanism for Dispute Settlement 337 the award on publication derived from the statute, it is legitimate to regard such an arbitrator now as part of the infra-structure of the sovereign’s dispensation of justice, thus falling within the rainbow of statutory tribunals amenable to judicial review. The second limb of the argument was that a writ of certiorari could not be issued to correct errors of facts. In this connection after affirming the ratio in Engineering Mazdoor Sabha vs Hind Cycle Ltd,47 this Court observes that 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 acute silence confers no greater or subtler immunity on the award than plain speech. 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. Broadly stated, the principle of law is that the jurisdiction of the High Court under Article 226 of the Constitution is limited to holding the judicial or quasi-judicial tribunals or administrative bodies exercising the quasi-judicial powers within the leading strings of legality and to see that they do not exceed their statutory jurisdiction and correctly administer the law laid down by the statute under which they act. So long as the hierarchy of officers and appellate authorities created by the statute function within their ambit the manner in which they do so can be no ground for interference. The powers of judicial supervision of the High Court under Article 227 of the Constitution (as it then stood) are not greater than those under Article 226 and it must be limited to seeing that a tribunal functions within the limits of its authority (see Nagendra Nath Bora vs Commr. of Hills Division & Appeals, Assam).48 This led to a proposition that in exercising jurisdiction under Article 226 the High Court is not constituted as a court of appeal over the decision of authorities, administrative or quasi-judicial. Adequacy or sufficiency of evidence is not its meat. It is not the function of a High Court in a petition for a writ under Article 226 to review the evidence and to arrive at an independent finding on the evidence. (See State of Andhra Pradesh vs S. Sree Rama Rao).49 A Constitution Bench of this Court in P. H. Kalyani vs Air France, Calcutta,50 succinctly set out the limits of the jurisdiction of the High Court in dealing with a writ petition. It was said that in order to justify a writ of certiorari it must be shown that an order suffers from an error apparent on the face of the record. It was further pointed out that if the finding of fact is made by the impugned order and it is shown that it suffers from an error of law and not of fact, a writ under Article 226 would issue, and, while so saying, the decision in Nagendra Nath Bora’s51 case was affirmed. Following the aforementioned decision, the Gujarat High Court in Navinchandra vs Manager, Ahmedabad Co-op. Department Stores Ltd.,52 observed that the amended Article 226 would enable the High Court to interfere with an award of the industrial adjudicator if that is based on a complete misconception of law or it is based on no evidence or that no reasonable man would come to the conclusion to which the arbitrator has arrived. Even apart from, but while approving, the Gujarat ruling in (1978) 19 Guj LR 108 cited before us, we are satisfied that the writ power is larger, given illegality and injustice, even if its use is severely discretionary, as decided cases have repeatedly laid down. We overrule the objection of invalidity of the High Court’s order for want of power. The more serious question is whether the arbitrator had the plenitude of power to re-examine the punishment imposed by the Management, even if he disagreed with its severity. In this case the arbitrator expressed himself as concurring with the punishment. But if he had disagreed, as the High Court, in his place, did, could be have interfered? Armed with the language of Section 11A, which confers wide original power to the tribunal to re-fix the ‘sentence’, Sri Sen argued that an arbitrator was uncovered by this new section. So, even if he would, he would not. And, in this case if he could, he would not. There the matter ended, was the argument. We disagree. Even if he could, he would not, true; but that did not preclude the High Court from reviewing the order in exercise of its extraordinary constitutional power. Moreover, Section 11A did clothe the arbitrator with similar power as tribunals, despite the doubt created by the abstruse absence

338 Social Justice and Labour Jurisprudence of specific mention of ‘arbitrator’ in Section 11A. This position needs closer examination and turns on interpretational limitations. At this stage, to facilitate the discussion, we may read the provision: Section 11A: Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court. Tribunal or National Tribunal for adjudication and, in the course of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman, including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require; Provided that in any proceeding under this section the Labour Court, Tribunal or National Tribunal, as the case may be, shall rely on the materials on record and shall not take any fresh evidence in relation to the matter. Section 11A was introduced in purported implementation of the I.L.O. recommendation which expressly referred, inter alia, to arbitrators. The Statement of Objects and Reasons which illumines the words of the legislative text when it is half-lit, even if it cannot directly supplement the Section, does speak of the I.L.O. recommendations, and in terms of tribunals and arbitrators. When it came to drafting Section 11A, the word ‘arbitrator’ was missing. Was this of deliberate legislative design to deprive arbitrators, who discharge identical functions as tribunals under the Industrial Disputes Act, of some vital powers which vested in their tribunal brethren? For what mystic purpose could such distinction be? Functionally, tribunals and arbitrators belong to the same brood. The entire scheme, from its I.L.O. genesis, through the Objects and Reasons, fit in only with arbitrators being covered by Section 11A, unless Parliament cheated itself and the nation by proclaiming a great purpose essential to industrial justice and, for no rhyme or reason and wittingly or unwittingly, withdrawing one vital word. Every reason for clothing tribunals with Section 11A powers applies a fortiori to arbitrators. Then why omit? Could it be synoptic omission which did not affect the semantics because a tribunal, in its wider connotation, embraced every adjudicatory organ including an arbitrator? An economy of words is a legislative risk before a judiciary accustomed to the Anglo-Saxon meticulousness in drafting. We may easily see meaning by one construction. A ‘tribunal’ is merely a seat of justice or a judicial body with 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, difference by speaking of tribunals and national tribunals. So we see no ground 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, not mutilates[;] furthers the expressed purpose, not hampers by narrow literality. Section 2(r) defines Tribunal thus: ‘Tribunal’ means an Industrial Tribunal constituted under Section 7A and includes an Industrial Tribunal constituted before the 10th day of March, 1957, under this Act; Prima facie it is a different category from arbitrators but all statutory definitions are subject to contextual changes. It is perfectly open to the court to give the natural meaning to a word defined in the 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.

Voluntary Arbitration as a Mechanism for Dispute Settlement 339 Then what is the natural meaning of the expression Tribunal? A tribunal literally means a seat of justice. Maybe, justice is dispensed by a quasi-judicial body, an arbitrator, a commission, a court or other adjudicatory organ created by the State. All these are tribunals and naturally the import of the word embraces an arbitration tribunal. Stroud’s Judicial Dictionary (Vol. 4 p. 3093) speaks of ‘tribunal’ in this wider sense and quoted Fry, L. J. in Dawkins v. Rokeby,53 Affirmed, [1875] 7 HL 744): I accept that, with this qualification that I do not like the word ‘tribunal’. The word is ambiguous, because it has not like ‘courts’ any ascertainable meaning in English law (Royal Acquarium vs Parkinson,54 cited Court). There is a reference to the Bishop’s Commission of enquiry as a judicial tribunal and, significantly, specific mention has been made in these terms. Disputes between employers and employees are referred to such tribunals as the Civil Service Arbitration Tribunal, National Arbitration Tribunal and the Industrial Disputes Tribunal. (Stroud’s Judicial Dictionary, p. 3094). We have hardly any doubt that ‘tribunal’ simpliciter has a sweeping signification and does not exclude ‘arbitrator’. Here we come upon a fundamental dilemma of interpretative technology vis-a-vis the judicative faculty. What are the limits of statutory construction? Does creativity in his jurisprudential area permit travel into semantic engineering as 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 ferreting out flaws in the draftsman, once the object and effect are plain. Judges may not be too ‘Anglophonic’ lest the system fail. It is edifying to recall from Robert Stevens’ Law and Politics of the House of Lords as a judicial body: Moreover, Macmillan, who began to specialize in the increasingly frequent tax appeals, continued to develop this highly artificial approach. In Inland Revenue Commrs. vs Ayrshire Employers Mutual Insurance Association,55 when Parliament had clearly intended to make the annual surpluses of mutual insurance companies subject to tax, Macmillan found a particularly formalistic argument to show that this had not been the effect of Section 31 of the Finance Act of 1933. He was then happily able to announce, ‘The Legislature has plainly missed fire’.56 Of this decision Lord Diplock was later to say that ‘if, as in this case, the Courts can identify the target of Parliamentary legislation their proper function is to see that it is hit; not merely to record that it has been missed. Here is judicial legislation at its worst’.57 We would rather adopt Lord Diplock’s thought and have the court help hit the legislative target, within limits, than sigh relief that the legislative fire has missed the bull’s eye. Of course, the social philosophy of the Constitution has, as ruled by this court in several cases, a role in interpretative enlightenment and judicial value vision. We may reinforce this liberal rule of statutory construction, being a matter of importance in the daily work of the Court, by reference even to Roman Law from Justinian’s days 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’.58 Pro. Bodenheimer has explained that Civil Law does not regard words as the sole basis

340 Social Justice and Labour Jurisprudence 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’.59 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.60 Plowden pointed out that ‘when the words of a statute enact one thing, they enact all other things which are in the like degree’.61 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. 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... And it often happens that when you know the letter, you know not the sense, for sometimes the sense is more confined and contracted than the letter, and sometimes it is more large and extensive.62 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,63 the U.S. 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’. In the present case, as the narration of the facts unfolded, the reference of the dispute was to an arbitrator. He reinvestigated and reassessed the evidence bearing on the guilt of the discharged workmen after giving an opportunity to both sides to adduce evidence thereon. Admittedly, he had this power. But had he the follow-up power, if he held the men guilty of punitive misconduct, to reweigh the quantum of punishment having regard to the degree of culpability? This jurisdiction he enjoys if Section 11A includes ‘arbitrators’. This, in turn, flows from our inference as to whether the word ‘tribunal’ takes in an adjudicatory organ like the arbitrator. It is plain that the expression ‘arbitrator’ is not expressly mentioned in Section 11A. Nevertheless, if the meaning of the word ‘tribunal’ is wider rather than narrower, it will embrace ‘arbitrator’ as well. That is how the dynamics of interpretation are, in one sense, decisive of the fate of the present appeal. Competing interpretative angles have contended for judicial acceptance. English preferences apart, Indian sociolegal conditions must decide the choice in each situation. Sometimes judges are prone to castigate creative interpretation in preference to petrified literality by stating that judges declare the law and cannot make law. The reply to this frozen faith is best borne out by Lord Radcliffe’s blunt words: There was never a more sterile controversy than that upon the question whether a judge makes law. Of course he does. How can he help it?... Judicial law is always a reinterpretation of principles in the light of new combinations of facts... (J)udges do not reverse principles, once well established, but they do modify them, extend them, restrict them and even deny their application to the combination in hand.64

Voluntary Arbitration as a Mechanism for Dispute Settlement 341 Lord Devlin, in his ‘Samples of Lawmaking’, agreed that judges are fashioners of law, if not creators out of material supplied to them, and went on to observe: If the House of Lords did not treat itself as bound by its own decisions, it might do its own lopping and pruning... and perhaps even a little grafting, instead of leaving all that to the legislature. But it could not greatly alter the shape of the tree.65 Even so eminent a judge as Lord Reid leaned to the view that the law should be developed since it was not static and, in this limited sense, judges are lawmakers although this view prevented ‘technical minded Judges (from pressing) precedents to their logical conclusions’.66 On the whole, a just and humanist interpretative technique, meaning permitting, is the best. We do not mean to conclude that judges can take liberties with language ad libitum and it is wholesome to be cautious, as Lord Reid, in Shaw vs D.P.P,67 warned: ‘Where Parliament fears to tread it is not for the courts to rush in.’ We are persuaded that there is much to learn from Lord Denning’s consistent refrain about the inevitable creative element in the judicial process in the interpretative area. We permit ourselves a quote from Lord Denning because Shri A. K. Sen did draw our attention to straightening the creases as permissible but not stitching the cloth, making a critical reference to the controversial activism of which Lord Denning was a leading light: The truth is that the law is uncertain. It does not cover all the situations that may arise. Time and again practitioners and judges are faced with new situations where the decision may go either way. No one can tell what the law is until the courts decide it. The judges do everyday make law, though it is almost heresy to say so. If the truth is recognised then we may hope to escape from the dead hand of the past and consciously mould new principles to meet the needs of the present. Mr Justice Mathew in Kesavananda Bharti’s 68 case referred with approval—and so do we—to the observations of Justice Holmes:69 I recognize without hesitation that judges do and must legislate, but they can do so only interstitially; they are confined from molar to molecular motions. Arthur Selwyn Miller writes: ‘Some have called it (the Supreme Court) the highest legislative chamber in the nation. Although there is no question that the Court can and does make law, and does so routinely...’70 Assuming the above approach to be too creatively novel for traditionalism, let us approach the same problem from a conventional angle authenticated by case-law. The question of construction of Section 11A was argued at length, as to whether an omission of any reference to arbitrator appointed under Section 10A in Section 11A would suggest that the arbitrator under Section 10A, notwithstanding the terms of reference, would not enjoy the power conferred on all conceivable industrial adjudicators under Section 11A. It was said, after referring to the Objects and Reasons in respect of the bill which was moved to enact Section 11A in the Industrial Disputes Act, that while the I.L.O. had indicated that an arbitrator selected by the parties for adjudication of industrial dispute must be invested with power by appropriate legislation as found in Section 11A, the Parliament, while enacting the section, in its wisdom, did not include the arbitrator even though other adjudicators of industrial disputes have been conferred such power and, therefore, it is a case of casus omissus. Reliance was placed on Gladstone vs Bower,71 where the question arose whether a reference to a tenancy from year to year in Section 2(1) of the Agricultural Holdings Act, 1948 would also cover a tenancy for 18 months which could be

342 Social Justice and Labour Jurisprudence terminated at the end of the first year. The submission was that even though no notice was necessary at common law because the tenancy would automatically terminate at the expiry of the specified period of tenancy, the tenancy took effect as tenancy from year to year by virtue of Section 2(1) of the Act so that it continued until terminated by notice to quit and, therefore, the landlord was not entitled to possession without notice. It was further contended that if a tenancy from year to year was to get the protection of the Act, it is inconceivable that tenancy for a longer duration would not qualify for that protection. Court of Appeal negatived this contention holding that this is a case simply of casus omissus and the Act is defective. The court further held that if it were ever permissible for the Court to repair a defective Act of Parliament, the Court would be very glad to do so in this case so far as the Court could. The Court will always allow the intention of a statute to override the defects of wording, but the Court’s ability to do so is limited by the recognised canons of interpretation. The Court may, for example, prefer an alternative construction which is less well fitted to the words but better fitted to the intention of the Act. But here, for the reasons given by the learned Judge, there is no alternative construction; it is simply a case of something being overlooked. The Court cannot legislate for a casus omissus. To do so would be to usurp the function of the legislature (see Magor & St. Mellons Rural District Council vs Newport Corporation).72 Where the statute’s meaning is clear and explicit, words cannot be interpolated. Even where the meaning of the statute is clear and sensible, either with or without the omitted word, interpolation is improper, since the primary source of the legislative intent is in the language of the statute (see Crawford’s ‘Construction of Statutes’, 1940 Edn, p. 269 extracted in S. Narayanaswami vs G. Panneerselvam, AIR 1972 SC 2284, para 20). Undoubtedly, the Court cannot put into the Act words which are not expressed, and which cannot reasonably be implied on any recognised principles of construction. That would be a work of legislation, not of construction, and outside the province of the Court (see Kamalaranjan vs Secy. of State).73 Similarly, where the words of the statute are clear, it would not be open to the Court, in order to obtain a desired result, either to omit or add to the words of the statute. This is not the function of the Court charged with a duty of construction. This approach has, however, undergone a sea change as expressed by Denning, L.J. in Seaford Court Estates Ltd. vs Asher,74 wherein he observed as under: When a defect appears, a judge cannot simply fold his hands and blame the draftsman. H e 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. Approved in State of Bihar vs Dr Asis Kumar Mukherjee.75 The old order changeth, yielding place to new. This long excursion has become important because, once in a while, social legislation which requires sharing of social philosophy between the Parliament and the Judiciary meets with its Waterloo in the higher courts because the true role of interpretation shifts from judge to judge. We are clearly of the view that statutory construction which 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 industrial legislation which develops from day to day in the growing economy of India. The necessary conclusion from this discussion is that the expression ‘tribunal’ includes, in the statutory setting, an arbitrator also. Contemporaneous para-legislative material may legitimately be consulted when a word of wider import and of marginal obscurity needs to be interpreted. So viewed, we are not in a ‘sound-proof system’ and the I.L.O. recommendation accepted by India and the

Voluntary Arbitration as a Mechanism for Dispute Settlement 343 Object and Reasons of the amending Act leave no doubt about the sense, policy and purpose. Therefore Section 11A applies to the arbitrator in the present case and he has the power to examine whether the punishment imposed in the instant case is excessive. So has the High Court, if the Award suffers from a fundamental flaw. A study of the lengthy award discloses no mention of Section 11A, and presumably, the authority was unmindful of that provision while rendering the verdict. In a limited sense, even prior to Section 11A, there was jurisdiction for a labour tribunal, including an arbitrator, to go into the punitive aspect of the Management’s order. This Court has, in a catena of cases, held that a mala fide punishment is bad in law and when the punishment is grotesquely condign or perversely harsh or glaringly discriminatory, an easy inference of bad faith, unfair labour practice or victimisation arises. The wider power to examine or prescribe the correct punishment belongs to the tribunal/arbitrator even under Section 11 if no enquiry (or a defective enquiry which is bad and, therefore, can be equated with a ‘no enquiry’ situation) has been held by the Management. For then there is no extant order of guilt or punishment and the tribunal determines it afresh. In such a virgin situation, both culpability and quantification of punishment are within the jurisdiction of the tribunal/arbitrator. The present is such a case. Volleys of rulings from both sides were fired during arguments, the target being the limited area of the tribunal’s power to overturn the quantum of punishment awarded by the Management. We do not think it necessary to regurgitate all that has been said by this Court up to now, since it is sufficient to bring out the correct law in the light of the leading citations. It is incontrovertible that where, as here, no enquiry has been held by the Management, entire subject is at large and both guilt and punishment, in equal measure, may be determined, without inhibition of jurisdiction, by the tribunal. Lastly, as rightly urged by counsel for the Sabha, an arbitrator has all the powers the terms of reference, to which both sides are party, confer. Here, admittedly, the reference is very widely worded and includes the nature of the punishment. The law and the facts do not call for further elaboration and we hold that, in any view, the arbitrator had the authority to investigate into the propriety of the discharge and the veracity of the misconduct. Even if Section 11A is not applicable, an arbitrator under Section 10A is bound to act in the spirit of the legislation under which he is to function. A commercial arbitrator who derives his jurisdiction from the terms of reference will, by necessary implication, be bound to decide according to law and, when one says ‘according to law’, it only means existing law and the law laid down by the Supreme Court being the law of the land, an Arbitrator under Section 10A will have to decide keeping in view the spirit of Section 11A (see Union of India vs Bungo Steel Furniture Pvt. Ltd.).76 The jurisdictional hurdles being thus cleared, we may handle the basic facts and the divergencies between the Arbitrator and the High Court before moulding the final relief. 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. But in the present case, both before the arbitrator and High Court, the parties have proceeded on the agreed footing that the strike was illegal under Section 23(a). We do not reopen the issue at this late stage and assume the illegality of the strike. The Fatal Flaw in the Award: The Achilles heel of the arbitrator’s award is where he makes, as a substitute for specific and individuated findings of guilt and appropriate penalty vis-a-vis each workman, a wholesale survey

344 Social Justice and Labour Jurisprudence of the march of events, from tension to breakdown, from fair settlement to illegal and unjustified strike, from futility of negotiation to readiness for arbitration, from offer of full re-employment to partial taking back on application by workmen in sack cloth and ashes, by picking and choosing after a humble declaration that the strike has been formally buried, from episodes of violence and paralysis of production to backstage manoeuvres to get the factory taken over as a ‘sick mill’, and after a full glimpse of this scenario, holds that the Sabha was always in the wrong, and inevitably, the Management was surely reasonable and, ergo, every employee must individually bear the cross of misconduct and suffer dismissal for the sins of the Sabha leadership— its secretary was not an employee of the mill—by some sub-conscious doctrine of guilt by association! Non Sequitur. Each link in the chain of facts has been challenged by the respondents, but let us assume them to be true, to test the strength of the legal fibre of the verdict. (We may mention by way of aside that the Company seems to be a well managed one.) The cardinal distinction in our punitive jurisprudence between a commission of enquiry and a court of adjudication, between the cumulative causes of a calamity and the specific guilt of a particular person, is that speaking generally, we have rejected, as a nation, the theory of community guilt and collective punishment and instead that no man shall be punished except for his own guilt. Its reflection in the disciplinary jurisdiction is that no worker shall be dismissed save on proof of his individual delinquency. Blanket attainder of a bulk of citizens on any vicarious theory for the gross sins of some only is easy to apply but obnoxious in principle. Here, the arbitrator has found the Sabha leadership perverse, held that the strikers should have reasonably reported for work and concluded that the Management had, for survival, to make-do with new recruits. Therefore what? What, at long last, is the answer to the only pertinent question in a disciplinary proceeding, viz. what is the specific misconduct against the particular workman who is to lose his job and what is his punitive desert? Here you can’t generalise any more than a sessions judge can, by holding a faction responsible for a massacre, sentence every denizen of that faction’s village to death penalty. The legal error is fundamental, although lay instinct may not be outraged. What did worker A do? Did he join the strike or remain at home for fear of vengeance against blacklegs in a para-violent situation? Life and limb are dearer than loyalty, to the common run of men, and discretion is the better part of valour. Surely, the Sabha complained of Management’s goondas and the latter sought police aid against the unruly core of strikers. In between, the ordinary rustic workmen might not have desired to be branded blacklegs or become martyrs and would not have reported for work. If not being heroic in daring to break through the strike cordon— illegal though the strike be—were misconduct, the conclusion would have been different. Not reporting for work does not lead to an irrebuttable presumption of active participation in the strike. More is needed to bring home the mens rea and that burden is on the prosecutor, to wit, the Management. Huddling together the eventful history of deteriorating industrial relations and perverse leadership of the Sabha is no charge against a single worker whose job is at stake on dismissal. What did he do? Even when lawyers did go on strike in the higher courts or organize a boycott, legally or illegally, even top law officers of the Central Govt. did not attend court, argued Shri Tarkunde, and if they did not boycott but merely did not attend, could workers beneath the bread line be made of sterner stuff. There is force in this pragmatic approach. The strike being illegal is a non-issue at this level. The focus is on active participation. Mere absence, without more, may not compel the conclusion of involvement. Likewise, the further blot on the strike, of being unjustified, even if true, cuts no ice. Unjustified, let us assume; so what? The real question is, did the individual worker, who was to pay the penalty, actively involve himself in this unjustified misadventure? Or did he merely remain a quiescent non-worker during that explosive period? Even if he was a passive striker, that did not visit him with the vice of activism in running an unjustified strike. In the absence of proof of being

Voluntary Arbitration as a Mechanism for Dispute Settlement 345 militant participant, the punishment may differ. To dismiss a worker, in an economy cursed by massive unemployment, is a draconian measure as a last resort. Rulings of this Court have held that the degree of culpability and the quantum of punishment turn on the level of participation in the unjustified strike. Regrettably, no individualised enquiry has been made by the Arbitrator into this significant component of delinquency. Did any dismissed worker instigate, sabotage or indulge in vandalism or violence? The Management’s necessity to move the mill into production for fear of being branded a ‘sick unit’ is understandable. Of course, collective strike is economic pressure by cessation of work and not exchange of pleasantries. It means embarrassing business. Such a quandary cannot alter the law. Here the legal confusion is obvious. No inquest into the Management’s recruitment of fresh hands is being made at this stage. The inquiry is into the personal turpitudes of particular workmen in propelling an illegal and unjustified strike and the proof of their separate part therein meriting dismissal. The despair of the Management cannot, by specious transformation of logic, be converted into the despair of each of the 853 workmen. Sympathies shall not push one into fallacies. We may now concretise this generalised criticism of the otherwise well-covered award. The crowd of documents and carping attitudes must have added to the strain on the Arbitrator: A voluminous record of documents and correspondence has been produced before me by both sides. There have been allegations and counter allegations made by both sides not only against each other but even against the Police, the Department of Labour and persons in Authority. The history has been sought to be traced right from the inception of the Company in 1966 or 1967, by the Company to show that their conduct has been always proper and above reproach and by Sabha to establish that not only the Gujarat Steel Tubes Ltd. were not fair to the employees but that every action of theirs good or bad was ill-motivated, was executed with some sinister ulterior motives. The Award set out the history of the Company, its vicissitudes, the hills and valleys, the lights and shadows, of industrial relations with mob fury and lock-outs and allied episodes often ending in settlements and pious pledges. Then the Arbitrator stressed Clause 6 of the Agreement of December 1971, which bespoke a no-strike zone for five years. There was reference to the Management’s promise to implement the Wage Board recommendations. The Arbitrator was upset that despite Clause 6, a strike was launched, but was not disturbed that despite the Wage Board proposals, negotiations were being baulked and an interminable arbitral alternative was being offered by the Management. He exclaimed: If such a settlement arrived at was not respected and implemented the machinery provided by Law would lose all meaning and so also the sanctity of the word of the Management or the word of the union. It is, therefore, essential to ascertain who was responsible for the breach of the agreement so solemnly entered into. Serious breach by management is alleged, and this is given as a reason or is made as an excuse for getting rid of the obligations arising out of the agreement which specifically could not be terminated for five years. The narration continues and the following conclusion is reached: It is thus very clear that the company had fully discharged its obligation under the allegation made by the Sabha of the company having made a breach thereof is not correct. We thus see that at this stage, the arbitrator has merely made a generalised approach as if a commission of inquiry were going into the conduct of the Management and the Sabha to discover

346 Social Justice and Labour Jurisprudence who was blameworthy in the imbroglio. The award then swiveled round to a study of the case of the Sabha vis-a-vis the triple grievances the Sabha had: I shall first deal with the grievance regarding demands for implementation of the recommendations of the Wage Board. The long and sterile correspondence was set out and the arbitrator arrived at the conclusion that the insistence on reference to arbitration as against negotiation was justified on the part of the Management: I, therefore, have accepted the version of the Management and disbelieved the motivated denial of the Sabha in this respect. The culmination of the protracted discussion on the atmosphere and environment, rather than on the actual charge against each worker, was recorded in the Award: I have exhaustively, perhaps more exhaustively than even necessary, dealt with the allegations made by the Sabha that the Management had committed breach of agreement by refusing to accede to the demand of the Sabha for implementation of recommendations of the Wage Board. There appears to be no doubt that the Management had agreed to implement the recommendation of the Wage Board. There is also not the least doubt the Management was ready and willing to implement the recommendations of the Wage Board it was because it was prevented by the Sabha from doing so. An analysis of the Management’s conduct in the matter of non-implementation of the Wage Board recommendation was thereafter made by the Arbitrator and he wound up thus: I am satisfied that the Company had not committed any breach of the settlement dated 4-8-1972 at least so far as implementation of the recommendations of the Wage Board is concerned. The question of bonus for the year 1971 was also considered and dismissed and the Sabha’s case to that extent was negatived. Again, the plea for wages for the period of the lock-out was also negatived with the observations: I fail to see how the Sabha can allege breach of the agreement dated 4-8-1972 in view of the clear unequivocal terms contained in Clause 4 of that Agreement. In this strain the Award continued and the refrain was the same that the Sabha was in the wrong. The Award even went to the exaggerated extent of morbidly holding that the workers were wearing printed badges which, along with other circumstances, amounted to a breach of the agreement! The Award then moved on to the strike of 27 January 1973 because it led to the dismissal of all the workmen. Until this stage, the arbitrator was merely painting the background and, at any rate, did not engage himself in isolating or identifying any worker or any misconduct. He merely denounced the Sabha, which is neither here nor there, in the matter of disciplinary proceedings against each individual workman. He missed the meat of the matter. The relevant portion of the Award based on generalisation proved this error: I am concerned herein with the question whether the discharge or dismissal of the 400 workmen was legal and proper or not and what relief to grant to them.

Voluntary Arbitration as a Mechanism for Dispute Settlement 347 Approached from any point of view the action of the Company appears to me to be legal, proper and justified and the demands on behalf of these workmen must be rejected. A condemnation of the Sabha and an approval of the Management’s handling of the strike are miles away from the issue on hand. We observe here also an unfortunate failure to separate and scan the evidence with specific reference to charges against individual workman. On the contrary, all that we find in the award is an autopsy of the strike by the Sabha and a study of its allegedly perverse postures. A disciplinary inquiry resulting in punishment of particular delinquents cannot but be illegal if the evidence is of mass misconduct by unspecified strikers led by leaders who are perhaps not even workmen. We are constrained to state that pointed consideration of facts which make any of the 400 workmen guilty is a search in vain. The award being ex facie blank from this vital angle, the verdict must prima facie rank as void since vicarious guilt must be brought home against the actively participating members of a collectivity by positive testimony, not by hunch, suspicion or occult intuition. The short position is this. Is there a punishment of any workman? If yes, has it been preceded by an enquiry? If not, does the Management desire to prove the charge before the tribunal? If yes, what is the evidence, against whom, of what misconduct? If individuated proof be forthcoming and relates to an illegal strike, the further probe is this: was the strike unjustified? If yes, was the accused worker an active participant therein? If yes, what role did he play and of what acts was he author? Then alone the stage is set for a just punishment. These exercises, as an assembly-line process, are fundamental. Generalisation of a violent strike, of a vicious Union leadership, of strikers fanatically or foolishly or out of fear failing to report for work are good background material. Beyond that, these must be identified by a rational process, the workmen, their individual delinquency and the sentence according to their sin. Sans that, the dismissal is bad. Viewed from this perspective, the Award fails. The Arbitrator comes to grips with the core question of discharge simpliciter versus dismissal as punishment but not with the identification of delinquents and delinquency. After referring to Order 23 of the Model Standing Orders, he goes on to state the law correctly by extracting observations from the Assam Oil Company77 case. Another vital facet of industrial law is that when no enquiry has been held by the management before imposing a punishment (or the enquiry held is defective and bad), the whole field of delinquency and consequent penalty is at large for the tribunal. Several rulings support this logic. We are constrained to hold that a certain observation made per incuriam by Mr Justice Vaidyalingam, strongly relied on by Sri A.K. Sen, does not accurately represent the law, although the learned Judge had earlier stated the law and case-law correctly, if we may say so with respect. A selective study of the case-law is proper at this place. Before we do this, a few words on the basis of the right to strike and progressive legal thinking led by constitutional guidelines is necessitous. The right to unionise, the right to strike as part of collective bargaining and, subject to the legality and humanity of the situation, the right of the weaker group, viz., labour, to pressure the stronger party, viz., capital, to negotiate and render justice, are processes recognised by industrial jurisprudence and supported by Social Justice. While society itself, in its basic needs of existence, may not be held to ransom in the name of the right to bargain and strikers must obey civilised norms in the battle and not be vulgar or violent hoodlums. Industry, represented by intransigent managements, may well be made to reel into reason by the strike weapon and cannot then squeal or wail and complain of loss of profits or other ill-effects but must negotiate or get a reference made. The broad basis is that workers are weaker although they are the producers and their struggle to better their lot has the sanction of the rule of law. Unions and strikes are no more conspiracies than professions and political parties are, and, being far weaker, need succour. Part IV of the Constitution, read with Article 19, sows the seeds of this burgeoning jurisprudence. The Gandhian quote at the beginning of this judgment sets the tone of economic equity in

348 Social Justice and Labour Jurisprudence industry. Of course, adventurist, extremist, extraneously inspired and puerile strikes, absurdly insane persistence and violent or scorched earth policies boomerang and are anathema for the law. Within these parameters the right to strike is integral to collective bargaining. Responsible trade unionism is an instrument of concerted action and the laissez faire law that all strikes are ipso facto conspiracies is no longer current coin even in Adam Smith’s English country. Lord Chorley, in Modern Law Review, Vol. 28, 1965, p. 451, is quoted as saying that law must be altered as a consequence of Rookes vs Barnard,78 so as to remove the effects of decisions of conspiracy and intimidation. He goes on to state that Allen vs Flood79 and Quinn v. Leathem,80 taking the conspiratorial view, must never be permitted to be quoted in courts. In contrast, reference was made to Willis on Constitutional Law, pp. 878–79, wherein the Supreme Court of America reflects the impact of capitalistic development and the economic views of the judges and the fact that the judges are members of a social order and a social product and the decisions are due more to the capitalistic system and the world of ideas in which the judges live. Our Constitution is clear in its mandate, what with Article 39A superadded, and we have to act in tune with the values enshrined therein. The benign attitude towards strike being what we have outlined, the further question arises whether in the light of the accepted finding that the strike as such was illegal and, further, was unjustified, all the strikers should face the penalty of dismissal or whether individual cases with special reference to active participation in the strike, should be considered. A rapid but relevant glance at the decided cases may yield dividends. In India General Navigation and Rly. Co. Ltd. vs Their Workmen,81 this Court did observe that if a strike is illegal, it cannot be called ‘perfectly justified’. But, between ‘perfectly justified’ and ‘unjustified’, the neighbourhood is distant. Mere illegality of the strike does not per se spell unjustifiability. For in Crompton Greaves Ltd. vs Workmen,82 this Court held that even if a strike be illegal, it cannot be castigated as unjustified, unless the reasons for it are entirely perverse or unreasonable—an aspect which has to be decided on the facts and circumstances of each case. In that decision, this Court awarded wages during the strike period because the Management failed to prove that the workmen resorted to force and violence. Even in India General Navigation and Rly. Co. Ltd.,83 where the strike was illegal and affected a public utility service, this Court observed that ‘the only question of practical importance which may arise in the case of an illegal strike would be the kind or quantum of punishment, and that, of course, has to be modulated in accordance with the facts and circumstances of each case... There may be reasons for distinguishing the case of those who may have acted as mere dumb-driven cattle from those who have taken an active part in fomenting the trouble and instigating workmen to join such a strike, or have taken recourse to violence.’ The court, after holding that the strike was illegal ‘and that it was not even justified’, made a pregnant observation: To determine the question of punishment, a clear distinction has to be made between those workmen who not only joined in such a strike, but also took part in obstructing the loyal workmen from carrying on their work, or took part in violent demonstrations, or acted in defiance of law and order, on the one hand, and those workmen who were more or less silent participators in such a strike on the other hand. It is not in the interest of the industry that there should be a wholesale dismissal of all the workmen who merely participated in such a strike. It is certainly not in the interest of the workmen themselves. An Industrial Tribunal, therefore, has to consider the question of punishment, keeping in view the overriding consideration of the full and efficient working of the Industry as a whole. The punishment of dismissal or termination of services, has, therefore, to be imposed on such workmen as had not only participated in the illegal strike, but had fomented it, and had been guilty of violence or doing acts detrimental to the maintenance of law and order in the locality where work had to be carried on.

Voluntary Arbitration as a Mechanism for Dispute Settlement 349 After noticing the distinction between peaceful strikers and violent strikers, [Justice] Sinha, in that case, observed: It must be clearly understood by those who take part in an illegal strike that thereby they make themselves liable to be dealt with by their employers. There may be reasons for distinguishing the case of those who may have acted as mere dumb driven cattle from those who have taken an active part in fomenting the trouble and instigating workmen to join such a strike, or have taken recourse to violence. The same line of dichotomy is kept up: Both the types of workmen may have been equally guilty of participation in the illegal strike, but it is manifest that both are not liable to the same kind of punishment. Significantly, the Court stressed the need for individual charge-sheet being delivered to individual workmen so that the degree of misconduct of each and the punitive deserts of each may be separately considered. We may as well refer to a few more rulings since considerable argument was expended on this point. This Court, in Burn & Co. Ltd. vs Their Workmen,84 clearly laid down that mere participation in the strike would not justify the suspension or dismissal of workmen, particularly where no clear distinction can be made between those persons and the very large number of workmen who had been taken back into service although they had participated in the strike. After referring to the ratio in Burn & Co. Ltd.85 case, this Court in Bata Shoe Co. (P) Ltd. vs D. N. Ganguly,86 observed that there is no doubt that if an employer makes an unreasonable discrimination in the matter of taking back employees, there may in certain circumstances be reason for the industrial tribunal to interfere; but the circumstances of each case have to be examined before the tribunal can interfere with the order of the employer in a properly held managerial inquiry on the ground of discrimination. The Court then proceeded to determine the facts placed before it. Sri Sen specifically pointed out that in the Bata Shoe Co.’s87 case, this Court distinguished the decision in India General Navigation & Rly. Co. Ltd.88 and observed that the decision in that case was on the facts placed before the Court. In fact, Bata Shoe Co.’s89 case does not lay down any distinct proposition about the treatment to be meted out to participants in strike and actually it is a decision on its own facts. In The Swadeshi Industries Ltd vs Its Workmen,90 the Management, after holding that the strike was illegal, terminated the services of 230 workmen without framing any charge-sheet or holding any enquiry. It was contended that the strike was not legal. The Court observed that collective bargaining for securing improvement on matters like basic pay, dearness allowance, bonus, provident fund and gratuity leave and holidays was the primary object of a trade union and when demands like these were put forward and thereafter a strike was resorted to in an attempt to induce the company to agree to the demands or at least to open negotiations, the strike must prima facie be considered justified. As the order of termination was found to be illegal, it was held that reinstatement with back wages must follow as a matter of course, not necessarily because new hands had not been inducted. In I.M.H. Press, Delhi vs Addl. Industrial Tribunal Delhi,91 this Court was called upon to examine the ratio in Model Mills92 case and India General Navigation & Rly. Co. Ltd.93 case, and this Court in terms affirmed the ratio in India General Navigation & Railway Co. Ltd,94 observing that mere taking part in an illegal strike without anything further would not justify the dismissal of all the workmen taking part in the strike. In Indian Iron & Steel Co. Ltd. vs Their Workmen,95 this Court observed that the management of a concern has power to direct its own internal administration and discipline, but the power is not unlimited and when a dispute arises, Industrial Tribunals have been given the power to see whether the termination of service of a workman is justified and to give appropriate relief.

350 Social Justice and Labour Jurisprudence It may be noticed that the decision is prior to introduction of Section 11A. It would thus appear that the important effect of omission to hold an enquiry was merely this that the tribunal would have to consider not only whether there was a prima facie case but would decide for itself on the evidence adduced whether the charges have been made out. A defective enquiry in this connection stood on the same footing as no enquiry and in either case the tribunal would have jurisdiction to go into the entire matter and the employer would have to satisfy the tribunal that on the facts the order of dismissal or discharge was proper. (See Workmen of Motipur Sugar Factory (Pvt.) Ltd. vs Motipur Sugar Factory,96 and Provincial Transport Service vs State Industrial Court.)97 Once, therefore, it was held that the enquiry was not proper, it was irrelevant whether the workman withdrew from the enquiry or participated in it, the decision had to be on appraisal of evidence, and if it was found that the enquiry was not proper the whole case was open before the labour court to decide for itself whether the charge of misconduct was proved and what punishment should be awarded (see Imperial Tobacco Company of India Ltd. vs Its Workmen).98 As against the above propositions, Sri Sen relied upon the observations of this Court in Oriental Textile Finishing Mills, Amritsar vs Labour Court, Jullundur.99 We fail to see how it runs counter to the established principle. The Court, in fact, held that even where the strike is illegal, before any action was taken with a view to punishing the strikers a domestic enquiry must be held. Even though the Standing Orders prescribing enquiry before punishment did not provide for any such enquiry the Court held that nonetheless a domestic enquiry should have been held in order to entitle the management to dispense with the service of the workman on the ground of misconduct, viz., participation in the illegal strike. After so saying, the Court agreed with the view of the Court in India General Navigation & Rly. Co. Ltd. case100 and reaffirmed the principle that mere taking part in an illegal strike without anything further would not necessarily justify the dismissal of all the workers taking part in the strike and that if the employer, before dismissing a workman, gave him sufficient opportunity of explaining his conduct and no question of mala fides or victimisation arose, it was not for the tribunal in adjudicating the propriety of such dismissal to look into the sufficiency or otherwise of the evidence led before the enquiry officer or insist on the same degree of proof as was required in a court of law, as if it were sitting in appeal over the decision of the employer. Another aspect of this case emphasised that it could not be dogmatised as a matter of law that an overt act such as intimidation or instigation of violence was necessary in order to justify termination of service for participating in an illegal strike. On the facts of that case, even though it was found that no domestic enquiry was held, reinstatement was refused on the ground that misconduct was made out. Sri Sen, of course, relied on this judgment to show that where a strike was resorted to and the workers were called upon to join service within the stipulated time, on their failure it was open to the company to employ new hands. This is reading more into the ruling than is warranted. We cannot agree that mere failure to report for duty, when a strike is on, necessarily means misconduct. Many a workman, as a matter of prudence, may not take the risk of facing the militant workmen or the Management’s hirelings for fear, especially when there is evidence in the case from the Sabha that the Management had hired goondas and from the Management that the striking vanguard was violent. It is also possible, in the absence of evidence to the contrary, that several workmen might not be posted with the Management’s notice of recall or the terms on which they were being recalled. In this view, we are not able to uphold the conclusion of the arbitrator that the punishment of dismissal was appropriate for the entire mass of workmen whose only guilt, as proved, was nothing more than passive participation in the illegal and unjustified strike by not reporting for duty. The verdict is inevitable that the discharge is wrongful. The only comment we reluctantly make about the otherwise thorough award of the Arbitrator is that omnibus rhetoric about the obnoxious behaviour of a class may not make-do for hard proof of specific acts of particular persons where a punitive jurisdiction is exercised.

Voluntary Arbitration as a Mechanism for Dispute Settlement 351 What, then, is the normal rule in the case of wrongful dismissal when the workmen claim reinstatement with full back wages? The High Court has held the discharge wrongful and directed restoration with an equitable amount of back wages. The following rulings of this Court, et al., deal with this subject: The recent case of Hindustan Tin Works vs Its Employees,101 sets out the rule on reinstatement and back wages when the order of discharge is demolished: It is no more open to debate that in the field of industrial jurisprudence a 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. The relief of reinstatement with continuity of service can be granted where termination of service is found to be invalid. It would mean that the employer has taken away illegally the right to work of the workman contrary to the relevant law or in breach of contract and simultaneously deprived the workman of his earnings. If thus the employer is found to be in the wrong as a result of which the workman is directed to be reinstated, the employer could not shirk his responsibility of paying the wages which the workman has been deprived of by the illegal or invalid action of the employer. Speaking realistically, where termination of service is questioned as invalid or illegal and the workman has to go through the gamut of litigation, his capacity to sustain himself throughout the protracted litigation is itself such an awesome factor that he may not survive to see the day when law’s proverbial delay has become stupefying. If after such a protracted time and energy consuming litigation, during which period the workman just sustains himself, ultimately he is to be told that though he will be reinstated, he will be denied the back wages which would be due to him, the workman would be subjected to a sort of penalty for no fault of his and it is wholly undeserved. Ordinarily, therefore, a workman whose service has been illegally terminated would be entitled to full back wages except to the extent he was gainfully employed during the enforced idleness. That is the normal rule. Any other view would be a premium on the unwarranted litigative activity of the employer. If the employer terminates the service illegally and the termination is motivated as in this case, viz., to resist the workman’s demand for revision of wages, the termination may well amount to unfair labour practice. In such circumstances reinstatement being the normal rule it should be followed with full back wages. Articles 41 and 43 of the Constitution would assist us in reaching a just conclusion in this respect... In the very nature of things there cannot be a strait-jacket formula for awarding relief of back wages. All relevant considerations will enter the verdict. More or less, it would be a motion, addressed to the discretion of the Tribunal. Full back wages would be the normal rule and the party objecting to it must establish the circumstances necessitating departure. At that stage the Tribunal will exercise its discretion keeping in view all the relevant circumstances. Dealing with the complex of considerations bearing on payment of back wages, the new perspective emerging from Article 43A cannot be missed, as explained in Hindustan Tin Works.102 Labour is no more a mere factor in production but a partner in industry, conceptually speaking, and less than full back wages is a sacrifice by those who can best (least?) afford and cannot be demanded by those who least sacrifice their large ‘wages’ though can best afford, if financial constraint is the ground urged by the latter (Management) as inability to pay full back pay to the former. The morality of law and the constitutional mutation implied in Article 43A bring about a new equation in industrial relations. Anyway, in the Hindustan Tin Works case, 75 per cent of the past wages was directed to be paid. Travelling over the same ground by going through every precedent is supererogatory and we hold the rule is simple that the discretion to deny reinstatement or pare down the quantum of back wages is absent save for exceptional reasons.

352 Social Justice and Labour Jurisprudence It must be added however that particular circumstances of each case may induce the court to modify the direction in regard to the quantum of back wages payable as happened in the India General Navigation and Railway Co. Ltd. vs Their Workmen.103 We may, therefore, have to consider, when finally moulding the relief, what, in this case, we should do regarding reinstatement and back wages. A Sum-up: We may now crystallise our conclusions in the light of the long discussion. The basic assumption we make is that the strike was not only illegal but also unjustified. On the latter part, a contrary view cannot be ruled out in the circumstances present but we do not re-investigate the issue since the High Court has proceeded on what both sides have taken for granted. The Management, in our view, did punish its 853 workmen when it discharged them for reasons of misconduct set out in separate but integrated proceedings, even though, with legal finesse, the formal order was phrased in harmless verbalism. But fine words butter no parsnips, and law, in its intelligent honesty, must be blunt and when it sees a spade, must call it a spade. The action taken under the general law or the standing orders was illegal in the absence of individualised charge-sheets, proper hearing and personalised punishment, if found guilty. None of these steps having been taken, the discharge orders were still-born. But the Management could, as in this case it did, offer to make out the delinquency of the employees and the arbitrator had, in such cases, the full jurisdiction to adjudge de novo both guilt and punishment. We hold that Section 11A does take in an arbitrator too, and, in this case, the arbitral reference, apart from Section 11A, is plenary in scope. In the second chapter of our sum-up, the first thing we decide is that Article 226, however restrictive in practice, is a power wide enough, in all conscience, to be a friend in need when the summons comes in a crisis from a victim of i2njustice; and, more importantly, this extraordinary reserve power is unsheathed to grant final relief without necessary recourse to a remand. What the tribunal may, in its discretion, do, the High Court too, under Article 226, can, if facts compel, do. Secondly, we hold that the Award suffers from a fundamental flaw that it equates an illegal and unjustified strike with brazen misconduct by every workman without so much as identification of the charge against each, the part of each, the punishment for each, after adverting to the gravamen of his misconduct meriting dismissal. Passive participation in a strike which is both illegal and unjustified does not ipso facto invite dismissal or punitive discharge. There must be active individual excess such as master-minding the unjustified aspects of the strike, e.g., violence, sabotage or other reprehensible role. Absent such gravamen in the accusation, the extreme economic penalty of discharge is wrong. An indicator of the absence of such grievous guilt is that the Management, after stating in strong terms all the sins of the workmen, took back over 400 of them as they trickled back slowly and beyond the time set, with continuity of service, suggestive of the dubiety of the inflated accusations and awareness of the minor role of the mass of workmen in the lingering strike. Furthermore, even though all sanctions short of punitive discharge may be employed by a Management, in our current conditions of massive unemployment, low wages and high cost of living, dismissal of several hundreds, with disastrous impact on numerous families, is of such sensitive social concern that, save in exceptional situations, the law will inhibit such a lethal step for the peace of the industry, the welfare of the workmen and the broader justice that transcends transient disputes. The human dimensions have decisional relevance. We hold the discharge orders, though approved by the Arbitrator, invalid. The last part of our conclusions relates to the relief which must be fashioned with an eye on mutual equities. We cannot ignore a few raw realities, since law is not dogmatics but pragmatics, without temporising on principle. The Management’s limitations in absorbing all the large number of discharged employees all at once when steel, the raw material, is scarce is a problem. Likewise, their inability to pay huge sums by way of back wages or otherwise, without crippling

Voluntary Arbitration as a Mechanism for Dispute Settlement 353 the progress of the industry, cannot be overlooked but cannot be overplayed after Hindustan Tin Works.104 Another factor which cannot be wished away is the presence of over a couple of hundred workmen, with varying lengths of service, who may have to be sacked if the old workmen are to be brought back. It is a problem of humanist justice. Lastly, the rugged fact of life must not be missed that some of the workmen, during the long years of desperate litigation, might have sought jobs elsewhere and most of them perhaps have, for sheer survival, made at least a starving wage during the prolonged idle interval. This factor too is a weak consideration, tested by the reasoning in Hindustan Tin Works.105 Moreover, rationalisation of re-absorption of the removed workmen requires attention to the classification of permanent workmen and their casual counterparts. Every proposal must be bottomed on the basic economic fact that the beneficiaries are from the many below the destitution line. This Court has, in a very different context though, drawn attention to the Gandhian guideline: Whenever you are in doubt... apply the following test. Recall the face of the poorest and the weakest man whom you may have seen, and ask yourself if the step you contemplate is going to be of any use to him. It is apt here. This perspective informs our decision. What did the High Court do regarding reinstatement and should we modify and why? If the discharge is bad, reinstatement is the rule. In India General Navigation,106 Punjab National Bank,107 and Swadeshi Industries,108 et al, restoration, despite large numbers, was directed. But most rules have exceptions wrought by the pressure of life and Oriental was relied on to contend that reinstatement must be denied. There is force in the High Court’s reasoning to distinguish Oriental, as we hinted earlier, and we quote: There were only 22 workmen involved in that case. The management had made genuine and persistent efforts to persuade the concerned workmen to call off the strike and join work. Those efforts were made at three different stages, namely, (1) immediately after the workers went on the lightning strike and before charge-sheets were issued (2) after the charges were dropped and individual notices were sent to the workmen asking them to resume work by specified dates and (3) after the orders of termination were served and conciliation proceedings were commenced pursuant to the demand notice. But this is not all. Even the Labour Officer and Labour Inspector had tried to persuade the concerned workmen to join duty before the charge-sheets came to be issued. As against these repeated bona fide attempts on the part of the management and an outside agency to persuade the erring workmen, they not only did not resume work but also failed to acknowledge or send a reply to the individual notices served upon them requesting them to resume work and they appear to have made it a condition precedent to their joining duty that the suspended workmen should also be taken back. Even under such circumstances, the management did not straightway terminate their services but gave individual notices requiring the concerned workmen to show cause why their names should not be struck off and asked them to submit their reply by a certain date. Even those notices were not replied. It is only thereafter that the services of the concerned workmen came to be terminated. It is against this background that the Supreme Court held that there was ‘a persistent and obdurate refusal by the workmen to join duty’ notwithstanding the fact that ‘the management has done everything possible to persuade them and give them opportunities to come back to work’ and that they had without any sufficient cause refused to do so, which constituted ‘misconduct’ so as to ‘justify the termination of their services’. ...If the workmen had been approached individually, not only those amongst them who were unwilling to join strike but were prevented from joining work would have taken courage to resume duty, but even those amongst them who were undecided could also have been won over. That apart, those notices, as their contents disclose, were hardly persuasive efforts. They

354 Social Justice and Labour Jurisprudence were a mixture of ultimatums, threats, complaints and indictment of the workmen and the Sabha. Was it, therefore, a genuine effort on the part of a keenly desirous employer to offer an olive branch? In Oriental, orders of termination were passed only after giving individual notices to the concerned workmen to show cause why their names should not be struck off. Besides, those notices were given after charges formally served upon each workman earlier were dropped and persuasive efforts made in the meantime had failed. None of those steps was taken herein. All that happened was that in one of the notices meant for mass consumption and circulation, such intimation was given. Even so, during the several years of the pendency of the dispute, surely some workmen would have secured employment elsewhere as was conceded by counsel at a certain stage, and it is not equitable to recall them merely to vindicate the law especially when new workmen already in precarious service may have to be evicted to accommodate them. In the course of the debate at the bar we gained the impression that somewhere around a hundred workmen are likely to be alternatively employed. Hopefully, there is no hazard in this guess. Another facet of the relief turns on the demand for full back wages. Certainly, the normal rule, on reinstatement, is full back wages since the order of termination is non est. Lad’s109 case and Panitole Tea Estate’s110 case. Even so, the industrial court may well slice off a part if the workmen are not wholly blameless or the strike is illegal and unjustified. To what extent wages for the long interregnum should be paid is, therefore, a variable dependant on a complex of circumstances (see for example [1967] 15 Fac LR 395 paras 3 and 4) (SC). We are mindful of the submission of Sri Tarkunde, urged in the connected appeal by the Sabha, that where no enquiry has preceded a punitive discharge and the tribunal, for the first time, upholds the punishment this Court has in D. C. Roy vs Presiding Officer, Madhya Pradesh Industrial Court, Indore,111 taken the view that full wages must be paid until the date of the award. There cannot be any relation back of the date of dismissal to when the Management passed the void order. Kalyani112 was cited to support the view of relation back of the Award to the date of the employer’s termination orders. We do not agree that the ratio of Kalyani113 corroborates the proposition propounded. Jurisprudentially, approval is not creative but confirmatory and therefore relates back. A void dismissal is just void and does not exist. If the Tribunal, for the first time, passes an order recording a finding of misconduct and thus breathes life into the dead shell of the Management’s order, pre-dating of the nativity does not arise. The reference to Sasa Musa114 in Kalyani115 enlightens this position. The latter case of D.C. Roy vs Presiding Officer, Madhya Pradesh Industrial Court, Indore116 specifically refers to Kalyani’s117 case and Sasa Musa’s118 case and holds that where the Management discharges a workman by an order which is void for want of an enquiry or for blatant violation of rules of natural justice, the relation-back doctrine cannot be invoked. The jurisprudential difference between a void order, which by a subsequent judicial resuscitation comes into being de novo, and an order which may suffer from some defects but is not still-born or void and all that is needed in the law to make it good is a subsequent approval by a tribunal, which is granted, cannot be obfuscated. We agree that the law stated in D.C. Roy119 is correct but now that the termination orders are being set aside, the problem does not present itself directly. Even the other alternative submission of Sri Tarkunde that if the plea of the Management that the order is a discharge simpliciter were to be accepted, the result is a retrenchment within the meaning of Section 2(oo), which, in this case, is in violation of Section 25F and therefore bad, is not a point urged earlier. We are disposed to stand by the view that discharge, even where it is not occasioned by a surplus of hands, will be retrenchment, having regard to the breadth of the definition and its annotation in (1977) 1 SCR 586: (AIR 1977 SC 31). But the milieu in which the order was passed in February 1973 is not fully available, viewed from this new angle. So we decline to go into that contention.

Voluntary Arbitration as a Mechanism for Dispute Settlement 355 Final Relief: We are concerned with 400 workmen, some of whom have been claimed by death or other irreversible causes—casualties of litigative longevity! 370 workmen are left behind, of whom 239 are admittedly permanent. We have already stated that 100, out of them, are probably fixed up elsewhere. So, we exclude them and direct that the remaining 139 alone will be reinstated. A list of the aforesaid 100 workmen will be furnished to the Management by the Sabha within two weeks from today. That shall be accepted as correct and final. While reinstatement is refused for these 100 workmen, when shall they be deemed to have ceased to be in service for drawal of terminal benefits? Their discharge orders having been quashed, they remain in service until today. We concluded the arguments on 3 August 1979 and on the eve of the closure of counsel’s submissions certain inconclusive settlement proposals were discussed. We, therefore, consider 3 August 1979 as a pivotal point in the calendar with reference to which the final relief may be moulded. We direct that the 100 workmen for whom reinstatement is being refused will be treated as in service until 3 August 1979 on which date they will be deemed to have been retrenched. We direct this step with a view to pragmatise the situation in working out the equities. These 100 will draw all terminal benefits plus 75 per cent of the back wages. This scaling down of back pay is consistent with the assumption that somewhere in the past they had secured alternative employment. The long years and the large sum payable also persuade us to make this minor cut. Of course, in addition, they will be entitled to retrenchment benefits under Section 25F of the Act, and one month’s notice pay. The remaining 139 will be awarded 50 per cent of the back wages since we are restoring them. The High Court has adopted this measure and so we do not depart from it. The case of the hundred stands on a slightly different footing, because some compensation in lieu of refusal of reinstatement is due to them and that also has entered our reckoning while fixing 75 per cent for them. The computation of the wages will be such as they would have drawn had they continued in service and on that the cut directed will be applied. We have disposed of the case of the permanent workmen except to clarify that in their case continuity of service will be maintained and accrual of benefits on that footing reckoned. The next category relates to casual employees, 131 in number of whom 57 have less than nine months’ service. The policy of the Act draws a distinction between those with service of 240 days and more and others with less. The casuals with less than nine months service are 57 in number and we do not think that this fugitive service should qualify for reinstatement especially when we find a number of intermediate recruits, with longer though untenable service, have to be baled out. We decline reinstatement of these 57 hands. The other 74 must be reinstated although notionally but wrongly they are shown as casual. In the ‘life’ sense, all mortals are casuals but in the legal sense, those with a record of 240 days on the rolls are a class who have rights under industrial law. We direct the 74 long-term casuals aforesaid to be reinstated but not the 57 short-term ones. To this extent, we vary the High Court’s order. We adopt the directive of the High Court regarding the back wages to both categories of casuals except that for the lesser class of 57 casuals, a flat sum of Rs 1,000 more will be paid as a token compensation in lieu of reinstatement. The reinstated casuals (74 of them) will be put back as casuals but will be confirmed within six months from the date of rejoining since it is meaningless to keep them as casual labourers when they are, by sheer length of service, on the regular rolls. Two issues remain. When the workmen to be retaken and what is to happen in the meanwhile? How is the amount payable by the Management to be discharged and on what terms? Many years have flowed by, thanks to the long-drawn-out litigation. Further delay in putting back the workers will be unfair. But the Management pleads that steel shortage cuts into the flesh of the factory’s expansion, without which additional intake of workers is beyond their budget unless considerable time for re-absorption were given. But the lot of the workmen is unspeakable

356 Social Justice and Labour Jurisprudence while the overall assets and outlook of the Company are commendable enough to bear an increased wage bill. Dives cannot complain when Lazarus asks for more crumbs. Even if a slight slant be made in favour of the Management, the direction to them to take back, in order of seniority, the first 70 out of the 139 permanent workmen on or before 31 December 1979 and the rest on or before 31 March 1980 is the least that is just. Until those dates the workmen will be paid 2/3rd of their wages as now due. Of course, if any workman fails to report for work within 15 days of service of written notice to him, with simultaneous copy to the Sabha, he will not be eligible for any more reinstatement or wages. The back wages run into a large sum but a good part has been paid under the stay order of this Court. We make it clear that the payments made will be given credit and the balance if paid as directed below and within the time specified will not carry interest. If default is made, the sums in default will carry 10 per cent interest. The figures of amounts due will be worked out by both sides and put into Court in 10 days from now. Half the amount determined by the Court, after perusing both statements, will be paid directly to the workmen or deposited with the Industrial Tribunal who will give notice and make disbursements, on or before 31-3-1980 and the other half on or before 30-9-1980. The conclusions may be capsulated for easier consumption: 1. Out of 370 workmen directed to be reinstated by the High Court, 239 are permanent. It is assumed that 100 have found alternative employment and are not interested any more in reinstatement and they are to be excluded from the direction of reinstatement. The Company must, therefore, reinstate 139 permanent workmen and the list of 100 workmen who are not to be reinstated would be supplied by the Sabha within two weeks from the date of this judgment. The discharge order in respect of 100 workmen hereinbefore mentioned would be set aside and they are deemed to be in service till 3 August 1979, when they will be retrenched and they will be paid retrenchment compensation as provided in Section 25F plus one month’s pay in lieu of notice, the compensation to be worked out on the basis of the wages that will be admissible under the recommendations of the Engineering Wage Board as applicable to the Company. This amount will be paid in lieu of reinstatement and they will also be paid 75 per cent of the back wages. 2. The remaining 139 permanent employees would be paid 50 per cent of the back wages as directed by the High Court. 3. 70 out of 139 permanent workmen directed to be reinstated should be provided actual employment on or before 31 December 1979, and the rest on or before 31 March 1980. During this period and till the actual reinstatement each one of these 139 workmen should be paid 2/3 of the monthly wages from 9 August 1979, when the hearing in this case concluded. 50 per cent of the amount that becomes payable to each workman under the directions hereinabove given will be paid on or before 31 March 1980, and the balance on or before 30 September 1980, and till then the amount will carry interest at the rate of 10 per cent. 4. In respect of casual workmen whose service was less than 9 months on the date of dismissal it would not be proper to grant reinstatement. They are 57 in number. The remaining casual workmen 74 in number shall be reinstated. In case of 57 casual workmen to whom reinstatement is refused, the direction of the High Court is confirmed with the further addition that each one will be paid Rs 1,000 over and above the amount payable under the direction of the High Court and this would be in lieu of reinstatement. Casual workmen 74 in number and having service of more than 9 months on the date of dismissal will be treated as confirmed within six months of the date of their rejoining and they will be offered reinstatement by 31 March 1980, and the High Court’s direction for back wages in their respect is confirmed. With these modifications, we dismiss both the appeals. The Management-appellant will pay the costs of the Sabha-respondent, advocates fee being fixed at Rs 5,000/-.

Voluntary Arbitration as a Mechanism for Dispute Settlement 357 An afterword: This litigation, involving many workmen living precariously on poor wages amidst agonising inflation and a Management whose young budget, what with steel scarcity, may well be shaken by the burden of arrears, points to the chronic pathology of our Justice System—the intractable and escalating backlog in the Forensic Assembly Line that slowly spins Injustice out of Justice and effectually wears down or keeps out the weaker sector of Indian life. This trauma is felt more poignantly in Labour litigation and the legislature fails functionally if it dawdles to radicalise, streamline and simplify the conflict resolution procedures so as to be credibly available to the common people who make up the lower bracket of the nation. The stakes are large, the peril is grave, the evils are worse than the prognostics of Prof. Laurence Tribe (of the Harvard Law School): If court backlogs grow at their present rate, our children may not be able to bring a lawsuit to a conclusion within their lifetime. Legal claims might then be willed on, generation to generation, like hillbilly feuds; and the burdens of pressing them would be contracted like a hereditary disease. Law may be guilty of double injustice when it is too late and too costly for it holds out remedial hopes which peter out into sour dupes and bleeds the anaemic litigant of his little cash only to tantalise him into a system equal in form but unequal in fact. The price of this promise of unreality may be the search by the lowly for the reality of revolutionary alternatives. Compelled by the crisis in the Justice System, we sound this sombre judicial note. We direct payments and reinstatements as spelt out earlier, within the specificated time, and, hopefully, leave the case with the thought that, given better rapport between the partners in production, the galvanic Gujarat Steel Tubes Ltd. will forge ahead as a paradigm for the rest.

NOTES 1. AIR 1976 SC 425. This case was heard by V.R. Krishna Iyer and A.C. Gupta. 2. Article 226 of the Constitution of India provides: (1) Not withstanding anything in article 32, every High Court shall have power, 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.

358 Social Justice and Labour Jurisprudence (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. 3. Engineering Mazdoor Sabha vs Hind Cycles. (1962) 2 LLJ 760, 796 (SC):(1963) Supp. ISCR 625. 4. Section 18 of the Industrial Disputes Act, 1947, provides that: (1) A settlement arrived at by agreement between the employer and workman 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 (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 10 A 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 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. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36.

(1967) 1 SCR 633:AIR 1967 SC 378. CA No. 107 of 1966 decided on 27 November 1968 (SC). AIR 1967 SC 361. 50 IA 324. (1857) 3 CB (NS) 189. (1944) 1 KB 566. (1944) I KB 566. 1892 AC 25. 1898 AC 1. 1901 AC 495. 1925 AC 700. 1892 AC 25. 1925 AC 700. 1925 AC 700. AIR 1975 SC 2238. AIR 1975 SC 2238. (1831) 1 B & Ad 847 (2), 859:9 LJ OS KB 113:199 ER 1001. 1897 AC 615. AIR 1975 SC 2238. (1949) 1 LLJ 245. AIR 1980 SC 1896. This case was heard by V.R. Krishna Iyer, D.A. Desai and A.D. Koshal. A.D. Koshal delivered a dissenting opinion. 1958 SCR 828:AIR 1958 SC 36. Samsher Singh vs State of Punjab. (1975) I SCR 814:AIR 1974 SC 2192. (1965) 2 SCR 148:AIR 1965 SC 1496. 1952 LAC 490. (1960) 3 SCR 441:AIR 1960 SC 919. 1962 Supp (2) SCR 822:AIR 1963 SC 411. (1960) 3 SCR 441:AIR 1960 SC 919. Samsher Singh vs State of Punjab. (1975) I SCR 814:AIR 1974 SC 2192. 1958 SCR 828:AIR 1958 SC 36. Samsher Singh vs State of Punjab. (1975) I SCR 814:AIR 1974 SC 2192. 1949 FCR 321:AIR 1949 FC 111.

Voluntary Arbitration as a Mechanism for Dispute Settlement 359 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87. 88. 89.

(1960) 3 SCR 457 at p. 462:AIR 1960 SC 1264. (1964) 2 SCR at p. 180. (1965) 2 SCR 148 at p. 152:AIR 1965 SC 1496. (1969) 8 SCR 372 at 378. (1965) 2 SCR 148:AIR 1965 SC 1496. (1975) 3 SCR 489:AIR 1975 SC 661. 1972 LIC 1262 SC:(1971) 2 LLJ 620. (1960) 3 SCR 441:AIR 1978 SC 919. (1978) 3 SCR 1000:AIR 1978 SC 1380. (1976) (1) SCR 625:AIR 1976 SC 425. 1963 Supp (1) SCR 625:AIR 1963 SC 874. 1958 SCR 1240:AIR 1958 SC 398. (1964) 3 SCR 25 at p. 33:AIR 1963 SC 1723. (1964) 2 SCR 104:AIR 1963 SC 1756. 1958 SCR 1240:AIR 1958 SC 398. (1978) 19 Guj LR 108 at p. 140. (1873) 8 QB 255. (1892) 1 QB 431. (1946) 1 All ER 637. (1946) 1 All ER at p. 641. William John Kenneth Diplock—The Courts as Legislators: Being the Presidential Address of the Rt. Hon. Sir Kenneth Diplock. Van Riebeeck Society Publications. Edgar Bodenheimer, 1962. Jurisprudence: The Philosophy and Method of the Law. Harvard University Press, p. 474. Ibid. Ibid., p. 414. Ibid., p. 415. Ibid., pp. 115–16. (1940) 310 US 534 at pp. 543–44. Robert Stevens. Law and Politics, The House of Lords as a Judicial Body—1800–1976. p. 447. Devlin. Samples of Law-making. p. 116. Stevens. Judge as Law Maker. pp. 28–470. 1962 AC 220 at p. 275. (1973) Supp SCR 1:AIR 1973 SC 1461. Edgar Bodenheimer, 1962. ‘Sources and Techniques of the Law’ Jurisprudence: The Philosophy and Method of the Law. Harvard University Press. Arthur Selwyn Miller, 1978. The Supreme Court, Myth and Reality. Greenwood Press, p. 133. (1960) 3 All ER 353. 1952 AC 189. AIR 1938 PC 281 at p. 283. (1949) 2 All ER 155 at p. 164. (1975) 2 SCR 894 at p. 902:AIR 1975 SC 192. (1967) I SCR 324:AIR 1967 SC 1032. AIR 1960 SC 1264. (1964) 1 All ER 367. (1898 AC 1). (1901 AC 495). AIR 1960 SC 219. AIR 1978 SC 1489. AIR 1960 SC 219. AIR 1959 SC 259. AIR 1959 SC 259. (1961) 3 SCR 308:AIR 1961 SC 1158. (1961) 3 SCR 308:AIR 1961 SC 1158. AIR 1960 SC 219. (1961) 3 SCR 308:AIR 1961 SC 1158.

360 Social Justice and Labour Jurisprudence 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109. 110. 111. 112. 113. 114. 115. 116. 117. 118. 119.

AIR 1960 SC 1258. AIR 1961 SC 1168. AIR 1958 SC 311. AIR 1960 SC 219. AIR 1960 SC 219. 1958 SCR 667 at p. 685:AIR 1958 SC 130. (1965) 3 SCR 588 at p. 597: AIR 1965 SC 1803. (1968) 3 SCR 650:AIR 1963 SC 114. AIR 1962 SC 1348. (1972) 1 SCR 490:AIR 1972 SC 277. AIR 1960 SC 219. 1978 LIC 1667:AIR 1979 SC 75 at pp. 77–78. 1978 LIC 1667:AIR 1979 SC 75. AIR 1960 SC 219. AIR 1979 SC 75. AIR 1979 SC 75. AIR 1960 SC 219. AIR 1960 SC 160. AIR 1960 SC 1258. (1979) 1 SCC 590:AIR 1979 SC 582. (1971) 3 SCR 774:AIR 1971 SC 2171. (1976) 3 SCR 801:AIR 1976 SC 1760. (1963) I LLJ 679:AIR 1963 SC 1756. (1963) I LLJ 679:AIR 1963 SC 1756. AIR 1959 SC 923. (1963) I LLJ 679:AIR 1963 SC 1756. (1976) 3 SCR 801:AIR 1976 SC 1760. (1963) I LLJ 679:AIR 1963 SC 1756. AIR 1959 SC 923. (1976) 3 SCR 801:AIR 1976 SC 1760.

Chapter 9

Industrial Employment (Standing Orders) Act, 1946 The purpose of the Industrial Employment (Standing Orders) Act, 1946, is to define the terms and conditions of employment of workmen with precision and clarity. The standing orders of a particular establishment are prima facie useful to the workmen since by these they know their status of employment that is, whether they are permanent or temporary employees. The standing orders also provide for matters of discharge, disciplinary action, holidays and leave, and so on. This Act applies in the first instance to every industrial establishment wherein 100 or more workmen are employed which includes factories and railways, mines, quarries and oil fields, tramways or motor or omnibus services, docks, wharves and jetties, inland steam vessels, plantations and workshops. The appropriate government is competent to extend the Act to other classes of industrial establishments or to grant exemptions where necessary by notification.1 Conflicts often arise however, between the workmen and the employer in cases where Section 13B of the Act operates.2

Service Conditions: The Scope of the Standing Orders Act The U.P. State Electricity Board and Another vs Hari Shanker Jain and Others 3 In this case, the Supreme Court had to consider the scope and operation of Section 13B of the Act in respect of statutory corporations owned by the state. THE JUDGEMENT DELIVERED BY JUSTICE O. CHINNAPPA REDDY The case is primarily concerned with the age of retirement of two obscure workmen but it raises the questions of general importance concerning workmen employed by most statutory bodies and corporations. It is on such chance cases that the development of our law depends. The two workmen were originally employed by Messrs Seth Ram Gopal and Partners who were licensees for the distribution of electricity under the Indian Electricity Act, 1910. There were certified Standing Orders for the industrial establishment of M/s. Seth Ram Gopal and Partners. The certified Standing Orders did not prescribe any age of superannuation for the employees. That, according to the workmen, meant that they could continue to work as long as they were fit and able to discharge their duties. The electricity undertaking of M/s. Seth Ram Gopal and Partners was purchased by the U.P. State Electricity Board, with effect from

362 Social Justice and Labour Jurisprudence 15-12-1964, under the provision of the Electricity (Supply) Act, 1948. The employees of Seth Ram Gopal and Partners became the employees of U.P. State Electricity Board. The U.P. State Electricity Board, which it is no longer disputed is an industrial establishment to which the Industrial Employment (Standing Orders) Act, 1946, applies, neither made nor got certified any Standing Orders as it was bound so to do under that Act. But it is evident, though not admitted, from two letters, one from the Superintending Engineer in reply to a letter dated 31-12-1966 from the Executive Engineer and the other from the Certifying Officer for Standing Orders and Labour Commissioner to the General Secretary of the Employees Union that the Board and the workmen considered the certified Standing Orders of the establishment of Seth Ram Gopal and Partners as applicable to them even after the purchase of the undertaking by the Board. This, however, is not very material. The Board, as we said earlier, made and got certified no Standing Orders either in regard to age of superannuation or in regard to any other matter mentioned in the schedule to the Standing Orders Act. We may mention here that by reason of a notification dated 17-11-1959 ‘age of superannuation or retirement, rate of pension or any other facility which the employers may like to extend or may be agreed upon between the parties’ is one of the matters in respect of which an employer to whom the Standing Orders Act applies is bound to make Standing Orders and get them certified. However, on 28 May 1970, the Governor of Uttar Pradesh notified, under Section 13-B of the Industrial Employment (Standing Orders) Act, 1946, a regulation made by the U.P. State Electricity Board under Section 79(c) of the Electricity (Supply) Act, 1948. The notification was as follows: In pursuance of the provision of Section 13-B of the Industrial Employment (Standing Orders) Act, 1946 (Act No. 20 of 1946), the Governor is pleased to notify in the official Gazette that U.P. State Electricity Board has made the following Regulations under sub-section (c) of Section 79 of the Electricity (Supply) Act, 1948 (Act No. 54 of 1948): Notwithstanding any rule or an order or practice hitherto followed, the date of compulsory retirement of an employee of the Board will be the date on which he attains the age of 58 years; provided that— (i) in the case of the inferior servants of the Board, whose counterparts under State Government are at present entitled to serve up to the age of 60 years, the age of compulsory retirement will be the date on which they attain the age of 60 years. (ii) the Board or its subordinate appointing authority may require an employee to retire after he attains or has attained the age of 55 years on the three months’ notice or three months’ salary in lieu thereof without assigning any reason. Acting in pursuance of this regulation as notified by the Governor, the Board sought to retire the two respondents on 2 July 1972 and 7 July 1972 respectively on their attaining the age of 58 years. The respondents thereupon filed a writ petition in the Allahabad High Court challenging the regulation made by the Board and its notification by the Governor. Their contention was that the Board was not competent to make a regulation in respect of a matter covered by the Industrial Employment (Standing Orders) Act. The writ petition was dismissed by a learned Single Judge. The respondents preferred a special appeal and the Division Bench which heard the Special Appeal in the first instance referred the following three questions to a Full Bench: (1) Whether the Industrial Employment (Standing Orders) Act, 1946 applies to the Industrial establishments of the State Electricity Board? (2) Whether the Standing Orders framed for an industrial establishment of an electrical undertaking cease to be operative on the purchase of the undertaking by the Board or on the framing of regulations under Section 79(c) of the Electricity (Supply) Act, 1948?

Industrial Employment (Standing Orders) Act, 1946 363 (3) Whether Section 13-B of the Industrial Employment (Standing Orders) Act, 1946, applies only to industrial establishments of the Government or also to other industrial establishments? The Full Bench answered the questions as follows: (1) The Industrial Employment (Standing Orders) Act, 1946 applies to the industrial establishments of the State Electricity Board; (2) The Standing Orders framed in an industrial establishment by an electrical undertaking do not cease to be operative on the purchase of the undertaking by the Board or on framing of the regulations under Section 79(c) of the Electricity (Supply) Act, 1948. (3) Section 13-B of the Industrial Employment (Standing Orders) Act, 1946, applies only to the industrial establishments of the Government and to no other establishments. Following the opinion of the Full Bench, the Division Bench allowed the Special Appeal and issued a writ quashing the notification dated 28 May 1970 and directing the U.P. State Electricity Board not to enforce the regulation against the appellants before them. The U.P. State Electricity Board having obtained a certificate from the High Court under Article 133(1) of the Constitution has preferred this appeal. Shri G. B. Pai, learned Counsel for the appellant did not canvass the correctness of the answer of the Full Bench to the first question referred to it. He confined his attack to the answers to the second and third questions. Relying upon the decisions of this Court in Sukhdev Singh vs Bhagat Ram4, and Rajasthan Electricity Board vs Mohan Lal,5 Shri Pai argued that the U.P. State Electricity Board was an authority within the meaning of Article 12 of the Constitution and that the regulations made by the Board under Section 79(c) of the Act had the ‘full force and effect of the statute and the force of law’ so as to displace, override or supersede Standing Orders made and certified under the Industrial Employment (Standing Orders) Act, which, he submitted were mere contractual conditions of service subjected to a quasi-judicial process and which, therefore, could not take precedence over legislatively processed regulations. The learned Counsel further submitted that Section 79(c) of the Electricity Supply Act was a special law and that it prevailed over the provisions of the Industrial Employment (Standing Orders) Act. Alternately, he submitted, the notifying of the regulation regarding age of superannuation under Section 13-B of the Industrial Employment (Standing Orders) Act excluded the applicability of that Act in regard to the subject of age of superannuation. He urged that Section 13-B was not confined in its application to Government undertakings only or to cases where there were comprehensive sets of rules, as was thought by the High Court. Shri P.K. Garg, for the workmen contended that the Industrial Employment (Standing Orders) Act was an act specially designed to define and secure reasonable conditions of service for workmen in industrial establishments employing one hundred or more workmen and to that end to compel employers to make Standing reference to its subject-matter. The Electricity (Supply) Act, on the other hand, was intended ‘to provide for the rationalisation of the production and supply of electricity, and generally for taking measures conducive to electrical development’. It was not specially designed to define the conditions of service of employees of Electricity Boards or to displace the Standing Orders Act. The power given to an Electricity Board under Section 79(c) to make regulations providing for ‘the duties of officers and servants of the Board and their salaries, allowances and other conditions of service’ was no more than the usual, general power possessed by every employer. Shri Garg argued that the Industrial Employment Standing Orders Act, was a special Act which dealt with the special subject of conditions of employment of workmen in industrial establishments and, therefore, in the matter of conditions of employment of workmen in industrial establishments, it prevailed over the provisions of the Electricity (Supply) Act. He urged that under Section 13-B of the Standing Orders Act, Government undertakings which had a comprehensive set of rules alone could be excluded from the

364 Social Justice and Labour Jurisprudence applicability of the Act. He submitted that to permit a single rule or regulation made for a limited purpose to be notified under Section 13-B would have the disastrous effect of excluding the applicability of the whole of the Standing Orders Act. 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 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. Let us now examine the various statutory provisions in their proper context with a view to resolve the problem before us. First, the Industrial Employment (Standing Orders) Act, 1946. Before the passing of the Act, conditions of service of industrial employees were invariably illdefined and were hardly ever known with even a slight degree of precision to the employees. There was no uniformity of conditions of service for employees discharging identical duties in the same establishment. Conditions of service were generally ad-hoc and the result of oral arrangements which left the employees at the mercy of the employer. With the growth of the trade union movement and the right of collective bargaining, employees started putting forth their demands to end this sad and confusing state of affairs. Recognizing the rough deal that was being given to workers by employers who would not define their conditions of service and the inevitability of industrial strife in such a situation, the legislature intervened and enacted the Industrial Employment (Standing Orders) Act. It was stated in the statement of objects and reasons: Experience has shown that ‘Standing Orders’, defining the conditions of recruitment, discharge, disciplinary, action, holidays, leave, etc., go a long way towards minimizing friction between the management and workers in industrial undertakings. Discussion on the subject at the tripartite Indian Labour Conferences revealed a consensus of opinion in favour of legislation. The Bill accordingly seeks to provide for the framing of ‘Standing Orders’ in all industrial establishments employing one hundred and more workers. It was, therefore, considered, as stated in the preamble, ‘expedient to require employers in industrial establishments to define with sufficient precision the conditions of employment under them and to make the said conditions known to workmen employed by them’. The scheme of the Act, as amended in 1956 and as it now stands, requires every employer of an industrial establishment as defined in the Act to submit to the Certifying Officer draft standing Orders, that is, ‘Rules relating to matters set out in the Schedule’, proposed by him for adoption in his industrial establishment. This is mandatory. It has to be done within six months after the commencement of the Act. Failure to do so is punishable and is further made a continuing offence. The draft Standing Orders are required to cover every matter set out in the schedule. The Schedule enumerates the matters to be provided in the Standing Orders and they include classification of workmen, shift working, attendance and late coming, leave and holidays, termination of employment, suspension or dismissal for misconduct, means of redress for wronged workmen, etc. Item 11 of the Schedule is ‘Any other matter which may be prescribed’. By a notification dated

Industrial Employment (Standing Orders) Act, 1946 365 17 November 1959 the Government of Uttar Pradesh has prescribed ‘Age of superannuation or retirement, rate of pension or any other facility which the employer may like to extend or may be agreed upon between the parties’ as a matter requiring to be provided in the Standing Orders. On receipt of the draft Standing Orders from the employer, the Certifying Officer is required to forward a copy of the same to the trade union concerned or the workmen inviting them to prefer objections, if any. Thereafter the Certifying Officer is required to give a hearing to the employer and the trade union or workmen as the case may be and to decide ‘whether or not any modification of or addition to the draft submitted be the employer is necessary to render the draft Standing Orders certifiable under the Act’. Standing Orders are certifiable under the Act only if provision is made therein for every matter set out in the schedule, if they are in conformity with the provisions of the Act and if the Certifying Officer adjudicated them as fair and reasonable. The Certifying Officer is invested with the powers of a Civil Court for the purposes of receiving evidence, administering oaths, enforcing the attendance of witnesses, etc. The order of the Certifying Officer is subject to an appeal to the prescribed appellate authority. The Standing Orders as finally certified are required to be entered in a register maintained by the Certifying Officer. The employer is required to prominently post the Certified Standing Orders on special boards maintained for that purpose. This is the broad scheme of the Act. The Act also provides for exemptions. About that, later. The Act, as originally enacted, precluded the Certifying Officer from adjudicating upon the fairness or reasonableness of the Draft Standing Orders submitted by the employer but an amendment introduced in 1956 now casts a duty upon the Certifying Officer to adjudicate upon the fairness or reasonableness of the draft Standing Orders. The scheme of the Act has been sufficiently explained by this Court in Associated Cement Co. Ltd. P.D. Vyas,6 Rohtak Hissar District Electricity Supply Co. Ltd. vs State of U.P.,7 and Western India Match Co. Ltd. vs Workmen.8 The Industrial Employment (Standing Orders) Act is thus seen to be an Act specially designed to define the terms of employment of workmen in industrial establishments, to give the workmen a collective voice in defining the terms of employment and to subject the terms of employment to the scrutiny of quasi-judicial authorities by the application of the test of fairness and reasonableness. It is an Act giving recognition and form to hard-won and precious rights of workmen. We have no hesitation in saying that it is a special Act expressly and exclusively dealing with the schedule—enumerated conditions of service of workmen in industrial establishments. Turning next to the Electricity Supply Act, it is, as its preamble says, ‘An Act to provide for the rationalization of the production and supply of electricity, and generally for taking measures conducive to electrical development’. The statement of objects and reasons and a glance at the various provisions of the Act show that the primary object of the Act is to provide for the coordinated, efficient and economic development of electricity in India on a regional basis consistent with the needs of the entire region including semi-urban and rural areas. Chapter II of the Act provides for the constitution of the Central Electricity Authority and Chapter III for the constitution of State Electricity Boards. Chapter IV prescribes the powers and duties of State Electricity Boards, and Chapter V the Board’s works and trading procedure. Chapter VI deals with the Board’s Finance, Accounts and Audit. 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 (a) 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 of 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

366 Social Justice and Labour Jurisprudence 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 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. The maxim ‘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’,9 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. The question in Seward vs The Owner of the ‘Vera Cruz’,10 was whether Section 7 of the Admiralty Court Act of 1861, which gave jurisdiction to that Court over ‘any claim for damage done by any ship’ also gave jurisdiction over claims for loss of life which would otherwise come under the Fatal Accidents Act. It was held that the general words of Section 7 of the Admiralty Court Act did not exclude the applicability of the Fatal Accidents Act and therefore, the Admiralty Court had no jurisdiction to entertain a claim for damages for loss of life. The reason for the rule that a general provision should yield to a specific provision is this: In passing a special Act, Parliament devotes its entire consideration to a particular subject. When a general Act is subsequently passed, it is logical to presume that Parliament has not repealed or modified the former special Act unless it appears that the Special Act again received consideration from Parliament. Vide London and Blackwall Railway vs Limehouse District Board of Works11 and Thorpe vs Adam.12 In J.K. Cotton Spinning and Weaving Mills Co. Ltd. vs State of U.P,13 this Court observed (at p. 1174): The rule that general provisions should yield to specific provision 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 the 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 Order) Act embodying as they do hard-won 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 of matters to which the Standing Orders Act applies. Shri G. B. Pai, relying on what was said in the Rajasthan State Electricity Board case14 and Sukhdev Singh15 case argued that the regulations made under Section 79(c) of the Electricity Supply Act being statutory in nature stood on so high a pedestal as to override, by their very nature, the Standing Orders made under the Standing Orders Act. The observations in the Rajasthan State Electricity Board 16 case, on which he relied, are: The state, as defined in Article 12, is thus comprehended to include bodies created for the purpose of promoting the educational and economic interest of the people. The State, as

Industrial Employment (Standing Orders) Act, 1946 367 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. On the other hand, there are provisions in the Electricity Supply Act which clearly show that the powers conferred on the Board include power to give directions, the disobedience of which is punishable as a criminal offence. In these circumstances, we do not consider it at all necessary to examine the cases cited by Mr Desai to urge before us that the Board cannot be held to be an agent or instrument of the Government. The Board was clearly an authority to which the provisions of Part III of the Constitution were applicable. And in Sukhdev Singh’s17 case: Rules, regulations, schemes, bye-laws, orders made under statutory powers are all comprised in delegated legislation: Subordinate legislation has, if validly made, the full force and effect of a Statute. Rules and Regulations of the Oil and Natural Gas Commission, Life Insurance Corporation, Industrial Finance Corporation have the force of law. The employees of these statutory bodies have a statutory status and they are entitled to a declaration of being in employment when their dismissal or removal is in contravention of statutory provisions. These statutory bodies are authorities within the meaning of Article 12 of the Constitution. The propositions that Statutory Bodies are ‘authorities’ within the meaning of Article 12 of the Constitution, that the employees of these bodies have a statutory status and that regulations made under the statutes creating these bodies have the force of law are not in dispute before us. The question is not whether the employees and the Board have a statutory status; they undoubtedly have. The question is not whether the regulations made under Section 79 have the force of law; again, they undoubtedly have. The question is whether Section 79(c) of the Electricity Supply Act is a general law and therefore, regulation cannot be made under it in respect of matters covered by the Industrial Employment (Standing Orders) Act, a special law. That question we have answered and the answer to that question makes irrelevant the submissions based on the statutory status of the employees and the statutory force of the regulations. Next, we turn to the submission based on the notification made under Section 13B of the Standing Orders Act. Section 13B reads as follows: 13B. Nothing in this Act shall apply to an industrial establishment in so far as the workmen employed therein are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Service (Temporary Service) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Service (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code or any other rules or regulations that may be notified in this behalf by the appropriate Government in the official Gazette, apply. The notification made by the Government has already been extracted by us. Some doubts were expressed whether the U.P. State Electricity Board had in fact made the regulation and whether the Government merely notified the regulation without applying its mind. The learned Counsel appearing for the Board and the Government placed before us the relevant records and note-files and we are satisfied that the Board did make the regulation and the Government did apply its mind.

368 Social Justice and Labour Jurisprudence The High Court expressed the views that the expression ‘any other rules or regulations’ should be read ejusdem generis with the expressions ‘Fundamental and Supplementary Rules’, ‘Civil Service, Control, Classification and Appeal Rules’, etc. So read, it was said, the provisions of Section 13-B could only be applied to industrial establishments in which the workmen employed could properly be described as Government servants. We are unable to agree that the application of the ejusdem generis rule leads to any such result. The true scope of the rule of ejusdem generis is that words of general nature following specific and particular words should be construed as limited to things which are of the same nature as those specified. But the rule is one which has to be ‘applied with caution and not pushed too far’. It is a rule which must be confined to narrow bounds so as not to unduly or unnecessarily limit general and comprehensive words. If a broad-based genus could consistently be discovered, there is no warrant to cut down general words to dwarf size. If giant it cannot be, dwarf it need not be. It is true that in Section 13-B the species specifically mentioned happens to be Government servants. But they also possess this common characteristic that they are all public servants enjoying a statutory status, and governed by statutory rules and regulations. If the Legislature intended to confine the applicability of Section 13-B to industrial undertakings employing Government servants only nothing was easier than to say so instead of referring to various rules specifically and following it up with a general expression like the one before us. The words ‘rules and regulations’ have come to acquire a special meaning when used in statutes. They are used to describe subordinate legislation made by authorities to whom the statute delegates that function. The words can have no other meaning in Section 13-B. Therefore, the expression ‘workmen... to whom... any other rules or regulations that may be notified in this behalf ’ means, in the context of Section 13-B, workmen enjoying a statutory status, in respect of whose conditions of service the relevant statute authorizes the making of rules or regulations. The expression cannot be construed so narrowly as to mean Government servants only; nor can it be construed so broadly as to mean workmen employed by whomsoever including private employers, so long as their conditions of service are notified by the Government under Section 13-B. Shri Garg relied on certain observations of the Madras High Court in Raman Nambissan vs State Electricity Board,18 and Thiruvenkataswami vs Coimbatore Municipality.19 In Raman Nambissan20 case it was held that the mere fact that the Electricity Board had adopted the rules and regulations of the Government of Madras as its transitory rules and regulations did not bring the workmen employed in industrial establishments under the Board within the mischief of Section 13-B of the Industrial Employment (Standing Orders) Act. In Thiruvenkataswami’s21 case it was held that rules made by the Government under the District Municipalities Act could not be considered to be rules notified under Section 13-B of the Standing Orders Act merely because the rules were made by the Government and published in Government Gazette. We agree with the conclusions in both cases. In Thiruvenkataswami’s 22 case [Justice] Kailasam, also observed that the Industrial Employment (Standing Orders) Act was a special act relating exclusively to the service conditions of persons employed in industrial establishments, and therefore, its provisions prevailed over the provisions of the District Municipalities Act. We entirely agree. But, the learned Judge went on to say: ‘Section 13-B cannot be availed of for purposes of framing rules to govern the relationships in an industrial establishment under private management or in a Statutory Corporation. This rule can apply only to industrial establishments in respect of which the Government is authorized to frame rules and regulations relating to the conditions of employment in industrial establishments.’ There we disagree. Our disagreement however is only in regard to industrial establishments under Statutory Corporations which are authorized by statute to make rules and regulations and not in regard to those under Statutory Corporations not so authorized, nor in regard to those under private management. Our reasons are mentioned in the previous paragraph. Shri Garg suggested that the rules and regulations specific mention of which has been made in Section 13-B were all comprehensive sets of rules and, therefore, ‘any other rules or regulations’

Industrial Employment (Standing Orders) Act, 1946 369 that might be notified by the Government should also satisfy the test of comprehensiveness. He argued that a single rule or regulation could not be notified under Section 13-B as it would be too much to say, he said, that the notifying of a single rule or regulation would exclude the applicability of all the provisions of the Standing Orders Act. We do not think that the notifying of one or many regulations has the effect that Shri Garg apprehends it has. The words ‘Nothing in this Act shall apply’ are not to be interpreted too literally as to lead to absurd results and to what the Legislature never intended. In our view the only reasonable construction that we can put upon the language of Section 13-B is that a rule or regulation, if notified by the Government, will exclude the applicability of the Act to the extent that the rule or regulation covers the field. To that extent and to that extent only ‘nothing in the Act shall apply’. To understand Section 13-B in any other manner will lead to unjust and uncontemplated results. For instance, most of the Service Rules and Regulations expressly mentioned in Section 13-B do not deal with a large number of the matters enumerated in the schedule such as ‘Manner of intimating to workmen periods and hour of work, holidays, pay-days and wage rates’, ‘shift working’, ‘Attendance and late coming’, conditions of, procedure in applying for, and the authority which may grant leave and holidays’, ‘Closing and reopening of Sections of the industrial establishments and temporary stoppages of work and the rights and liabilities of the employer and workmen arising therefrom, etc. To exclude the applicability of Standing Orders relating to all these matters because the Fundamental Rules, the Civil Services Rules or the Civil Services Control, (Classification, Control and Appeal) Rules provide for a few matters like ‘Classification of workmen’ or ‘suspension or dismissal for misconduct’ would be to reverse the processes of history, apart from leading to unjust and untoward results. It will place workmen once again at the mercy of the employer be he ever so benign and it will certainly promote industrial strife. We have indicated what according to us is the proper construction of Section 13-B. That is the only construction which gives meaning and sense to Section 13-B and that is a construction which can legitimately be said to conform to the Directive Principles of State Policy proclaimed in Articles 42 and 43 of the Constitution. We, therefore hold that the Industrial Employment (Standing Orders) Act, 1946 is a special law in regard to the matters enumerated in the schedule and the regulations made by the Electricity Board with respect to any of those matters are no effect unless such regulations are either notified by the Government under Section 13-B or certified by the Certifying officer under Section 5 of the Industrial Employment (Standing Orders) Act. In regard to matters in respect of which regulations made by the Board have not been notified by the Governor or in respect of which regulations have been made by the Board, the Industrial Employment (Standing Orders) Act shall continue to apply. In regard to age of the superannuation having been duly notified by the Government, the regulation shall have effect notwithstanding the fact it is a matter which could be the subject matter of standing orders under the Industrial Employment Standing Orders Act. The respondents were therefore properly retired at the age of 58 years. The appeal is therefore allowed.

Modification of Standing Orders: The Views of the Supreme Court The power to frame model standing orders within the framework of the standing orders specified in Schedule I of the Industrial Employment (Standing Orders) Act, 1946, is in the realm of the employer, subject to scrutiny by the certifying officer, under the Act.

370 Social Justice and Labour Jurisprudence

Modification of the standing orders would arise only on the basis of the certifying officer’s directions and at the interference of the Labour Court (the appellate authority).

Ghaziabad Engineering Company vs the Certifying Officer and Another 23 In this case, the Supreme Court had to interfere in providing finality to a modified standing order. THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER This appeal by special leave raises a short question which has been decided adverse to the appellant by the Certifying Officer, Kanpur and the Industrial Tribunal which is the appellate authority. The narrow point that falls for decision is as to whether the modification of the Standing Orders under the Industrial Employment (Standing Orders) Act, 1946 and the rules framed thereunder was illegally made by the Certifying Officer. The modification itself related to grant of six days’ casual leave (on a paid basis) to the workers in the appellant’s factory in Ghaziabad. The Certifying Officer has considered this grant of casual leave as fair and reasonable having regard to the prevalent practice in the neighbouring industries of this industrial belt and also paying attention to the financial position of the appellant’s undertaking. For this purpose he has relied upon the fact that 20% bonus was paid under the Payment of Bonus Act, 1965 and has further stated that certain other factories have been giving paid casual leave for their workers. These facts persuaded him to grant the modification although reducing the number of days to six as against twelve which the workers originally claimed. The Appellate Authority concurred by a separate discussion in the same conclusion. We are requested by Shri Gupta to reverse this concurrent finding of fact on two grounds. He states that the undertaking of the appellant is a losing proposition and relies upon certain balance sheets stated to have been produced before the Certifying Officer. He also argues that there is no positive material to make out that other industries in the locality are granting casual leave to their workers. These are pure questions of fact and this Court’s jurisdiction under Art. 136 cannot be exploited for canvassing points such as these. It is clear that the modification was within the jurisdiction of the Certifying Officer and he has not contravened any provision of the Act or any Statute. The Factories Act, 1948 prescribes in Section 79(1) a certain number of days’ leave but this is the minimum and not the maximum as had been indicated in this Court’s ruling in Alembic Chemical Works Co Ltd vs Workmen.24 Moreover, the model Standing Orders as well as the Schedule to the Industrial Employment (Standing Orders) Act, 1946 deal with casual leave. In this view there is nothing illegal in the order impugned nor are we satisfied that there is anything shockingly violative of fairness or justice. It is a notorious fact that casual leave is not an automatic advantage to the total number of days leave that a worker is entitled. It is only in the event of sudden emergencies that casual leave is allowed and so the grievance of the appellant is exaggerated, if not imaginary. Apart from this, it is elementary that unforeseen circumstances may unexpectedly crop up necessitating sudden absence of an employee, be he in Government service or any other office or in an industrial undertaking. The whole concept of casual leave is calculated to provide for contingencies. We see nothing unfair in the Certifying Officer according six days by way of casual leave to the workers. After all the contentment of the workers is an essential component of their efficiency and if the Certifying Officer and the Appellate Authority who deal regularly with such matters

Industrial Employment (Standing Orders) Act, 1946 371 have felt that his step was fair and nothing is shown to our satisfaction that there is anything grossly unfair about this modification, we should not interfere by exercise of the special jurisdiction of this Court. The third point put forward by Shri Gupta was that according to the Appellate Tribunal, the current trend is to grant an overall maximum of thirty days leave while in this case if the casual leave is also taken into account it may extend to 33½ days leave. As pointed out earlier, casual leave is not a matter of right and a man may not get casual leave unless circumstances are sudden or which in the ordinary course cannot be met by taking regular leave. Secondly, we are not satisfied that the current trend in a particular area or industry has the force of law. It may have persuasive value but not more. That is why after taking note of that circumstance, the Tribunal has still chosen to affirm the claim for 6 days casual leave. After all the excess is around three days in a year. We, therefore, dismiss the appeal, but, in the circumstance, without costs.

NOTES 1. The proviso to Section 1(3) of the Act provides that the appropriate government may, after giving not less than two months’ notice of its intention to do so, by notification in the official gazette, apply the provisions of this Act to any industrial establishment employing less than 100 persons, specifying this new lower number in the notification. 2. Section 13B of the Act provides that nothing in this Act shall apply to an industrial establishment insofar as the workmen employed therein are persons to whom the Fundamental and Supplementary Rules, Civil Services (Classification, Control and Appeal) Rules, Civil Services (Temporary Services) Rules, Revised Leave Rules, Civil Service Regulations, Civilians in Defence Service (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code, or any other rules or regulations as may be notified in this behalf by the appropriate government in the official gazette, apply. Section 14 of the Act provides that the appropriate government may, by notification in the official gazette, exempt, conditionally or unconditionally, any industrial establishment or class of industrial establishments from all or any of the provisions of this Act. 3. AIR 1979 SC 65. This case was heard by V.R. Krishna Iyer, D.A. Desai and O. Chinnappa Reddy, J.J. 4. AIR 1975 SC 1331. 5. AIR 1967 SC 1857. 6. AIR 1960 SC 665. 7. (1966) 2 SCR 863. 8. AIR 1973 SC 2650. 9. (1884) 10 AC 59 at 68. 10. (1884) 10 AC 59. 11. 26 LJ Ch 164:69 ER 1048. 12. (1871) LR 6 CP 125). 13. AIR 1961 SC 1170. 14. AIR 1967 SC 1857. 15. AIR 1975 SC 1331. 16. AIR 1967 SC 1857. 17. AIR 1975 SC 1331. 18. (1967) 1 LLJ 252. 19. (1968) 1 LLJ 361. 20. (1967) 1 LLJ 252. 21. (1968) 1 LLJ 252. 22. (1968) 1 LLJ 361. 23. AIR 1978 SC 769. The case was heard by V.R. Krishna Iyer and Jaswant Singh. 24. AIR 1961 SC 647.

Chapter 10

Change of Service Conditions: Restrictions on the Freedom of the Employer The matters relating to change of service conditions as applicable to any workman are dealt under the Industrial Disputes Act, 1947, mainly under two different circumstances. They are: 1. 2.

Any change in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule,1 and Conditions of service to remain unchanged under certain circumstances during pendency of proceedings before a conciliation officer or a board or of any proceeding before an arbitrator or a Labour Court, tribunal or national tribunal in respect of an industrial dispute and in other circumstances.2

The industrial law of the country, i.e., the Industrial Disputes Act, 1947, provides an important relief to the disputing workmen, which is analogous to the provision of a stay order or injunction under the civil law of the country. Many a time the workmen raise their voices against the hard treatment of the employer in meting out proper terms and conditions of employment to them. In such situations, if the industrial dispute takes recourse to proceedings under the Industrial Disputes Act, 1947, there is every possibility that the employer may easily, with the power of his might, effect changes in the service conditions of the workmen so as to have a prejudicial effect on workers’ rights in the pending proceedings. Precisely for this reason, the provisions under Sections 33 and 33A render in practice a stay order with respect to the service conditions of the workmen, against the employer’s right to dispose of his labour as he wills. If one conducts a deeper study into these aspects, the law that is, the Industrial Disputes Act, 1947—leaves certain pertinent questions unanswered in this context.

Notice of Change Exclusively under Section 9A As stated already, Section 9A of the Act imposes appropriate restrictions on the employer’s freedom in effecting changes in the conditions of service applicable to any workman in respect of any matter specified in the Fourth Schedule. In substance, the Fourth Schedule covers every aspect of the interests of the workmen as far as their terms and conditions of employment are concerned.

Change of Service Conditions 373

The Management of the Indian Oil Corporation vs its Workmen3 In this case, the Supreme Court had to consider the correctness of the award of an industrial tribunal in restoring a compensatory allowance to the workmen for the employer’s noncompliance with the provisions of Section 9A of the Act. This was an appeal by special leave against the award dated 22 October 1969 by R. Medhi, Presiding Officer, Industrial Tribunal, Gauhati, on a reference made to the tribunal by the Government of Assam by virtue of its notification No. FLR 46/61/194, dated 14 July 1965, in view of an industrial dispute having existed between the parties. The appellant was the management of the Indian Oil Corporation, which had taken, over what was known as the Assam Oil Refineries, situated at Gauhati. The reference to the tribunal was made by the government in the following circumstances. THE FACTS OF THE CASE By virtue of a notification dated 3 September 1957, the Central Government granted compensatory allowance according to certain rates to all Central Government employees posted throughout Assam. The appellant had set up the refinery some time in the year 1959 and, in view of the circular of the Central Government referred to above, the management thought it fit in the circumstances to grant compensatory allowance to all its employees sometime in September 1959. The grant of compensatory allowance was not made through any standing orders or through any circular, but it is alleged to have been given as an implied condition of service. Thereafter, there was another notification by the Central Government, dated 8 December 1960, by which it was provided that employees in receipt of the compensatory allowance, would be given the option to choose the house rent allowance or compensatory allowance but would not be entitled to draw both. This order was to remain in force for five years. By virtue of another notification dated 9 August 1965, the Central Government further made it clear that the employees of the Central Government would have to draw either compensatory allowance at the existing rates or the house rent allowance, but not both. In view, however, of the notification dated 8 December 1960 alluded to above, the management thought that the contents of the circular were binding on the company and, therefore, they unilaterally, without giving any notice to the workers, withdrew the concession of the compensatory allowance which had been granted to the workers in September 1959. This concession was withdrawn with effect from July 1960. The workers moved the government to make a reference to the tribunal because a dispute arose between the parties regarding the competency of the appellant to withdraw the concession unilaterally. The government made a reference to the industrial tribunal, which held that there was a dispute between the parties and, as Section 9A of the Industrial Disputes Act, 1947 (hereinafter referred to as ‘the Act’), has not been complied with by the company, the management was not legally entitled to withdraw the concession of the compensatory allowance granted to the employees. The award of the industrial tribunal was published by the Government of Assam in the Gazette dated 14 July 1965.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE FAZL ALI Dr Anand Prakash, counsel for the appellant, made the following three contentions before us: (1) that the compensatory allowance was given purely on the basis of the Central Government circular dated 3 September 1957, on the distinct understanding that it was a temporary

374 Social Justice and Labour Jurisprudence measure which could be withdrawn at the will of the employer and did not amount to a condition of service at all; (2) that even if the provisions of Section 9A of the Act applied, since the management had substituted the house rent allowance for compensatory allowance the workers were not adversely affected and, therefore it was not necessary to give any notice to them before withdrawing the concession of the compensatory allowance; and (3) that even if the provisions of Section 9A of the Act were not complied with, the Tribunal should have at least gone into the question on merits instead of basing its award on the question of applicability of Section 9A of the Act. Before, however, dealing with the contentions raised before us, it may be necessary to mention a few admitted facts. In the first place it is the admitted case of the parties that the circulars of the Central Government were not binding on the appellant Corporation but the Corporation chose to follow them in its own wisdom. Secondly, it is also admitted that at the time when the concession of compensatory allowance was granted to the employees of the Corporation, there was nothing to show that it was given only by way of an interim measure which could be withdrawn at the will of the employer. Thirdly, it is also not disputed that before withdrawing the concession of the compensatory allowance in August, 1960 the appellant gave any notice to the workers, nor did it consult them in any way before depriving them of the concession originally granted by the employer. In fact the Tribunal has found very clearly that the act of the Corporation in granting the Assam Compensatory Allowance was an independent one and made out of their own volition, though the circulars of the Central Government may have been one of the factors that swayed the decision of the management. It is against the background of these admitted facts and the circumstances that we have to examine the contentions raised by Counsel for the appellant in this appeal. As regards the first contention that the concession of the compensatory allowance was granted to the workers by way of a temporary measure and would not amount to a condition of service, we find absolutely no material on the record to support the same. There is no evidence to show that the management before granting the concession of the compensatory allowance had in any way indicated to the workers that this was only a stop-gap arrangement which could be withdrawn after housing subsidy was granted. Even before the unilateral withdrawal of the concession granted by the appellant no notice was given to the workers nor were they taken into confidence, nor any attempt was made to open a dialogue with them on this question. Indeed if the circulars of the Central Government are admittedly not binding on the Corporation, then we are unable to appreciate the stand taken by the appellant that the management unilaterally withdrew the concession merely because of the Central Government circulars. So far as the compensatory allowance is concerned it was given in order to enable the workers to meet the high cost of living in a far-fetched and backward area like Assam. It had absolutely no casual connection with the housing subsidy or house rent allowance which was a different type of concession. Furthermore, the grant of compensatory allowance by the appellant was indeed a very charitable act which showed that the employers were extremely sympathetic towards the needs of their workers. In these circumstances we have no hesitation in holding that the grant of compensatory allowance was undoubtedly an implied condition of service so as to attract the mandatory provisions of Section 9A of the Act which runs thus: 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:

Change of Service Conditions 375 Provided that no notice shall be required for effecting any such change— (a) where the change is effected in pursuance of any settlement or award; or (b) where the workmen likely to be affected by the change are persons to which the Fundamental and Supplementary Rules, Civil Service (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Services Regulations, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code, or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply.) An analysis of Section 9A of the Act clearly shows that this provision comes into operation the moment the employer proposes to change any condition of service applicable to any workman, and once this is done twenty-one days’ notice has to be given to the workmen. This admittedly was not done in this case. By withdrawing the Assam Compensatory Allowance the employers undoubtedly effected substantial change in the conditions of service, because the workmen were deprived of the compensatory allowance for all times to come. Dr Anand Prakash however relied on a few decisions in support of the fact that such a change in the conditions of service does not amount to any change as contemplated by Section 9A of the Act. Reliance was placed on a decision of the Andhra Pradesh High Court in Workmen of Hindustan Shipyard (Private) Ltd. vs Industrial Tribunal, Hyderabad 4 In our opinion the facts of that case are clearly distinguishable from the facts in the present case. In that case a concession was granted to the employees to attend the office half an hour late due to wartime emergency, but this concession was conditional on the reservation of the right to change the office hours and it was open to the employer to take a different decision. Secondly, the working hours being fixed at 6½ hours were below the maximum prescribed by the Factories Act which were 8 hours and, therefore, there was no adverse change in the conditions of service. Finally in this case there was a clear finding given by the learned Judge that the concession would not amount to a condition of service. In this connection, Jaganmohan Reddy, J., observed as follows: In this case as it cannot be said that the concession which they were enjoying in the winter month was a privilege to which they were entitled before the Act came into force in February, 1948. I have already stated that the concession was subject to the condition of its withdrawal unilaterally and cannot, therefore, be said to have conferred any right on the employees to enjoy it as such. ... further that Section 9A came into play only when the conditions of service were altered, but the workmen having agreed to the reservation of the employer to alter it, they have made the right to alter it also a condition of service and therefore the action in accordance with the said right can give no cause for complaint. In the instant case we have already held that the grant of compensatory allowance cannot be construed to be merely an interim measure, but having regard to the circumstances in which this concession was given will amount to an implied condition of service. Reliance was also placed on a decision by this Court in Bhiwani Textile Mills vs Their Workmen,5 where this Court observed as follows: Sri G.B. Pai, on behalf of the mills, and Sri M.S.M. Sastri and Y. Kumar, for the two unions representing the workmen, stated before us that the parties are agreed that this direction given in the award may be deleted as no party objects to its deletion. Consequently, we need not go into the question whether the tribunal was in law competent to make such a direction in the award or not ...

376 Social Justice and Labour Jurisprudence In view of this agreement between the parties, the only question that remains for decision by us is whether the tribunal was right in directing that workmen, who do duty on any Sunday, will be entitled to an extra payment of 20 per cent of their consolidated wages for that Sunday. A perusal of the observations made by this Court would clearly show that the case before this Court proceeded on the basis of a consent order as agreed to by the counsels for the parties. Secondly, the question for decision was whether the workmen were entitled to additional payment for working on Sundays even if they were given another off day as a substitute for Sunday. The Court pointed out that this could not be treated as a condition of service because all that the workmen were entitled to was that they should take at least one day off in a week and this facility was not disturbed but instead of giving Sunday off they were given some other day as weekly off. In these circumstances this case also does not assist the appellant. Dr Anand Prakash also cited a decision in Oil & Natural Gas Commission vs Workmen.6 In this case also there was a finding of fact by this Court that there was nothing to show that 6½ hours per day was a condition of service. In this connection, the Court observed as follows: In our opinion on the facts and circumstances of this case it cannot be said that 6½ working hours a day was a term of service, for the simple reason that it was only during a period of the first six months, when the factory was being constructed at the site of the workshop that, due to shortage of accommodation, the administrative office was, as an interim arrangement, temporarily located in tents at a place about 2 km. away, that the staff in this office was not required to work for more than 6½ hours per day. There is no evidence that 6½ hours per day was a condition of services; neither is there any such term of service in their letters of appointment, nor is such a term of service otherwise discernible from other material on the record. In view of our finding, however, that the grant of the Assam Compensatory Allowance was undoubtedly a condition of service and this case has absolutely no application. Reliance was placed on a decision of this Court in Hindustan Lever Ltd. vs Ram Mohan Ray 7... for the proposition that withdrawal of the concession of the compensatory allowance did not adversely affect the service conditions of the workmen. In this case, this Court observed as follows: As regards item 11 it was urged that as one department out of three has been abolished this item applies. Though to bring the matter under this item the workmen are not required to show that there is increase in the workload, it must be remembered that the 4th schedule relates to conditions of service for change of which notice is to be given and Section 9A requires the employer to give notice under that section to the workmen likely to be affected by such change. The word ‘affected’ in the circumstances could only refer to the workers being adversely affected and unless it could be shown that the abolition of one department has adversely affected the workers it cannot be brought under item 11. The same consideration applied to the question of change in usage under item 8. It is true that this Court held on the fact of that case that the Company had abolished one department, but as the workload was not increased the workers were not adversely affected and the abolition of one department could not be brought under item 11. The contingency contemplated in the aforesaid case, however, cannot be equated with the present case by virtue of the unilateral deprivation of the compensatory allowance which was received by the employees by the withdrawal of which they were undoubtedly prejudiced. It cannot be contended that the

Change of Service Conditions 377 sudden withdrawal of a substantial concession in the conditions of service would not materially or adversely affect the workmen. We are therefore, of the opinion that the aforesaid case also does not support the contention of the learned Counsel for the appellant. On the other hand Mr Sen Gupta appearing for the respondents drew our attention to the decision of this Court in M/s Tata Iron and Steel Co. Ltd. vs Workmen,8 where this Court, while pointing out the object of Section 9A, observed as follows: The real object and purpose of enacting Section 9A seems to be to afford an opportunity to the workmen to consider the effect of the proposed change and, if necessary, to represent their point of view on the proposal. Such consultation further serves to stimulate a feeling of common joint interest of the management and the workmen in the industrial progress and increased productivity. This approach on the part of the industrial employer would reflect his harmonious and sympathetic co-operation in improving the status and dignity of the industrial employee in accordance with the egalitarian and progressive trend of our industrial jurisprudence, which strives to treat the capital and labour as co-sharers and to break away from the tradition of labour’s subservience to capital. The observations made by this Court lay down the real test as to the circumstances in which Section 9A would apply. In the instant case, however, we are satisfied (1) that the grant of the compensatory allowance was an implied condition of service; and (2) that by withdrawing this allowance the employer sought to effect a change which adversely and materially affected the service conditions of the workmen. In these circumstances, therefore, Section 9A of the Act was clearly applicable and the non-compliance 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. It was also contended that the compensatory allowance was only an allowance given in substitution for housing subsidy. We are, however, unable to agree with this contention. Mr Sen Gupta appearing for the respondents rightly pointed out that there is a well-knit and a clear distinction between the compensatory allowance and a housing subsidy or house rent allowance. This distinction is clearly brought out by the Second Pay Commission’s Report (1957–59), in which the Commission observed as follows: The compensatory allowances considered here fall into three broad groups: (i) allowances to meet the high cost of living in certain specially costly cities and other local areas, including hill stations where special requirements such as additional warm clothing and fuel, etc., add to the cost of living; (ii) those to compensate for the hardship of service in certain areas, e.g. areas which have a bad climate, or are remote and difficult of access; and (iii) allowances granted in areas, e.g. field service areas, where because of special conditions of living or service, an employee cannot, besides other disadvantages, have his family with him. There are cases in which more than one of these conditions for grant of a compensatory allowance are fulfilled. The Second Pay Commission also observed: The rent concessions dealt with here are of two kinds: (i) provision of rent free quarters or grant of a house rent allowance in lieu thereof; and (ii) grant of a house rent allowance in certain classes of cities to compensate the employees concerned for the specially high rents that have to be paid in those cities. The former is allowed only to such staff as are required to reside on the premises where they have to work, and is thus intended to be a facility necessary

378 Social Justice and Labour Jurisprudence to enable an employee to discharge his duties. In some cases, it is a supplement to pay, or substitute for special pay, etc., which would have been granted but for the existing of that concession. In either case, it is not related to the expensiveness of a locality. The latter, on the other hand, is a compensatory or a sort of a dearness allowance intended to cover not the high cost of living as a whole but the prevailing high cost of residential accommodation; and it has no relationship to the nature of an employee’s duties. The observations made by the Second Pay Commission throw light on this question. In fact the compensatory allowance and housing subsidy are two different and separate categories of the terms of service conditions and they cannot be clubbed together, nor can the one be made dependent on the other. The object of these two concessions is quite different and both of them serve quite different purposes. It was next contended that even if Section 9A of the Act applied, the Tribunal should have gone into the question on merits instead of giving the award on the basis of non-compliance with the provisions of Section 9A. This argument also appears to us to be equally untenable. On the facts and circumstances of the present case the only point that fell for determination was whether there was any change in the conditions of service of the workmen and, if so, whether the provisions of Section 9A of the Act were duly complied with. We cannot conceive of any other point that could have fallen for determination on merits, after the Tribunal held that Section 9A of the Act applied and had not been complied with by the appellant. It was also faintly suggested that there was no question of a customary claim or usage because the period during which the compensatory allowance was granted and withdrawn was too short. It is, however, not necessary to take any notice of this argument, because Counsel for the respondents Mr Sen Gupta fairly conceded that he had not based his claim on any customary claim at all. It was argued by Mr Sen Gupta that after the Central Government notification of 3 September 1957, the appellant took an independent and voluntary decision on their own to give the facility of the Assam Compensatory Allowance as an implied term of the contract and having done so they could not wriggle out from the provisions of Section 9A of the Act. Thus all the contentions raised by the appellant fail and the appeal is dismissed, but in the circumstances of this case we leave the parties to bear their own costs.

Pendency of Proceedings before the Conciliation Officer: Duties under Section 33(1)(a) Section 33(5) of the Act concedes equal powers to the conciliation officer, board, arbitrator, Labour Court, tribunal or national tribunal in respect of an application made by the employer under the proviso to sub-section (2) of Section 33 for approval of the action taken by the employer. The authority concerned shall, without delay, hear such application and pass such order in relation thereto as it deems fit. Inclusion of conciliation proceedings before the conciliation officer or the board in Section 33 may apparently go against the spirit of the mechanism envisaged under the Industrial Disputes Act, 1947: As such, the role of conciliation under the Act is purely persuasive, but not imposing, and under the circumstance, such power lacks the status of quasi-judicial character. But the language used in sub-section 5 of Section 33 sounds a different note and this was considered by the Supreme Court in this case.

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N.M. Desai vs the Testeels and Another 9 THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER The brief facts are that a certain employee of the first respondent was sought to be dismissed by it at a time when there was an industrial dispute pending conciliation. So, the Management sought the approval of the Conciliation Officer as required by the proviso to Section 33(2) of the Industrial Disputes Act 1947. The appellant officer passed an order refusing approval but assigning no reasons whatever. The aggrieved Management challenged the said order on the score that a quasi-judicial power could not be exercised without complying with the obligation to pass a speaking order. The question was considered at great length by a full Bench of the High Court of Gujarat to which it was referred. The conclusion arrived at was that the order was void because every order passed by a quasi-judicial authority should contain order on the face of the order. In this view, the High Court set aside the order and remitted the matter back to the Conciliation Officer. All this took place way back in 1969. The Court held that the proposition of law which appealed to the High Court is not wrong. It follows that the order of the Conciliation Officer impugned is bad and the appeal must fail. It transpires that the respondent Management has since reached a settlement of the dispute with the employee concerned and so the question itself has become purely academic. The respondent has not entered appearance either.

Termination during Pendency of Proceedings: Validity Section 33(2) empowers the employer to discharge or punish, whether by dismissal or otherwise, a workman who is a party in the pending proceedings of an industrial dispute before a Labour Court or tribunal for any misconduct not connected with the dispute after obtaining approval for this action from the authority before which the dispute is pending. Where an application is made by the employer for an approval of action taken under Section 33(2)(b), is the tribunal empowered to go into the whole question relating to the misconduct and come to its own conclusion and provide an appropriate relief to the concerned workman in the circumstances?

Mahendra Singh Dhantwal vs Hindusthan Motors Ltd 10 In this case, the Supreme Court had to consider the precise scope of the powers of the tribunal under Section 33(5), read with Section 33(2)(b) of the Act. This is an appeal at the instance of the workman on a certificate from the Calcutta High Court against the decision of the Division Bench reversing the earlier judgment and order of the learned single Judge against the award of the Industrial Tribunal, made under Section 33A of the Industrial Disputes Act. The appellant workman had been 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

380 Social Justice and Labour Jurisprudence 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 sometime 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 com-ply 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 reinstatement of the workman with 50% 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 of 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 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 dismissal…’ The learned Judge further observed that ‘the circumstances

Change of Service Conditions 381

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, 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 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. The question that arises for consideration relates to the applicability of the proviso to Section 33(2)(b) of the Act as amended in 1956.11 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.

382 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 the 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 is 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. Misconduct contemplated in Section 33(2)(b) must be a misconduct enumerated in the standing orders of the company. 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.

Change of Service Conditions 383 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 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 appellant relied on a decision of the Supreme Court in The Management of Murugan Mills Ltd. vs Industrial Tribunal Madras12 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 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 Section 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. 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 issue. It is interesting to examine at this stage that the Supreme Court has legitimately disproved the ratio laid down by the Madras High Court in Shyamala Studios vs Kannu Devar13 and Sri Rama Machinery Corporation (P) Ltd. Madras vs N.R. Murthi14 after having noticing the Supreme Court decision in Murugan Mills15 case. The Court in this context observed that although the decision of the Supreme Court in Murugan Mills’16 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 Mills17 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

384 Social Justice and Labour Jurisprudence 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, Section 33(2)(b) will not be applicable and necessarily there will be no contravention of Section 33A of the Act. 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 Section 33 would not arise. Solicitium for Unequal Fight: The workman 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. In this context it was observed: 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, 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 Role of the Labour Court or Tribunal in Adjudicating Matters under Sections 33(2) and 33(3) Sections 33(1), (2) and (3) constitute the mandatory provisions wherein the employer has to obtain permission from the appropriate authority while altering the service conditions prejudicially to the interests of the employees who are parties to a dispute and also in terminating the services of persons involved in the dispute under certain circumstances.

Change of Service Conditions 385

Any technical flaw in making such an application for permission within the scope of this section must not render the whole action taken by the employer as non-compliance with the provisions of Section 33. The Labour Court or the tribunal charged with the duty of administering justice has to remember that it is not the form but the substance of the matter that has to be looked into and the parties cannot be penalised for inadvertent errors committed by them in the conduct of their cases.

Management of the Borpukhurie Tea Estate vs the Presiding Officer, Industrial Tribunal, Assam, and Another 18 In this case, the Supreme Court expressed its discontent over the manner in which the industrial tribunal had exercised its functions under Section 33 of the Act, solely confining itself to technicalities. This case came before the court as an appeal by special leave directed against the judgement and order dated 18 September 1970 of the High Court of Assam and Nagaland, passed as Civil Rule 236 of 1967. THE FACTS OF THE CASE Naresh Kumar Ganguli, respondent 2 (hereafter referred to as ‘the respondent’), was employed by the Borpukhurie Tea Estate belonging to the Bishnauth Tea Company (which was engaged in the cultivation and manufacture of tea and employed a large number of workmen of various categories to carry on its business) as Second Clerk and was recognised as a ‘Protected workman’ within the meaning of Section 33(3) of the Industrial Disputes Act, 1947 (hereafter referred to as ‘the Act’). On 11 September 1966, the Company’s cheque No. 53, which allegedly bore a forged signature of the manager of the Borpukhurie Tea Estate, was encashed at a local bankers. On enquiry, Mansid Munda, the factory chowkidar, stated that the cheque was cashed under the instructions of the respondent and that the proceeds thereof, amounting to Rs 680, were handed over to the latter at the tea-garden office. As this act of the respondent prima facie constituted grave misconduct under clause 10(a)(2) of the standing orders of the establishment, a charge- sheet was served on him on 19 September 1966, accusing him of obtaining money through Mansid Munda from the local banker by forging the manager’s signatures on the aforesaid cheque and calling upon him to submit his explanation with regard to this matter, which he did on 22 September 1966. As the explanation tendered by the respondent (which was one of denial) was found to be unsatisfactory, an enquiry into the charge was held by Mr R.R.L. Pennell, the superintendent of the company. The respondent, who was present throughout the enquiry, was afforded opportunity to cross-examine the witness produced on behalf of the company and to produce evidence in his own defence. At the conclusion of the enquiry, the enquiry officer submitted his report, stating that the material adduced in the course of the enquiry proved that the respondent was guilty of grave misconduct as envisaged by the relevant clause of the standing orders. The management, therefore, decided to dismiss the respondent from service. As the respondent was a workman and an industrial dispute, being reference 35 of 1964, was pending before the Industrial Tribunal, Assam, at Gauhati, the management could not straightaway dismiss the respondent. Accordingly, by its letter dated 10 November 1966, the management informed the respondent that he had been found guilty of the charge contained in the charge sheet served on him on 19 September 1966 and that he would be dismissed from service of the company, but that the punishment would not be put into effect pending the orders of the

386 Social Justice and Labour Jurisprudence competent authority under Section 33 of the Act, and in the meantime, he would remain under suspension.... On 24 December 1966, the respondent filed a complaint before the industrial tribunal under Section 33A of the Act, alleging contravention of the provisions of Section 33 by the appellant company and praying for a decision in the matter. On 27 June 1967, when its original application under Section 33(2)(b) of the Act was still pending, the appellant company made an application to the industrial tribunal, praying that the said application be treated as one under Section 33(3)(b) of the Act. This application is reproduced below for facility of reference: (1) That in submitting the application under Section 33(2)(b) of the Industrial Disputes Act there was a technical error made unintentionally by the applicant. (2) That a reading of the application will clearly indicate that the Management in fact intended to comply with the provisions of Section 33(3) of the Act and not of Section 33(2) of the said Act, although the application is described as such. (3) That even the Management’s letter dated 10 November 1966 addressed to Sri N.K. Ganguli will also indicate that action was being taken under Section 33(3) of the I.D. Act. It is, therefore, prayed that the Hon’ble Tribunal may be pleased to treat the application as one under Section 33(3) of the Industrial Disputes Act. By his order dated 10 July 1967, the presiding officer of the industrial tribunal refused to treat the management’s original application under Section 33(2) of the Act as one under Section 33(3)(b) of the Act and rejected the same as not maintainable, holding that the management had violated the provisions of the Act in dismissing the respondent, who was admittedly a protected workman ‘without obtaining the permission from the Tribunal’. Aggrieved by this order, the management filed an application before the High Court under Article 226 of the Constitution, seeking issuance of a writ of certiorari or mandamus, or any other appropriate writ, quashing the tribunal’s order. However, this was dismissed with the observation that the punishment of dismissal having already been inflicted without complying with the provisions of Section 33(3)(b) of the Act, an ex post facto permission could not be granted. It was in appeal against this order that the management has come up in the Supreme Court.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE JASWANT SINGH Appearing in support of the appeal, Mr Nariman has urged that though it may be open to an Industrial Tribunal to withhold the permission contemplated by Section 33(3)(b) of the Act if it finds that an employer has not been able to make out a prima facie case justifying dismissal of a workman or if it finds that there is material to establish that the employer was guilty of unfair labour practice or victimisation, there was no justification in the instant case for the Industrial Tribunal to hold that the appellant had violated the provisions of Section 33(3)(b) of the Act or to refuse to accede to the prayer of the appellant to treat its original application dated 10 November 1966 as one under Section 33(3)(b) of the Act ignoring the real substance thereof. We find considerable force in the submissions made by Mr Nariman. The facts and circumstances of the case specially the underlined portions of the correspondence reproduced above i.e. the appellant’s very first letter dated 10 November 1966 to the respondent which expressly stated that as the latter had been found guilty after due enquiry, he would be dismissed from service of the Company but the punishment would not be put into effect pending orders of the competent authority under Section 33 of the Act and in the mean time he would remain under suspension, and the respondent’s own application dated 17 November 1966 to the Management for permission to avail of the privileges of rations, etc. in connection with his service on the plea that he had not ‘yet’ been dismissed as also the averments in the ultimate part of paragraph 10

Change of Service Conditions 387 of the appellant’s application dated 10 November 1966 to the Industrial Tribunal to the effect that the respondent workman had been informed that the appellant had decided that he should be dismissed for misconduct under clause 10(a)(2) of the Standing Orders but until permission of the Tribunal is received, he would be under suspension clearly show that the appellant had not dismissed the respondent but had only decided to dismiss him, and the Industrial Tribunal and the High Court were manifestly wrong in making deduction to the contrary. It is unfortunate that both the Industrial Tribunal and the High Court tried to clutch at some stray words here and there to justify rejection of the appellant’s prayer to treat its original application as one under Section 33 (3)(b) of the Act and in so doing missed the real pith and substance of the application. The courts charged with the duty of administering justice have to remember that it is not the form but the substance of the matter that has to be looked to and the parties cannot be penalised for inadvertent errors committed by them in the conduct of their cases. The following observations made by this Court in Western India Match Company Ltd. vs Their Workmen 19 are apposite in this connection: Again, as in most questions which come before the Courts, it is the substance which matters and not the form; and every fact and circumstance relevant to the ascertainment of the substance deserve careful attention. It is equally important for the courts to remember that it is necessary sometimes in appropriate case for promotion of justice to construe the pleadings not too technically or in a pedantic manner but fairly and reasonably. Keeping in view therefore the totality of the facts and circumstances of the case and the purport of the observations of this Court in Patna Electric Supply Co. Ltd., Patna vs Bali Rai20 to the effect that the Labour Courts and Tribunals are competent to allow the parties when they are not actuated by any oblique motive to modify their pleadings to subserve the interests of justice, we are of the view that the present one is an eminently fit case in which the Industrial Tribunal should treat the appellant’s original application which was in fact and in substance for permission as one under Section 33(3)(b) of the Act and dispose of the same in conformity with law after going into the following points: (1) Whether it is conclusively proved that the signatures of the Manager of the Borpukhurie Tea Estate on the aforesaid cheque 53 were forged? (2) What became of the report which appears to have been made by the appellant to the police in respect of the said cheque and what is the impact of the result of that report on the truth or otherwise of the alleged forgery? (3) Whether a prima facie case for dismissal of the respondent is made out by the appellant? (4) Whether the appellant’s decision to dismiss the respondent was bona-fide or was it an outcome of any unfair labour practice or victimisation? (5) Whether the respondent was entitled to any payment in the interregnum between the conclusion of the enquiry and the final order of the Tribunal? Accordingly, we allow the appeal, quash the aforesaid orders of the Industrial Tribunal and the High Court and remit the case to the former with the direction to treat the appellant’s aforesaid application date 10 November 1966 as one under Section 33(3)(b) of the Act and to dispose of the same with utmost despatch not exceeding six months of receipt of the order, after going into the points set out above. The parties shall be allowed to adduce such evidence as they may like in respect of the aforesaid points. The costs of this appeal shall be paid by the appellant to the second respondent workman which is quantified at Rs 1500. The order in C.M.P. 5411 of 1971 dated 14 January 1972 shall stand.

388 Social Justice and Labour Jurisprudence

Application for Approval of an Act of Dismissal for Misconduct: The Scope for Interference Where an application has been preferred by an employer seeking an approval of the tribunal for the action initiated under Section 33(2)(b) of the Industrial Disputes Act, 1947, the tribunal, basing on evidence, reach to a conclusion that there was a grave violation of the principles of natural justice by the employer in initiating such action, can reject the approval as required.

Shankar Chakravarti vs Britannia Biscuit Company and Another 21 In the following case the employer not only denied the workman a hearing, but also failed before the tribunal to avail the opportunity to prove the case against the workman. But he pleaded the same before the Division Bench of the High Court at the stage of Letters Patent Appeal which was granted by the High Court. The reaction of the Supreme Court to this event was significant. THE FACTS OF THE CASE The appellant joined service with the first respondent company (‘company’ for short) in August 1963 and was confirmed in service in March 1964. In October 1970, the appellant was drawing a composite salary of Rs 180. An industrial dispute touching the workmen of the company was pending before the industrial tribunal when the events leading to the present appeal occurred. On 1 October 1970, around 5 p.m., the appellant was alleged to have hoisted two red flags atop the branch office building, simultaneously shouting inflammatory slogans. He was alleged to have threatened the shift manager, Manik Mukherjee, who was on duty at the time. The incident was reported to the police. The respondent, the employer, felt aggrieved by the indiscipline exhibited by the appellant and decided to hold a disciplinary enquiry, as a first step towards which, a chargesheet dated 1 October 1970, was served on the appellant, calling upon him to submit his explanation within three days from the receipt of the chargesheet. In the meantime, on 3 October 1970, the first respondent (the company) declared a lock-out. The appellant submitted his explanation on 10 October 1970, denying all the charges and complaining that as he was a trade-union leader, he was being singled out for victimisation. On the same day, the appellant was arrested by the police and a criminal case was lodged against him, of which he was acquitted by the magistrate on 2 December 1970. It happened that the management did not proceed with the enquiry till as late as 30 June 1971, when the appellant was informed that the enquiry would be held on 8 July 1971. In the meantime, the appellant had been detained under the Prevention of Violence Act, 1970, with the result that when he received intimation of the date on which the enquiry was to be held, he informed the company that as he was in detention and would not be able to attend the enquiry and so sought an adjournment. Adjournment appears to have been granted, but a fresh notice was served upon the appellant, in jail, calling him to appear before the enquiry officer on 15 September 1971: but as the appellant was still in detention, he could not avail of this opportunity. Consequently, on 16 September 1971, the enquiry proceeded ex parte. The enquiry officer held the charges proved and on the report of the enquiry officer, the management of the company dismissed the appellant from service and gave him one month’s wages in lieu of notice. Since an industrial dispute between the workmen of the company and the company was then pending before the industrial tribunal, an application was made under

Change of Service Conditions 389 Section 33(2)(b) of the Industrial Disputes Act 1947 (the ‘Act’ for short), seeking the approval of the industrial tribunal for the management’s action. This case came to be registered as Case No. 128 of 1971 under Section 33(2)(b) of the Act before the Third Industrial Tribunal, West Bengal. On a notice issued by the industrial tribunal, the appellant was produced before the tribunal, from jail custody and he submitted his written statement. The tribunal then proceeded to adjudicate upon the dispute. The tribunal was of the opinion that the enquiry was conducted in violation of the principles of natural justice and hence vitiated. Accordingly, by its award dated 15 September 1973, the tribunal rejected the application for approval of the action terminating the service of the appellant by the company and declined to grant its approval to the same. The company preferred a writ petition under Articles 226 and 227 of the Constitution to the High Court of Calcutta. The single judge of the High Court before whom the writ petition came up for hearing dismissed the petition, observing that the enquiry was not held according to the principles of natural justice and the order terminating the service made in such an enquiry was invalid and of no effect, and that the industrial tribunal was fully justified in declining to grant approval of such an action. It may be specifically mentioned that no contention was raised at this time before the judge that no opportunity had been afforded to the company to lead evidence in proof of charges after the domestic enquiry was found to be defective. However, the company than preferred a letters patent appeal, which came to be No. 80 of 1974, to this effect. A Division Bench of the Calcutta High Court held that after the industrial tribunal adjudicated upon the preliminary issue—whether the enquiry was in accordance with the principles of natural justice—and had held against the company, it was incumbent upon the industrial tribunal to give an opportunity to the employer to lead evidence to prove the charges alleged against the workman and as the issue of the validity of the enquiry was not decided as a preliminary issue and as thereafter no opportunity was given to the employer, it would be necessary to remand the matter to the industrial tribunal again, giving an opportunity to the employer to adduce further evidence, if so advised, and then to finally let the tribunal dispose of the application made by the employer under Section 33(2)(b).

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE D.A. DESAI The hollow plea of the employer of an alleged denial of an opportunity (never claimed at any stage except in Letters Patent Appeal) to substantiate an alleged misconduct of the workman by evidence aliened has been responsible for dragging a tiny dispute rendering the workman jobless for an unusually long period of more than 7 years to this apex Court. The present appeal by special leave is filed by aggrieved workman. While granting leave this Court limited it to the question as to whether the principle in Cooper Engineering Ltd. vs P.P. Mundha,22 applies to a situation where the management seeks approval of an order of dismissal under Section 33(2)(b) of the Act. That necessitates ascertainment of the principle enunciated by this Court in Cooper Engineering Ltd.23 case. Before the contention raised in this appeal is adverted to, the limited nature of the controversy must be put in focus to avoid deviation from the central issue. The challenge to penal termination of service of a workman by the employer whose undertaking is governed by the Act is likely to come before a Labour Court or Industrial Tribunal or National Tribunal for adjudication either by way of a reference under Section 10 or by way of an application by the employer under Section 33. Preceding domestic enquiry is implicit in both the situations. Where a workman is accused of misconduct a domestic enquiry has to be held

390 Social Justice and Labour Jurisprudence against him in accordance with the provisions contained in the standing orders governing the industrial establishment or in the absence of such standing orders in accordance with the principles of natural justice. After such a domestic enquiry is held it would be open to the employer to impose a penalty including one of termination of service howsoever styled. If at the time of imposition of penalty no other industrial dispute between the employer and its workmen as comprehended by Section 33 is pending before any of the authorities mentioned in that section it would be open to the workman to approach the appropriate Government to refer the industrial dispute arising out of termination of his service to an appropriate authority under the Act. But if at the relevant time a situation obtains such as is comprehended by Section 33, namely, pendency of a conciliation proceeding before a conciliation officer or a Board or of any proceeding before an arbitrator or a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute touching the workmen of the employer, the employer before his order terminating service of the workman becomes effective has to seek either prior permission or subsequent approval of the action, as the case may be, under Section 33. When the dispute comes before the Industrial Tribunal by way of a reference under Section 10 it is the aggrieved workman who has sought adjudication of the industrial dispute arising from the termination of his service. When the matter comes before the appropriate authority under Section 33 it is the employer who has moved for permission or approval of its intended action. Where the reference is at the instance of a workman under Section 10 the Tribunal would call upon the workman to file his statement of claim and thereafter the employer would be called upon to file its written statement. Rule 10-B of the Industrial Disputes (Central) Rules, 1957 provides that within two weeks of the date of receipt of the order of reference, the party representing workmen and the employer involved in the dispute shall file with the concerned authority a statement of demands relating only to the issues as are included in the order of reference and shall also forward a copy of such statement to each one of the opposite parties involved in the said dispute. Similarly, when the employer seeks permission for taking the intended action or seeks approval of the action taken by it under Section 33 it has to make an application as provided by rule 60 in either Form J or K as the case may be. Both the forms require that the necessity for and circumstances in which the proposed action is taken or is intended to be taken must be clearly and specifically set out and either express permission should be sought before taking the intended action or an approval of the already taken action must be sought. The matter in this case came before the Tribunal upon an application made by the company under Section 33(2)(b) seeking approval of its action terminating service of the appellant. A copy of the application is not put on record of this appeal. However, it was stated at the Bar that in the application charges preferred against the appellant were set out. The fact that an enquiry and upon the findings recorded in the enquiry, order terminating the service of the workman was passed has also been set out in the application. The Tribunal was called upon to accord its approval to the action. The appellant appeared before the Tribunal and contested this application totally denying the charges. It must be specifically noticed that the first respondent company in its application seeking approval of its action has set out in its application the charges preferred by it and the domestic enquiry held in respect of the charges. A prayer was made in the application that its action terminating service of the appellant be approved. Nowhere in this application either in express terms or by implication it was averred that in the event the Tribunal comes to the conclusion that the enquiry was defective, the employer first respondent company proposes to offer evidence for substantiating the charges. Neither such an averment was made in the application made to the Industrial Tribunal but till the Industrial Tribunal concluded its proceedings by saying that the matter is set down for making the Award any oral or written application ... made on behalf of the company that over and above the record of enquiry it proposed to lead evidence in its possession in respect of the charges to substantiate the same to the satisfaction of the Tribunal.

Change of Service Conditions 391 Not only no such request was made at any time before the Award was made by the Industrial Tribunal but no such contention appears to have been taken before the learned Single Judge of the Calcutta High Court in writ petition filed by the company questioning the validity and correctness of the award made by the Industrial Tribunal declining to grant approval. Such an opportunity was sought for the first time before the Appellate Bench of the Calcutta High Court at the hearing of the Letters Patent Appeal preferred by the company. Mr Tarkunde, learned Counsel for the company formulated his contention thus: When an industrial dispute touching the punitive termination of service of a workman is brought before the Labour Court or the Industrial Tribunal, either under Section 10 or Section 33 of the Act, irrespective of the fact whether the employer has made any express or implied request in its application or in the course of proceedings either orally or in writing, the Labour Court or the Industrial Tribunal must as an obligation in law at the initial stage of the proceeding frame a preliminary issue as to whether the domestic enquiry was in fact held and, if held, was in accordance with the standing orders or the principles of natural justice or was in any manner defective. If this issue, urged Mr Tarkunde, is answered in favour of the workman and against the employer, a preliminary finding to that effect should be recorded and then notwithstanding the fact that the employer has not made any request in its original application or in the course of proceedings before the Tribunal it is the duty and obligation of the Tribunal to call upon the employer by giving it a specific opportunity to lead evidence if it so chooses to do, to substantiate the charges preferred against the workman. Failure to give such an opportunity either on request of the employer or suo moto by the Tribunal, the proceedings would be vitiated. According to Mr Tarkunde this proposition is no more res integra and is concluded by the decision of this Court in Cooper Engineering Ltd 24 case. As this contention was sought to be substantiated on some of the cases decided by this Court it would be advantageous to examine the proposition first on precedent and then, if it is open, on principle. In Bharat Sugar Mills Ltd. vs Shri Jai Singh,25 the matter came before this Court questioning an Award of the Industrial Tribunal by which the Tribunal declined to grant permission under Section 33 except in respect of one workman holding that the domestic enquiry was not proper and that the employer was guilty of mala fide conduct and victimisation. Before this Court the workman contended that once the domestic enquiry was found to be improper, the Tribunal had to dismiss the application and it could not take independent evidence and arrive at a finding of its own as to the guilt of the workman. It may be mentioned that there was no preliminary issue framed in this case by the Tribunal about the validity of the enquiry. Yet the employer had adduced evidence to substantiate the charges against the workman simultaneously relying upon the papers of domestic enquiry. Negativing this contention of the workman this Court observed as under: Where there has been a proper enquiry by the management itself the Tribunal, it has been settled by a number of decisions of this Court, has to accept the findings arrived at in that enquiry unless it is perverse and should give the permission asked for unless it has reason to believe that the management is guilty of victimisation or has been guilty of unfair labour practice or is acting mala fide. But the mere fact that no enquiry has been held or that the enquiry has not been properly conducted cannot absolve the Tribunal of its duty to decide whether the case that the workman has been guilty of the alleged misconduct has been made out. The proper way for performing this duty where there has not been a proper enquiry by the management is for the Tribunal to take evidence of both sides in respect of the alleged misconduct. When such evidence is adduced before the Tribunal the management is deprived of the benefit of having the findings of the domestic tribunal being accepted as prima facie proof of the alleged misconduct unless the finding is perverse and has to prove to the satisfaction of the Tribunal itself that the workman was guilty of the alleged misconduct. We do not

392 Social Justice and Labour Jurisprudence think it either just to the management or indeed even fair to the workman himself that in such a case the Industrial Tribunal should refuse to take evidence and thereby drive the management to make a further application for permission after holding a proper enquiry and deprive the workman of the benefit of the Tribunal itself being satisfied on evidence adduced before it that he was guilty of the alleged misconduct. This question again surfaced in Management of Ritz Theatre (P) Ltd. vs Its Workmen.26 The matter came before this Court challenging an award of the Industrial Tribunal by which the Industrial Tribunal in a reference under Section 10 directed reinstatement of two workmen who were dismissed after holding a domestic enquiry against them. When the matter was before the Tribunal the employer relied not only on the papers of domestic enquiry but 11 witnesses were examined on behalf of the employer and an equal number of witnesses was examined on behalf of the workmen. In the appeal by the employer a contention was raised on behalf of the workmen that once the employer adduced evidence before the Industrial Tribunal to substantiate the charges against the workmen, that by itself would amount to a concession on behalf of the employer that the enquiry held by it was not proper or was defective and, therefore, the employer cannot then rely upon the fact that the enquiry being proper the Tribunal cannot go into the merits of the case. Negativing this contention after referring to Bharat Sugar Mills27 case, this Court expressed an opinion that there is no authority for the proposition that whenever the employer seeks to lead additional evidence before the Tribunal in respect of dismissal of its employee it must necessarily follow that he has given up his stand based on the previous departmental enquiry and the Tribunal is entitled to examine the dispute on merits itself and on the principles of fair play and justice the proposition is unsound. In reaching this conclusion this Court made some pertinent observations which may be extracted: If the view taken by the Tribunal was held to be correct, it would lead to this anomaly that the employer would be precluded from justifying the dismissal of his employee by leading additional evidence unless he takes the risk of inviting the Tribunal to deal with the merits for itself, because as soon as he asks for permission to lead additional evidence, it would follow that he gives up his stand based on the holding of the domestic enquiry. Otherwise, it may have to be held that in all such cases no evidence should be led on the merits unless the issue about the enquiry is tried as a preliminary issue. If the finding on that preliminary issue is in favour of the employer, then, no additional evidence need be cited by the employer; if the finding on the said issue is against him; permission will have to be given to the employer to cite additional evidence, instead of following such an elaborate and somewhat cumbersome procedure; if the employer seeks to lead evidence in addition to the evidence adduced at the departmental enquiry and the employees are also given an opportunity to lead additional evidence, it would be open to the Tribunal first to consider the preliminary issue and then to proceed to deal with the merits in case the preliminary issue is decided against the employer. That, in our opinion, is the true and correct legal position in this matter. It may be noted that in this case evidence was adduced by the employer before any preliminary finding was recorded on the validity of the enquiry. In fact, application for adducing additional evidence was made by the employer much before the Tribunal proceeded to examine the validity of the enquiry and evidence was recorded before recording a preliminary finding that the enquiry was improper or defective. The observations in this case have to be understood in the context of the facts found. In Workmen vs Motipur Sugar Factory,28 the workmen contended before this Court that as respondent employer held no enquiry as required by the standing orders before dispensing with the services of the appellants by way of discharge on the grounds that the appellants had resorted to ‘go slow’ in the sugar factory, the Tribunal in a reference under Section 10 of the Act was in

Change of Service Conditions 393 error in holding that the appellants had in fact resorted to ‘go-slow’ tactics and the respondent was justified in discharging them from service. The specific contention raised was that where no domestic enquiry is held before terminating services of a workman as required by the standing orders all that the Tribunal was concerned with was to decide whether the discharge of the workman was justified or not and that it was no part of the duty of the Tribunal to decide that there was go-slow which would justify the order of discharge. Negativing this contention, the Court held as under: It is now well-settled by a number of decisions of this Court that where an employer has failed to make an enquiry before dismissing or discharging a workman it is open to him to justify the action before the Tribunal by leading all relevant evidence before it. In such a case the employer would not have the benefit which he had in cases where domestic inquiries have been held. The entire matter would be open before the Tribunal which will have jurisdiction not only to go into the limited questions open to a Tribunal where domestic inquiry has been properly held (see Indian Iron & Steel Co. vs Their Workmen)29 but also to satisfy itself on the facts adduced before it by the employer whether the dismissal or discharge was justified. We may in this connection refer to M/s. Sasa Musa Sugar Works (P) Ltd. vs Shobrati Khan MA,30 Phulbari Tea Estate vs Its Workmen31 and The Punjab National Bank Limited vs Its Workmen.32 These three cases were further considered by this Court in Bharat Sugar Mills Ltd. vs Shri Jai Singh,33 and reference was also made to the decision of the Labour Appellate Tribunal in Shri Ram Swarath Sinha vs Belcund Sugar Co.34 It was pointed out that ‘the important effect of omission to hold an enquiry was merely this: that the Tribunal would not have to consider only whether there was a prima facie case but would decide for itself on the evidence adduced whether the charges have really been made out’. It is true that three of these cases, except Phulbari Tea Estate case,35 were on applications under Section 33 of the Industrial Disputes Act, 1947. But in principle we see no difference whether the matter comes before the Tribunal for approval under Section 33 or on a reference under Section 10 of the Industrial Disputes Act, 1947. In either case if the enquiry is defective or if no enquiry has been held as required by standing orders, the entire case would be open before the Tribunal and the employer would have to justify on facts as well that its order of dismissal or discharge was proper. Phulbari Tea Estate,36 was on a reference under Section 10, and the same principle was applied there also, the only difference being that in that case, there was an enquiry though it was defective. A defective enquiry in our opinion stands on the same footing as no enquiry and in either case the Tribunal would have jurisdiction to go into the facts and the employer would have to satisfy the Tribunal that on facts the order of dismissal or discharge was proper. The Court rejected the contention that as there was no enquiry in this case it was not open to the respondent company to justify the discharge before the Tribunal. It may be noted that in the situation as was disclosed in this case there was no question of deciding a preliminary issue and then giving an opportunity to the employer to adduce additional evidence justifying the punitive action on merits. This Court went into the allegations of go-slow tactics resorted to by the workmen as canvassed on behalf the employer and agreed with the finding of the Tribunal that the allegations were proved and accordingly upheld the order of discharge and affirmed the Award. In State Bank of India vs R. K. Jain,37 in a reference made by the Central Government the Industrial Tribunal held that the respondent R.K. Jain was not afforded a reasonable opportunity to produce evidence in his defence during the enquiry and that the management was not justified in terminating his service on the basis of the report of the enquiry officer. This Award was questioned in an appeal to this Court, inter alia, on the ground that even assuming that the domestic enquiry conducted by the bank was in any manner vitiated, the Tribunal erred in law

394 Social Justice and Labour Jurisprudence in not giving an opportunity to the management to adduce evidence before the Tribunal to establish the validity of the order of discharge. The contention in terms raised was that the Tribunal has first to consider whether the domestic enquiry on the basis of which the order of termination has been passed has been conducted properly and bona fide by the management and if it comes to the conclusion that the domestic enquiry is vitiated, it is only then that the stage is set for giving an opportunity to the management to adduce evidence before the Tribunal to support the order of termination. In support of this contention reliance was placed on the decision of a Division Bench of the Orissa High Court in M/s. Hindustan Steel Ltd. vs Their Workmen.38 A contrary view taken by the Madhya Pradesh High Court in Madhya Pradesh State Road Transport Corporation vs Industrial Court, Madhya Pradesh 39 was also brought to the notice of the court. Attention of the court was also drawn to a decision of a learned Single Judge of the Delhi High Court in Prem Nath Motors Workshop Pvt. Ltd. vs Industrial Tribunal Delhi,40 which accepted the view of the Madhya Pradesh High Court. The conflict of decisions may be noticed first. The Orissa High Court was of the opinion that there was no obligation in law on the part of the Labour Court to indicate its mind about the infirmities in the enquiry at any stage before it gave its findings and the Award. Contrary view expressed by the Madhya Pradesh and Delhi High Courts was that it is a healthy practice that after coming to the conclusion that the domestic enquiry was not proper the Industrial Tribunal or Labour Court should give an opportunity to the employer to produce evidence to satisfy the authority that the action taken by it is justified. Thus this Court in R.K. Jain41 case was clearly seized of the conflict of opinion and the controversy raised was whether there was any obligation in law on the Industrial Tribunal or the Labour Court, notwithstanding that no such request was made by the employer, to call upon the employer to adduce additional evidence to sustain the charges after a formal preliminary order is recorded that either there was no domestic enquiry or the one held was defective. Negativing this contention this Court held as under: It should be remembered that when order of punishment by way of dismissal or termination of service is effected by the management, the issue that is referred is whether the management was justified in discharging and terminating the service of the workman concerned and whether the workman is entitled to any relief. In the present case, the actual issue that was referred for adjudication to the Industrial Tribunal has already been quoted in the earlier part of the judgment. There may be cases where an inquiry has been held preceding the order of termination or there may have been no inquiry at all. But the dispute that will be referred is not whether the domestic inquiry has been conducted properly or not by the management, but the larger question whether the order of termination, dismissal or the order imposing punishment on the workman concerned is justified. Under those circumstances it is the right of the workman to plead all infirmities in the domestic inquiry, if one has been held and also to attack the order on all grounds available to him in law and on facts. Similarly the management has also a right to defend the action taken by it on the ground that a proper domestic inquiry has been held by it on the basis of which the order impugned has been passed. It is also open to the management to justify on facts that the order passed by it was proper. But the point to be noted is that the inquiry that is conducted by the Tribunal is composite inquiry regarding the order which is under challenge. If the management defends its action solely on the basis that the domestic inquiry held by it is proper and valid and if the Tribunal holds against the management on that point, the management will fail. On the other hand, if the management relies not only on the validity of the domestic inquiry, but also adduces evidence before the Tribunal justifying its action, it is open to the Tribunal to accept the evidence adduced by the management and hold in its favour even if its finding is against the management regarding the validity of the domestic inquiry. It is essentially a matter for the management to decide about the stand that it proposes to take before the Tribunal. It may be emphasised that it is the right of the management to sustain its order by adducing also independent evidence

Change of Service Conditions 395 before the Tribunal. It is a right given to the management and it is for the management to avail itself of the said opportunity. The Court also in terms held that by and large this Court was in agreement with the view expressed by the Orissa High Court meaning thereby that no such obligation in law is fastened on the Labour Court or the Industrial Tribunal to indicate its mind about the infirmities in the enquiry before it gave its finding and the award and then calling upon the employer to start the next round of leading evidence in its attempt to sustain the charges alleged against the workman. If the matter were to rest here, the contention of the appellant must fail on precedent. But it was urged that the point has been re-examined in later cases to which we may now turn. In Delhi Cloth and General Mills Co. vs Ludh Budh Singh42 the appellant company questioned the correctness of the decision of the Industrial Tribunal refusing permission to dismiss the respondent as he was held guilty of misconduct in a domestic enquiry conducted by the appellant. The question of seeking permission arose because Section 33 was attracted as an industrial dispute between the appellant company and its workmen was then pending before the Industrial Tribunal. Before the Tribunal pronounced its order rejecting the application for permission under Section 33, an application was made on the day next after the date on which the respondent filed his written statement before the Tribunal requesting in clear and unambiguous terms the Tribunal that in case the Tribunal held that the enquiry conducted by it was defective, it should be given an opportunity to adduce evidence before the Tribunal to justify the action proposed to be taken against the respondent. Neither party examined any witness before the Tribunal. The appellant merely produced the papers of enquiry. The Tribunal reached the conclusion that the enquiry proceedings had not been conducted against the respondent in accordance with the principles of natural justice and that the findings recorded by the enquiry officer were not in accordance with the evidence adduced before him. In accordance with these findings the Tribunal concluded that the appellant had not made out a case for permission for dismissing the respondent and the application was rejected. It may be noticed that there was no reference to the application made by the appellant for adducing additional evidence in the order rejecting permission and no order appears to have been made on the application whether it was granted or rejected. Before this Court the appellant contended that the Tribunal was in error in law in not permitting the appellant to adduce evidence before it, to justify the action proposed to be taken against the respondent. After an exhaustive review of the decisions bearing on the question and affirming the ratio in R.K. Jain case,43 this Court extracted the emerging principles from the review of decisions. Propositions 4, 5 and 6 would be relevant for the present discussion. They are as under: (4) When a domestic enquiry has been held by the management and the management relies on the same, it is open to the latter to request the Tribunal to try the validity of the domestic enquiry as a preliminary issue and also ask for an opportunity to adduce evidence before the Tribunal, if the finding on the preliminary issue is against the management. However elaborate and cumbersome the procedure may be, under such circumstances, it is open to the Tribunal to deal, in the first instance, as a preliminary issue the validity of the domestic enquiry. If its finding on the preliminary issue is in favour of the management, then no additional evidence need be cited by the management. But, if the finding on the preliminary issue is against the management, the Tribunal will have to give the employer an opportunity to cite additional evidence and also give a similar opportunity to the employee to lead evidence contra, as the request to adduce evidence had been made by the management to the Tribunal during the course of the proceedings and before the trial has come to an end. When the preliminary issue is decided against the management and the latter leads evidence before the Tribunal, the position, under such circumstances, will be, that the management is deprived of the benefit of having the

396 Social Justice and Labour Jurisprudence finding of the domestic Tribunal being accepted as prima facie proof of the alleged misconduct. On the other hand, the management will have to prove, by adducing proper evidence, that the workman is guilty of misconduct and that the action taken by it is proper. It will not be just and fair either to the management or to the workman that the Tribunal should refuse to take evidence and thereby ask the management to make a further application, after holding a proper enquiry, and deprive the workman of the benefit of the Tribunal itself being satisfied, on evidence adduced before it, that he was or was not guilty of the alleged misconduct. (5) The management has got a right to attempt to sustain its order by adducing independent evidence before the Tribunal. But the management should avail itself of the said opportunity by making a suitable request to the Tribunal before the proceedings are closed. If no such opportunity has been availed of, or asked for by the management, before the proceedings are closed, the employer can make no grievance that the Tribunal did not provide such an opportunity. The Tribunal will have before it only the enquiry proceedings and it has to decide whether the proceedings have been held properly and the findings recorded therein are also proper. (6) If the employer relies only on the domestic enquiry and does not simultaneously lead additional evidence or ask for an opportunity during the pendency of the proceedings to adduce such evidence, the duty of the Tribunal is only to consider the validity of the domestic enquiry as well as the finding recorded therein and decide the matter. If the Tribunal decides that the domestic enquiry has not been held properly, it is not its function to invite suo motu the employer to adduce evidence before it to justify the action taken by it. The point worthy of note is that the contention of the appellant that there is something like an obligatory duty of the Industrial Tribunal to call upon the employer to adduce additional evidence if it so chooses after recording a specific finding on the preliminary issue whether there was no enquiry or the one held was defective has been, in terms and demonstrably negative. As a corollary a principle was enunciated that such an opportunity should be availed of by the employer by making a suitable request to the Tribunal before the proceedings are closed. If no such opportunity has been asked for by the management before the proceedings are closed, the employer can make no grievance that the Tribunal did not provide such an opportunity. The ghost of any obligatory duty cast on a quasi-judicial authority, viz., Labour Court or Industrial Tribunal to notify one of the parties to the proceedings before it, what it should do or what are its rights and by what procedure it should prove its case, even when the party is a well entrenched employer, ably assisted by the best available talent in the legal profession, was laid to rest. We would presently examine Cooper Engineering Ltd.44 case, where the employer made some attempt to infuse life into that ghost but that decision rests on the facts of the case. In this case the fact that before the final order was pronounced by the Tribunal a written request was made on behalf of the employer for adducing additional evidence to sustain the charge on which the Tribunal appears to have passed no order, was held insufficient by this Court to entertain a contention that the employer was denied any such opportunity. Reference was next made to Workmen vs Messrs. Firestone Tyre and Rubber Company of India (P) Ltd.45 Contention raised therein was that by the introduction of Section 11-A with its proviso in the Act the Legislature has once and for ever put its final seal upon the controversy whether the employer who has failed to hold proper, legal and valid domestic enquiry before taking punitive action, was entitled to adduce fresh evidence when the matter is brought before the Labour Court or the Industrial Tribunal either under Section 10 or under Section 33 of the Act. The proviso to Section 11-A provides that the Labour Court or the Industrial Tribunal in a proceeding under Section 11-A shall rely only on the materials on record and shall not take any fresh evidence in relation to the matter. This contention was in terms negatived by this

Change of Service Conditions 397 Court observing that at the time of introducing Section 11-A in the Act the Legislature must have been aware of the long line of decisions of this Court enunciating several principles bearing on the subject and therefore it is difficult to accept that by a single stroke of pen by the expression used in the proviso of Section 11-A all these principles were set at naught. This Court then exhaustively reviewed all the previous decisions bearing on the subject and formulated the principles emerging therefrom. The relevant principles are 4, 6, 7 and 8. They read as under: (4) Even if no enquiry has been held by an employer or if the enquiry held by him is found to be defective, the Tribunal in order to satisfy itself about the legality and validity of the order, has to give an opportunity to the employer and employee to adduce evidence before it. It is open to the employer to adduce evidence for the first time justifying his action, and it is open to the employee and adduce. (5) ....... (6) The Tribunal gets jurisdiction to consider the evidence placed before it for the first time in justification of the action taken only if no enquiry has been held or after the enquiry conducted by an employer is found to be defective. (7) It was never been recognised that the Tribunal should straight away, without anything more, direct reinstatement of a dismissed or discharged employee, once it is found that no domestic enquiry has been held or the said enquiry is found to be defective. (8) An employer, who wants to avail himself of the opportunity of adducing evidence for the first time before the Tribunal to justify his action, should ask for it at the appropriate stage. If such an opportunity is asked for, the Tribunal has no power to refuse. The giving of an opportunity to an employer to adduce evidence for the first time before the Tribunal is in the interest of both the management and the employee and to enable the Tribunal itself to be satisfied about the alleged misconduct. The noticeable feature of principle 8 is that an employer who wants to avail himself of the opportunity of adducing evidence of the first time before the Tribunal to justify his action should ask for it at the appropriate stage. If any such opportunity has been asked for the Tribunal has no power to refuse. But it is not for a moment suggested that there is some duty or obligation as a matter of law cast upon the Tribunal to call upon the employer to adduce additional evidence even if no such opportunity is sought by the employer. At page 610 the Court has observed that the stage at which the employer has to ask for such an opportunity has been pointed out by the Court in Delhi Cloth & General Mills Co. case46 and the ratio of the decision was affirmed. In the quest of the principle bearing on the subject we come to the last decision relying on which the Division Bench of the Calcutta High Court in Letters Patent Appeal allowed a contention to be raised for the first time and remanded the matter back to the Industrial Tribunal. It was said that the point decided by the Division Bench of the Calcutta High Court is no more res integra and is concluded by the decision in Cooper Engineering Ltd.47 case. In that case the workman was dismissed by the employer and an industrial dispute arising out of the termination of service was referred to the Labour Court. The Labour Court found that the domestic enquiry was defective and directed reinstatement of the workman. In appeal by the employer company it was contended that the Labour Court failed to give an opportunity to the employer to adduce additional evidence to sustain the charge after recording a finding that the domestic enquiry held by the employer was defective. This Court referred to propositions nos. 4, 5 and 6 in the Delhi Cloth and General Mills Co.48 case and propositions nos. 4, 6, 7 and 8 in the case of Messrs. Firestone Tyre and Rubber Co. of India (P) Ltd.49 case and posed to itself a question as to what is the appropriate stage, specifically adverted to in the Delhi Cloth and General Mills Co.50 case when the Court is not required to seriously consider that the opportunity should be given to the employer to adduce evidence. The Court then recorded its opinion as under: We are, therefore, clearly of opinion that when a case of dismissal or discharge of an employee is referred for industrial adjudication the Labour Court should first decide as a preliminary

398 Social Justice and Labour Jurisprudence issue whether the domestic enquiry has violated the principles of natural justice. When there is no domestic enquiry or defective enquiry is admitted by the employer, there will be no difficulty. But when the matter is in controversy between the parties that question must be decided as a preliminary issue. On that decision being pronounced it will be for the management to decide whether it will adduce any evidence before the Labour Court. If it chooses not to adduce any evidence, it will not be thereafter permissible in any proceedings to raise the issue. It was contended that this Court has in unambiguous and incontrovertible terms laid down that there is an obligatory duty in law fastened on the Labour Court or the Industrial Tribunal dealing with a case of punitive termination of service either under Section 10 or Section 33 of the Act, irrespective of the fact whether there is any such request to that effect or not, to raise a preliminary issue as to whether domestic enquiry allowed to have been held by the employer is proper or defective and then record a formal finding on it and if the finding is in favour of the workman the employer should be called upon which must demonstrate on record, without waiting for any such request or demand or pleading from the employer, to adduce further evidence to sustain the charge of misconduct if it so chooses to do. We are afraid that much is being read into the observation of this Court which is not either expressly or by necessary implication stated. There is nothing to suggest that in Cooper Engineering Ltd.51 case this Court specifically overruled the decision in R.K. Jain52 case where the Court in terms negatived the contention of the employer that there is an obligatory duty in law on the Labour Court or the Industrial Tribunal to give an opportunity to the employer irrespective of the fact whether it is asked for or not to adduce additional evidence after recording a finding on the preliminary issue that either no domestic enquiry was held or the one held was defective. It would be advantageous to refer to an observation of this Court in Delhi Cloth and General Mills Co.53 case at page 53 where after examining the ratio of the decision in R.K. Jain54 case this Court held that there was no question of opportunity to adduce evidence having been denied by the Tribunal as the appellant therein had made no such request and that the contention that the Tribunal should have given an opportunity suo moto to adduce evidence was not accepted in the circumstances of that case. This observation in fact rejects the contention that there is any such obligatory duty cast by law on the Labour Court or the Industrial Tribunal to give such an opportunity to the employer and then leave it to the sweet will of the employer either to avail it or not. This view in R.K. Jain55 case was reaffirmed in Delhi Cloth and General Mills Co.56 case and there is nothing in the decision in Cooper Engineering Ltd.57 case that that case overrules the two earlier decisions. It was not possible so to do because the decision in the Ritz Theatre case wherein even though the application for adducing additional evidence was given before the Tribunal passed its final order, this Court declined to interfere saying that such a request was made at a very late stage and that is the decision of three judges and the decision in Cooper Engineering Ltd.58 case is equally a decision of three judges. Further, the decision in Cooper Engineering Ltd.59 case does not propose to depart from the ratio of the earlier decisions because this Court merely posed a question to itself as to what is the appropriate stage at which the opportunity has to be given to the employer to adduce additional evidence, if it so chooses to do. Merely the stage is indicated, namely, the stage after decision on the preliminary issue about the validity of the enquiry. Cooper Engineering Ltd.60 case is not an authority for the proposition in every case coming before the Labour Court or Industrial Tribunal under Section 10 or Section 33 of the Act complaining about the punitive termination of service following a domestic enquiry that the Court or Tribunal as a matter of law must first frame a preliminary issue and proceed to decide the validity or otherwise of the enquiry and then serve a fresh notice on the employer by calling upon the employer to adduce further evidence to sustain the charges if it so chooses to do. No section of the Act or the Rules framed thereunder was read to pin-point such an obligatory duty in law upon the Labour

Change of Service Conditions 399 Court or the Industrial Tribunal. No decision was relied upon to show that such is the duty of the Labour Court or the Industrial Tribunal. This Court merely indicated the stage where such opportunity should be given meaning thereby if and when it is sought. This reading of the decision in Cooper Engineering Ltd.61 case is consistent with the decision in Ritz Theatre 62 case because there as the application for permission to adduce additional evidence was made at a late stage the Tribunal rejected it and this Court declined to interfere. Now, if the ratio of the Cooper Engineering Ltd.63 case is to be read to the effect that in every case as therein indicated it is an obligatory duty of the Industrial Tribunal or the Labour Court to give an opportunity after recording the finding on the preliminary issue adverse to the employer to adduce additional evidence it would run counter to the decision in Ritz Theatre64 case. Such is not the ratio in Cooper Engineering Ltd.65 case. When read in the context of the propositions called out in Delhi Cloth & General Mills Co.66 case and the Firestone Tyre & Rubber Co. of India (P) Ltd.67 case, the decision in Cooper Engineering Ltd.68 case merely indicates the stage at which an opportunity is to be given but it must not be overlooked that the opportunity has to be asked for. Earlier clearcut pronouncements of the Court in R. K. Jain69 case and Delhi Cloth and General Mills Co.70 case that this right to adduce additional evidence is a right of the management or the employer and it is to be availed of by a request at appropriate stage and there is no duty in law cast on the Industrial Tribunal or the Labour Court suo moto to give such an opportunity notwithstanding the fact that none was ever asked for are not even departed from. When we examine the matter on principle we would point out that a quasi-judicial Tribunal is under no such obligation to acquaint parties appearing before it about their rights more so in an adversary system which these quasi-judicial Tribunals have adopted. Therefore, it is crystal clear that the rights which the employer has in law to adduce additional evidence in a proceeding before the Labour Court or Industrial Tribunal either under Section 10 or Section 33 of the Act questioning the legality of the order terminating service must be availed of by the employer by making a proper request at the time when it files its statement of claim or written statement or makes an application seeking either permission to take a certain action or seeking approval of the action taken by it. If such a request is made in the statement of claim, application or written statement, the Labour Court or the Industrial Tribunal must give such an opportunity. If the request is made before the proceedings are concluded the Labour Court or the Industrial Tribunal should ordinarily grant the opportunity to adduce evidence. But if no such request is made at any stage of the proceedings, there is no duty in law on the Labour Court or the Industrial Tribunal to give such an opportunity and if there is no such obligatory duty in law failure to give any such opportunity cannot and would not vitiate the proceedings. Having examined the matter on precedent it would be worthwhile to examine the matter on principle. The Labour Court or Industrial Tribunal to which either a reference under Section 10 or an application under Section 33 for permission to take an intended action or approval of an action already taken is made, would be exercising quasi-judicial powers, which would imply that a certain content of the judicial power of the State is vested in it and it is called upon to exercise it (see Bharat Bank Ltd. vs Employees of Bharat Bank Ltd ).71 A quasi-judicial decision presupposes an existing dispute between two or more parties and involves presentation of their case by the parties to the dispute and if the dispute between them is on a question of fact, the ascertainment of the fact by means of evidence adduced by the parties to the dispute and often with the assistance of arguments by or on behalf of the parties on the evidence (see Cooper vs Wilson).72 Parties are arrayed before these quasi-judicial Tribunals either upon a reference under Section 10 or Section 33. There is thus a lis between the parties. There would be assertion and denial of facts on either side. With the permission of the Tribunal and consent of the opposite side, parties are entitled to appear through legal practitioners before these quasi-judicial Tribunals. The system adopted by these Tribunals is an adversary system, a word as understood in contradistinction to the inquisitorial system. This also becomes clear from rule 10-B(1) of the Industrial

400 Social Justice and Labour Jurisprudence Disputes (Central) Rules, 1957, which provides that when a reference is made to the Labour Court or Industrial Tribunal, within two weeks of the date of receipt of the order of reference the parties representing the workmen and the employer involved in the dispute shall file with the Labour Court or the Industrial Tribunal a statement of demands relying only upon issues which are included in the order of reference and shall also forward a copy of such statement to each one of the opposite parties involved in the dispute. Sub-rule (2) provides that within two weeks of receipt of the statement referred to in sub-rule (1) the opposite party shall file its rejoinder with the Labour Court or the Industrial Tribunal as the case may be and simultaneously forward a copy thereof to the other party. Sub-rule (4) provides that the hearing of the dispute shall ordinarily be continued from day-to-day and arguments shall follow immediately after the closing of the evidence. Sub-rule (6) casts a duty on the Labour Court or the Industrial Tribunal, as the case may be, to make a memorandum of the substance of the proceedings of what the witnesses depose and such memorandum shall be written and signed by the Presiding Officer. Rule 15 confers power to admit or call for evidence. Rule 16 enables the Labour Court or Industrial Tribunal to administer oath. Rule 60 prescribes the form of application to be made under Section 33. The application has to be in Form J or K, as the case may be, and has to be on verification. The cause-title in the prescribed form requires that the applicant and the opposite party should be specifically described in the application. These forms are more or less analogous to a plaint in a suit and the reply to be filed would take more or less the form of a written statement. Where the parties are at variance for facility of disposal, issues will have to be framed. It is open to it to frame an issue and dispose it of as a preliminary issue as held in M/s. Dalmia Dadri Cement Ltd. vs Its Workmen.73 Parties have to lead evidence. Section 11-C confers power of a civil court under the Code of Civil Procedure on the Labour Court or Industrial Tribunal in respect of matters therein specified. The Labour Court or Tribunal would then proceed to decide the lis between the parties. It has to decide the lis on the evidence adduced before it. While it may not be hide bound by the rules prescribed in the Evidence Act it is nonetheless a quasi-judicial Tribunal proceeding to adjudicate upon a lis between the parties arrayed before it and must decide the matter on the evidence produced by the parties before it. It would not be open to it to decide the lis on any extraneous considerations. Justice, equity and good conscience will inform its adjudication. Therefore, the Labour Court or the Industrial Tribunal has all the trappings of a Court. If such be the duties and functions of the Industrial Tribunal or the Labour Court, any party appearing before it must make a claim or demur the claim of the other side and when there is a burden upon it to prove or establish the fact so as to invite a decision in its favour, it has to lead evidence. The quasi-judicial tribunal is not required to advise the party either about its rights or what it should do or omit to do. Obligation to lead evidence to establish an allegation made by a party is on the party making the allegation. The test would be who would fail if no evidence is led. It must seek an opportunity to lead evidence and lead evidence. A contention to substantiate which evidence is necessary has to be pleaded. If there is no pleading raising a contention there is no question of substantiating such a non-existing contention by evidence. It is well settled that allegation which is not pleaded, even if there is evidence in support of it, cannot be examined because the other side has no notice of it and if entertained it would be tantamount to granting an unfair advantage to the first mentioned party. We are not unmindful of the fact that pleadings before such bodies have not to be read strictly, but it is equally true that the pleadings must be such as to give sufficient notice to the other party of the case it is called upon to meet. This view expressed in Tin Printers (Private) Ltd. vs Industrial Tribunal,74 commends to us. The rules of fair play demand where a party seeks to establish a contention which if proved would be sufficient to deny relief to the opposite side, such a contention has to be specifically pleaded and then proved. But if there is no pleading there is no question of proving something which is not pleaded. This is very elementary.

Change of Service Conditions 401 Can it for a moment be suggested that this elementary principle does not inform industrial adjudication? The answer must be an emphatic ‘no’. The employer terminates the services of a workman. That termination raises an industrial dispute either by way of an application under Section 33 of the Act by the employer or by way of a reference by the appropriate Government under Section 10. If an application is made by the employer as it is required to be made in the prescribed form all facts are required to be pleaded, if a relief is asked for in the alternative that it has to be pleaded. In an application under Section 33 the employer has to plead that a domestic enquiry has been held and it is legal and valid. In the alternative it must plead that if the Labour Court or Industrial Tribunal comes to the conclusion that either there was no enquiry or the one held was defective, the employer would adduce evidence to substantiate the charges of misconduct alleged against the workman. Now, if no such pleading is put forth either at the initial stage or during the pendency of the proceedings there arises no question of a sort of advisory role of the Labour Court or the Industrial Tribunal, unintended by the Act, to advise the employer, a party much better off than the workman, to inform it about its rights, namely, right to lead additional evidence, and then give an opportunity which was never sought. This runs counter to the grain of industrial jurisprudence. Undoubtedly, if such a pleading is raised and an opportunity is sought, it is to be given but if there is no such pleading either in the original application or in the statement of claim or written statement or by way of an application during the pendency of the proceeding there is no duty cast by law or by the rules of justice, reason and fair play that a quasi-judicial Tribunal like the Industrial Tribunal or the Labour Court should adopt an advisory role by informing the employer of its rights, namely, the right to adduce additional evidence to substantiate the charges when it failed to make good the domestic enquiry and then to give an opportunity to it to adduce additional evidence. This, apart from being unfair to the workman, is against the principles or rules governing the procedure to be adopted by quasi-judicial Tribunal, against the grain of adversary system and against the principles governing the decision of a lis between the parties arrayed before a quasi-judicial Tribunal. Having given our most anxious consideration to the question raised before us, and minutely examining the decision in Cooper Engineering Ltd.75 case to ascertain the ratio as well as the question raised both on precedent and on principle, it is undeniable that there is no duty cast on the Industrial Tribunal or the Labour Court while adjudication upon a penal termination of service of a workman either under Section 10 or under Section 33 to call upon the employer to adduce additional evidence to substantiate the charge of misconduct by giving some specific opportunity after decision on the preliminary issue whether the domestic enquiry was at all held, or if held, was defective, in favour of the workman. Cooper Engineering Ltd.76 case merely specifies the stage at which such opportunity is to be given, if sought. It is both the right and obligation of the employer, if it so chooses, to adduce additional evidence to substantiate the charges of misconduct. It is for the employer to avail of such opportunity by a specific pleading or by specific request. If such an opportunity is sought in the course of the proceeding the Industrial Tribunal or the Labour Court, as the case may be, should grant the opportunity to lead additional evidence to substantiate the charges. But if no such opportunity is sought nor there is any pleading to that effect no duty is cast on the Labour Court or the Industrial Tribunal suo moto to call upon the employer to adduce additional evidence to substantiate the charges. Viewed from this angle, in the present case there was neither a pleading in which any such claim for adducing additional evidence was made, nor any request was made before the Industrial Tribunal till the proceedings were adjourned for making the Award and till the Award was made. The case squarely falls within the ratio of Delhi Cloth and General Mills Co.77 case. Therefore, the Division Bench of the Calcutta High Court was clearly in error in granting such a nonsought opportunity at the stage of the Letters Patent Appeal. Accordingly, this appeal is allowed and the judgment of the Calcutta High Court in Letters Patent Appeal No. 80 of 1974 is set aside and the Award of the Industrial Tribunal is restored, with costs quantified at Rs 2,000.

402 Social Justice and Labour Jurisprudence

Action Amounting to Change of Conditions of Service during Pendency of Proceedings: The Amount of Relief Sub-section (2) of Section 33 empowers the employer to alter the service conditions to the prejudice of the disputing workmen during the pendency of proceedings not connected with the dispute, in accordance with the standing orders applicable to such workmen, with the approval of the authority before which the proceeding is pending in cases that relate to the discharge or dismissal of such workmen. The scope of the standing orders is very much relevant in invoking the power under this sub-section. Whether a particular action, resulting in discharge or dismissal, initiated by the employer is within the scope of the standing orders applicable in the establishment is always a question of fact or interpretation. The Supreme Court had occasion to deal with this aspect in the following case:

G.T. Lad and Others vs Chemicals and Fibres India78 This appeal by special leave was directed against the common award dated 27 February 1976 of the Industrial Tribunal, Maharashtra, Bombay, rejecting—as not maintainable—complaints Nos 48 of 1973 to 63 of 1973 made by the appellants against the respondent (hereafter referred to for brevity as ‘the Company’) under Section 33A of the Industrial Disputes Act, 1947 (hereafter called ‘the Act’) in Reference (IT) No. 336 of 1972.

THE FACTS OF THE CASE The appellants (hereafter described as ‘workmen’) were employees of the company. During the pendency of Reference 336 of 1972 before the Second Labour Court, Bombay, for adjudication of a dispute, 334 workmen of the company, including the appellants, went on an indefinite, peaceful strike with effect from 30 August 1972, pursuant to the strike notice given to the company by their registered union called ‘The Association of Chemical Workers’, in support of its demand for the reinstatement of three of the union leaders who had been dismissed by the company. On the same date, 30 August 1972, the company put up a notice stating that the strike embarked upon by the workmen was illegal and those participating in the said strike were liable to disciplinary action for misconduct as per the company’s Certified Standing Orders 22(b) and 24(a). On 7 September 1972, the company issued notices to the appellants and 10 others, asking them to report for duty on or before 18 September 1972, failing which their absence would be construed as voluntary abandonment of service and their names would be struck off the muster rolls of the company. On 19 September 1972, the company sent separate communications to the appellants and 10 others informing them that since ‘by not reporting for duty they had confirmed its presumption that they were no longer interested to continue in service of the Company and had totally abandoned the company’s service’, their names had been struck off from the rolls of the company from that date. Along with its communication, the company sent a cheque to each one of the appellants for the amount due to him on account of gratuity, leave salary, and one month’s salary in lieu of notice. On 26 September 1972, the appellants wrote to the company returning the cheques sent by the company and stating that its letter dated 7 September 1972, which had reached them only on 20 September 1972, had already been replied to by a letter dated 21 September 1972, stating that they were interested in the service of the company and had neither voluntarily abandoned the service of the company nor did they wish to do so, and that they would report for work the moment the strike was

Change of Service Conditions 403 called off by their union. On 23 October 1972, the company wrote to the appellants acknowledging their letter dated 26 September 1972, but stating therein that it did not wish to revise its earlier decision under which their names had been struck off the rolls. It is to be noted that in its letter the company did not refute the averment made by the appellants in their letter dated 26 September 1972, that the Company’s letter dated 7 September 1972, had reached them only on 20 September 1972. On the same day, 26 September 1972, the appellants’ union wrote to the Labour Commissioner, complaining of the arbitrary termination of service of 25 workmen (including the appellants) and emphasising that they had not abandoned service. On 2 October 1972, the appellants and the other striking workmen addressed letters to the works manager of the company, protesting against the action of the company in removing them from service and asserting that the said action was by way of victimisation over their participation in the strike. On 30 March 1973, the union made a formal demand calling upon the company to reinstate the appellants and others who had been removed from service on the ground that they had abandoned their service. On 19 May 1973, certain proposals for settlement were made on behalf of the employees whose services were terminated by the company and requests made to the company for the reinstatement of the appellants and 10 other workmen. On 5 July 1973, the union wrote a letter to the Assistant Commissioner of Labour, Naupada, soliciting his intervention in the dispute concerning the reinstatement of the 16 employees, including the appellants. The Assistant Commissioner thereupon summoned the parties to a discussion on 19 July 1973, but his attempts at conciliation did not bear any fruit. Thereafter, the appellants made their complaints before the industrial tribunal, with the result.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE JASWANT SINGH Appearing in support of the appeal Mr Ramamurti has vehemently urged that the action of the Company in removing the names of the appellants from its rolls was illegal and arbitrary, that the appellants had not abandoned the Company’s service, that at any rate the termination of their services could only be in terms of the Company’s standing orders and since the standing orders did not provide for treating the workmen as having abandoned service in case they were absent in connection with the notified strike, the Company’s action was manifestly illegal and invalid. Three questions arise for consideration in this case, namely: (1) What is the true meaning of the expression ‘abandonment of service’; (2) Whether in the circumstances of the case it could be said that the appellants had voluntarily abandoned the service of the Company; and (3) Whether the action of the Company in removing the names of the appellants from its rolls on the presumption that they had abandoned service would constitute a change in the conditions of service of the appellants? We will deal with these questions seriatim: Re Question No. 1: In the Act, we do not find any definition of the expression ‘abandonment of service’. In the absence of any clue as to the meaning of the said expression, we have to depend on meaning assigned to it in the dictionary of English language. In the unabridged edition of the Random House Dictionary, the word ‘abandon’ has been explained as meaning ‘to leave completely and finally; forsake utterly; to relinquish, renounce; to give up all concern in something’. According to the Dictionary of English Law by Earl Jowitt (1959 edition) ‘abandonment’ means ‘relinquishment of an interest or claim’. According to Black’s Law Dictionary, ‘abandonment’ when used in relation to an office means ‘voluntary relinquishment’. It must be total and under such circumstances as clearly to indicate an absolute relinquishment. The failure to perform

404 Social Justice and Labour Jurisprudence the duties pertaining to the office must be with actual or imputed intention, on the part of the officer to abandon and relinquish the office. The intention may be inferred from the acts and conduct of the party, and is a question of fact. Temporary absence is not ordinarily sufficient to constitute an ‘abandonment of office’. From the connotations reproduced above it clearly follows that to constitute abandonment, there must be total or complete giving up of duties so as to indicate an intention not to resume the same. In Buckingham & Carnatic Co. vs Venkatiah,79 it was observed by this Court that under common law an inference that an employee has abandoned or relinquished service is not easily drawn unless from the length of absence and from other surrounding circumstances an inference to that effect can be legitimately drawn and it can be assumed that the employee intended to abandon service. Abandonment or relinquishment of service is always a question of intention, and normally, such an intention cannot be attributed to a employee without adequate evidence in that behalf. Thus, whether there has been a voluntary abandonment of service or not is a question of fact which has to be determined in the light of the surrounding circumstances of each case. Re Question No. 2: This takes us to the consideration of the second question, namely, whether in the circumstances of the instant case, it could be said that the appellants had voluntarily abandoned the service of the Company. It may be recalled that the appellants had along with 229 other workmen gone on indefinite and peaceful strike (which ended on 22 October 1972) in response to the strike notice given by the union to the Company to press its demand for reinstatement of its three dismissed leaders and had not only by their letters dated 21 September 1972 and September 26, 1972 unequivocally intimated to the Company that they did not intend to abandon the service but had also returned the cheques sent to them by the Company on account of their leave salary, gratuity, etc. The appellants’ stand that the letter of the Company dated 7 September 1972 was received by them on 20 September 1972 and not earlier was never denied or refuted by the Company in the correspondence that passed between the parties. Thus, there was nothing in the surrounding circumstances or the conduct of the appellants indicating or suggesting an intention on their part to abandon service which in view of the ratio of Gopal Chandra Misra80 case, can be legitimately said to mean to detach, unfasten, undo or untie the binding knot or link which holds one to the office and the obligations and privileges that go with it. Their absence from duty was purely temporary and could, by no stretch of imagination, be construed as voluntary abandonment by them of the Company’s service. In Express Newspapers (P) Limited vs Michael Marx,81 which is on all fours with the present case, it was held that if the employees absent themselves from the work because of strike in enforcement of their demands, there can be no question of abandonment of employment by them. In the present case also, the appellants’ absence from duty was because of their peaceful strike to enforce their demand. Accordingly, we are of the view that there was no abandonment of service on the part of the appellants. Re Question No. 3: Let us now advert to the last but the most crucial question, namely, whether the action of the Company in removing the names of the appellants from its rolls during the pendency of the proceedings before the Labour Court in respect of the industrial dispute on the presumption that they had abandoned Company’s service constituted an alteration in the conditions of service applicable to them immediately before the commencement of the said proceedings which prejudiciously affected them. Although the learned Counsel appearing on behalf of the respondent has taken us through the certified standing orders as applicable to the appellants, he has not been able to point out anything therein to indicate that the Company could terminate the services of the appellants on the ground of abandonment of service because of their going on strike in enforcement of their demands. Thus, there being no provision in the certified standing orders by virtue of which the Company could have terminated the services of the appellants in the aforesaid circumstances, the impugned action on the part of the Company

Change of Service Conditions 405 clearly amounted to a change in the conditions of service of the appellants during the admitted pendency of the industrial dispute before the Labour Court which adversely affected them and could not be countenanced. We are fortified in this view by the aforesaid decision of this Court in Express Newspapers (P) Limited vs Michael Mark,82 where repelling an identical contention to the effect that the failure of the workmen to return to work by a notified date clearly implied abandonment of their employment, it was held that the management cannot, by imposing a new terms of employment, unilaterally convert the absence of work into abandonment of employment. It was further held in that decision that if the strike was in fact illegal, the management could take disciplinary action against the employees under the standing orders and dismiss them. If that were done, the strikers would not have been entitled to any compensation under standing orders but that was not what the appellants purported to do and the respondents were, therefore, entitled to relief. For the foregoing reasons, we are unable to uphold the impugned action of the Company and the award under appeal which are manifestly illegal. In the result, we allow the appeal, set aside the aforesaid award of the Industrial Tribunal and direct the Company to reinstate the appellants. The appellants shall also be entitled to the costs of appeal. A point which requires to be clarified and has been brought to the notice of the Court after the judgment was delivered relates to back wages from 19 September 1972 to the date of reinstatement. The rule in such cases is that where reinstatement has been directed by the Court, the entire back wages must follow as a matter of course. Of course there is a discretion in the Court having regard to special circumstances if any to modify this normal rule. In the present case the period stretches over six years and Shri Sachin Chaudhary brings to our notice the fact that back wages have to be computed, if ordered in full, on a much higher scale because of two settlements which have raised the scales of wages substantially. While there is no case specifically put forward that the workmen concerned have been employed elsewhere during this period, still we take a total view of the whole case and direct that for the entire period from 1972 to the date of reinstatement, 75 per cent of the wages will be paid to all the workmen concerned on the scales and revised scales as the case may be.

NOTES 1.

Section 9A of the Act provides that: 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: Provided that no notice shall be required for effecting any such change— (a) where the change is effected in pursuance of any settlement or award; or (b) where the workmen likely to be affected by the change are persons to which the Fundamental and Supplementary Rules, Civil Service (Classification, Control and Appeal) Rules, Civil Services (Temporary Service) Rules, Revised Leave Rules, Civil Services Regulations, Civilians in Defence Services (Classification, Control and Appeal) Rules or the Indian Railway Establishment Code, or any other rules or regulations that may be notified in this behalf by the appropriate Government in the Official Gazette, apply.

2.

Section 33 of the Act provides that: (1) During the pendency of any conciliation proceeding before a conciliation officer or a Board or of any proceeding before an Arbitrator or a Labour Court or Tribunal or National Tribunal in respect of an industrial dispute, no employer shall—

406 Social Justice and Labour Jurisprudence (a) regard to any matter connected with the dispute, alter, to the prejudice of the workmen concerned in such dispute, the conditions of service applicable to them immediately before the commencement of such proceeding; or (b) for any misconduct connected with the dispute, discharge or punish, whether by dismissal or otherwise, any workmen concerned in such dispute, save with the express permission in writing of the authority before which the proceeding is pending; (2) During the pendency of any such proceeding in respect to an industrial dispute, the employer may, in accordance with standing orders applicable to a workman concerned in such dispute or where there is no such standing orders, in accordance with the terms of the contract, whether express or implied, between him and the workman— (a) alter, in regard to any matter not connected with the dispute, the conditions of service applicable to that workman immediately before the commencement of such proceeding; or (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. (3) Notwithstanding anything contained in sub-section (2) no employer shall, during the pendency of any such proceeding in respect of any industrial dispute, take any action against any protected workman concerned in such dispute— (a) by altering, to the prejudice of such protected workman, the conditions of service applicable to him immediately before the commencement of such proceedings; or (b) by discharging or punishing, whether by dismissal or otherwise, such protected workman, save with the express permission in writing of the authority before which the proceeding is pending. Explanation: For the purposes of this sub-section a ‘protected workman’ in relation to an establishment, means a workman who, being a member of the executive or other office bearer of a registered trade union connected with the establishment, is recognized as such in accordance with rules made in this behalf. (4) In every establishment, the number of workmen to be recognized as protected workmen for the purposes of sub-section (3) shall be one per cent of the total number of workmen employed therein subject to a minimum number of five protected workmen and a maximum number of one hundred protected workmen and for the aforesaid purpose, the appropriate government may make rules providing for the distribution of such protected workmen among various trade unions, if any, connected with the establishment and the manner in which the workmen may be chosen and recognized as protected workmen. (5) Where an employer makes an application to a conciliation officer, Board, an Arbitrator, a Labour Court, Tribunal or National Tribunal under the proviso to sub-section (2) for approval of the action taken by him, the authority concerned shall, without delay, hear such application and pass within a period of three months from the date of receipt of such application, such order in relation thereto as it deems fit: Provided that where any such authority considers it necessary or expedient so to do, it may, for reasons to be recorded in writing, extend such period by such further periods as it may think fit: Provided further that no proceedings before any such authority shall lapse merely on the ground that any period specified in this sub-section had expired without such proceedings being completed. Further Section 33A provides that where an employer contravenes the provisions of Section 33 during the pendency of proceedings before a conciliation officer, Board, an arbitrator, Labour Court, Tribunal or National Tribunal, any employee aggrieved by such contravention may in writing make a complaint in the prescribed manner— (a) to such conciliation officer or Board, and the conciliation officer or Board shall take such complaint into account in mediating in, and promoting the settlement of, such industrial dispute; and

Change of Service Conditions 407 (b) to such arbitrator, Labour Court, Tribunal or National Tribunal and on receipt of such complaint, the said authority 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 his or its award to the appropriate Government and the provisions of this Act shall apply accordingly. 3. AIR 1975 SC 1856. The case was heard by V.R. Krishna Iyer, A.N. Ray, S. Murtaza Fazl Ali and K.K. Mathew. The majority judgement was delivered by Justice Fazl Ali. 4. (1961) 2 LLJ 526 (AP.). 5. (1969) 2 LLJ 739 SC. 6. AIR 1973 SC 968. 7. AIR 1972 SC 1156. 8. AIR 1972 SC 1917. 9. AIR 1980 SC 2124. The case was heard by V.R. Krishna Iyer and A.C. Gupta. The majority judgement was delivered by Justice V.R. Krishna Iyer. 10. AIR 1976 SC 2062. The case was heard by H.R. Khanna, V.R. Krishna Iyer and P.K. Goswame, and the majority decision was delivered by Justice Goswami. 11. For the reasons best known to the party Workman, the matter relating to the violation of Section 19 read with Section 29 was not advanced either before the Industrial Tribunal, High Court or Supreme Court. Even Supreme Court did not touch this aspect since the same perhaps was not placed before the Court. 12. AIR 1965 SC 1496. 13. (1966) II LLJ 428 (Mad). 14. (1966) II LLJ 899 (Mad). 15. AIR 1965 SC 1496. 16. AIR 1965 SC 1496. 17. AIR 1965 SC 1496. 18. AIR 1978 SC 992. The case was heard by V.R. Krishna Iyer and Jaswant Singh, JJ. The majority judgement was delivered by Justice Jaswant Singh. 19. (1963) 2 LLJ 459. 20. AIR 1958 SC 204. 21. AIR 1979 SC 1652. The case was heard by Justices V.R. Krishna Iyer, D.A. Desai and A.D. Koshal. The majority judgement was delivered by Justice D.A. Desai. 22. (1976) 1 SCR 361:1975 LIC 1441. 23. (1976) 1 SCR 361:1975 LIC 1441. 24. (1976) 1 SCR 361:AIR 1975 SC 1441. 25. (1962) 3 SCR 684. 26. AIR 1963 SC 295. 27. (1962) 3 SCR 684. 28. AIR 1965 SC 1803. 29. (1958) SCR 667:AIR 1953 SC 130. 30. AIR 1959 SC 923. 31. (1960) 1 SCR 32:AIR 1959 SC 1111. 32. (1960) 1 SCR 806:AIR 1960 SC 160. 33. (1962) 3 SCR 684. 34. (1954) Lab AC 697. 35. (1960) 1 SCR 32:AIR 1959 SC 1111. 36. (1960) 1 SCR 32:AIR 1959 SC 1111. 37. (1972) 1 SCR 755:(1972 Lab IC 13). 38. 1970 Lab IC 102. 39. 1970 Lab IC 510. 40. (1971) 22 Fac LR 370. 41. (1972) 1 SCR 755: (1972 Lab IC 13). 42. 1972 Lab IC 573. 43. (1972) 1 SCR 755: (1972 Lab IC 13). 44. (1975 Lab IC 1441) (SC). 45. 1973 Lab IC 851. 46. (1972) Lab IC 573 (SC). 47. (1975 Lab IC 1441) (SC).

408 Social Justice and Labour Jurisprudence 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82.

(1972 Lab IC 573) (SC). (1973 Lab IC 851). (1972 Lab IC 573) (SC). (1975 Lab IC 1441). (1972 Lab IC 13). (1972 Lab IC 573). (1972) 1 SCR 755:(1972 Lab IC 13). (1972) 1 SCR 755:(1972 Lab IC 13). (1972 Lab IC 573). (1975 Lab IC 1441) (SC). (1975 Lab IC 1441) (SC). (1975 Lab IC 1441) (SC). (1975 Lab IC 1441) (SC). (1975 Lab IC 1441) (SC). AIR 1963 SC 295. (1975 Lab IC 1441) (SC). AIR 1963 SC 295. (1975 Lab IC 1441) (SC). (1972 Lab IC 573) (SC). (1973 Lab IC 851) (SC). (1975 Lab IC 1441) (SC). (1972) 1 SCR 755:(1972 Lab IC 13). (1972 Lab IC 573) (SC). AIR 1950 SC 188. (1937) 2 KB 309. 1970 Lab IC 350 (Punj). (1967) 2 Lab LJ 677. 1975 Lab IC 1441. 1975 Lab IC 1441. (1972) LIC 573 SC. AIR 1979 SC 582. The case was heard by V.R. Krishna Iyer, Jaswant Singh and A.D Koshal. The majority judgement was delivered by Justice Jaswant Singh. AIR 1964 SC 1272. AIR 1978 SC 548. AIR 1963 SC 1141 (1963) 3 SCR 405:AIR 1963 SC 1141.

Chapter 11

Disciplinary Proceedings One area in the realm of the industrial law of the country that has grown up totally outside the framework of labour legislations is the law relating to ‘disciplinary proceedings’. Under the guise of ‘disciplinary proceedings’, the employer can dispense with the services of his workmen permanently. The Industrial Employment (Standing Orders) Act, 1946, and the Industrial Disputes Act, 1947, are the prime legislations that ensure security and continuity of employment for an industrial worker. This aspect is also known as the concept of ‘regulation of employment’ in industrial relations. Both these legislations are totally silent as far as the regulation of the entry point of a workman into employment is concerned. But once the workman is taken into employment by an employer, these legislations serve as a mechanism for the ‘regulation of employment’. These two legislations provide various remedies to aggrieved workmen for the redressal of their grievances against actions initiated by an employer on this score. The Industrial Employment (Standing Orders) Act, 1946, in its schedule, provides the matters to be contained in the standing orders of an establishment under the Act.1 More relevant in the context are the matters specified in items 8 and 9 of the schedule. Suspension or dismissal for misconduct and the acts and omissions which constitute misconduct are very much relevant to the matters of ‘disciplinary proceedings’. The Industrial Employment (Standing Orders) Central Rules, 1946, under rule 17, provides various acts and omissions that constitute ‘misconduct’.2 The Industrial Disputes Act, 1947, under the Second Schedule, in item 3 specifies the matters relating to the discharge or dismissal of workmen, including reinstatement of, or grant of relief to workmen wrongfully dismissed, within the jurisdiction of labour courts and industrial tribunals under the Act. Further, Section 11A of the Act provides:3 Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court, Tribunal or National Tribunal for adjudication and, in the course of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require.

The discharge or dismissal of a workman must be preceded by either the examination of the terms and conditions of employment based on which the workman is employed or a fair enquiry conducted by the employer in accordance with norms recognised thereunder.

410 Social Justice and Labour Jurisprudence

The industrial tribunals in India in the early stages only asserted themselves with this power which in fact had been approved by the higher judiciary. Since then, voluminous amounts of jurisprudence have evolved thereunder by industrial adjudication and supplemented by the higher judiciary. The law is so meticulous that even a tiny lapse on the part of the employer in affording a ‘fair hearing’ to the delinquent workman would render the whole process of the proceedings void.

Reopening of Disciplinary Proceedings: The Rule Chanan Singh vs the Registrar, Co-operative Societies, Punjab and Others4 In this case, the Supreme Court made it very clear when an aggrieved workman may approach the judiciary in the event of the initiation of disciplinary proceedings against him by his employer. THE FACTS OF THE CASE The appellant had been an employee of the second respondent. A notice was issued to him to show cause why disciplinary action should not be taken against him for certain items of misconduct imputed to him. The erstwhile secretary of the bank, Daljit Singh, enquired into the allegations. Thereafter, on 1 April 1975, the secretary issued a notice to the appellant to show cause why his next increment should not be stopped by way of punishment. A reply was sent by the appellant by way of explanation and the secretary, accepting the explanation, dropped the proceedings by the order dated 9 April 1975 (Annexure III). Thereafter, the managing director, taking the view that Daljit Singh, the secretary, had no power to inflict any punishment on the employee of the bank and that, therefore, the proceedings culminating in the exoneration of the appellant were invalid, issued a fresh memorandum, which concluded thus: After considering the said enquiry report along with other relevant documents, I am provisionally of the view to impose upon you a penalty of dismissal from bank services. Before doing so, you are asked to show cause within 21 days from the receipt of this memorandum why on account of finding of the said enquiry Officer, into the charges, you should not be dismissed from the bank service. In case no reply is received within the prescribed period, it will be presumed that you have no reply in this behalf and the proposed punishment will be imposed. The appellant was also suspended on 7 July 1975. Thereupon, a writ petition under Articles 226 and 227 was moved by the appellant, challenging the revival of the proceedings against him as illegal and opposed to natural justice.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER The first point raised in objection by the second respondent is that the writ petition is premature since no action has been taken finally against the appellant, the disciplinary proceedings

Disciplinary Proceedings 411 are still pending and the explanation of the appellant under consideration. It is only in the event of the appellant being punished that any grievance can arise for him to be agitated in the proper forum. Other obstacles in the ways of granting the appellant relief were also urged before the High Court and before us but we are not inclined to investigate them for the short reason that the writ petition was in any case premature. No punitive action has yet been taken. It is difficult to state, apart from speculation, what the outcome of the proceedings will be. In case the appellant is punished, it is certainly open to him either to file an appeal as provided in the relevant rules or to take other action that he may be advised to resort to. It is not for us, at the moment, to consider whether a writ petition will lie or whether an industrial dispute should be raised or whether an appeal to the competent authority under the rules is the proper remedy, although these are issues which merit serious consideration. We are satisfied that, enough unto the day being the evil thereof, we need not dwell on problems which do not arise in the light of the view we take that there is no present grievance of punitive action which can be ventilated in Court. After all, even the question of jurisdiction to reopen what is claimed to be a closed enquiry will, and must, be considered by the Managing Director. On this score, we dismiss the appeal but, in the circumstances, without costs. Before parting with this case, we would like to make it clear that counsel for the co-operative bank has not been able to show any power to suspend an employee pending an enquiry. If that be so, the suspension of the appellant is plainly without the pale of law and he would be entitled to his salary during the period till final orders are passed. Since the matter has been pending long enough, we are assured by counsel for the respondent that final order may be passed within one month from today.

Cases where the Act of Misconduct is Not So Serious: The Relief In cases where the alleged act of misconduct is not so serious, the Supreme Court, taking the circumstances into consideration, has summarily dispensed with the cases without even discussing the facts involved. This is what is being depicted in this case.

Kamalprasad vs the Central India Spinning Weaving and MFG Company and Another 5 EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER We heard the appeal to some extent but at an intermediate point felt that the subject matter involved only one workman and the alleged misconduct resulting in dismissal was not so serious, although he was dismissed by the Management and his dismissal though upset by the Labour Court was reversed by the Industrial Court and challenged unsuccessfully in the High Court. On a suggestion from us, counsel for the Management, Mr Bobde agrees that the respondent would pay the appellant a sum of Rs 10,000 within one month from today as an ex gratia payment. The costs which we direct the respondent to pay the appellant, the appeal being one regarding a single workman will be assessed at Rs 2,000. With these directions, we dispose of the appeal.

412 Social Justice and Labour Jurisprudence

Termination on Grounds of Loss of Confidence: Discharge Simpliciter or Discharge for Misconduct The question whether the termination of a workman by an employer amounts to discharge simpliciter or discharge for misconduct was considered by the Supreme Court in the following case.

Michael and Another vs Johnson Pumps6 The appellant Michael, a permanent employee of proved efficiency and six years’ standing, was appreciatively given two ‘merit’ increments. But a letter of 2-09-1970, told him off service giving him one month’s notice-pay discharging him with damning, as distinguished from dismissing him for misconduct. The rival versions illumine the factual confrontation, the resolution of which is no easy legal essay. The worker, Michael, through his Union, protested against the ‘sack’ order as victimisation of a trade union activist but the Management was heedless, conciliation was 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 emerges from them. 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 antagonized by his active part in the formation of an Employees’ Union, especially because oral warnings by the Regional Manager against his unionist proclivity was ignored. Michael became the treasurer of the Union. This Union chapter claimed its price, for the Management quietly terminated his services by simple letter which reads: 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 elementary principles of natural justice without assigning any reason and without giving him an opportunity to defend himself. This, in his statement, he challenged the termination as ‘wrongful, malafide, illegal, and an act of victimisation’. The counter case of the management set up in its statement, as was apparent from the discharge order, was that no dismissal was involved, no enquiry necessary and no illegality invalidates. The Management claimed that the alleged annoyance with the workman for union activity was a concoction in self-defence, as the Management had not even knowledge of the formation of the Union. This latter of limb of the plea is 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 a disciplinary action were not attracted.

Disciplinary Proceedings 413 The Management, however, took the Court into confidence to explain why the employee was discharged. He was employed as a Receipt and Despatch Clerk in the office upto 10-3-1970. As an insider with access to office correspondence the employee 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 visited 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, 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.

414 Social Justice and Labour Jurisprudence 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 Bank7 and Murugan8 through Sudder Office9 and Air India Corporation.10 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 Mills11 Wanchoo, J, 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 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 Company12 The matter then came up before this Court also in Chartered Bank vs Chartered Bank Employees Union13 and the Management of U.B. Dutt and Co. vs Workmen of U.B. Dutt and Co,14 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 the power or as a result of victimisation or unfair 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

Disciplinary Proceedings 415 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.15 The power of the Court to go behind language of the order is reaffirmed there. In Sudder Office16 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, Vaidialingam, J 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 Union17 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 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

416 Social Justice and Labour Jurisprudence 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 case18 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 case19 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 air-hostesses. 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 20 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 that he was a cantankerous person undesirable to be retained was good. We do not read the Delhi Transport case 21 to depart from Murugan Mills 22 case. Indeed the latter did not, and may be could not, overall the former. The above study of the chain of rulings brings out the futility of the contention that subsequent to Murugan Mills 23 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

Disciplinary Proceedings 417 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. It was urged by 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 there is sufficient material and it so advised, to proceed against the workman for misconduct or on other grounds valid in law. This case is an example to restrict the employer’s freedom to ‘hire and fire’ his workmen.

418 Social Justice and Labour Jurisprudence

Mass Termination without Enquiry: The Approach The power to terminate the services of workmen for indulging in acts of misconduct is without any doubt in the employer’s power, as provided under the standing orders applicable to his establishment. In some cases, though, it is an apparent fact that the delinquent workmen were involved in the act of misconduct en masse, yet the employer cannot inflict the economic death of dismissal in one stroke of a pen without holding proper enquiry in respect of each workman to prove his guilt. Justice V.R. Krishna Iyer, speaking for the majority, made this aspect amply clear in the following case.

Gujarat Steel Tubes and Others vs Gujarat Steel Tubes Mazdoor Sabha and Others 24 THE FACTS OF THE CASE An affluent Management and an indigent work force are the two wings of the Gujarat Steel Tubes Ltd. which manufactures steel tubes in the outskirts of Ahmedabad city and is scarred by an industrial dispute resulting in these appeals. This industry, started in 1960, went into production since 1964 and waggled from infancy to adulthood with smiling profits and growling workers, punctuated by smouldering demands, strikes and settlements, until there brewed a confrontation culminating in a head-on collision following upon certain unhappy happenings. A total strike ensued, whose chain reaction was a wholesale termination of all the employees, followed by fresh recruitment of workmen, de facto breakdown of the strike and dispute over restoration of the removed workmen. This cataclysmic episode and its sequel formed the basis of a Section 10A arbitration and award, a writ petition and judgment, inevitably spiralling up to this Court in two appeals—one by the Management and the other by the Union—which have been heard together and are being disposed of by this common judgment. The arbitrator held the action of the Management warranted while the High Court reversed the Award and substantially directed reinstatement.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Every litigation has a moral and, these appeals have many, the foremost being that the economics of law is the essence of labour jurisprudence. A few fundamental issues, factual and legal, on which bitter controversy raged at the bar, settle the decisional fate of this case. A plethora of precedents has been cited and volumes of evidence read for our consideration by both sides. But the jural resolution of labour disputes must be sought in the law-life complex, beyond the factual blinkers of decided cases, beneath the lexical littleness of statutory texts, in the economic basics of industrial justice which must enliven the consciousness of the court and the corpus juris. This Court has developed labour law on this broad basis and what this Court has declared holds good for the country. We must first fix the founding faith in this juristic branch before unravelling the details of the particular case. Viewing from this vantage point, it is relevant to note that the ethical roots of jurisprudence, with economic overtones, are the elan vital of any country’s legal system. So it is that we begin with two quotations—one from the Old Testament and the other from Gandhiji, the Indian New Testament—as perspective-setters. After all, industrial law must set the moral-legal norms for the modus vivendi between the partners in management, namely, Capital and Labour. Cain retorted, when asked by God about his brother Abel, in the Old Testament, ‘Am I my brother’s

Disciplinary Proceedings 419 keeper?’ ‘Yes’ was the implicit answer in God’s curse of Cain. In the fraternal economics of national production, worker is partner in this biblical spirit. In our society, Capital shall be the brother and keeper of Labour and cannot disown this obligation, especially because Social Justice and Articles 43 and 43A are constitutional mandates. Gandhiji, to whom the Arbitrator has adverted in passing in his award, way back in March 1946, wrote on Capitalism and Strikes in the Harijan: How should capital behave when labour strikes? This question is in the air and has great importance at the present moment. One way is that of suppression named or nicknamed ‘American’. It consists in suppression of labour through organised goondaism. Everybody would consider this as wrong and destructive. The other way, right and honourable, consists in considering every strike on its merits and giving labour its due not what capital considers as due, but what labour itself would so consider and enlightened public opinion acclaims as just. In my opinion, employers and employed are equal partners, even if employees are not considered superior. But what we see today is the reverse. The reason is that the employers harness intelligence on their side. They have the superior advantage which concentration of capital brings with it, and they know how to make use of it.... Whilst capital in India is fairly organised, labour is still in a more or less disorganised condition in spite of Unions and Federation. Therefore, it lacks the power that true combination gives. Hence, my advice to the employers would be that they should willingly regard workers as the real owners of the concerns which they fancy they have created.... Socialism of my Conception (M. K. Gandhi) by Anand T. Hingorani, Bhartiya Vidya Bhavan. Tuned to these values are the policy directives in Articles 39, 41, 42, 43 and 43A. They speak of the right to an adequate means of livelihood, the right to work, humane conditions of work, living wage ensuring a decent standard of life and enjoyment of leisure and participation of workers in management of industries. Dehors these mandates, law will fail functionally. Such is the value-vision of Indian Industrial Jurisprudence. The nidus of facts which enwomb the issues of law may be elaborated a little more at this stage. In the vicinity of Ahmedabad city, the appellant is a prosperous engineering enterprise which enjoys entrepreneurial excellence and employs over 800 workmen knit together into the respondent Union called the Gujarat Steel Tubes Mazdoor Sabha (the Sabha, for short). Fortunately, the industry has had an innings of escalating profits but the workmen have had a running complaint of a raw deal. Frequent demands for better conditions, followed by negotiated settlements, have been a lovely feature of this establishment, although the poignant fact remains that till the dawn of the seventies, the gross wages of the workmen have hovered around a harrowing hundred rupees or more in this thriving Ahmedabad industry. The course of this precarious coexistence was often ruffled, and there was, now and then, some flare-up leading to strike, conciliation and even reference under Section 10. When one such reference was pending, another unconnected dispute arose which, after some twists and turns, led to an industrial break-down and a total strike. The episodic stages of this bitter battle will have to be narrated at length a little later. Suffice it to say that the Management jettisoned all the 853 workmen and recruited some freshers to take their place and to keep the wheels of production moving. In the war of attrition that ensued, Labour lost and capitulated to Capital. At long last, between the two, a reference to arbitration of the disputes was agreed upon under Section 10A of the Industrial Disputes Act, 1947 (the Act for short). The highlight of the dispute referred for arbitration was whether the termination orders issued by the Management against the workmen whose names were set out in the annexure to the reference were “legal, proper and justified;” if not, whether the workmen were entitled to any reliefs including the relief of reinstatement with continuity of service and full back wages.’ The arbitrator’s decision went against the Sabha while, on a challenge under Article 226, the High Court’s judgment virtually vindicated its stand. This is the hang of the case. The substantial appeal is by the Management

420 Social Justice and Labour Jurisprudence while the Sabha has a marginal quarrel over a portion of the judgment as disclosed in its appeal. The ‘jetsam’ workmen, a few hundred in number, have been directed to be reinstated with full or partial back pay and this is the bitter bone of contention. A stage-by-stage recapitulation of the developments is important to get to grips with the core controversy. Shri Ashoke Sen, for the appellant-Management and Shri Tarkunde for the respondent— Sabha, have extensively presented their rival versions with forceful erudition. Shri R. K. Garg,— of course,— for some workmen—has invoked with passion the socialist thrust of the Constitution as a substantive submission and, as justificatory of the workmen’s demands, relied on the glaring contrast between the soaring profits and the sagging wages, while Shri Bhandare has pressed the lachrymose case of the several hundreds of ‘interregnal’ employees whose removal from service, on re-instatement of the old, might spell iniquity. Olive Branch Approach: At this stage we must disclose an effort at settlement we made with the hearty participation of Sri Asoke Sen and Sri Tarkunde at the early stages of the hearing. The golden rule for the judicial resolution of an industrial dispute is first to persuade fighting parties, by judicious suggestions, into the peace-making zone, disentangle the differences, narrow the mistrust gap and convert them, through consensual steps, into negotiated justice. Law is not the last word in justice, especially social justice. Moreover, in our hierarchical court system, the little man lives in the short run but most litigation lives in the long run. So, it is that negotiation first and adjudication next is a welcome formula for the Bench and the Bar, Management and Union. This ‘olive branch’ approach brought the parties closer in our court and gave us a better understanding of the problem, although we could not clinch a settlement. So we heard the case in depth and felt that some of the legal issues did merit this court’s declaratory pronouncement, settlement or no settlement. Mercifully counsel abbreviated their oral arguments into an eight-day exercise, sparing us the sparring marathon of 28 laborious days through which the case stretched out in the High Court. Orality ad libitum may be the genius of Victorian era advocacy but in our ‘needy’ Republic with crowded dockets, forensic brevity is a necessity. The ‘Bench and the Bar must fabricate a new Shorthand form of court methodology which will do justice to the pockets of the poor who seek right and justice and to the limited judicial hours humanly available to the court if the delivery system of justice is not to suffer absolescence. The facts: Back to the Central Facts: Proof of the ‘efficient’ management of the Gujarat Steel Tubes Ltd., is afforded by the testimony of larger turnover and profits, year after year, from the beginning down to date. The mill was commissioned in January 1964 but by the accounting year 1971–72 the turnover had leapt to Rs 560 lakhs. It soared to Rupees 680 lakhs the next year, to Rs 1,136 lakhs the year after and to Rs 20 crores in 1974–75: This enterprise entered the export trade and otherwise established itself as a premier manufactory in the line. Steel shortage is the only shackle which hampers its higher productivity. But its increasing shower of prosperity was a sharp contrast, according to Sri Garg, to the share of the wage bill. The Worker started on a magnificent sum per mensem of Rs 100 in toto even as late as 1970, although some workmen, with more service, were paid somewhat higher. The extenuatory plea of the Management, justificatory of this parsimony, was that other mill-hands were receiving more niggardly wages in comparable enterprises. Probably, unionisation, under these luridly low-paid circumstances, caught on and a workers’ union was born somewhere around 1966. A sensible stroke of enlightened capitalism persuaded the Management to enter into agreements with the Unions, somewhat improving emoluments and ameliorating conditions. By 1968, the Sabha, a later union came into being and commanded

Disciplinary Proceedings 421 the backing of all or most of the mill hands. By March, 1969, the Sabha presented a charter of demands, followed by resistance from the Management and strike by the workers. By July, 1969, a settlement with the Sabha was reached. Agreements relating to the various demands brought quiet and respite to the industry although it proved temporary. A vivid close-up of the sequence and consequence of the dramatic and traumatic events culminating in the reference to arbitration and the impugned award is essential as factual foundation for the decision of the issues. Even so, we must condense, since labyrinthine details are not needed in a third tier judgment. Broad lines with the brush bring out the effect not minute etches which encumber the picture. An agreement of futuristic import with which we may begin the confrontational chronicle is that of April 1970. Clause 6 thereof runs thus: Management of the Company agrees to implement recommendations of the Central Wage Board for Engineering Industries as and when finally declared and all the increments granted to workmen from time to time under this agreement shall be adjusted with those recommendations provided that such adjustment shall not adversely affect the wages of workmen. The engineering industry, where India is forging ahead, was apparently exploitative towards labour, and to make amends for this unhealthy position, the Central Wage Board was appointed in 1964 although it took six long years to recommend revision of wages to be implemented with effect from 1-1-1969. Meanwhile, the masses of workers were living ‘below the bread line’. Saintly patience in such a milieu was too much to expect from hungry demands and pressing for the recommendations of the Wage Board to be converted into immediate cash. But, as we will presently unravel, ‘Wage Board expectations’ were proving teasing illusions and premises of unreality because of non-implementation, viewed from the Sabha’s angle. The Management, on the other hand, had a contrary version which we will briefly consider. Luckily, agreed miniincreases in wages were taking place during the years 1970, 1971 and 1972. Likewise, bonus was also the subject of bargain and agreement. But in September 1971, an allegedly violent episode broke up the truce between the two, spawned criminal cases against workers, led to charges of go-slow tactics and lock-outs and burst into suspension, discharge and dismissal of workmen. The crisis was tided over by continued conciliations and two settlements. We are not directly concerned with the cluster of clauses therein save one 64 workmen had been discharged or dismissed, of whom half the number were agreed to be reinstated. The fate of the other half (32 workers) was left for arbitration by the Industrial Tribunal. The dark clouds cleared for a while but the sky turned murky over again, although the previous agreement had promised a long spell of normalcy. The Sabha, in October 1972, met and resolved to raise demands of which the principal ones were non-implementation of the Wage Board recommendations, bonus for 1971 and wages during the lock-out period. The primary pathology of industrial friction is attitudinal. The Management could have (and, indeed, did, with a new Union) solved these problems had they regarded the Sabha as partner, not saboteur. Had the bitter combativeness of the Sabha been moderated, may be the showdown could have been averted. Apportioning blame does not help now, but we refer to it here because Sri Ashoke Sen with feeling fury fell foul of the criticism by the High Court that the Management had acted improperly in insisting on arbitration, and argued that when parties disagreed, arbitral reference was the only answer and the workers’ fanatical rejection of arbitration made no sense. We need not delve into the details of the correspondence relied on by either side to reach the truth. For, the Union’s case is that in the prior settlement between the two parties arbitral reference came only after negotiations failed. That was why they pressed the Management to reason together, avoiding wrestling with each other before a slow-moving umpire.

422 Social Justice and Labour Jurisprudence Sri Tarkunde, for the Sabha, urged that the workmen were not intransigent but impatient and pleaded for a negotiated settlement since the main point in dispute, namely, the implementation of the Central Engineering Wage Board’s recommendations, was too plain to admit of difference, given good faith on both sides. We will examine the substance of this submission later but it needs to be emphasised that workmen, surviving on starving wages and with notoriously fragile staying power, are in no mood for adjudicatory procedures, arbitral or other, if the doors of negotiation are still ajar. The obvious reason for this attitude is that the litigative length of the adjudicatory apparatus, be it the tribunal, the court or the arbitrator, is too lethargic and long-winded for workmen without the wherewithal to survive and is beset with protracted challenges either by way of appeal upon appeal or in the shape of writ petitions and, thereafter, appeals upon appeals. The present case illustrates the point. Where workmen on hundred rupees a month demand immediate negotiation the reason is that privations have no patience beyond a point. Now and here, by negotiation, is the shop-floor clamour. In this very matter, although the controversy before the arbitrator fell within a small compass, he took a year and ninety printed pages to decide, inevitably followed by a few years and hundred and thirty printed pages of judgment in the High Court and a longer spell in this Court with slightly lesser length of judgment. Which workman under Third World conditions can withstand this wasting disease while hunger leaves no option save to do or die? Raw life, not rigid logic, is the mother of law. After the demands were raised by the Union, the main issue being implementation of the Wage Board recommendations, a stream of correspondence, meetings and inchoate settlements ensued, but the crucial question, which would have meant ‘cash and carry’ for the workman, baffled solution. Do negotiate since the application of the Wage Board recommendations are beyond ambiguity, was the Sabha’s peremptory plea. We differ; therefore, go to arbitration, was the Management’s firm response. A stalemate descended on the scene. No breakthrough being visible, the Sabha charged the Management by its letter of 25 January 1973 with breach of Clause 6 of the Agreement of 4 August 1972 which ran thus: That the parties agree that for a period of 5 years from the date of this settlement all disputes will be solved by mutual negotiations or, failing that, by joint arbitration under Section 10A of the Industrial Disputes Act, 1947. Neither party shall take any direct action including goslow, strike and lock-out for a period of 5 years from the date of this settlement. Various aspersions of anti-labour tactics were included in the Sabha’s letter but the most moneyloaded item was the grievance about the Wage Board recommendations. The temper, by now, was tense. The Management, on the same day (25 January 1973), set out its version on the notice board and the High Court’s summary of it runs thus: The notice stated that during the course of the meeting with the representatives of the Sabha held on 20 January 1973 the Company had expressed its willingness to implement the Wage Board recommendations according to its interpretation on and with effect from 1 January 1969 without prejudice to the rights and contentions of the workmen and leaving it open to the parties to take the matter to arbitration for resolution of the points of dispute. The Sabha, however, had turned down this suggestion and it came to the notice of the Company that workmen were being instigated by making false representations. The Company clarified that on and with effect from 1 January 1972 every workman would be entitled to the benefits of Wage Board recommendations, irrespective of whether the concerned workman had put in 240 days attendance. The Sabha’s answer was a strike two days later. This event of January 27 was countered quickly by the Management restating its attitude on the Wage Board recommendations, asserting that

Disciplinary Proceedings 423 the strike was illegal and in breach of the settlement of 4 August 1972 and wholly unjustified because the offer of reference to arbitration, negotiations failing, had been spurned by the Sabha. The notice wound up with a command and a caveat: If the workmen do not immediately resume duty, the Company would not be under any obligation to continue in service those 32 workmen who have been taken back in service pursuant to the settlement dated 4 August 1972. Besides, if (the workmen) continue causing loss to the Company from time to time in this manner, the Company will not also be bound to implement the Wage Board recommendations on and with effect from 1 January 1969, which may also be noted. The Company hereby withdraws all its proposals unless the workmen withdraw the strike and resume work within two days. This threat was dismissed by the workmen as a brutum fulmen and the strike continued. The Management, therefore, came up on the notice board castigating the Sabha with irresponsible obduracy in waging an illegal and unjustified strike. A warning of the shape of things to come was given in this notice; the High Court has summed it up thus: The Company gave intimation that in view of such obstinate attitude on the part of the Sabha and the Workmen, it had decided to withdraw its earlier offer to implement the Wage Board recommendations on and with effect from 1 January 1969 as already cautioned in the notice dated 27 January 1973. The said decision must be taken to have been thereby communicated to the workmen and Sabha. The notice further stated that having regard to the obdurate, unreasonable and illegal attitude adopted by the workmen and Sabha, the Company had decided to take disciplinary proceedings against the defaulting workmen. In this connection, the attention of the workmen was drawn to the fact that the strike was illegal not only because of the terms of the settlement dated 4 August 1972 but also because of the pendency of the reference relating to reinstatement of 32 workmen before the Industrial Court and, that, therefore, the Company was entitled to take disciplinary action against them. Finally, the Company appealed to the workmen to withdraw their illegal and unjustified strike forthwith and to resume work. These exercises notwithstanding, the strike raged undaunted, the production was paralysed and the Management retaliated by an elaborate notice which dilated on its preparedness to negotiate or arbitrate and the Sabha’s unreason in rejecting this gesture and persisting on the war path. The stern economic sanction was brought home in a critical paragraph: By this final notice the workmen are informed that they should withdraw the strike and resume work before Thursday, 15 February 1973. If the workmen resume duty accordingly, the management would be still willing to pay salary according to the recommendations of the Wage Board on and with effect from 1 January 1969. Furthermore, the management is ready and willing to refer to the arbitration of the Industrial Tribunal the question as to whether the management has implemented the settlement dated 4 August 1972 and all other labour problems. In spite of this, if the workmen do not resume duty before Thursday, 15 February 1973, then the Company will terminate the services of all workmen who are on strike and thereafter it will run the factory by employing new workmen. All workmen may take note of this fact. The count-down thus began. 15 February 1973 arrived, and the Management struck the fatal blow of discharging the strikers—all the labour force, 853 strong—and recruiting fresh hands unless work was resumed by 19 February 1973.

424 Social Justice and Labour Jurisprudence This public notice was allegedly sent to the Sabha and circulated to such workmen as hovered around the factory, It is common case that the notice of 15 February 1973, was not sent to individual workmen but was a signal for action. The drastic consequence of disobedience was spelt out in no uncertain terms: The workmen are hereby informed that they should resume duty on or before Monday, 19 February 1973 failing which the Management will presume that the workmen want to continue their strike and do not wish to resume work until their demands as aforesaid are accepted by the management. Parallel negotiations were going on even while mailed fist manoeuvres were being played up—thanks to the basic goodwill and tradition of dispute settlements that existed in this company. Even amidst the clash of arms, bilateral diplomacy has a place in successful industrial relations. The Management and the Sabha allowed the talks to continue which, at any rate, clarified the area of discord. One thing that stood out of these palavers was that both sides affirmed the precondition of negotiations before arbitration over differences although the content, accent and connotation of ‘negotiations’ varied with each side. No tangible results flowed from these exercises and the inevitable happened on 21 February 1973 when the Management blotted out the entire lot of 853 workmen from the roster, by separate orders of discharge from service, couched in identical terms. The essential terms read thus: Your services are hereby terminated by giving you one month’s salary in lieu of one month’s notice and accordingly you are discharged from service. You should collect immediately from the cashier of the factory your one month’s notice-pay and due pay, leave entitlements and gratuity, if you are entitled to the same. The payment will be made between 12 noon and 5 p.m. If and when you desire to be employed, you may apply in writing to the Company in that behalf and on receipt of the application, a reply will be sent to you in the matter. Casual workmen were issued separate but similar orders. The Management did record its reasons for the action taken, on 20 February 1973 and forwarded them to the Sabha and to the individual workmen on request. The anatomy of this proceeding is of critical importance in deciding the character of the action. Was it a harmless farewell to the workmen who were unwilling to rejoin or a condign punishment of delinquent workmen? The separate memorandum of reasons refers to the strike as illegal and unjustified and narrates the hostile history of assault by workmen of the officers, their go-slow tactics and sabotage activities, their contumacious conduct and a host of other perversities vindicating the drastic action of determining the services of all the employees. The concluding portion reads partly stern and partly non committal: In the interest of the Company it is decided to terminate the services of all the workmen who are on illegal and unjustified strike since 27th January, 1973. Under the circumstances, it is decided that the services of all the workmen who are on illegal and unjustified strike should be terminated by way of discharge simpliciter. These workmen, however, may be given opportunity to apply for employment in the Company and in case applications are received for employment from such employees, such applications may be considered on their merits later on. It may be mentioned here that while arriving at the aforesaid decision to terminate the services of the workmen, various documents, notices, correspondence with the Union and others, records of production, etc. have been considered and therefore the same are treated as part of the relevant evidence to come to the conclusion as aforesaid.

Disciplinary Proceedings 425 Final Conclusion: The services of all the workmen who are on illegal and unjustified strike since 27-1-1973 should be terminated by way of discharge simpliciter and they should be offered all their legal dues immediately. The Administrative Manager is hereby directed to pass orders on individual workers as per draft attached. We thus reach the tragic crescendo when the Management and the workmen fell apart and all the workmen’s services were severed. Whether each of these orders using, in the contemporaneous reasons, the vocabulary of misconduct but, in the formal part, the expression ‘discharge simpliciter’, should be read softly as innocent termination or sternly as penal action, is one of the principal disputes demanding decision. We may as well complete the procession of events before taking up the major controversies decisive of the case. The total termination of the entire work force of 853 employees was undoubtedly a calamity of the first magnitude in a country of chronic unemployment and starving wages. Nevertheless, under certain circumstances, discharge of employees may well be within the powers of the Management subject to the provisions of the Act. With all the strikers struck off the rolls there was for a time the silence of the grave. The conditional invitation to the employees to seek de novo employment by fresh applications which would be considered on their merits, left the workers cold. So the factory remained closed until 28 April 1973 when, with new workers recruited from the open market, production recommenced. Among the militants, the morale which kept the strike going, remained intact but among the others the pressure to report for employment became strong. Re-employment of discharged workmen began and slowly snowballed, so that by 31 July 1973 a substantial number of 419 returned to the factory. The crack of workmen’s morale was accelerated by escalating re-employment and the Management’s restoration of continuity of service and other benefits for re-employed hands. The employer relied on this gesture as proof of his bona fides. Meanwhile, there were exchanges of letters between and ‘trading’ of charges against each other. The Management alleged that the strikers were violent and prevented loyalists’ return while the Sabha was bitter that goondas were hired to break the strike and promote blacklegs. These imputations have a familiar ring and their impact on the legality of the discharge of workmen falls for consideration a little later. The stream of events flowed on. The Sabha protested that the Management was terrorising workmen, exploiting their sagging spirit and illegally insisting on fresh applications for employment while they were in law continuing in services. With more ‘old workers’ trickling back for work and their discharge orders being cancelled, the strike became counter-productive. Many overtures on both sides were made through letters but this epistolary futility failed to end the embroglio and brought no bread. The worker wanted bread, job, and no pyrrhic victory. A crescent of hope appeared on the industrial sky. The Management put out a ‘final offer’ on 31 May 1973, calling on all workmen to rejoin lest the remaining vacancies also should be filled by fresh recruits. The Sabha responded with readiness to settle and sought some clarifications and assurances. The employer informed: Our offer is open till 10-6-1973. From 11-6-1973 we shall recruit new hands to the extent necessary. Thereafter workers who will not have reported for work shall have no chance left for re-employment with us. We repeat that those workers who will report for work will be taken back in employment with continuity of their services, that the orders of discharge passed against them on 21-2-1973 shall be treated as cancelled and they will also be paid the difference in wages from 1969 as per the recommendations of the Wage Board.

426 Social Justice and Labour Jurisprudence The Sabha was willing and wrote back on 8 June 1973 but sought details about the attitude of the Management to the many pending demands. Meanwhile, the sands of time were running out and so the Sabha telegraphed on 9th June that the workers were willing to report for work but were being refused work. They demanded the presence of an impartial observer. The reply by the Management repelled these charges, but there was some thaw in the estrangement, since the time for return to work of the strikers was extended up to 16-6-73. An apparent end to a long strike was seemingly in sight with the Sabha sore but driven to surrender. On 13-6-73 the Sabha Secretary wrote back: This is a further opportunity to you even now to show your bona fides. If you confirm to take all the workmen discharged on 21-2-1973 as stated in your various letters and to give them intimation and reasonable time to join, I will see that your offer is accepted by the workmen. Here, at long last, was the Management willing to ‘welcome’ back all the former employees and the Sabha limping back to the old wheels of work. Was the curtain being finally drawn on the feud? Not so soon, in a world of bad blood and bad faith; or may be, new developments make old offers obsolete and the expected end proves an illusion. Anyway, the victor was the Management and the vanquished the Sabha and the re-employment proffered was watered down. In our materialist cosmos, often Might is Right and victory dictates morality! Hot upon the receipt of the Sabha’s letter accepting the offer the Management back-tracked or had second thoughts on full re-employment. For, they replied with a long catalogue of the Sabha’s sins, set out the story of compulsion to keep the production going and explained that since new hands had come on the scene full re-employment was beyond them. In its new mood of victorious righteousness, the Management modified the terms of intake of strikers and saddled choosy conditions on such absorption suggestive of breaking the Sabha’s solidarity: As on the present working of the Company, the Company may still need about 250 more workers including those to be on the casual list as per the employment position prior to the start of the strike. Yon may, therefore, send to us immediately per return of post the list of the workers who can and are willing to join duty immediately so as to enable us to select and employ the workmen as per the requirement of the Company. Further, it would also be necessary for you to state in your reply that you have called off the strike and have advised the workers to resume the work as otherwise it is not clear from your letter as to whether you are still advocating the continuance of the strike or that you have called off the strike. Therefore, unless we have a very definite stand known from you on this issue, it may not be even now possible for us to enter into any correspondence with you. We may again stress that if your tactics of prolonging the issue by correspondence are continued the management would be constrained to take new recruits and in that case, at a later date it may not be even possible to employ as many workmen as may be possible to employ now.” Nothing is more galling, says Sri Tarkunde, than for a Union which has lost the battle and offered to go back to work to be told that it should further humiliate itself by formally declaring the calling off of the strike. Sentiment apart, the Sabha had agreed to go back, but then the management cut down the number to be re-employed to 250 and, even this, on a selective basis. This selection could well be to weed out Union activists or to drive a wedge among the Union members. These sensitive thoughts and hard bargains kept the two apart. The Sabha, wounded but not wiped out, did not eat the humble pie. The Management, on account of the intervening recruitments and injuries inflicted by the strike, did not budge either.

Disciplinary Proceedings 427 At this point we find that out of 853 employees who had been sacked 419 had wandered back by July 31, leaving 434 workmen as flotsam. Their reinstatement became the focus of an industrial dispute raised by the Sabha. A few more were left out of this jobless mass, and through the intercession of the Commissioner of Labour both sides agreed to resolve their disagreement by arbitral reference under Section 10A of the Act, confining the dispute to reinstatement of 400 workmen discharged on 21 February 1973. A reference under Section 10A materialised. The ‘Labour litigation’ began in May 1975 and becoming ‘at each remove a lengthening chain’ laboured from deck to deck and is coming to a close, hopefully, by this decision. Is legal justice at such expensive length worth the candle or counterproductive of social justice? Is a streamlined alternative beyond the creative genius of Law India? An Aside: As urgent as an industrial revolution is an industrial law revolution, if the rule of law were at all to serve as social engineering. The current forensic process needs thorough overhaul because it is over-judicialised and under-professionalised, lacking in social orientation and shop-floor knowhow and, by its sheer slow motion and high price, defeats effective and equitable solution leaving both Managements and Unions unhappy. If Parliament would heed, we stress this need. Industrial Justice desiderates specialised processual expertise and agencies. This factual panorama, omitting a welter of debatable details and wealth of exciting embellishments, being not germane to the essential issues, leads us to a formulation of the decisive questions which alone need engage our discussion. The Management might have been right in its version or the Sabha might have been wronged as it wails, but an objective assessment of the proven facts and unbiased application of the declared law will yield the broad basis for working out a just and legal solution. Here, it must be noticed that a new Union now exists even though its numerical following is perhaps slender. We are not concerned whether it is the favoured child of the Management, although it has received soft treatment in several settlements which have somewhat benefited the whole work force and suggests a syndrome not unfamiliar among some industrial bosses allergic to strong unions. The central problem on the answer to which either the award of the arbitrator or the judgment of the High Court can be sustained as sound is whether the discharge of the workmen en masse was an innocuous termination or a disciplinary action. If the latter, the High Court’s reasoning may broadly be invulnerable. Secondly, what has been mooted before us is a question as to whether the evidence before the Arbitrator even if accepted at its face value, establishes any misconduct of any discharged workman and further whether the misconduct, if any, made out is of such degree as to warrant punitive discharge. Of course, the scope of Section 11A as including arbitrators, the power of arbitrators, given sufficiently wide terms of reference, to examine the correctness and propriety of the punishment, inter alia, deserve examination. Likewise the rules regarding reinstatement, retrenchment, back wages and the like, fall for subsidiary consideration. Prefatory to this discussion is the appreciation or the constitutional consciousness with regard to Labour Law. The Constitution of India is not a non-aligned parchment but a partisan of social justice with a direction and destination which it sets in the Preamble and Article 38, and so, when we read the evidence, the rulings, the statute and the rival pleas we must be guided by the value set of the Constitution. We not only appraise Industrial Law from this perspective in the disputes before us but also realise that ours is a mixed economy with capitalist mores, only slowly wobbling towards a socialist order, notwithstanding Sri Garg’s thoughts. And, 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’. The new jurisprudence in industrial relations must prudently be tuned to the wave-length of our constitutional values whose emphatic expression is found in a passage quoted by Chief Justice Rajamannar of the Madras High Court. The learned Judge observed: [Law and the People—A Collection of Essays by V.R. Krishna Iyer, p. 36].

428 Social Justice and Labour Jurisprudence The doctrine of ‘laissez faire’ which held sway in the world since the time of Adam Smith has practically given place to a doctrine which emphasises the duty of the State to interfere in the affairs of individuals in the interests of the social well-being of the entire community. As Julian Huxley remarks in his essay on ‘Economic Man and Social Man’, Many of our old ideas must be retranslated, so to speak, into a new language. The democratic idea of freedom, for instance, must lose its nineteenth century meaning of individual liberty in the economic sphere, and become adjusted to new conception of social duties and responsibilities. When a big employer talks about his democratic rights to individual freedom, meaning thereby a claim to socially irresponsible control over a huge industrial concern and over the lives of tens of thousands of human beings whom it happens to employ, he is talking in a dying language. Homo economicus can no longer warp the social order. Even so the Constitution is ambitiously called socialist but realists will agree that a socialist transformation of the law of labour relations is a slow though steady judicial desideratum. Until specific legislative mandates emerge from Parliament the court may mould the old but not make the new law. ‘Interstitially, from the molar to the molecular’ is the limited legislative role of the court; as Justice Holmes said and Mr Justice Mathew quoted. The Core Question: Right at the forefront falls the issue whether the orders of discharge are, as contended by Sri Tarkunde, de facto dismissals, punitive in impact and, therefore, liable to be voided if the procedural imperatives for such disciplinary action are not complied with, even though draped in silken phrases like ‘termination simpliciter’. It is common case that none of the processes implicit in natural justice and mandated by the relevant standing orders have been complied with, were we to construe the orders impugned as punishment by way of discharge or dismissal. But Sri Asoke Sen impressively insists that the orders here are simple terminations with no punitive component, as, on their face, the orders read. To interpret otherwise is to deny to the employer the right, not to dismiss but to discharge, when the law gives him the option. An analysis of the standing orders in the background of disciplinary jurisprudence is necessitous at this point of the case. The Model Standing Orders prescribed under Section 15 of the Industrial Employment (Standing Orders) Act, 1946 apply to this factory. Order 23, clauses (1) and (4), relate to termination of employment of permanent workmen. Termination of their services on giving the prescribed notice or wages in lieu of such notice is provided for. But clause (4A) requires reasons for such termination of service of permanent workmen to be recorded and, if asked for, communicated, This is obviously intended to discover the real reason for the discharge so that remedies available may not be defeated by clever phraseology of orders of termination. Clause (7) permits the services of non-permanent workmen to be terminated without notice except when such temporary workmen are discharged by way of punishment. Punitive discharge is prohibited unless opportunity to show cause against charges of misconduct is afforded (Standing Order 25). Orders of termination of service have to be by the Manager and in writing and copies of Orders shall be furnished to the workmen concerned. Standing Order 24 itemises the acts and omissions which amount to misconduct: According to clause (b) of the said Standing Order, going on an illegal strike or abetting, inciting, instigating or acting in furtherance thereof amount to misconduct. Standing Order 25 provides for penalty imposable on a workman guilty of misconduct. Accordingly amongst other punishments, a workman could be visited with the penalty of discharge under Order 23 or dismissal without notice for a misconduct (see sub-clauses [f ] and [g] of clause [1]). Clause (3) provides that no order of dismissal under sub-clause (g) of Clause (1) shall be made except after holding an enquiry against the workmen concerned in respect of the alleged

Disciplinary Proceedings 429 misconduct in the manner set forth in clause (4). Clause (4) provides for giving to the concerned workman a charge-sheet and an opportunity to answer the charge and the right to be defended by a workman working in the same department as himself and production of witnesses and cross-examination of witnesses on whom the charge rests. Under clause (6), in awarding punishment the Manager has to take into account the gravity of the misconduct, the previous record, if any, of the workman, and any other extenuating or aggravating circumstances. The finding of the arbitrator that the workmen went on a strike which was illegal and in which they had participated is not disputed. In this background, the application of the procedural imperatives before termination of services of the workmen, in the circumstances of the present case, has to be judged. This, in turn, depends on the key finding as to whether the discharge orders issued by the management were punitive or non-penal. The anatomy of a dismissal order is not a mystery, once we agree that substance, not semblance, governs the decision. Legal criteria are not so slippery that verbal manipulations may outwit the court. Broadly stated, the face is the index to the mind and an order fair on its face may be taken at its face value. But there is more to it than that, because sometimes words are designed to conceal deeds by linguistic engineering. So it is beyond dispute that the form of the order, or the language in which it is couched is not conclusive. The court will lift the veil to see the true nature of the order. Many situations arise where courts have been puzzled because the manifest language of the termination order is equivocal or misleading and dismissals have been dressed up as simple termination. And so, judges have delved into distinctions between the motive and the foundation of the order and a variety of other variations to discover the true effect of an order of termination. Rulings are a maze on this question but, in sum, the conclusion is clear. If two factors co-exist, an inference of punishment is reasonable though not inevitable. What are they? If the severance of service is effected, the first condition is fulfilled and if the foundation or causa causans of such severance is the servant’s misconduct the second is fulfilled. If the basis or foundation for the order of termination is clearly not turpitudinous or stigmatic or rooted in misconduct or visited with evil pecuniary effects, then the inference of dismissal stands negated and vice versa. These canons run right through the disciplinary branch of master and servant jurisprudence, both under Article 311 and in other cases including workmen under managements. The law cannot be stultified by verbal haberdashery because the court will lift the mask and discover the true face. It is true that decisions of this court and of the High Courts since Dhingra’s 25 case have been at times obscure, if cited dehors the full facts. In Samsher Singh’s 26 case the unsatisfactory state of the law was commented upon by one of us, per Krishna Iyer, J., quoting Dr. Tripathi for support: In some cases, the rule of guidance has been stated to be ‘the substance of the matter’ and the ‘foundation’ of the order. When does ‘motive’ trespass into ‘foundation’. When do we lift the veil of form to touch the ‘substance’? When the Court says so. These ‘Freudian’ frontiers obviously fail in the work-a-day world and Dr Tripathi’s observations in this context are not without force. He says: As already explained, in a situation where the order of termination purports to be a mere order of discharge without stating the stigmatizing results of the departmental enquiry a search for the ‘substance of the matter’ will be indistinguishable from a search for the motive (real unrevealed object) of the order. Failure to appreciate this relationship between motive (the real, but unrevealed object) and form (the apparent; or officially revealed object) in the present context has led to an unreal inter-play of words and phrases wherein symbols like ‘motive’, ‘substance’ ‘form’ or ‘direct’ parade in different combinations without communicating precise situations or entities in the world of facts.

430 Social Justice and Labour Jurisprudence The need, in this branch of jurisprudence, is not so much to reach perfect justice but to lay down a plain test which the administrator and civil servant can understand without subtlety and apply without difficulty. After all, between ‘unsuitability’ and ‘misconduct’ thin partitions do their bounds divide’. And over the years, in the rulings of this Court the accent has shifted, the canons have varied and predictability has proved difficult because the play of legal light and shade has been baffling. The learned Chief Justice has in his judgment, tackled this problem and explained the rule which must govern the determination of the question as to when termination of service of a probationer can be said to amount to discharge simpliciter and when it can be said to amount to punishment so as to attract the inhibition of Article 311. Masters and servants cannot be permitted to play hide and seek with the law of dismissals and the plain and proper criteria are not to be misdirected by terminological cover-ups or by appeal to psychic processes but must be grounded on the substantive reason for the order, whether disclosed or undisclosed. The Court will find out from other proceedings or documents connected with the formal order of termination what the true ground for the termination is. If, thus scrutinised, the order has a punitive flavour in cause or consequence, it is dismissal. If it falls short of this test, it cannot be called a punishment. To put it slightly differently, a termination effected because the master is satisfied of the misconduct and of the consequent desirability of terminating the service of the delinquent servant, it is a dismissal, even if he had the right in law to terminate with an innocent order under the standing order or otherwise. Whether, in such a case the grounds are recorded in a different proceeding from the formal order does not detract from its nature. Nor the fact that, after being satisfied of the guilt, the master abandons the enquiry and proceeds to terminate. Given an alleged misconduct and a live nexus between it and the termination of service the conclusion is dismissal, even if full benefits as on simple termination, are given and non-injurious terminology is used. On the contrary, even if there is suspicion of misconduct the master may say that he does not wish to bother about it and may not go into his guilt but may feel like not keeping a man he is not happy with. He may not like to investigate nor take the risk of continuing a dubious servant. Then it is not dismissal but termination simpliciter, if no injurious record of reasons or punitive pecuniary cut-back on his full terminal benefits is found. For, in fact, misconduct is not then the moving factor in the discharge. We need not chase other hypothetical situations here. What is decisive is the plain reason for the discharge, not the strategy of a non-enquiry or clever avoidance of stigmatising epithets. If the basis is not misconduct, the order is saved. In Murugan Mills27 this Court observed: 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 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 Carnatic Co. Ltd. vs Workers of the Co.28 The matter then came up before this Court also in Chartered Bank vs Chartered Bank Employees’ Union 29 and the Management of U.B. Dutt and Co. vs Workmen of U.B. Dutt and Co.,30 wherein the view taken by 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 the power or as a result of victimisation or unfair 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 the power or was a result of victimisation

Disciplinary Proceedings 431 or 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. Again, in Chartered Bank vs Employees’ Union31 this Court emphasised: ...The form of the order of termination is not conclusive of the true nature of the order, for it is possible that the form may be merely a camouflage for an order of misconduct. It is, therefore, always open to the Tribunal to go behind the form and look at the substance and if it comes to the conclusion, for example, that though in form the order amounts to termination simpliciter, it in reality cloaks a dismissal for misconduct, it will be open to it to set it aside as a colourable exercise of the power. A rain of rulings merely adds to the volume, not to the weight of the proposition, and so we desist from citing all of them. A Bench of seven judges of this Court considered this precise point in Shamsher Singh’s32 case, and Chief Justice Ray ruled: The form of the order is not decisive as to whether the order is by way of punishment. Even an innocuously worded order terminating the service may in the facts and circumstances of the case establish that an enquiry into allegations of serious and grave character of misconduct involving stigma has been made in infraction of the provision of Article 811. In such a case the simplicity of the form of the order will not give any sanctity. That is exactly what has happened in the case of Ishwar Chand Agarwal. The Order of termination is illegal and must be set aside. Simple Termination or Punitive Discharge? We must scan the present order of discharge of 853 workmen and ask the right questions to decide whether they are punishments or innocent terminations. Neither judicial naiveté nor managerial ingenuity will put the court off the track of truth. What, then, are the diagnostic factors in the orders under study? An isolated reading of the formal notices terminating their services reveals no stigma, no penalty, and no misconduct. They have just been told off. But the Management admits that as required by the Standing Orders it has recorded reasons for the discharge. There, several pages of damnatory conduct have been heaped on the workers collectively accounting for the resort of the Management to the extreme step of discharging the whole lot, there being no alternative. Sri A.K. Sen took us through the various appeals made by the Management, the losses sustained, the many offers to negotiate and arbitrate, the Sabha’s deaf obduracy and resort to sudden strike and violent tactics and, worst of all, its attempts to persuade the Central Government to take over the factory as a ‘sick’ mill. These ordeals were described by Sri Asoke Sen graphically to justify the submission that the Management had no choice, caught between Scylla of strike and Charybdis of take over, but to get rid of the strikers and recruit new workers. If the employer did not discharge the strikers they were adamant and would not return to work, and the very closure compelled by the Sabha was being abused by it to tell the Central Government that for three months there had been no production and so the mill qualified to be taken over as ‘sick’ under the Industries (Development and Regulation) Act. If the Management discharged the workers to facilitate fresh recruitment and save the factory from statutory takeover the cry was raised that the action was dismissal because an elaborate enquiry was not held. The Management had avoided injury to the workmen, argued Sri Sen, by merely terminating their services without resort to disciplinary action and recording the uncomplimentary grounds in a separate invisible order. He also underscored the fact that the strike was illegal and unjustified, as concurrently held by the Arbitrator and the High Court. We agree that industrial law promotes industrial life, not industrial death, and realism is the soul of legal dynamics. Any doctrine that destroys industrial progress interlaced with social justice

432 Social Justice and Labour Jurisprudence is lethal juristic and cannot be accepted. Each side has its own version of the role of the other which we must consider before holding either guilty. Sri Tarkunde told us the tale of woe of the workmen. In a country where the despair of Government is appalling unemployment it is a terrible tragedy to put to economic death 853 workmen. And for what? For insisting that the pittance of Rs 100 per month be raised in terms of the Central Wage Board recommendations, as long ago agreed to by the Management but put off by the tantalising but treacherous offer of arbitration when the point admitted of easy negotiated solution. Arbitration looks nice, but, since 1969, the hungry families have been yearning for a morsel more, he urged. Blood, toil, sweat and tears for the workers and all the profits and production for the Management was the industrial irony! Knowing that every arbitral or other adjudicatory agency in India, especially when weak Labour is pitted against strong Capital in the sophisticated processual system, consumes considerable time, the lowly working class is allergic to this dilatory offer of arbitration. They just don’t survive to eat the fruits. Such was his case. The story of violence was also refuted by Sri Tarkunde, since the boot was on the other leg. Goondas were hired by the Management to sabotage the fundamental right to strike and with broken hearts several of them surrendered. When at last, the Sabha agreed to see that all workmen reported for work within the extended time, the Management took to the typical tactics of victimisation, of refusing work for all, as first offered, and of picking and choosing even for the 250 vacancies. Moreover, other conditions were put upon the Sabha calculated to break unionism which those familiar with trade union movements would painfully appreciate. This insult and injury apart, the orders of termination were plainly dismissals for a series of alleged misconducts which were chronicled in separate proceedings. The formal order was like a decree, the grounds recorded contemporaneously were like the judgment, to use court vocabulary. It was obvious that the foundation for the termination was the catena of charges set out by the Management. The true character of the order could not be hidden by the unfair device of keeping a separate record and omitting it from the formal communication. Law is not such an ass as yet and if the intent and effect is damnatory the action is disciplinary. Between these two competing cases, presented by counsel, we have to gravitate towards the correct factual-legal conclusion. A number of peripheral controversies have been omitted from this statement, for brevity’s sake. When two high tribunals have spread out the pros and cons it is supererogation for this court to essay likewise, and miniaturization is a wise husbandry of judicial resources. First, we must decide whether the order of termination was a punitive discharge or a simple discharge. Here we reach the dilemma of the law for discovering unfailing guidelines to distinguish between discharge simpliciter and dismissal sinister. The search for infallible formulae is vain and only pragmatic humanism can help navigate towards just solutions. We have earlier explained that from Dhingra’s 33 case, to Shamsher Singh’s34 case, the law has been dithering but some rough and ready rules can be decocted to serve in most situations. Law, in this area, is a pragmatist, not a philologist, and we have set out the dual diagnostic tests applicable in such cases. It was not retrenchment, according to the Management. Then what was it? If there was work to be done, why terminate services of workmen except as punishment? Because, argued Sri Sen, the workers did not work, being on strike and the Management, bent on keeping the factory going, needed workmen who work. To recruit fresh hands into the lists and to keep the old hands on the roster was double burden, and, therefore, the strikers had to be eased out to yield place to new recruits. The object was not to punish the workmen but to keep the factory working. Accepting this plea, as it were, the award of the arbitrator has exonerated the Management of the charge of dismissal while the High Court has held the action to be dismissal for misconduct and therefore bad in law. In our opinion, the facts of the case before us speak for themselves. Here are workmen, on strike. The strike is illegal. The Management is hurt because production is paralysed. The strikers allegedly indulge in objectionable activities. The exasperated Management hits back by ordering

Disciplinary Proceedings 433 their discharge for reasons set out in several pages in the appropriate contemporaneous proceeding. Misconduct after misconduct is flung on the workers to justify the drastic action. In all conscience and common sense, the discharge is the punishment for the misconduct. The Management minces no words. What is explicitly stated, is not a colourless farewell to make way for fresh hands to work the factory until the strike is settled but a hard hitting order with grounds of guilt and penalty of removal. The inference is inevitable, however ingenious the contrary argument, that precisely because the Management found the workmen refractory in their misconduct they were sacked. Maybe the Management had no other way of working the factory but that did not change the character of the action taken. Once we hold the discharge punitive the necessary consequence is that enquiry before punishment was admittedly obligatory and confessedly not undertaken. The orders were bad on this score alone. Sri A.K. Sen urged that in a dismissal the employee is denied some of the retiral and other benefits which he gets in a simple discharge, and here all the employees were offered their full monetary benefits, so that it was wrong to classify the orders of discharge as punitive. Maybe, a dismissed servant may well be disentitled to some, at least, of the financial benefits which his counterpart who is simply discharged may draw. But that is not a conclusive test. Otherwise, the master may ‘cashier’ his servant and camouflage it by offering full retiral benefits. Dismissal is not discharge plus a price. The substance of the action is the litmus test. In the present case, the penal core, ‘tied in tooth and claw’, shows up once we probe: and the non-committal frame of the formal order is a disguise. For a poor workman loss of his job is a heavy penalty when inflicted for alleged misconduct, for he is so hungry that, in Gandhiji’s expressive words, he sees God Himself in a loaf of bread. Before we leave this part of the case, a reference to some industrial law aspects and cases may be apposite though a little repetitive. Standing orders certified for an industrial undertaking or the Model Standing Orders framed under the Industrial Employment Standing Orders Act provide for discharge simpliciter, a term understood in contradistinction to punitive discharge or discharge by way of penalty. It is not unknown that an employer resorts to camouflage by garbing or cloaking a punitive discharge in the innocuous words of discharge simpliciter. Courts have to interpose in order to ascertain whether the discharge is one simpliciter or a punitive discharge, and in doing so, the veil of language is lifted and the realities perceived. In the initial stages the controversy raised was whether the court/tribunal had any jurisdiction to lift such a veil. Probe and penetrate so as to reveal the reality, but this controversy has been set at rest by the decision in Western India Automobile Association vs Industrial Tribunal, Bombay.35 The wide scope of the jurisdiction of industrial tribunal/court in this behalf is now well established. If standing orders or the terms of contract permit the employer to terminate the services of his employee by discharge simpliciter without assigning reasons, it would be open to him to take recourse to the said term or condition and terminate the services of his employee but when the validity of such termination is challenged in industrial adjudication it would be competent to the industrial tribunal to enquire whether the impugned discharge has been effected in the bona fide exercise of the power conferred by the terms of employment. If the discharge has been ordered by the employer in bona fide exercise of his power, then the industrial tribunal may not interfere with it; but the words used in the order of discharge and the form which it may have taken are not conclusive in the matter and the industrial tribunal would be entitled to go behind the words and form and decide whether the discharge is a discharge simpliciter or not. If it appears that the purported exercise of power to terminate the services of the employee was in fact the result of the misconduct alleged against him, then the tribunal would be justified in dealing with the dispute on the basis that, despite its appearance to the contrary, the order of discharge is in effect an order of dismissal. In the exercise of this power, the court/tribunal would be entitled to interfere with the order in question, (see Assam Oil Co. vs Its Workmen).36 In the matter of an order of discharge of an employee as understood within the meaning of the

434 Social Justice and Labour Jurisprudence Industrial Disputes Act the form of the order and the language in which it is couched are not decisive. If the industrial court is satisfied that the order of discharge is punitive or that it amounts to victimisation or unfair labour practice it is competent to the court/tribunal to set aside the order in a proper case and direct reinstatement of the employee (see Tata Oil Mills Co. Ltd. vs Workmen).37 The form used for terminating the service is not conclusive and the tribunal has jurisdiction to enquire into the reasons which led to such termination. In the facts of the case it was found that Standing Orders provided that an employee could ask for reasons for discharge in the case of discharge simpliciter. Those reasons were given before the tribunal by the appellant, viz., that the respondent’s services were terminated because he deliberately resorted to go-slow and was negligent in the discharge of his duty. It was accordingly held that the services of the employee were terminated for dereliction of duty and go-slow in his work which clearly amounted to punishment for misconduct and, therefore, to pass an order under clause 17(a) of the Standing Orders permitting discharge simpliciter in such circumstances was clearly a colourable exercise of power to terminate services of a workman under the provisions of the Standing Orders. In these circumstances, the tribunal would be justified in going behind the order and deciding for itself whether the termination of the respondent’s services could be sustained (vide Management of Murugan Mills Ltd. vs Industrial Tribunal, Madras38). This view was affirmed in Tata Engineering and Locomotive Co. Ltd. vs S.C. Prasad.39 After approving the ratio in Murugan Mills40 case, this Court in L. Michael vs Johnson Pumps India Ltd.41 observed that the manner of dressing up an order did not matter. The slightly different observation in Workmen of Sudder Office Cinnamare vs Management,42 was explained by the Court and it was further affirmed that since the decision of this Court in Chartered Bank vs Chartered Bank Employees’ Union,43 it has taken the consistent view that if the termination of service is a colourable exercise of power vested in the management or is a result of victimisation or unfair labour practice, the court/tribunal would have jurisdiction to intervene and set aside such termination. It was urged that a different view was taken by this Court in Municipal Corporation of Greater Bombay vs P. S. Malvenkar.44 The employee in that case was discharged from service by paying one month’s wages in lieu of notice. This action was challenged by the employee before the Labour Court and it was contended that it was a punitive discharge. The Corporation contended that under Standing Order No. 26 the Corporation had the power to discharge but there was an obligation to give reasons if so demanded by the employee. The Corporation had also the power to discharge by way of punishment. The Court in this connection observed as under: Now one thing must be borne in mind that these are two distinct and independent powers and as far as possible neither should be construed so as to emasculate the other or to render it ineffective. One is the power to punish an employee for misconduct while the other is the power to terminate simpliciter the service of an employee without any other adverse consequence. Now, proviso (i) to clause (1) of Standing Order 26 requires that the reason for termination of the employment should be given in writing to the employee when exercising the power of termination of service of the employee under Standing Order 26. Therefore, when the service of an employee is terminated simpliciter under Standing Order 26, the reason for such termination has to be given to the employee and this provision has been made in the Standing Order with a view to ensuring that the management does not act in an arbitrary manner. The management is required to articulate the reason which operated on its mind in terminating the service of the employee. But merely because the reason for terminating the service of the employee is required to be given and the reason must obviously not be arbitrary, capricious or irrelevant—it would not necessarily in every case make the order of termination punitive in character so as to require compliance with the requirement of clause (2) of Standing Order 21 read with Standing Order 23. Otherwise, the power of termination of service of an employee under Standing Order 26 would be rendered meaningless and futile, for in no case it would be possible to exercise it. Of course if misconduct of the employee constitutes the

Disciplinary Proceedings 435 foundation for terminating his service, then even if the order of termination is purported to be made under Standing Order 26, it may be liable to be regarded as punitive in character attracting the procedure of clause (2) of Standing Order 21 read with Standing Order 23, though even in such a case it may be argued that the management has not punished the employee but has merely terminated his service under Standing Order 26. It does not purport to run counter to the established ratio that the form of the order is not decisive and the Court can lift the veil. However, it may be noted that there was an alternative contention before the Court that even if the order of discharge was considered punitive in character, the employer corporation had led evidence before the Labour Court to substantiate the charge of misconduct and that finding was also affirmed. We are satisfied that the Management, whatever its motives vis-à-vis keeping the stream of production flowing, did remove from service, on punitive grounds, all the 853 workmen. The law is trite that the Management may still ask for an opportunity to make out a case for dismissal before the Tribunal. The refinements of industrial law in this branch need not detain us because the arbitrator did investigate and hold that the workmen were guilty of misconduct and the ‘sentence’ of dismissal was merited, even as the High Court did reappraise and reach, on both counts, the reverse conclusion. The more serious question is whether the arbitrator had the plenitude of power to re-examine the punishment imposed by the Management, even if he disagreed with its severity. In this case the arbitrator expressed himself as concurring with the punishment. But if he had disagreed, as the High Court, in his place did, could be have interfered? Armed with the language of Section 11A, which confers wide original power to the tribunal to re-fix the ‘sentence’, Sri Sen argued that an arbitrator was uncovered by this new Section. So, even if he would, he would not. And, in this case if he could, he would not. There the matter ended, was the argument. We disagree. Even if he could, he would not, true; but that did not preclude the High Court from reviewing the order in exercise of its extraordinary constitutional power. Moreover, Section 11A did clothe the arbitrator with similar power as tribunals, despite the doubt created by the abstruse absence of specific mention of ‘arbitrator’ in Section 11A. This position needs closer examination and turns on interpretational limitations. At this stage, to facilitate the discussion, we may read the provision: Section 11A: Where an industrial dispute relating to the discharge or dismissal of a workman has been referred to a Labour Court. Tribunal or National Tribunal for adjudication and, in the course of the adjudication proceedings, the Labour Court, Tribunal or National Tribunal, as the case may be, is satisfied that the order of discharge or dismissal was not justified, it may, by its award, set aside the order of discharge or dismissal and direct reinstatement of the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman on such terms and conditions, if any, as it thinks fit, or give such other relief to the workman, including the award of any lesser punishment in lieu of discharge or dismissal as the circumstances of the case may require; Provided that in any proceeding under this section the Labour Court, Tribunal or National Tribunal as the case may be, shall rely on the materials on record and shall not take any fresh evidence in relation to the matter. Section 11A was introduced in purported implementation of the I.L.O. recommendation which expressly referred, inter alia to arbitrators. The Statement of Objects and Reasons which illumines the words of the legislative text when it is half-lit, even if it cannot directly supplement the Section, does speak of the I.L.O. recommendations and, in terms of tribunals and arbitrators. When it came to drafting Section 11A the word ‘arbitrator’ was missing. Was this of deliberate legislative design to deprive arbitrators, who discharge identical functions as tribunals under the

436 Social Justice and Labour Jurisprudence Industrial Disputes Act, of some vital powers which vested in their tribunal brethren? For what mystic purpose could such distinction be? Functionally, tribunals and arbitrators belong to the same brood. The entire scheme, from its I.L.O. genesis, through the Objects and Reasons, fit in only with arbitrators being covered by Section 11A, unless Parliament cheated itself and the nation by proclaiming a great purpose essential to industrial justice and, for no rhyme or reason and wittingly or unwittingly, withdrawing one vital word. Every reason for clothing tribunals with Section 11A powers applies a fortiori to arbitrators. Then why omit? Could it be synoptic omission which did not affect the semantics because a tribunal, in its wider connotation, embraced every adjudicatory organ including an arbitrator? An economy of words is a legislative risk before a judiciary accustomed to the Anglo-Saxon meticulousness in drafting. We may easily see meaning by one construction. A ‘tribunal’ is merely a seat of justice or a judicial body with 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, difference by speaking of tribunals and national tribunals. So we see no ground 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, not mutilates, furthers the expressed purpose, not hampers by narrow literality. Section 2(r) defines Tribunal thus: ‘Tribunal’ means an Industrial Tribunal constituted under Section 7A and includes an Industrial Tribunal constituted before the 10th day of March, 1957, under this Act; Prima facie it is a different category from arbitrators but all statutory definitions are subject to contextual changes. It is perfectly open to the court to give the natural meaning to a word defined in the 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. Then what is the natural meaning of the expression Tribunal”? A tribunal literally means a seat of justice. Maybe, justice is dispensed by a quasi-judicial body, an arbitrator, a commission, a court or other adjudicatory organ created by the State. All these are tribunals and naturally the import of the word embraces an arbitration tribunal. Stroud’s Judicial Dictionary (Vol. 4, p. 3093) speaks of ‘tribunal’ in this wider sense and quoted Fry, L.J. in Dawkins v. Rokeby,45 Affirmed, (1875) 7 HL 744: I accept that, with this qualification that I do not like the word ‘tribunal’. The word is ambiguous, because it has not like ‘courts’ any ascertainable meaning in English law (Royal Acquarium vs Parkinson, [1892] 1 QB 431, cited Court). There is a reference to the Bishop’s Commission of enquiry as a judicial tribunal and, significantly, specific mention has been made in these terms. Disputes between employers and employees are referred to such tribunals as the Civil Service Arbitration Tribunal, National Arbitration Tribunal and the Industrial Disputes Tribunal. (Stroud’s Judicial Dictionary, p. 3094). We have hardly any doubt that ‘tribunal’ simpliciter has a sweeping signification and does not exclude ‘arbitrator’. Here we come upon a fundamental dilemma of interpretative technology vis-à-vis the judicative faculty. What are the limits of statutory construction? Does creativity in his jurisprudential area permit travel into semantic engineering as substitute for verbalism? It is increasingly important

Disciplinary Proceedings 437 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 ferreting out flaws in the draftsman, once the object and effect are plain. Judges may not be too ‘Anglophonic’ lest the system fail. It is edifying to recall from Robert Stevens’ Law and Politics of the House of Lords as a judicial body: Moreover, Macmillan, who began to specialize in the increasingly frequent tax appeals, continued to develop this highly artificial approach. In Inland Revenue Commrs. vs Ayrshire Employers Mutual Insurance Association,46 when Parliament had clearly intended to make the annual surpluses of mutual insurance companies subject to tax, Macmillan found a particularly formalistic argument to show that this had not been the effect of Section 31 of the Finance Act of 1933. He was then happily able to announce, ‘The Legislature has plainly missed fire.’47 Of this decision Lord Diplock was later to say that ‘if, as in this case, the Courts can identify the target of Parliamentary legislation their proper function is to see that it is hit; not merely to record that it has been missed. Here is judicial legislation at its worst.’ Sir Kenneth Diplock—The Courts as Legislators, 10. We would rather adopt Lord Diplock’s thought and have the court help hit the legislative target, within limits, than sigh relief that the legislative fire has missed the bull’s eye. Of course, the social philosophy of the Constitution has, as ruled by this court in several cases, a role in interpretative enlightenment and judicial value vision. We may reinforce this liberal rule of statutory construction, being a matter of importance in the daily work of the Court, by reference even to Roman Law from Justinian’s days 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.’48 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’.49 ‘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.’50 Plowden pointed out that ‘when the words of a statute enact one thing, they enact all other things which are in the like degree.’51 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. ‘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......And it often happens that when you know the letter, you know not the sense, for sometimes the sense is more confined and contracted than the letter, and sometimes it is more large and extensive.’52 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,53 the U.S. 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

438 Social Justice and Labour Jurisprudence 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’. In the present case, as the narration of the facts unfolded, the reference of the dispute was to an arbitrator. He reinvestigated and reassessed the evidence bearing on the guilt of the discharged workmen after giving an opportunity to both sides to adduce evidence thereon. Admittedly, he had this power. But had he the follow-up power, if he held the men guilty of punitive misconduct, to reweigh the quantum of punishment having regard to the degree of culpability? This jurisdiction he enjoys if Section 11A includes ‘arbitrators’. This, in turn, flows from our inference as to whether the word ‘tribunal’ takes in an adjudicatory organ like the arbitrator. It is plain that the expression ‘arbitrator’ is not expressly mentioned in Section 11A. Nevertheless, if the meaning of the word tribunal’ is wider rather than narrower, it will embrace arbitrator as well. That is how the dynamics of interpretation are, in one sense, decisive of the fate of the present appeal. Competing interpretative angles have contended for judicial acceptance. English preferences apart, Indian sociolegal conditions must decide the choice in each situation. Sometimes Judges are prone to castigate creative interpretation in preference to petrified literality by stating that Judges declare the law and cannot make law. The reply to this frozen faith is best borne out by Lord Radcliffe’s blunt words: There was never a more sterile controversy than that upon the question whether a judge makes law. Of course he does. How can he help it?... Judicial law is always a reinterpretation of principles in the light of new combinations of facts... ( J)udges do not reverse principles, once well established, but they do modify them, extend them, restrict them and even deny their application to the combination in hand.54 Lord Devlin in his “Samples of Lawmaking”, agreed that Judges are fashioners of law, if not creators out of material supplied to them and went on to observe: If the House of Lords did not treat itself as bound by its own decisions, it might do its own lopping and pruning... and perhaps even a little grafting, instead of leaving all that to the legislature. But it could not greatly alter the shape of the tree.55 Even so eminent a Judge as Lord Reid leaned to the view that the law should be developed since it was not static and, in this limited sense, Judges are lawmakers although this view prevented ‘technical minded Judges (from pressing) precedents to their logical conclusions’.56 On the whole, a just and humanist interpretative technique, meaning permitting, is the best. We do not mean to conclude that Judges can take liberties with language ad libitum and it is wholesome to be cautious as Lord Reid in Shaw vs D.P.P.,57 warned: ‘Where Parliament fears to tread it is not for the courts to rush in’. We are persuaded that there is much to learn from Lord Denning’s consistent refrain about the inevitable creative element in the judicial process in the interpretative area. We permit ourselves a quote from Lord Denning because Shri A.K. Sen did draw our attention to straightening the creases as permissible but not stitching the cloth, making a critical reference to the controversial activism of which Lord Denning was a leading light: The truth is that the law is uncertain. It does not cover all the situations that may arise. Time and again practitioners and judges are faced with new situations where the decision may go either way. No one can tell what the law is until the courts decide it. The Judges do

Disciplinary Proceedings 439 everyday make law, though it is almost heresy to say so. If the truth is recognised then we may hope to escape from the dead hand of the past and consciously mould new principles to meet the needs of the present. Mr Justice Mathew in Kesavananda Bharti’s58 case referred with approval—and so do we—to the observations of Justice Holmes:59 I recognize without hesitation that judges do and must legislate, but they can do so only interstitially; they are contined from molar to molecular motions. Arthur Selwyn Miller writes; ‘Some have called it (the Supreme Court) the highest legislative chamber in the nation. Although there is no question that the Court can and does make law, and does so routinely....’60 Assuming the above approach to be too creatively novel for traditionalism, let us approach the same problem from a conventional angle authenticated by case-law. The question of construction of Section 11A was argued at length, as to whether an omission of any reference to arbitrator appointed under Section 10A in Section 11A would suggest that the arbitrator under Section 10A, notwithstanding the terms of reference, would not enjoy the power conferred on all conceivable industrial adjudicators under Section 11A. It was said, after referring to the Objects and Reasons in respect of the bill which was moved to enact Section 11A in the Industrial Disputes Act, that while the I.L.O. had indicated that an arbitrator selected by the parties for adjudication of industrial dispute must be invested with power by appropriate legislation as found in Section 11A, the Parliament, while enacting the section in its wisdom, did not include the arbitrator even though other adjudicators of industrial disputes have been conferred such power and, therefore, it is a case of casus omissus. Reliance was placed on Gladstone vs Bower,61 where the question arose whether a reference to a tenancy from year to year in Section 2 (1) of the Agricultural Holdings Act, 1948 would also cover a tenancy for 18 months which could be terminated at the end of the first year. The submission was that even though no notice was necessary at common law because the tenancy would automatically terminate at the expiry of the specified period of tenancy, the tenancy took effect as tenancy from year to year by virtue of Section 2(1) of the Act so that it continued until terminated by notice to quit and, therefore the landlord was not entitled to possession without notice. It was further contended that if a tenancy from year to year was to get the protection of the Act it is inconceivable that tenancy for a longer duration would not qualify for that protection. Court of Appeal negatived this contention holding that this is a case simply of casus omissus and the Act is defective. The court further held that if it were ever permissible for the Court to repair a defective Act of Parliament, the Court would be very glad to do so in this case so far as the Court could. The Court will always allow the intention of a statute to override the defects of wording but the Court’s ability to do so is limited by the recognised canons of interpretation. The Court may, for example, prefer an alternative construction which is less well fitted to the words but better fitted to the intention of the Act. But here, for the reasons given by the learned Judge, there is no alternative construction; it is simply a case of something being overlooked. The Court cannot legislate for a casus omissus. To do so would be to usurp the function of the legislature (see Magor & St. Mellons Rural District Council vs Newport Corporation).62 Where the Statute’s meaning is clear and explicit, words cannot be interpolated. Even where the meaning of the statute is clear and sensible, either with or without the omitted word, interpolation is improper, since the primary source of the legislative intent is in the language of the statute (see Crawford’s Construction of Statutes, 1940 Edn., p. 269 extracted in S. Narayanaswami vs G. Panneerselvam, AIR 1972 SC 2284, para 20). Undoubtedly, the Court cannot put into the Act words which are not expressed, and which cannot reasonably be implied on any recognised principles of construction. That would be a work of legislation, not of construction, and outside the province of the Court (see Kamalaranjan vs Secy., of State).63 Similarly, where

440 Social Justice and Labour Jurisprudence the words of the statute are clear it would not be open to the Court in order to obtain a desired result either to omit or add to the words of the statute. This is not the function of the Court charged with a duty of construction. This approach has, however, undergone a sea change as expressed by Denning, L.J. in Seaford Court Estates Ltd. vs Asher,64 wherein he observed as under: 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. Approved in State of Bihar vs Dr Asis Kumar Mukherjee.65 The old order changeth, yielding place to new. This long excursion has become important because, once in a while, social legislation which requires sharing of social philosophy between the Parliament and the Judiciary meets with its Waterloo in the higher courts because the true role of interpretation shifts from Judge to Judge. We are clearly of the view that statutory construction which 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 industrial legislation which develops from day to day in the growing economy of India. The necessary conclusion from this discussion is that the expression ‘tribunal’ includes, in the statutory setting, an arbitrator also. Contemporaneous para-legislative material may legitimately be consulted when a word of wider import and of marginal obscurity needs to be interpreted. So viewed, we are not in a ‘sound-proof system’ and the I.L.O. recommendation accepted by India and the Object and Reasons of the amending Act leave no doubt about the sense, policy and purpose. Therefore Section 11A applies to the arbitrator in the present case and he has the power to examine whether the punishment imposed in the instant case is excessive. So has the High Court, if the Award suffers from a fundamental flaw. A study of the lengthy award discloses no mention of Section 11A, and presumably, the authority was unmindful of that provision while rendering the verdict. In a limited sense, even prior to Section 11A, there was jurisdiction for a labour tribunal, including an arbitrator, to go into the punitive aspect of the Management’s order. This Court has, in a catena of cases, held that a mala fide punishment is bad in law and when the punishment is grotesquely condign or perversely harsh or glaringly discriminatory, an easy inference of bad faith, unfair labour practice or victimisation arises. The wider power to examine or prescribe the correct punishment belongs to the tribunal/arbitrator even under Section 11 if no enquiry (or a defective enquiry which is bad and, therefore, can be equated with a ‘no enquiry’ situation) has been held by the Management. For, then, there is no extant order of guilt or punishment and the tribunal determines it afresh. In such a virgin situation both culpability and quantification of punishment are within the jurisdiction of the tribunal/arbitrator. The present is such a case. Volleys of rulings from both sides were fired during arguments, the target being the limited area of the tribunal’s power to overturn the quantum of punishment awarded by the Management. We do not think it necessary to regurgitate all that has been said by this Court up to now, since it is sufficient to bring out the correct law in the light of the leading citations. It is incontrovertible that where, as here, no enquiry has been held by the Management, entire subject is at large and both guilt and punishment, in equal measure, may be determined, without inhibition of jurisdiction, by the tribunal.

Disciplinary Proceedings 441 Lastly, as rightly urged by counsel for the Sabha, an arbitrator has all the powers the terms of reference, to which both sides are party, confer. Here, admittedly, the reference is very widely worded and includes the nature of the punishment. The law and the facts do not call for further elaboration and we hold that, in any view the arbitrator had the authority to investigate into the propriety of the discharge and the veracity of the misconduct. Even if Section 11A is not applicable, an Arbitrator under Section 10A is bound to act in the spirit of the legislation under which he is to function. A commercial arbitrator who derives his jurisdiction from the terms of reference will by necessary implication, be bound to decide according to law and, when one says ‘according to law’, it only means existing law and the law laid down by the Supreme Court being the law of the land, an Arbitrator under Section 10A will have to decide keeping in view the spirit of Section 11A (see Union of India vs Bungo Steel Furniture Pvt. Ltd.).66 The jurisdictional hurdles being thus cleared, we may handle the basic facts and the divergencies between the Arbitrator and the High Court before moulding the final relief. 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. But in the present case, both before the arbitrator and High Court, the parties have proceeded, on the agreed footing that the strike was illegal under Section 23 (a). We do not reopen the issue at this late stage and assume the illegality of the strike. The Fatal Flaw in the Award: The Achilles heel of the arbitrator’s award is where he makes, as a substitute for specific and individuated findings of guilt and appropriate penalty vis-a-vis each workman, a wholesale survey of the march of events, from tension to breakdown, from fair settlement to illegal and unjustified strike, from futility of negotiation to readiness for arbitration, from offer of full reemployment to partial taking back on application by workmen in sack cloth and ashes, by picking and choosing after a humble declaration that the strike has been formally buried, from episodes of violence and paralysis of production to backstage manoeuvres to get the factory taken over as a ‘sick mill’, and after a full glimpse of this scenario, holds that the Sabha was always in the wrong, and inevitably, the Management was surely reasonable and, ergo, every employee must individually bear the cross of misconduct and suffer dismissal for the sins of the Sabha leadership— its secretary was not an employee of the mill—by some sub-conscious doctrine of guilt by association! Non Sequitur. Each link in the chain of facts has been challenged by the respondents but let us assume them to be true, to test the strength of the legal fibre of the verdict. (We may mention by way of aside, that the Company seems to be a well managed one.) The cardinal distinction in our punitive jurisprudence between a commission or enquiry and a Court of Adjudication, between the cumulative causes of a calamity and the specific guilt of a particular person, is that speaking generally, we have rejected, as a nation, the theory of community guilt and collective punishment and instead that no man shall be punished except for his own guilt. Its reflection in the disciplinary jurisdiction is that no worker shall be dismissed save on proof of his individual delinquency. Blanket attainder of a bulk of citizens on any vicarious theory for the gross sins of some only, is easy to apply but obnoxious in principle. Here, the arbitrator has found the Sabha Leadership perverse, held that the strikers should have reasonably reported for work and concluded that the Management had for survival, to make-do with new recruits. Therefore what?

442 Social Justice and Labour Jurisprudence What, at long last, is the answer to the only pertinent question in a disciplinary proceeding viz. what is the specific misconduct against the particular workman who is to lose his job and what is his punitive desert? Here you can’t generalise any more than a sessions judge can, by holding a faction responsible for a massacre, sentence every denizen of that faction’s village to death penalty. The legal error is fundamental, although lay instinct may not be outraged. What did worker A do? Did he join the strike or remain at home for fear of vengeance against blacklegs in a para-violent situation? Life and limb are dearer than loyalty, to the common run of men, and discretion is the better part of valour. Surely, the Sabha complained of Management’s goondas and the latter sought police aid against the unruly core of strikers. In between, the ordinary rustic workmen might not have desired to be branded blacklegs or become martyrs and would not have reported for work. If not being heroic in daring to break through the strike cordon— illegal though the strike be—were misconduct, the conclusion would have been different. Not reporting for work does not lead to an irrebuttable presumption of active participation in the strike. More is needed to bring home the mens rea and that burden is on the prosecutor, to wit the Management. Huddling together the eventful history of deteriorating industrial relations and perverse leadership of the Sabha is no charge against a single worker whose job is at stake on dismissal. What did he do? Even when lawyers did go on strike in the higher Courts or organize a boycott, legally or illegally, even top law officers of the Central Govt. did not attend court, argued Shri Tarkunde, and if they did not boycott but merely did not attend, could workers beneath the bread line be made of sterner stuff. There is force in this pragmatic approach. The strike being illegal is a non-issue at this level. The focus is on active participation. Mere absence, without more, may not compel the conclusion of involvement. Likewise, the further blot on the strike, of being unjustified, even if true, cuts no ice. Unjustified, let us assume; so what? The real question is, did the individual worker, who was to pay the penalty, actively involve himself in this unjustified misadventure? Or did he merely remain a quiescent non-worker during that explosive period? Even if he was a passive striker, that did not visit him with the vice of activism in running an unjustified strike. In the absence of proof of being militant participant the punishment may differ. To dismiss a worker, in an economy cursed by massive unemployment, is a draconian measure as a last resort. Rulings of this Court have held that the degree of culpability and the quantum of punishment turn on the level of participation in the unjustified strike. Regrettably, no individualised enquiry has been made by the Arbitrator into this significant component of delinquency. Did any dismissed worker instigate, sabotage or indulge in vandalism or violence? The Management’s necessity to move the mill into production for fear of being branded a ‘sick unit’ is understandable. Of course, collective strike is economic pressure by cessation of work and not exchange of pleasantries. It means embarrassing business. Such a quandary cannot alter the law. Here the legal confusion is obvious. No inquest into the Management’s recruitment of fresh hands is being made at this stage. The inquiry is into the personal turpitudes of particular workmen in propelling an illegal and unjustified strike and the proof of their separate part therein meriting dismissal. The despair of the Management cannot, by specious transformation of logic, be converted into the despair of each of the 853 workmen. Sympathies shall not push one into fallacies. We may now concretise this generalised criticism of the otherwise well-covered award. The crowd of documents and carping attitudes must have added to the strain on the Arbitrator: A voluminous record of documents and correspondence has been produced before me by both sides. There have been allegations and counter allegations made by both sides not only against each other but even against the Police, the Department of Labour and persons in Authority. The history has been sought to be traced right from the inception of the Company in 1966 or 1967, by the Company to show that their conduct has been always proper and

Disciplinary Proceedings 443 above reproach and by Sabha to establish that not only the Gujarat Steel Tubes Ltd. were not fair to the employees but that every action of theirs good or bad was ill-motivated, was executed with some sinister ulterior motives. The Award set out the history of the Company, its vicissitudes, the hills and valleys, the lights and shadows, of industrial relations with mob fury and lock-outs and allied episodes often ending in settlements and pious pledges. Then the Arbitrator stressed Clause 6 of the Agreement of December, 1971 which bespoke a no-strike zone for five years. There was reference to the Management’s promise to implement the Wage Board recommendations. The Arbitrator was upset that despite Clause 6, a strike was launched but was not disturbed that despite the Wage Board proposals, negotiations were being baulked and an interminable arbitral alternative was being offered by the Management. He exclaimed: If such a settlement arrived at was not respected and implemented the machinery provided by Law would lose all meaning and so also the sanctity of the word of the Management or the word of the union. It is, therefore, essential to ascertain who was responsible for the breach of the agreement so solemnly entered into. Serious breach by management is alleged, and this is given as a reason or is made as an excuse for getting rid of the obligations arising out of the agreement which specifically could not be terminated for five years. The narration continues and the following conclusion is reached: It is thus very clear that the company had fully discharged its obligation under the allegation made by the Sabha of the company having made a breach thereof is not correct. We thus see that at this stage, the arbitrator has merely made a generalised approach as if a commission of inquiry were going into the conduct of the Management and the Sabha to discover who was blameworthy in the imbroglio. The award then swiveled round to a study of the case of the Sabha vis-à-vis the triple grievances, the Sabha had: I shall first deal with the grievance regarding demands for implementation of the recommendations of the Wage Board. The long and sterile correspondence was set out and the arbitrator arrived at the conclusion that the insistence on reference to arbitration as against negotiation was justified on the part of the Management: I, therefore, have accepted the version of the Management and disbelieved the motivated denial of the Sabha in this respect. The culmination of the protracted discussion on the atmosphere and environment, rather than on the actual charge against each worker, was recorded in the Award: I have exhaustively, perhaps more exhaustively than even necessary, dealt with the allegations made by the Sabha that the Management had committed breach of agreement by refusing to accede to the demand of the Sabha for implementation of recommendations of the Wage Board. There appears to be no doubt that the Management had agreed to implement the recommendation of the Wage Board: There is also not the least doubt the Management was ready and willing to implement the recommendations of the Wage Board it was because it was prevented by the Sabha from doing so.

444 Social Justice and Labour Jurisprudence An analysis of the Management’s conduct in the matter of non-implementation of the Wage Board recommendation was thereafter made by the Arbitrator and he wound up thus: I am satisfied that the Company had not committed any breach of the settlement dated 4-8-1972 at least so far as implementation of the recommendations of the Wage Board is concerned. The question of bonus for the year 1971 was also considered and dismissed and the Sabha’s case to that extent was negatived. Again, the plea for wages for the period of the lock-out was also negatived with the observations: I fail to see how the Sabha can allege breach of the agreement dated 4-8-1972 in view of the clear unequivocal terms contained in Clause 4 of that Agreement. In this strain the Award continued and the refrain was the same that the Sabha was in the wrong. The Award even went to the exaggerated extent of morbidly holding that the workers were wearing printed badges which, along with other circumstances, amounted to a breach of the agreement! The Award then moved on to the strike of 27 January 1973 because it led to the dismissal of all the workmen. Until this stage, the arbitrator was merely painting the background and, at any rate, did not engage himself in isolating or identifying any worker or any misconduct. He merely denounced the Sabha, which is neither here nor there, in the matter of disciplinary proceedings against each individual workman. He missed the meat of the matter. The relevant portion of the Award based on generalisation proved this error: I am concerned herein with the question whether the discharge or dismissal of the 400 workmen was legal and proper or not and what relief to grant to them. Approached from any point of view the action of the Company appears to me to be legal, proper and justified and the demands on behalf of these workmen must be rejected. A condemnation of the Sabha and an approval of the Management’s handling of the strike are miles away from the issue on hand. We observe here also an unfortunate failure to separate and scan the evidence with specific reference to charges against individual workman. On the contrary, all that we find in the award is an autopsy of the strike by the Sabha and a study of its allegedly perverse postures. A disciplinary inquiry resulting in punishment of particular delinquents cannot but be illegal if the evidence is of mass misconduct by unspecified strikers led by leaders who are perhaps not even workmen. We are constrained to state that pointed consideration of facts which make any of the 400 workmen guilty, is a search in vain. The award being ex facie blank from this vital angle, the verdict must prima facie rank as void since vicarious guilt must be brought home against the actively participating members of a collectivity by positive testimony, not by hunch, suspicion or occult intuition. The short position is this. Is there a punishment of any workman? If yes, has it been preceded by an enquiry? If not, does the Management desire to prove the charge before the tribunal? If yes, what is the evidence, against whom, of what misconduct? If individuated proof be forthcoming and relates to an illegal strike, the further probe is this: was the strike unjustified? If yes, was the accused worker an active participant therein? If yes, what role did he play and of what acts was he author? Then alone the stage is set for a just punishment. These exercises, as an assembly-line process are fundamental. Generalisation of a violent strike of a vicious Union leadership, of strikers fanatically or foolishly or out of fear, failing to report for work, are good background material. Beyond that, these must be identified by a rational process, the workmen, their individual delinquency and the sentence according to their sin. Sans that, the dismissal is bad. Viewed from this perspective, the Award fails.

Disciplinary Proceedings 445 The Arbitrator comes to grips with the core question of discharge simpliciter versus dismissal as punishment but not with the identification of delinquents and delinquency. After referring to Order 23 of the Model Standing Orders he goes on to state the law correctly by extracting observations from the Assam Oil Company67 case. Another vital facet of industrial law is that when no enquiry has been held by the Management before imposing a punishment (or the enquiry held is defective and bad), the whole field of delinquency and consequent penalty is at large for the tribunal. Several rulings support this logic. We are constrained to hold that a certain observation made per incuriam by Mr Justice Vaidyalingam, strongly relied on by Sri A. K. Sen, does not accurately represent the law, although the learned Judge had earlier stated the law and case-law correctly, if we may say so with respect. A selective study of the case-law is proper at this place. Before we do this, a few words on the basis of the right to strike and progressive legal thinking led by constitutional guidelines is necessitous. The right to unionise, the right to strike as part of collective bargaining and, subject to the legality and humanity of the situation, the right of the weaker group, viz., labour, to pressure the stronger party, viz., capital, to negotiate and render justice, are processes recognised by industrial jurisprudence and supported by Social Justice. While society itself, in its basic needs of existence, may not be held to ransom in the name of the right to bargain and strikers must obey civilised norms in the battle and not be vulgar or violent hoodlums. Industry, represented by intransigent Managements, may well be made to reel into reason by the strike weapon and cannot then squeal or wail and complain of loss of profits or other ill-effects but must negotiate or get a reference made. The broad basis is that workers are weaker although they are the producers and their struggle to better their lot has the sanction of the rule of law. Unions and strikes are no more conspiracies than professions and political parties are, and, being far weaker, need succour. Part IV of the Constitution, read with Article 19, sows the seeds of this burgeoning jurisprudence. The Gandhian quote at the beginning of this judgment sets the tone of economic equity in Industry. Of course, adventurist, extremist, extraneously inspired and puerile strikes, absurdly insane persistence and violent or scorched earth policies boomerang and are anathema for the law. Within these parameters the right to strike is integral to collective bargaining. Responsible trade unionism is an instrument of concerted action and the laissez faire law that all strikes are ipso facto conspiracies is no longer current coin even in Adam Smith’s English country. Lord Chorley, in Modern Law Review, Vol. 28, 1965, p. 451, is quoted as saying that law must be altered as a consequence of Rookes vs Barnard,68 so as to remove the effects of decisions of conspiracy and intimidation. He goes on to state that Allen vs Flood 69 and Quinn vs Leathem70 taking the conspiratorial view must never be permitted to be quoted in courts. In contrast, reference was made to Willis on Constitutional Law, pp. 878–79, wherein the Supreme Court of America reflects the impact of capitalistic development and the economic views of the judges and the fact that the judges are members of a social order and a social product and the decisions are due more to the capitalistic system and the world of ideas in which the judges live. Our Constitution is clear in its mandate, what with Article 39A superadded and we have to act in tune with the values enshrined therein. The benign attitude towards strike being what we have outlined, the further question arises whether in the light of the accepted finding that the strike as such was illegal and, further, was unjustified, all the strikers should face the penalty of dismissal or whether individual cases with special reference to active participation in the strike, should be considered. A rapid but relevant glance at the decided cases may yield dividends. In India General Navigation and Rly. Co. Ltd. vs Their Workmen,71 this Court did observe that if a strike is illegal, it cannot be called ‘perfectly justified’. But, between ‘perfectly justified’ and ‘unjustified’ the neighbourhood is distant. Mere illegality of the strike does not per se spell unjustifiability. For in Crompton Greaves Ltd. vs Workmen72 this Court held that even if a strike be illegal, it cannot be castigated as unjustified, unless the reasons for it are entirely perverse or unreasonable—an aspect which has to be decided on the facts and circumstances of each case. In that decision, this Court awarded wages during the

446 Social Justice and Labour Jurisprudence strike period because the Management failed to prove that the workmen resorted to force and violence. Even in India General Navigation and Rly. Co. Ltd.73 where the strike was illegal and affected a public utility service, this Court observed that “the only question of practical importance which may arise in the case of an illegal strike, would be the kind or quantum of punishment, and that, of course, has to be modulated in accordance with the facts and circumstances of each case.... There may be reasons for distinguishing the case of those who may have acted as mere dumb-driven cattle from those who have taken an active part in fomenting the trouble and instigating workmen to join such a strike, or have taken recourse to violence.” The court after holding that the strike was illegal “and that it was not even justified” made a pregnant observation: To determine the question of punishment, a clear distinction has to be made between those workmen who not only joined in such a strike, but also took part in obstructing the loyal workmen from carrying on their work, or took part in violent demonstrations, or acted in defiance of law and order, on the one hand, and those workmen who were more or less silent participators in such a strike on the other hand. It is not in the interest of the industry that there should be a wholesale dismissal of all the workmen who merely participated in such a strike. It is certainly not in the interest of the workmen themselves. An Industrial Tribunal, therefore, has to consider the question of punishment, keeping in view the overriding consideration of the full and efficient working of the Industry as a whole. The punishment of dismissal or termination of services, has, therefore, to be imposed on such workmen as had not only participated in the illegal strike, but had fomented it, and had been guilty of violence or doing acts detrimental to the maintenance of law and order in the locality where work had to be carried on. After noticing the distinction between peaceful strikers and violent strikers, Sinha, J., in that case, observed: It must be clearly understood by those who take part in an illegal strike that thereby they make themselves liable to be dealt with by their employers. There may be reasons for distinguishing the case of those who may have acted as mere dumb driven cattle from those who have taken an active part in fomenting the trouble and instigating workmen to join such a strike, or have taken recourse to violence. The same line of dichotomy is kept up: Both the types of workmen may have been equally guilty of participation in the illegal strike, but it is manifest that both are not liable to the same kind of punishment. Significantly, the Court stressed the need for individual charge-sheet being delivered to individual workmen so that the degree of misconduct of each and the punitive deserts of each may be separately considered. We may as well refer to a few more rulings since considerable argument was expended on this point. This Court in Burn & Co. Ltd. vs Their Workmen,74 clearly laid down that mere participation in the strike would not justify the suspension or dismissal of workmen particularly where no clear distinction can be made between those persons and the very large number of workmen who had been taken back into service although they had participated in the strike. After referring to the ratio in Burn & Co. Ltd.75 case, this Court in Bata Shoe Co. (P) Ltd. vs D.N. Ganguly,76 observed that there is no doubt that if an employer makes an unreasonable discrimination in the matter of taking back employees there may in certain circumstances be reason for the industrial tribunal to interfere; but the circumstances of each case have to be examined before the tribunal can interfere with the order of the employer in a properly held managerial inquiry on the ground of discrimination. The Court then proceeded to determine the facts placed before it. Sri Sen specifically pointed out that in the Bata Shoe Co.’s77 case this Court distinguished the decision in India General Navigation & Rly. Co. Ltd.78 and observed that the decision in that case was on the

Disciplinary Proceedings 447 facts placed before the Court. In fact, Bata Shoe Co.’s79 case does not lay down any distinct proposition about the treatment to be meted out to participants in strike and actually it is a decision on its own facts. In the Swadeshi Industries Ltd vs Its Workmen,80 the Management, after holding that the strike was illegal, terminated the services of 230 workmen without framing any charge-sheet or holding any enquiry. It was contended that the strike was not legal. The Court observed that collective bargaining for securing improvement on matters like basic pay, dearness allowance, bonus, provident fund and gratuity leave and holidays was the primary object of a trade union and when demands like these were put forward and thereafter a strike was resorted to in an attempt to induce the company to agree to the demands or at least to open negotiations the strike must prima facie be considered justified. As the order of termination was found to be illegal it was held that reinstatement with back wages must follow as a matter of course, not necessarily because new hands! had not been inducted. In I.M.H. Press, Delhi vs Addl. Industrial Tribunal Delhi,81 this Court was called upon to examine the ratio in Model Mills82 case, and India General Navigation & Rly. Co. Ltd.83 case and this Court in terms affirmed the ratio in India General Navigation & Railway Co. Ltd,84 observing that mere taking part in an illegal strike without anything further would not justify the dismissal of all the workmen taking part in the strike. In Indian Iron & Steel Co. Ltd. vs Their Workmen,85 this Court observed that the management of a concern has power to direct its own internal administration and discipline but the power is not unlimited and when a dispute arises, Industrial Tribunals have been given the power to see whether the termination of service of a workman is justified and to give appropriate relief. It may be noticed that the decision is prior to introduction of Section 11A. It would thus appear that the important effect of omission to hold an enquiry was merely this that the tribunal would have to consider not only whether there was a prima facie case but would decide for itself on the evidence adduced whether the charges have been made out. A defective enquiry in this connection stood on the same footing as no enquiry and in either case the tribunal would have jurisdiction to go into the entire matter and the employer would have to satisfy the tribunal that on the facts the order of dismissal or discharge was proper (see Workmen of Motipur Sugar Factory [Pvt.] Ltd. vs Motipur Sugar Factory,86 and Provincial Transport Service vs State Industrial Court).87 Once, therefore, it was held that the enquiry was not proper, it was irrelevant whether the workman withdrew from the enquiry or participated in it, the decision had to be on appraisal of evidence, and if it was found that the enquiry was not proper the whole case was open before the Labour Court to decide for itself whether the charge of misconduct was proved and what punishment should be awarded (see Imperial Tobacco Company of India Ltd. vs Its Workmen).88 As against the above propositions, Sri Sen relied upon the observations of this Court in Oriental Textile Finishing Mills, Amritsar vs Labour Court, Jullundur.89 We fail to see how it runs counter to the established principle. The Court, in fact, held that even where the strike is illegal, before any action was taken with a view to punishing the strikers a domestic enquiry must be held. Even though the Standing Orders prescribing enquiry before punishment did not provide for any such enquiry the Court held that nonetheless a domestic enquiry should have been held in order to entitle the management to dispense with the service of the workman on the ground of misconduct, viz., participation in the illegal strike. After so saying, the Court agreed with the view of the Court in India General Navigation & Rly. Co. Ltd. case90 and reaffirmed the principle that mere taking part in an illegal strike without anything further would not necessarily justify the dismissal of all the workers taking part in the strike and that if the employer, before dismissing a workman, gave him sufficient opportunity of explaining his conduct and no question of mala fides or victimisation arose, it was not for the tribunal in adjudicating the propriety of such dismissal to look into the sufficiency or otherwise of the evidence led before the enquiry officer or insist on the same degree of proof as was required in a court of law, as if it were sitting in appeal over the decision of the employer.

448 Social Justice and Labour Jurisprudence Another aspect of this case emphasised that it could not be dogmatised as a matter of law that an overt act such as intimidation or instigation of violence was necessary in order to justify termination of service for participating in an illegal strike. On the facts of that case, even though it was found that no domestic enquiry was held, reinstatement was refused on the ground that misconduct was made out. Sri Sen, of course, relied on this judgment to show that where a strike was resorted to and the workers were called upon to join service within the stipulated time, on their failure it was open to the company to employ new hands. This is reading more into the ruling than is warranted. We cannot agree that mere failure to report for duty, when a strike is on, necessarily means misconduct. Many a workman, as a matter of prudence, may not take the risk of facing the militant workmen or the Management’s hirelings for fear, especially when there is evidence in the case from the Sabha that the Management had hired goondas and from the Management that the striking vanguard was violent. It is also possible, in the absence of evidence to the contrary that several workmen might not be posted with the Management’s notice of recall or the terms on which they were being recalled. In this view, we are not able to uphold the conclusion of the arbitrator that the punishment of dismissal was appropriate for the entire mass of workmen whose only guilt, as proved was nothing more than passive participation in the illegal and unjustified strike by not reporting for duty. The verdict is inevitable that the discharge is wrongful. The only comment we reluctantly make about the otherwise thorough award of the Arbitrator is that omnibus rhetoric about the obnoxious behaviour of a class may not make-do for hard proof of specific acts of particular persons where a punitive jurisdiction is exercised. What, then, is the normal rule in the case of wrongful dismissal when the workmen claim reinstatement with full back wages? The High Court has held the discharge wrongful and directed restoration with an equitable amount of back wages. The following rulings of this Court, et al, deal with this subject: The recent case of Hindustan Tin Works vs Its Employees,91 sets out the rule on reinstatement and back wages when the order of discharge is demolished: It is no more open to debate that in the field of industrial jurisprudence a 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. The relief of reinstatement with continuity of service can be granted where termination of service is found to be invalid. It would mean that the employer has taken away illegally the right to work of the workman contrary to the relevant law or in breach of contract and simultaneously deprived the workman of his earnings. If thus the employer is found to be in the wrong as a result of which the workman is directed to be reinstated, the employer could not shirk his responsibility of paying the wages which the workman has been deprived of by the illegal or invalid action of the employer. Speaking realistically, where termination of service is questioned as invalid or illegal and the workman has to go through the gamut of litigation, his capacity to sustain himself throughout the protracted litigation is itself such an awesome factor that he may not survive to see the day when law’s proverbial delay has become stupefying. If after such a protracted time and energy consuming litigation during which period the workman just sustains himself, ultimately he is to be told that though he will be reinstated, he will be denied the back wages which would be due to him, the workman would be subjected to a sort of penalty for no fault of his and it is wholly undeserved. Ordinarily, therefore, a workman whose service has been illegally terminated would be entitled to full back wages except to the extent he was gainfully employed during the enforced idleness. That is the normal rule. Any other view would be a premium on the unwarranted litigative activity of the employer. If the employer terminates the service illegally and the termination is motivated as in this case, viz., to resist the workman’s demand for revision of wages, the termination may well amount to unfair

Disciplinary Proceedings 449 labour practice. In such circumstances reinstatement being the normal rule it should be followed with full back wages. Articles 41 and 43 of the Constitution would assist us in reaching a just conclusion in this respect.... In the very nature of things there cannot be a strait-jacket formula for awarding relief of back wages. All relevant considerations will enter the verdict. More or less, it would be a motion, addressed to the discretion of the Tribunal. Full back wages would be the normal rule and the party objecting to it must establish the circumstances necesessitating departure. At that stage the Tribunal will exercise its discretion keeping in view all the relevant circumstances. Dealing with the complex of considerations bearing on payment of back wages the new perspective emerging from Article 43A cannot be missed, as explained in Hindustan Tin Works.92 Labour is no more a mere factor in production but a partner in Industry, conceptually speaking and less than full back wages is a sacrifice by those who can best (least?) afford and cannot be demanded by those, who least sacrifice their large ‘wages’ though can best afford, if financial constraint is the ground urged by the latter (Management) as inability to pay full back pay to the former. The morality of law and the constitutional mutation implied in Article 43A bring about a new equation in industrial relations. Anyway, in the Hindustan Tin Works case, 75 per cent of the past wages was directed to be paid. Travelling over the same ground by going through every precedent is supererogatory and we hold the rule is simple that the discretion to deny reinstatement or pare down the quantum of back wages is absent save for exceptional reasons. It must be added however that particular circumstances of each case may induce the court to modify the direction in regard to the quantum of back wages payable as happened in the India General Navigation and Railway Co. Ltd. vs Their Workmen.93 We may, therefore, have to consider, when finally moulding the relief, what, in this case, we should do regarding reinstatement and back wages. A Sum-up: We may now crystallise our conclusions in the light of the long discussion. The basic assumption we make is that the strike was not only illegal but also unjustified. On the latter part, a contrary view cannot be ruled out in the circumstances present but we do not re-investigate the issue since the High Court has proceeded on what both sides have taken for granted. The Management, in our view, did punish its 853 workmen when it discharged them for reasons of misconduct set out in separate but integrated proceedings, even though, with legal finesse, the formal order was phrased in harmless verbalism. But fine words butter no parsnips, and law, in its intelligent honesty, must be blunt and when it sees a spade, must call it a spade. The action taken under the general law or the standing orders, was illegal in the absence of individualised charge-sheets, proper hearing and personalised punishment, if found guilty. None of these steps having been taken, the discharge orders were still-born. But the Management could, as in this case it did, offer to make out the delinquency of the employees and the arbitrator had, in such cases, the full jurisdiction to adjudge de novo both guilt and punishment. We hold that Section 11A does take in an arbitrator too, and, in this case, the arbitral reference, apart from Section 11A, is plenary in scope. In the second chapter of our sum-up, the first thing we decide is that Article 226, however restrictive in practice, is a power wide enough, in all conscience, to be a friend in need when the summons comes in a crisis from a victim of injustice; and, more importantly, this extraordinary reserve power is unsheathed to grant final relief without necessary recourse to a remand. What the tribunal may, in its discretion, do, the High Court too, under Article 226, can, if facts compel, do. Secondly, we hold that the Award suffers from a fundamental flaw that it equates an illegal and unjustified strike with brazen misconduct by every workman without so much as identification of the charge against each, the part of each, the punishment for each, after adverting to the gravamen of his misconduct meriting dismissal. Passive participation in a strike which is

450 Social Justice and Labour Jurisprudence both illegal and unjustified does not ipso facto invite dismissal or punitive discharge. There must be active individual excess such as master-minding the unjustified aspects of the strike, e.g., violence, sabotage or other reprehensible role. Absent such gravamen in the accusation, the extreme economic penalty of discharge is wrong. An indicator of the absence of such grievous guilt is that the Management, after stating in strong terms all the sins of the workmen, took back over 400 of them as they trickled back slowly and beyond the time set, with continuity of service, suggestive of the dubiety of the inflated accusations and awareness of the minor role of the mass of workmen in the lingering strike. Furthermore, even though all sanctions short of punitive discharge may be employed by a Management, in our current conditions of massive unemployment, low wages and high cost of living, dismissal of several hundreds, with disastrous impact on numerous families, is of such sensitive social concern that, save in exceptional situations, the law will inhibit such a lethal step for the peace of the Industry, the welfare of the workmen and the broader justice that transcends transient disputes. The human dimensions have decisional relevance. We hold the discharge orders, though approved by the Arbitrator, invalid. The last part of our conclusions relates to the relief which must be fashioned with an eye on mutual equities. We cannot ignore a few raw realities since law is not dogmatics but pragmatics, without temporising on principle. The Management’s limitations in absorbing all the large number of discharged employees all at once when, steel, the raw material, is scarce, is a problem. Likewise, their inability to pay huge sums by way of back wages or otherwise, without crippling the progress of the industry, cannot be overlooked but cannot be overplayed after Hindustan Tin Works.94 Another factor which cannot be wished away is the presence of over a couple of hundred workmen, with varying lengths of service, who may have to be sacked if the old workmen are to be brought back. It is a problem of humanist justice. Lastly, the rugged fact of life must not be missed that some of the workmen during the long years of desperate litigation, might have sought jobs elsewhere and most of them perhaps have, for sheer survival, made at least a starving wage during the prolonged idle interval. This factor too is a weak consideration, tested by the reasoning in Hindustan Tin Works.95 Moreover, rationalisation of re-absorption of the removed workmen requires attention to the classification of permanent workmen and their casual counterparts. Every proposal must be bottomed on the basic economic fact that the beneficiaries are from the many below the destitution line. This Court has, in a very different context though has drawn attention to the Gandhian guideline: Whenever you are in doubt... apply the following test. Recall the face of the poorest and the weakest man whom you may have seen, and ask yourself, if the step you contemplate is going to be of any use to him. It is apt here. This perspective informs our decision. What did the High Court do regarding reinstatement and should we modify and why? If the discharge is bad, reinstatement is the rule. In India General Navigation,96 Punjab National Bank,97 and Swadeshi Industries,98 et al, restoration, despite large numbers, was directed. But most rules have exceptions wrought by the pressure of life and Oriental was relied on to contend that reinstatement must be denied. There is force in the High Court’s reasoning to distinguish Oriental, as we hinted earlier and we quote: There were only 22 workmen involved in that case. The management had made genuine and persistent efforts to persuade the concerned workmen to call off the strike and join work. Those efforts were made at three different stages, namely, (1) immediately after the workers went on the lightning strike and before charge-sheets were issued (2) after the charges were dropped and individual notices were sent to the workmen asking them to resume work by specified dates and (3) after the orders of termination were served and conciliation proceedings

Disciplinary Proceedings 451 were commenced pursuant to the demand notice. But this is not all. Even the Labour Officer and Labour Inspector had tried to persuade the concerned workmen to join duty before the charge-sheets came to be issued. As against these repeated bona fide attempts on the part of the management and an outside agency to persuade the erring workmen, they not only did not resume work but also failed to acknowledge or send a reply to the individual notices served upon them requesting them to resume work and they appear to have made it a condition precedent to their joining duty that the suspended workmen should also be taken back. Even under such circumstances, the management did not straightway terminate their services but gave individual notices requiring the concerned workmen to show cause why their names should not be struck off and asked them to submit their reply by a certain date. Even those notices were not replied. It is only thereafter that the services of the concerned workmen came to be terminated. It is against this background that the Supreme Court held that there was ‘a persistent and obdurate refusal by the workmen to join duty’ notwithstanding the fact that ‘the management has done everything possible to persuade them and give them opportunities to come back to work’ and that they had without any sufficient cause refused to do so which constituted ‘misconduct’ so as to ‘justify the termination of their services.’ .... If the workmen had been approached individually, not only those amongst them who were unwilling to join strike but were prevented from joining work would have taken courage to resume duty but even those amongst them who were undecided could also have been won over. That apart, those notices, as their contents disclose, were hardly persuasive efforts. They were a mixture of ultimatums, threats, complaints and indictment of the workmen and the Sabha. Was it, therefore, a genuine effort on the part of a keenly desirous employer to offer an olive branch? In Oriental, orders of termination were passed only after giving individual notices to the concerned workmen to show cause why their names should not be struck off. Besides, those notices were given after charges formally served upon each workman earlier were dropped and persuasive efforts made in the meantime had failed. None of those steps was taken herein. All that happened was that in one of the notices meant for mass consumption and circulation, such intimation was given. Even so, during the several years of the pendency of the dispute, surely some workmen would have secured employment elsewhere as was conceded by counsel at a certain stage, and it is not equitable to recall them merely to vindicate the law especially when new workmen already in precarious service may have to be evicted to accommodate them. In the course of the debate at the bar we gained the impression that somewhere around a hundred workmen are likely to be alternatively employed. Hopefully, there is no hazard in this guess. Another facet of the relief turns on the demand for full back wages. Certainly, the normal rule, on reinstatement, is full back wages since the order of termination is non est. Lad’s99 case and Panitole Tea Estate’s100 case. Even so, the industrial court may well slice off a part if the workmen are not wholly blameless or the strike is illegal and unjustified. To what extent wages for the long interregnum should be paid is, therefore, a variable dependant on a complex of circumstances (see for example, [1967] 15 Fac LR 395 paras 3 and 4) (SC). We are mindful of the submission of Sri Tarkunde, urged in the connected appeal by the Sabha, that where no enquiry has preceded a punitive discharge and the tribunal, for the first time, upholds the punishment this Court has in D.C. Roy vs Presiding Officer, Madhya Pradesh Industrial Court, Indore,101 taken the view that full wages must be paid until the date of the award. There cannot be any relation back of the date of dismissal to when the Management passed the void order. Kalyani102 was cited to support the view of relation back of the Award to the date of the employer’s termination orders. We do not agree that the ratio of Kalyani103 corroborates the proposition propounded. Jurisprudentially, approval is not creative but confirmatory and therefore

452 Social Justice and Labour Jurisprudence relates back. A void dismissal is just void and does not exist. If the Tribunal, for the first time, passes an order recording a finding of misconduct and thus breathes life into the dead shell of the Management’s order, pre-dating of the nativity does not arise. The reference to Sasa Musa104 in Kalyani105 enlightens this position. The latter case of D.C. Roy vs Presiding Officer, Madhya Pradesh Industrial Court, Indore106 specifically refers to Kalyani’s107 case and Sasa Musa’s108 case and holds that where the Management discharges a workman by an order which is void for want of an enquiry or for blatant violation of rules of natural justice, the relation-back doctrine cannot be invoked. The jurisprudential difference between a void order, which by a subsequent judicial resuscitation comes into being de novo, and an order, which may suffer from some defects but is not still-born or void and all that is needed in the law to make it good is a subsequent approval by a tribunal which is granted, cannot be obfuscated. We agree that the law stated in D.C. Roy109 is correct but now that the termination orders are being set aside, the problem does not present itself directly. Even the other alternative submission of Sri Tarkunde that if the plea of the Management that the order is a discharge simpliciter were to be accepted, the result is a retrenchment within the meaning of Section 2(oo) which, in this case, is in violation of Section 25F and therefore bad, is not a point urged earlier. We are disposed to stand by the view that discharge, even where it is not occasioned by a surplus of hands, will be retrenchment, having regard to the breadth of the definition and its annotation in (1977) 1 SCR 586: (AIR 1977 SC 81). But the milieu in which the order was passed in February 1973 is not fully available, viewed from this new angle. So we decline to go into that contention. Final Relief: We are concerned with 400 workmen, some of whom have been claimed by death or other irreversible causes—casualties of litigative longevity! 370 workmen are left behind, of whom 239 are admittedly permanent. We have already stated that 100, out of them, are probably fixed up elsewhere. So, we exclude them and direct that the remaining 139 alone will be reinstated. A list of the aforesaid 100 workmen will be furnished to the Management by the Sabha within two weeks from today. That shall be accepted as correct and final. While reinstatement is refused for these 100 workmen, when shall they be deemed to have ceased to be in service for drawal of terminal benefits? Their discharge orders having been quashed, they remain in service until today. We concluded the arguments on Aug. 3, 1979 and on the eve of the closure of counsel’s submissions certain inconclusive settlement proposals were discussed. We, therefore, consider 3 August 1979 as a pivotal point in the calendar with reference to which the final relief may be moulded. We direct that the 100 workmen for whom reinstatement is being refused will be treated as in service until 3 August 1979 on which date they will be deemed to have been retrenched. We direct this step with a view to pragmatise the situation in working out the equities. These 100 will draw all terminal benefits plus 75 per cent of the back wages. This scaling down of back pay is consistent with the assumption that somewhere in the past they had secured alternative employment. The long years and the large sum payable also persuade us to make this minor cut. Of course, in addition, they will be entitled to retrenchment benefits under Section 25F of the Act, and one month’s notice pay. The remaining 139 will be awarded 50 per cent of the back wages since we are restoring them. The High Court has adopted this measure and so we do not depart from it. The case of the hundred stands on a slightly different footing, because some compensation in lieu of refusal of reinstatement is due to them and that also has entered our reckoning while fixing 75 per cent for them. The computation of the wages will be such as they would have drawn had they continued in service and on that the cut directed will be applied. We have disposed of the case of the permanent workmen except to clarify that in their case continuity of service will be maintained and accrual of benefits on that footing reckoned. The next category relates to casual employees, 131 in number of whom 57 have less than nine months’

Disciplinary Proceedings 453 service. The policy of the Act draws a distinction between those with service of 240 days and more and others with less. The casuals with less than nine months service are 57 in number and we do not think that this fugitive service should qualify for reinstatement especially when we find a number of intermediate recruits, with longer though untenable service, have to be baled out. We decline reinstatement of these 57 hands. The other 74 must be reinstated although notionally but wrongly they are shown as casual. In the ‘life’ sense, all mortals are casuals but in the legal sense, those with a record of 240 days on the rolls, are a class who have rights under industrial law. We direct the 74 long-term casuals aforesaid to be reinstated but not the 57 short-term ones. To this extent, we vary the High Court’s order. We adopt the directive of the High Court regarding the back wages to both categories of casuals except that for the lesser class of 57 casuals, a flat sum of Rs 1,000 more will be paid as a token compensation in lieu of reinstatement. The reinstated casuals (74 of them) will be put back as casuals but will be confirmed within six months from the date of rejoining since it is meaningless to keep them as casual labourers when they are, by sheer length of service, on the regular rolls. Two issues remain. When are the workmen to be retaken and what is to happen in the meanwhile? How is the amount payable by the Management to be discharged and on what terms? Many years have flowed by, thanks to the long-drawn-out litigation. Further delay in putting back the workers will be unfair. But the Management pleads that steel shortage cuts into the flesh of the factory’s expansion, without which additional intake of workers is beyond their budget unless considerable time for re-absorption were given. But the lot of the workmen is unspeakable while the overall assets and outlook of the Company are commendable enough to bear an increased wage bill. Dives cannot complain when Lazarus asks for more crumbs. Even if a slight slant be made in favour of the Management, the direction to them to take back, in order of seniority, the first 70 out of the 139 permanent workmen on or before 31 December 1979 and the rest on or before 31 March 1980 is the least that is just. Until those dates the workmen will be paid 2/3rd of their wages as now due. Of course, if any workman fails to report for work within 15 days of service of written notice to him, with simultaneous copy to the Sabha, he will not be eligible for any more reinstatement or wages. The back wages run into a large sum but a good part has been paid under the stay order of this Court. We make it clear that the payments made will be given credit and the balance if paid as directed below and within the time specified will not carry interest. If default is made, the sums in default will carry 10 per cent interest. The figures of amounts due will be worked out by both sides and put into Court in 10 days from now. Half the amount determined by the Court, after perusing both statements, will be paid directly to the workmen or deposited with the Industrial Tribunal who will give notice and make disbursements, on or before 31-3-1980 and the other half on or before 30-9-1980. The conclusions may be capsulated for easier consumption: 1. Out of 370 workmen directed to be reinstated by the High Court, 239 are permanent. It is assumed that 100 have found alternative employment and are not interested any more in reinstatement and they are to be excluded from the direction of reinstatement. The Company must, therefore, reinstate 139 permanent workmen and the list of 100 workmen who are not to be reinstated would be supplied by the Sabha within two weeks from the date of this judgment. The discharge order in respect of 100 workmen hereinbefore mentioned would be set aside and they are deemed to be in service till 3 August 1979, when they will be retrenched and they will be paid retrenchment compensation as provided in Section 25F plus one month’s pay in lieu of notice, the compensation to be worked out on the basis of the

454 Social Justice and Labour Jurisprudence wages that will be admissible under the recommendations of the Engineering Wage Board as applicable to the Company. This amount will be paid in lieu of reinstatement and they will also be paid 75 per cent of the back wages. 2. The remaining 139 permanent employees would be paid 50 per cent of the back wages as directed by the High Court. 3. 70 out of 139 permanent workmen directed to be reinstated should be provided actual employment on or before 31 December 1979, and the rest on or before 31 March 1980. During this period and till the actual reinstatement each one of these 139 workmen should be paid 2/3 of the monthly wages from 9 August 1979, when the hearing in this case concluded. 50 per cent of the amount that becomes payable to each workman under the directions hereinabove given will be paid on or before 31 March 1980, and the balance on or before 30 September 1980, and till then the amount will carry interest at the rate of 10 per cent. 4. In respect of casual workmen whose service was less than 9 months on the date of dismissal it would not be proper to grant reinstatement. They are 57 in number. The remaining casual workmen 74 in number shall be reinstated. In case of 57 casual workmen to whom reinstatement is refused, the direction of the High Court is confirmed with the further addition that each one will be paid Rs 1,000 over and above the amount payable under the direction of the High Court and this would be in lieu of reinstatement. Casual workmen 74 in number and having service of more than 9 months on the date of dismissal will be treated as confirmed within six months of the date of their rejoining and they will be offered reinstatement by 31 March 1980, and the High Court’s direction for back wages in their respect is confirmed. With these modifications, we dismiss both the appeals. The Management-appellant will pay the costs of the Sabha-respondent, advocates fee being fixed at Rs 5,000. An Afterword: This litigation, involving many workmen living precariously on poor wages amidst agonising inflation and a Management whose young budget, what with steel scarcity, may well be shaken by the burden of arrears, points to the chronic pathology of our Justice System—the intractable and escalating backlog in the Forensic Assembly Line that slowly spins Injustice out of Justice and effectually wears down or keeps out the weaker sector of Indian life. This trauma is felt more poignantly in Labour litigation and the legislature fails functionally if it dawdles to radicalise, streamline and simplify the conflict resolution procedures so as to be credibly available to the common people who make up the lower bracket of the nation. The stakes are large, the peril is grave, the evils are worse than the prognostics of Prof. Laurence Tribe (of the Harvard Law School): If court backlogs grow at their present rate, our children may not be able to bring a lawsuit to a conclusion within their lifetime. Legal claims might then be willed on, generation to generation, like hillbilly feuds; and the burdens of pressing them would be contracted like a hereditary disease. Law may be guilty of double injustice when it is too late and too costly for it holds out remedial hopes which peter out into sour dupes and bleeds the anaemic litigant of his little cash only to tantalise him into a system equal in form but unequal in fact. The price of this promise of unreality may be the search by the lowly for the reality of revolutionary alternatives. Compelled by the crisis in the Justice System, we sound this sombre judicial note. We direct payments and reinstatements as spelt out earlier, within the specificated time, and, hopefully, leave the case with the thought that, given better rapport between the partners in production, the galvanic Gujarat Steel Tubes Ltd., will forge ahead as a paradigm for the rest.

Disciplinary Proceedings 455

NOTES 1. The schedule of the Act provides for the following matters to be considered in the standing orders of a company under the Act: i. ii. iii. iv. v. vi. vii. viii. ix. x. xi.

Classification of workmen, e.g., whether permanent, temporary, apprentices, probationers, or badlies. Manner of intimating to workmen periods and hours of work, holidays, paydays and wage rates. Shift working. Attendance and late coming. Conditions of, procedure in applying for, and the authority which may grant leave and holidays. Requirement to enter premises by certain gates, and liability to search. Closing and reopening of sections of the industrial establishment, and temporary stoppages of work and the rights and liabilities of the employer and workmen arising therefrom. Termination of employment, and the notice thereof to be given by employer and workmen. Suspension or dismissal for misconduct, and acts or omissions which constitute misconduct. Means of redress for workmen against unfair treatment or wrongful exactions by the employer or his agents or servants. Any other matter which may be prescribed.

2. Rule 17(1) provides that: A workman may be suspended by the employer pending investigation or departmental enquiry and shall be paid subsistence allowance in accordance with the provisions of Section 10A of the Act. The employer shall normally complete the enquiry within 10 days. The payment of subsistence allowance shall be subject to the workman not taking any employment elsewhere during the period of suspension. 3. Inserted by the Amendment Act of 1971. Even prior to this amendment, the higher courts in India have accorded this power to the labour courts and the tribunals. 4. AIR 1976 SC 1821. 5. AIR 1978 SC 473. 6. AIR 1975 SC 661. This case was heard by V.R. Krishna Iyer, Alagiriswam and R.S. Sarkaria. 7. The Chartered Bank, Bombay vs The Chartered Bank Employees’ Union. (1960) II LLJ 222:AIR 1960 SC 919. 8. (1965) 2 SCR 148:AIR 1965 SC 1496. 9. (1972) LIC 1262:(1971) 2 LLJ 620. 10. (1972) 3 SCR 605:AIR 1972 SC 1343. 11. (1965) 2 SCR 148:AIR 1965 SC 1496. 12. 1952 LAC 490. 13. (1960) II LLJ 222:AIR 1960 SC 919:(1960) 3 SCR 441. 14. 1962 3 (SCR) 822:AIR 1963 SC 411. 15. (1970) 3 SCR 708. 16. (1972) LIC 1262:(1971) 2 LLJ 620. 17. (1960) II LLJ 222:AIR 1960 SC 919:(1960) 3 SCR 441. 18. (1972) 3 SCR 606:AIR 1972 SC 1343. 19. (1972) 3 SCR 606:AIR 1972 SC 1343. 20. (1970) 2 LLJ 20(1970) II LLJ 20. 21. (1970) 2 LLJ 20(1970) II LLJ 20. 22. (1965) 2 SCR 148:AIR 1965 SC 1496. 23. (1965) 2 SCR 148:AIR 1965 SC 1496. 24. AIR 1980 SC 1896. 25. 1958 SCR 828:AIR 1958 SC 36. 26. Samsher Singh vs State of Punjab. (1975) I SCR 814:AIR 1974 SC 2192. 27. (1965) 2 SCR 148:AIR 1965 SC 1496. 28. 1952 LAC 490. 29. (1960) 3 SCR 441:AIR 1960 SC 919. 30. 1962 Supp (2) SCR 822:AIR 1963 SC 411. 31. (1960) 3 SCR 441:AIR 1960 SC 919.

456 Social Justice and Labour Jurisprudence 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 60. 61. 62. 63. 64. 65. 66. 67. 68. 69. 70. 71. 72. 73. 74. 75. 76. 77. 78. 79. 80. 81. 82. 83. 84. 85. 86. 87.

Samsher Singh vs State of Punjab. (1975) I SCR 814:AIR 1974 SC 2192. 1958 SCR 828:AIR 1958 SC 36. Samsher Singh vs State of Punjab. (1975) I SCR 814:AIR 1974 SC 2192. 1949 FCR 321:AIR 1949 FC 111. (1960) 3 SCR 457 at p. 462:AIR 1960 SC 1264. (1964) 2 SCR at 180. (1965) 2 SCR 148 at p. 152:AIR 1965 SC 1496. (1969) 8 SCR 372 at 378. (1965) 2 SCR 148:AIR 1965 SC 1496. (1975) 3 SCR 489:AIR 1975 SC 661. 1972 LIC 1262 SC:(1971) 2 LLJ 620. (1960) 3 SCR 441:AIR 1978 SC 919. (1978) 3 SCR 1000:AIR 1978 SC 1380. (1873) 8 QB 255. (1946) 1 All ER 637. (1946) 1 All ER at 641. Jurisprudence—The Philosophy and Method of the Law by Edgar Bodenheimer at p. 474. Id. Jurisprudence—The Philosophy and Method of the Law by Edgar Bodenheimer at p. 414. Id at 415. Id at 115–116. (1940) 310 US 534 at pp. 543–544. Robert Stevens—Law and Politics, The House of Lords as a Judicial Body 1800–1976 p. 447. Devlin—Samples of Law-making. p. 116. Judge as Law Maker p. 28–470 (Stevens). 1962 AC 220 at p. 275. (1973) Supp SCR 1:AIR 1973 SC 1461. Sources and Techniques of the Law ‘Jurisprudence’ by Edgar Bodenheimer. Arthur Selwyn Miller: The Supreme Court, Myth and Reality, p. 133. (1960) 3 All ER 353. 1952 AC 189. AIR 1938 PC 281 at p. 283. (1949) 2 All ER 155 at p. 164. (1975) 2 SCR 894 at p. 902:AIR 1975 SC 192. (1967) I SCR 324:AIR 1967 SC 1032. AIR 1960 SC 1264. (1964) 1 All ER 367. (1898 AC 1). (1901 AC 495). AIR 1960 SC 219. AIR 1978 SC 1489. AIR 1960 SC 219. AIR 1959 SC 259. AIR 1959 SC 259. (1961) 3 SCR 308:AIR 1961 SC 1158. (1961) 3 SCR 308:AIR 1961 SC 1158. AIR 1960 SC 219. (1961) 3 SCR 308:AIR 1961 SC 1158. AIR 1960 SC 1258. AIR 1961 SC 1168. AIR 1958 SC 311. AIR 1960 SC 219. AIR 1960 SC 219. 1958 SCR 667 at p. 685:AIR 1958 SC 130. (1965) 3 SCR 588 at 597:AIR 1965 SC 1803. (1968) 3 SCR 650:AIR 1963 SC 114.

Disciplinary Proceedings 457 88. 89. 90. 91. 92. 93. 94. 95. 96. 97. 98. 99. 100. 101. 102. 103. 104. 105. 106. 107. 108. 109.

AIR 1962 SC 1348. (1972) 1 SCR 490:AIR 1972 SC 277. AIR 1960 SC 219. 1978 LIC 1667:AIR 1979 SC 75 at pp. 77–78. 1978 LIC 1667:AIR 1979 SC 75. AIR 1960 SC 219. AIR 1979 SC 75. AIR 1979 SC 75. AIR 1960 SC 219. AIR 1960 SC 160. AIR 1960 SC 1258. (1979) 1 SCC 590:AIR 1979 SC 582. (1971) 3 SCR 774:AIR 1971 SC 2171. (1976) 3 SCR 801:AIR 1976 SC 1760. (1963) I LLJ 679:AIR 1963 SC 1756. (1963) I LLJ 679:AIR 1963 SC 1756. AIR 1959 SC 923. (1963) I LLJ 679:AIR 1963 SC 1756. (1976) 3 SCR 801:AIR 1976 SC 1760. (1963) I LLJ 679:AIR 1963 SC 1756. AIR 1959 SC 923. (1976) 3 SCR 801:AIR 1976 SC 1760.

Chapter 12

Lay-off and Retrenchment The provisions relating to lay-off and retrenchment were inserted into the Industrial Disputes Act, 1947, by the Amendment Act of 1953. The provisions relating to closure of an undertaking were similarly inserted into the legislation by the Amendment Act of 1956. Later in 1982, these areas underwent several amendments pertaining to aspects relating to the definitions clause, restrictions and amount of compensation. Perhaps India is unique in the world in requiring the prior permission of the State in certain circumstances for lay-off, retrenchment or closure by an employer. The underlying philosophy is that when the State is providing every facility to an employer to start an industry, it is incumbent upon the employer to be under the State’s control in respect of these eventualities. Also, the law aims to provide some amount of social security to the workers, who may be rendered jobless either temporarily or permanently, in order to preserve their purchasing power. The law relating to lay-off, retrenchment and closure has been subjected to judicial scrutiny from time to time and has undergone various judicial interpretations. This area has proved to be most controversial, because it interferes with the freedom of the employer to dispose of his capital and labour as he wills. Basically, the Industrial Disputes Act, 1947, deals with these areas under two chapters— namely, Chapter VA and Chapter VB. The fundamental difference between these two chapters is that in respect of the undertakings covered by Chapter VB, prior permission from the State is a must in the event of lay-off,1 retrenchment or closure by the employer.

The Law Relating to Retrenchment The term ‘lay-off ’2 has been defined in the Act as defining a circumstance where the employer shows his refusal or inability, for the reasons stated, to give employment to a workman whose name is borne in the muster rolls of the industrial establishment. The establishments covered both under Chapter VA and Chapter VB are required to provide compensation in the manner provided in the Act to the laid-off workmen during the layoff period.3 The underlying implication in restricting the compensation to an amount not equivalent to full wages under these two chapters is because of the number of persons employed by the employer in these establishments. In case of establishments to which these two chapters do not apply and in the absence of any agreement conferring any right of lay-off, the situation in providing lay-off compensation differs.

Lay-off and Retrenchment 459

Workmen of Firestone Tyre and Rubber Company of India vs The Firestone Tyre and Rubber Company 4 THE FACTS OF THE CASE In this case, the respondent company had its head office at Bombay. It manufactured tyres at its Bombay factory and sold the tyres and other accessories in markets throughout the country. The company also had 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 and other products to the distribution office. In the Delhi office, there were 30 employees at the relevant time. Of these, 17 workmen were laid off by the management as per a 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 their wages or compensation for the period of lay-off. An industrial dispute was raised and referred by the Delhi administration on 17 April 1968, while the lay-off was in operation. 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 the Additional Industrial Tribunal, Delhi, held that the workmen were not entitled to any lay-off compensation. Hence this was an appeal to the Supreme Court by their union. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE N.L. 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 ‘lay-off ’ is a ‘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 Union5 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.

460 Social Justice and Labour Jurisprudence 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 lay-off and a closure. But just to point out the history of the law we have referred to this case. 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. 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 Section 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 laid-off 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 there under 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.

Lay-off and Retrenchment 461 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 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 of 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 workman 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 seems 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

462 Social Justice and Labour Jurisprudence 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’ Union6 in a case of suspension of a workman it was said by Wanchoo, J. as he then was, delivering the judgment on behalf of the Court at page 482: 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 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 Pradesh7 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 Fernandez (C.P.),8 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 lay-off 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 Management9 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 lay-off for reasons other than those specified in the relevant clause of the standing order. While considering this question, Gajendragadkar, J. as he then was, said at page 554: 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, and 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

Lay-off and Retrenchment 463 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.10 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 establishments also. This argument was repelled and in that connection it was observed at page 381: 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 there under. 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 there under by any categorical exclusion in the present case. And finally it was held at page 385:11 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 Dey12 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, Rohtak13 (Punjab and Haryana). The majority view of the Bombay High Court in K.T. Rolling Mills Private Ltd. vs M.R. Meher14 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.

464 Social Justice and Labour Jurisprudence 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 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 it 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 Nos. 1857 to 1859 of 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. There will be no order as to costs in any of the appeals.

Closure and Retrenchment: The Distinction The definition of ‘closure’ under Section 2(cc) and the definition of ‘industrial establishment or undertaking’ under Section 2(ka) of the Act were inserted by the Amendment Act of 1982. Prior to this amendment, the Supreme Court had occasion to distinguish between ‘retrenchment’ and ‘closure’ in the case we shall now discuss, where the issue was closure of a section of the establishment. Perhaps it was this decision of the apex Court that led to an amendment to the Act subsequently. In order to avoid the repetition of the case, only the relevant issues are dealt with here.

Avon Services Production Agencies vs the Industrial Tribunal 15 EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE 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 advances 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

Lay-off and Retrenchment 465 two employees jobless for more than seven years is encouraged. A brief recital of few facts touching upon the controversy would reveal the arena of dispute. The appellant is a private Limited Company incorporated under the Companies Act, 1956, and is engaged in the business of manufacturing Fire Fighters Foam Compound. It has set up two factories, one at Bombay and other at Ballabhgarh. The industrial dispute which is the subject-matter of appeal relates to Ballabhgarh factory. According to the appellant this factory, when commissioned in 1962, was divided into two sections, now styled as two separate undertakings: (i) manufacturing section; and (ii) packing material making section. The manufacturing section comprised two sub-sections, viz., the chemical section, i.e. Foam Compound manufacturing section, and boiler section. The packing material section was again composed of two sub-sections, one manufacturing containers, and the other painting of 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 one Mr Ramni intimating them that the management has decided to close the painting section effective from 13 July 1971 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 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. Since 13 July 1971 respondents 3 and 4 have been denied employment by the appellant. A Trade Union of the employees of the appellant affiliated to Bharatiya Mazdoor Sangh served a notice of demand, Annexure P-1 dated 16 July 1971 inter alia calling upon the appellant to reinstate respondents 3 and 4 and the third workman and also to pay them full back wages. On 19 February 1972 as per Annexure P-2, the Secretary to the Government of Haryana, Labour and Employment Department, intimated to the President of the Union that from amongst the demands contained in Annexure P-1, Demands 2 to 9 have been referred to Industrial Tribunal for adjudication. In respect of demand 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. This refusal to refer the demand concerning respondents 3 and 4 has been the subjectmatter of a very serious submission on behalf of the Company that the reference subsequently 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 Mohammad Yasin was justified and in order? If not, to what relief they are entitled? The Tribunal registered the reference at No. 81/72 and proceeded to adjudicate upon the dispute. Three issues were raised before the tribunal and it is necessary to set down 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 retrenchment of Sarvashri Mohammed Yamin and Mohammad Yasin was justified and in order? If not, to what relief they are entitled?

The contention is that the Tribunal was in error in holding that respondents 3 and 4 were retrenched from service and, 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

466 Social Justice and Labour Jurisprudence 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. Section 25F prescribes conditions precedent to retrenchment of workmen. The conditions precedent are (a) giving of one month’s notice in writing to the workmen 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 25FFF prescribes liability of an employer to pay compensation to workmen in case of closing down of undertaking. The relevant portion of Section 25FFF reads as under: 25FFF. (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 provisions 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. A comparison of the language employed in Section 25F and Section 25FFF(1) would bring about in bold relief the difference between the 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 Sabha16 held that the failure to comply with the provision prescribing conditions precedent for valid retrenchment in Section 25F renders the order of retrenchment invalid and inoperative. Expounding this position, Constitution Bench of this Court in Hatisingh Mfg. Co. Ltd. vs Union of India,17 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 or paying wages in lieu of notice is not prohibited. Payment of compensation and payment of wages for the period of notice are not, therefore, conditions precedent to closure. Is this then a case of retrenchment or closure? What constitutes retrenchment is no more res integra. In State Bank of India vs N. Sundara Money,18 one of us, Krishna Iyer, J., examined the definition of the expression ‘retrenchment’ under Section 2(oo) to ascertain the elements which constitute retrenchment. It was observed as under: A break-down of Section 2(oo) unmistakably expands the semantics of retrenchment. ‘Termination ... for any reason whatsoever’ are the key words. Whatever the reason, every termination spells retrenchment. So the sole question is—has the employee’s service been terminated? Verbal apparel apart, the substance is decisive. A termination takes place where a term expires either by the active step of the master or the running out of the stipulated term. To protect the weak against the strong this policy of comprehensive definition has been effectuated. Termination embraces not merely the act of termination by the employer, but the

Lay-off and Retrenchment 467 fact of termination howsoever produced. May be, the present may be a hard case, but we can visualise abuses by employers, by suitable verbal devices, circumventing the armour of Section 25F and Section 2(oo). Without speculating on possibilities, we may agree that ‘retrenchment’ is no longer terra incognita but area covered by an expensive definition. It means ‘to end, conclude, cease’. As against this, reference was made to Management of Hindustan Steel Ltd. vs The Workmen,19 wherein the management contended that it is a case of closure and the workmen contended that the termination was on account of retrenchment. The entire decision turns on the facts of the case. Hindustan Steel Ltd. had set up what was described as Ranchi Housing Project and this Project was completed in 1966. After completion of the residuary work, the services of certain employees were terminated. This termination was questioned alleging that it was a case of retrenchment and as the condition precedent was not complied with, the retrenchment was invalid. The employer contended that it is a case of closure and payment of compensation was not a condition precedent and did not invalidate the termination of service. This Court held that the word ‘undertaking’ as used in Section 25FFF appears to have been used in its ordinary sense connoting thereby any work, enterprise, project or business undertaking. It is not intended to cover the entire industry or business of the employer. Even closure or stoppage of a part of the business or activities of the employer would seem in law to be covered by this sub-section. The question has to be decided on the facts of each case. Examining the facts of the case, this Court came to the conclusion that it was a case of closure. In the present case the appellant attempted to serve notice dated 13 July 1971 on respondents 3 and 4 and one Mr Ramni. In this notice it was stated that the management has decided to close the painting section with effect from Tuesday, 13 July 1971 due to unavoidable circumstances and the services of the workmen mentioned in the notice would no longer be required and hence they are retrenched. The workmen were informed that they should collect their dues under Section 25FFF from the office of the Company. The tenor of the notice clearly indicates that workmen were rendered surplus and they were retrenched. It is thus on the admission of appellant a case of retrenchment. It was, however, urged that notice refers to Section 25FFF and therefore employer intended it to be a notice of termination of service consequent upon closure of painting undertaking. Now, even if a closure of an undertaking as contemplated by Section 25FFF need not necessarily comprehend a closure of the entire undertaking and a closure of a distinct and separate unit of the undertaking would also be covered by Section 25FFF, the question is—whether painting sub-section was itself an undertaking? The expression ‘undertaking’ is not defined in the Act. It also finds its place in the definition of the expression ‘industry’ in Section 2(j). While ascertaining the amplitude of the expression ‘undertaking’ in the definition of the expression ‘industry’, noscitur a sociis cannon of construction was invoked and a restricted meaning was assigned to it in Bangalore Water Supply and Sewerage Board vs A. Rajappa.20 While thus reading down the expression, in the context of Section 25FFF it must mean a separate and distinct business or commercial or trading or industrial activity. It cannot comprehend an infinitesimally small part of a manufacturing process. The Tribunal found that the alleged retrenchment notice was not served upon the workmen and that finding was not controverted by pointing out some evidence which may point to the contrary. The notice expressly states that the workmen are retrenched though it simultaneously states that the action is taken under Section 25FFF. But if the Company had a container making section which was closed way back in 1964 and yet these three workmen who used to paint the containers were retained, it cannot be said that painting section was a recognized sub-section eligible for being styled as a part of the undertaking. If such mini-classification is permitted it would enable the employer to flout Section 25F with impunity. These workmen appear not to have been employed initially as painters. They were doing some other work from which they

468 Social Justice and Labour Jurisprudence were brought to painting section. They could have as well been absorbed in some other work which they were capable of doing as observed by the Tribunal. If painting was no more undertaken as one of the separate jobs, the workmen would become surplus and they could be retrenched after paying compensation as required by Section 25F. To style a job of a particular worker doing a specific work in the process of manufacture as in itself an undertaking is to give meaning to the expression ‘undertaking’ which it hardly connotes. An employer may stop a certain work which was part of an undertaking but which could not be classified as an independent undertaking, the stoppage of work in this context would not amount to closure of the undertaking. The three workmen were doing work of painting the containers. No records were shown that there was a separate establishment, that it was a separate sub-section or that it had some separate supervisory arrangement. In fact, once the container-making section was closed down, the three painters became part and parcel of the manufacturing process and if the painting work was not available for them they could have been assigned some other work and even if they had to be retrenched as surplus, the case would squarely fall in Section 25F and not be covered by Section 25FFF, on a specious plea of closure of an undertaking. The Tribunal in our opinion was right in holding that this was a case of retrenchment and as conditions precedent was not complied with, the retrenchment was invalid and the relief of reinstatement with full back wages was amply deserved.

The Definition of Retrenchment under Section 2(oo) The definition of the term ‘retrenchment’ was inserted into the Act by an amendment in the year 1953. The erstwhile Section 2(oo) defines ‘retrenchment’ as: ... the termination by the employer of the service of a workman for any reason whatsoever otherwise than as a punishment inflicted by way of disciplinary action, but does not include(a) voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or (c) termination of the service of a workman on the ground of continued ill-health....

This new definition created flutters in the judiciary from the period after 1953. From a plain reading of the definition, it is very clear that termination for any reason whatsoever except under four circumstances stated in the section, is ipso facto ‘retrenchment’. The intentions of Parliament were very clear in its providing such a comprehensive description of the circumstances of ‘retrenchment’. What the law intends is very clear: that termination for any reason whatsoever, whatever may be the verbal attachments to the letter of appointment or contract, if such termination does not fall under any of the four exempted cases, certainly it is an act of ‘retrenchment’ by the employer. Justice V.R. Krishna Iyer clearly emphasised this view of the legislature’s intention in this case by clearly observing the prevailing ratio thereunder.

Lay-off and Retrenchment 469

State Bank of India vs N. Sundara Money 21 THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER The appellant employer, undaunted by a double defeat at both tiers in the High Court, has appealed against the adverse judgments, by certificate, on the only ground that there was no retrenchment of the respondent-employee [within the meaning of Section 2 (oo) of the Industrial Disputes Act, 1947 (Act XIV of 1947) (hereinafter called the Act)] and, consequently, the latter was ineligible to the statutory compensation the non-payment of which, along with the termination of service, nullified the termination itself. The end result was that the Division Bench of the Court ruled that the respondent ‘was entitled to retrenchment compensation’, which not having been paid, ‘the termination would be invalid’. The subtle legal issue, substantial in its financial impact, is whether Section 25F read with Section 2(oo), vis-a-vis a short employment, casts a lethal spell on the cessation of service for non-compliance with the condition precedent set out in the provision. The Certificate: The certificate issued by the High Court under Article 133(1) is bad on its face, according to Counsel for the respondent and the appeal consequently incompetent. We are inclined to agree that the grant of a constitutional passport to the Supreme Court by the High Court is not a matter of easy insouciance but anxious advertence to the dual vital requirements built into Article 133(1) by specific amendment. Failure here stultifies the scheme of the article and floods this Court with cases of lesser magnitude with illegitimate entry. A substantial question of law of general importance is a sine qua non to certify fitness for hearing by the apex Court. Nay, more; the question, however important and substantial, must be such pervasive import and deep significance that in the High Court’s judgment it imperatively needs to be settled at the national level by the highest bench. The crux of the matter has been correctly set out in a decision Union of India vs Hafiz Mohd.,22 said of the Delhi High Court in words which find our approval: A certificate can be granted only if the case involves a question of law (i) which is not only substantial but is also of general importance; and (ii) the said question, in our opinion, needs to be decided by the Supreme Court. It has to be noted that all the above requirements should be satisfied before a certificate can be granted. It means that it is not sufficient if the case involves a substantial question of law of general importance but in addition to it the High Court should be of the opinion that such question needs to be decided by the Supreme Court. Further, the word ‘needs’ suggests that there has to be a necessity for a decision by the Supreme Court on the question, and such a necessity can be said to exist when, for instance, two views are possible regarding the question and High Court takes one of the said views. Such a necessity can also be said to exist when a different view has been expressed by another High Court. It is but fair to add an implied but important footnote that while exercising the wider power under Article 136, this Court must have due regard to the constitutional limitations on Article 133(1) and owe allegiance to those restraints save in exceptional cases. This view of the certificate would have put the lid on this appeal but on hearing Counsel we feel that the omission of the High Court to assess the case explicitly from this angle does not disable us from granting special leave, if applied for. So much so Counsels have proceeded to argue on the merits, the penumbral area of industrial law covered by the subject-matter being one which cannot be left in legal twilight.

470 Social Justice and Labour Jurisprudence

THE FACTS OF THE CASE One of the two employees involved in these appeals has been reabsorbed in service and his case is therefore of lesser import, but the other is still out in the cold and his legal fate falls for examination in the matrix of facts which we proceed to state. This respondent was appointed off and on, by the State Bank of India between 31 July 1973 (1972) and 29 August 1973. The intermittent breaks notwithstanding, his total number of days of employment answered the test of ‘deemed’ continuous service within Section 25B(2) and both sides accept that fact situation. But the order of appointment, which bears in its bosom the ‘good bye’ to the employee after a few days, calls for construction in the light of Section 2(oo) and Section 25F and we may as well read it here: (1) The appointment is purely a temporary one for a period of 9 days but may be terminated earlier, without assigning any reason thereof at the bank’s discretion; (2) The employment, unless terminated earlier, will automatically cease at the expiry of the period, i.e., 18-11-1972. This nine day’s employment, tacked on to what has gone before, has ripened to a continuous service for a year on the antecedent arithmetic of 240 days of broken bits of service. The skiagram of the employment order must now be studied to ascertain which of the rival meanings Counsel have pressed deserves preference. Statutory construction, when courts consider welfare legislation with an economic justice bias, cannot turn on cold print glorified as grammatical construction but on teleological purpose and protective intendment. Here Sections 25F, 25B and 2(oo) have a workers’ mission and in input of Part IV of the Constitution also underscores this benignant approach. While canons of traditional sanctity cannot wholly govern, courts cannot go haywire in interpreting provisions, ignoring the text and context. With this guideline before us, we seek to decode the implications of the order of appointment. But before doing so, an analysis of the legal components of Section 25F will facilitate the diagnostic task. The leading case on this facet of law is The Hospital Mazdoor Sabha, State of Bombay vs Hospital Mazdoor Sabha,23 [Justice] Gajendragadkar (as he then was) observed: Section 25F(b) provides that no workman employed in any industry who has been in continuous service for not less than one year under an employer shall be retrenched by that employer until he has been paid at the time of retrenchment compensation which shall be equivalent to fifteen days’ average pay for every completed year of service or any part thereof in excess of six months. Clauses (a) and (e) of the said section prescribe similar conditions but we are not concerned with them. On a plain reading of Section 25F(b) it is clear that the requirement prescribed by it is a condition precedent for the retrenchment of the workman. The section provides that no workman shall be retrenched until the condition in question has been satisfied. It is difficult to accede to the argument that when the section imposes in mandatory terms a condition precedent, non-compliance with the said condition would not render the impugned retrenchment invalid. . . failure to comply with the said provision renders the impugned orders invalid and inoperative. Without further ado, we reach the conclusion that if the workman swims into the harbour of Section 25F, he cannot be retrenched without payment, at the time of retrenchment, compensation computed as prescribed therein read with Section 25B(2). But, argues the appellant, all these obligations flow only out of retrenchment, not termination outside that species of snapping employment. What, then, is retrenchment? The key to this vexed question is to be found in Section 2(oo) which reads thus:

Lay-off and Retrenchment 471 2. (oo) ‘retrenchment’ means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include— (a) voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or (c) termination of the service of a workman on the ground of continued ill-health;24 For any reason whatsoever-very wide and almost admitting of no exception. Still, the employer urges that when the order of appointment carries an automatic cessation of service, the period of employment works itself out by efflux of time, not by act of employer. Such cases are outside the concept of ‘retrenchment’ and cannot entail the burden-some condition of Section 25F. Of course, that a ‘nine-days’ employment, hedged in with an express condition of temporariness and automatic cessation, may look like being in a different street (if we may use a colloquialism) from telling a man off by retrenching him. To retrench is to cut down. You cannot retrench without trenching or cutting. But dictionaries are not dictators of statutory construction where the benignant mood of a law and, more emphatically, the definition clause furnish a different denotation. Section 2(oo) is the master of the situation and the Court cannot truncate its amplitude. A breakdown of Section 2(oo) unmistakably expands the semantics of retrenchment. ‘Termination. . . for any reason whatsoever’ are the key words. Whatever the reason, every termination spells retrenchment. So the sole question is, has the employee’s service been terminated? Verbal apparel apart, the substance is decisive. A termination takes place where a term expires either by the active step of the master or the running out of the stipulated term. To protect the weak against the strong this policy of comprehensive definition has been effectuated. Termination embraces not merely the act of termination by the employer, but the fact of termination howsoever produced. Maybe, the present may be a hard case, but we can visualise abuses by employers, by suitable verbal devices, circumventing the armour of Section 25F and Section 2(oo). Without speculating on possibilities, we may agree that ‘retrenchment’ is no longer terra incognita but area covered by an expansive definition. It means ‘to end, conclude, cease’. In the present case the employment ceased, concluded, ended on the expiration of nine days—automatically maybe, but cessation all the same. That to write into the order of appointment the date of termination confers no moksha from Section 25F(b) is inferable from the proviso to Section 25F(1) (Section 25F[a]?). True, the section speaks of retrenchment by the employer and it is urged that some act of volition by the employer to bring about the termination is essential to attract Section 25F and automatic extinguishment of service by effluxion of time cannot be sufficient. An English case R. vs Secretary of State 25 was relied on, where Lord Denning, M. R. observed: I think that the word ‘terminate’ or ‘termination’ is by itself ambiguous. It can refer to either of two things - either to termination by notice or to termination by effluxion of time. It is often used in that dual sense in landlord and tenant and in master and servant cases. But there are several indications in this paragraph to show that it refers here only to termination by notice. Buckley, L.J. concurred and said: In my judgment the words are not capable of bearing that meaning. As Counsel for the Secretary of State has pointed out, the verb ‘terminate’ can be used either transitively or intransitively. A contract may be said to terminate when it comes to an end by effluxion of time, or it may be said to be terminated when it is determined at notice or otherwise by some

472 Social Justice and Labour Jurisprudence act of one of the parties. Here in my judgment the word ‘terminated’ is used in this passage in para 190 in the transitive sense, and it postulates some act by somebody which is to bring the appointment to an end, and is not applicable to a case in which the appointment comes to an end merely by effluxion of time. Words of multiple import have to be winnowed judicially to suit the social philosophy of the statute. So screened, we hold that the transitive and intransitive senses are covered in the current context. Moreover, an employer terminates employment not merely by passing an order as the service runs. He can do so by writing a composite order, one giving employment and the other ending or limiting it. A separate, subsequent determination is not the sole magnetic pull of the provision. A pre-emptive provision to terminate is struck by the same vice as the post-appointment termination. Dexterity of diction cannot defeat the articulated conscience of the provision. What follows? Had the State Bank known the law and acted on it, half-a-month’s pay would have concluded the story. But that did not happen. And now, some years have passed and the bank has to pay for no service rendered. Even so, hard cases cannot make bad law. Reinstatement is the necessary relief that follows. At what point? In the particular facts and circumstances of this case, the respondent shall be put back where he left off, but his new salary will be what he would draw were he to be appointed in the same post today de novo. As for benefits, it any, flowing from service he will be ranked below all permanent employees in that cadre and will be deemed to be a temporary hand upto now. He will not be allowed to claim any advantages in the matter of seniority or other priority inter se among temporary employees on the ground that his retrenchment is being declared invalid by this Court. Not that we are laying down any general proposition of law, but make this direction in the special circumstances of the case. As for the respondent’s emoluments, he will have to pursue other remedies, if any. We substantially dismiss the appeal (C.A. No. 934 of 1975) subject to the slight modification made above. There was some intervening suggestion for settlement of the dispute but it fell through. We are persuaded to make the observation based on that circumstance that social justice has two sides, occasionally, one party or the other makes myopic mistakes resulting in further litigation. Subject to the above observations, the appeal is dismissed. The parties will bear their costs throughout, although, in cases like this, where the law is not free from obscurity and needs this Court’s pronouncement and one of the affected parties is weak, being a worker, the costs must come out of public funds as suggested in Trustees of Port of Bombay vs Premier Automobiles Ltd.26 The State, we hope, will constitute a suitors’ fund which will take care of hardships and public interest in the area of necessary litigation. In C.A. No. 933 of 1975 the respondent has been re-employed by the appellant although in his case also we declare, for reasons already given and subject to the same norms till his absorption that the retrenchment is invalid. The costs, in this appeal, will be borne by each of the parties. Cases of this type are not new before the apex Court. But this was a celebrity due to the reason of number of days the Respondent has put up.

The Definition of Retrenchment under the Payment of Gratuity Act, 1972: Interpretation State of Punjab vs Labour Court, Jullundur, and Others 27 In this case, the Supreme Court had to consider the scope of the definition of ‘retirement’ for the purposes of gratuity payable to the terminated workmen who, after having availed retrenchment compensation under the Industrial Disputes Act, 1947, subsequently claimed

Lay-off and Retrenchment 473

gratuity from the employer. In spite of the fact that the award of the Labour Court had been upheld by the High Court, the apex Court reversed the order by interpretating aptly the spirit of the provisions of the Payment of Gratuity Act, 1972, as far as the forum for redressal of claims under the Act is concerned. In this appeal by special leave, the state of Punjab appealed against the judgement and order of the High Court of Punjab and Haryana refusing to quash an order under Section 33-C(2) of the Industrial Disputes Act, 1947, for payment of gratuity to the respondents under the Payment of Gratuity Act, 1972.

THE FACTS OF THE CASE The Hydel Department of the Government of Punjab had undertaken a project described as the ‘Hydel Upper Bari Doab Construction Project’. Respondents 2 to 8 were employed as work-charged employees. On completion of the work assigned to them, they were retrenched and retrenchment compensation was paid to them. The respondent employees claimed that they were also entitled to gratuity, bonus and certain other allowances and benefits. The gratuity was claimed under the Payment of Gratuity Act, 1972. The claim being disputed, the respondents applied under Section 33-C(2) of the Industrial Disputes Act, 1947, to the Labour Court, Jullundur. The Labour Court passed an order dated 30 April 1975 saying that the respondents were entitled to the gratuity claimed by them but not to bonus or other allowances and benefits. A writ petition filed by the appellant was dismissed in limine by the High Court of Punjab and Haryana. In this appeal, the learned Additional Solicitor-General contends on behalf of the appellant that the Payment of Gratuity Act, 1972 cannot be invoked by the respondents because the Project does not fall within the scope of Section 1(3) of that Act. Section 1(3) provides that the Act will apply to: (a) every factory, mine, oilfield, plantation, port and railway company; (b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months; (c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE R.S. PATHAK According to the parties, it is clause (b) alone which needs to be considered for deciding whether the Act applies to the Project. The Labour Court has held that the Project is an establishment within the meaning of the Payment of Wages Act, Section 2(ii)(g) of which defines an ‘industrial establishment’ to mean any ‘establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on’. It is urged for the appellant that the Payment of Wages Act is not an enactment contemplated by Section 1(3)(b), of the Payment of Gratuity Act. The Payment of Wages Act, it is pointed out, is a Central enactment and Section 1(3)(b), it is said, refers to a law enacted by the State legislature. We are unable to accept the contention. Section 1(3)(b) speaks of ‘any law for the time being in force in relation to shops and establishments in a State’. There can be no dispute that the Payment of Wages Act is in force in the State of Punjab. Then, it is submitted, the Payment of Wages Act is not a law in relation to ‘shops and establishments’. As to that, the Payment of Wages Act is a

474 Social Justice and Labour Jurisprudence statute which, while it may not relate to shops, relates to a class of establishments, that is to say, industrial establishments. But, it is contended, the law referred to under Section 1(3)(b) must be a law which relates to both shops and establishments such as the Punjab Shops and Commercial Establishments Act, 1958. It is difficult to accept that contention because there is no warrant for so limiting the meaning of the expression ‘law’ in Section 1(3)(b). The expression is comprehensive in its scope, and can mean a law in relation to shops as well as separately, a law in relation to establishments, or a law in relation to shops and commercial establishments and a law in relation to non-commercial establishments. Had Section 1(3)(b) intended to refer to a single enactment, surely the appellant would have been able to point to such a statute, that is to say, a statute relating to shops and establishments, both commercial and non-commercial. The Punjab Shops and Commercial Establishments Act does not relate to all kinds of establishments. Besides shops, it relates to commercial establishments alone. Had the intention of Parliament been, when enacting Section 1(3)(b), to refer to a law relating to commercial establishments, it would not have left the expression ‘establishments’ unqualified. We have carefully, examined the various provisions of the Payment of Gratuity Act, and we are unable to discern any reason for giving the limited meaning to Section 1(3)(b) urged before us on behalf of the appellant. Section 1(3)(b) applies to every establishment within the meaning of any law for the time being in force in relation to establishments in a State. Such an establishment would include an industrial establishment within the meaning of Section 2(ii)(g) of the Payment of Wages Act. Accordingly, we are of opinion that the Payment of Gratuity Act applies to an establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on. The Hydel Upper Bari Doab Construction Project is such an establishment, and the Payment of Gratuity Act applies to it. The second contention on behalf of the appellant is that retrenchment does not fall within Section 4(1) of the Payment of Gratuity Act, under which gratuity is payable to an employee on the termination of his employment. The termination envisaged occurs either (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. Having regard to the definition of ‘superannuation’ in Section 2(r) of the Act, it is clear that the case is not under clause (a). Nor, admittedly, is it a case which falls under clause (c). As regards clause (b), it is not a case of resignation. The only question is whether it can be regarded under clause (b) as a case of retirement. The expression ‘retirement’ has been defined by Section 2(q) to mean ‘termination of the service of an employee otherwise than on superannuation’. The definition is framed in the widest terms. Except for superannuation, any termination of service would amount to ‘retirement’ for the purposes of the Act. Retrenchment is a termination of service. It is immaterial that the termination is occasioned by the need to discharge surplus labour. That retrenchment implies the discharge of surplus labour was explained in Barsi Light Railway Co. Ltd. vs K.N. Joglekar.28 Nonetheless, it amounts to termination of service. We are of opinion that the retrenchment of the employee respondents falls within the scope of Section 4(1) of the Payment of Gratuity Act, and the employee respondents are, therefore, entitled to gratuity under that provision. The third contention raised by the appellant is that the employee respondents were not entitled to apply under Section 33C(2) of the Industrial Disputes Act, 1947 for payment of the gratuity, and should have, if at all, applied under the provisions of the Payment of Gratuity Act. It is urged that the Payment of Gratuity Act is a self-contained code incorporating all the essential provisions relating to payment of gratuity which can be claimed under that Act, and its

Lay-off and Retrenchment 475 provisions impliedly exclude recourse to any other statute for that purpose. The contention has force and must be accepted. A careful perusal of the relevant provisions of the Payment of Gratuity Act shows that Parliament has enacted a closely knit scheme providing for payment of gratuity. A controlling authority is appointed by the appropriate government under Section 3, and Parliament has made him responsible for the administration of the entire Act. In what event gratuity will become payable and how it will be quantified are detailed in Section 4. Section 7(1) entitles a person eligible for payment of gratuity to apply in that behalf to the employer. Under Section 7(2), the employer is obliged, as soon as gratuity becomes payable and whether an application has or has not been made for payment of gratuity, to determine the amount of gratuity and inform the person to whom the gratuity is payable specifying the amount of gratuity so determined. He is obliged, by virtue of the same provision, to inform the controlling authority also, thus ensuring that the controlling authority is seized at all times of information in regard to gratuity as, it becomes payable. If a dispute is raised in regard to the amount of gratuity payable or as to the admissibility of any claim to gratuity, or as to the person entitled to receive the gratuity. Section 7(4)(a) requires the employer to deposit with the controlling authority such amount as he admits to be payable by him as gratuity. The controlling authority is empowered, under Section 7(4)(b), to enter upon an adjudication of the dispute, and after due inquiry, and after giving the parties to the dispute a reasonable opportunity of being heard, he is required to determine the amount of gratuity payable. In this regard, the controlling authority has all the powers as are vested in a court while trying a suit under the Code of Civil Procedure, 1908 in respect of obtaining evidentiary material and the recording of evidence. The amount deposited by the employer with the controlling authority as the admitted amount of gratuity will be paid over by the controlling authority to the employee or his nominee or heir. Section 7(7) provides an appeal against the order of the controlling authority under Section 7(4) to the appropriate Government or such other authority as may be specified by the appropriate Government in that behalf. The appropriate government or the appellate authority is empowered under Section 7(8), after giving the parties to the appeal a reasonable opportunity of being heard, to confirm, modify or reverse the decision of the controlling authority. Where the amount of gratuity payable is not paid by the employer within the prescribed time, the controlling authority is required by Section 8, on application made to it by the aggrieved person, to issue a certificate for that amount to the Collector. The Collector thereupon is empowered to recover the amount of gratuity, together with compound interest thereon at the rate of nine percent per annum from the date of expiry of the prescribed time, as arrears of land revenue, and pay the same to the person entitled thereto. It is apparent that the Payment of Gratuity Act enacts complete Code containing detailed provisions covering all the essential features of a scheme for payment of gratuity. It creates the right to payment of gratuity, indicates when the right will accrue, and lays down the principles for quantification of the gratuity. It provides further for recovery of the amount, and contains an especial provision that compound interest at nine percent per annum will be payable on delayed payment. For the enforcement of its provisions, the Act provides for the appointment of a controlling authority, which is entrusted with the task of administering the Act. The fulfilment of the rights and obligations of the parties are made his responsibility, and he has been invested with amplitude of power of the full discharge of that responsibility. Any error committed by him can be corrected in appeal by the appropriate Government or an appellate authority particularly constituted under the Act. Upon all these considerations, the conclusion is inescapable that parliament intended that proceedings for payment of gratuity due under the Payment of Gratuity Act must be taken under that Act and not under any other. That being so, it must be held that the applications filed by the employee-respondents under Section 33-C(2) of the Industrial Disputes Act did not lie, and the Labour Court had no jurisdiction to entertain and dispose of them. On that ground, this appeal must succeed.

476 Social Justice and Labour Jurisprudence In the circumstances, it is not necessary to notice the further submission on behalf of the appellant that where a serious disputes exists in regard to the basis of a claim for payment of gratuity, no proceedings will lie under Section 33-C(2) of the Industrial Disputes Act. The appeal is allowed, and the order dated 30 April 1975 of the Labour Court, Jullundur is quashed. Having regard to the terms on which special leave was granted by this court to the appellant, the appellant shall pay to the employee-respondents their costs of this appeal. At this stage we put to the learned Solicitor-General, who appeared for the State whether in the special circumstances it was not fair that the entire amount be paid by the appellant to the employees without driving them to a separate proceeding. He has fairly stated that the appellant is willing to do so and the sole object of this litigation was to have the law clarified. We, therefore, direct the appellant to pay to the employee respondents within one month from today the amounts that may be due to them, if they have not already been paid.

The Scope of ‘Retrenchment’ that Includes All Kinds of Termination Time and again the question of interpretation of the term ‘retrenchment’ under Section 2(oo) of the Act has figured before the judiciary as far as the expression ‘termination of service for any reason whatsoever’ is concerned. The apex Court has consistently maintained the status quo in this regard.

Santosh Gupta vs State Bank of Patiala 29 Though this case stood at the very threshold part of employment, yet the Court presented its view with clear reasoning after considering the prevailing ratio in the context. THE FACTS OF THE CASE Santosh Gupta, the appellant—‘workman’ (in fact, a woman), was employed in the State Bank of Patiala, the Mall, Patiala, from 13 July 1973 to 21 August 1974, at which time her services were terminated. Though there were some breaks in service for a few days, those breaks were not relevant for the purpose of deciding this case, though the judiciary did have to advert to them in another connection. Despite the breaks, the ‘workman’ had admittedly worked for 240 days in the year till 21 August 1974.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE CHINNAPPA REDDY According to the workman, the termination of her services was ‘retrenchment’ within the meaning of that expression in Section 2(oo) of the Industrial Disputes Act 1947, since it did not fall within any of the 3 excepted cases mentioned in Section 2(oo). Since there was ‘retrenchment’, it was bad for non-compliance with the provisions of Section 25-F of the Industrial Disputes Act. On the other hand the contention of the management was that the termination of services was not due to discharge of surplus labour. It was due to the failure of the workman to pass the test which would have enabled her to be confirmed in the service. Therefore, it was not retrenchment within the meaning of Section 2(oo) of the Industrial Disputes Act.

Lay-off and Retrenchment 477 Section 25-F prescribes that no workman employed in any industry who has been in continuous service for not less than one year shall be retrenched by the employer until—(a) the workman has been given one month’s notice in writing indicating the reasons for retrenchment and the period of notice has expired, or the workman has been paid, in lieu of such notice, wages for the period of the notice; (b) the workman has been paid at the time of retrenchment, compensation which shall be equivalent to fifteen days average pay for every completed year of continuance service or any part thereof in excess of six months and (c) notice in the prescribed manner is served on the appropriate Government or any such authority as may be specified by the appropriate Government by notification in the official Gazette. There is a proviso to clause (a) which dispenses with the necessity for the notice contemplated by the clause if the retrenchment is under an agreement which specifies the date for the termination of service. The expression retrenchment is specially defined by Section 2(oo) of the Act and is as follows: ‘retrenchment’ means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include (a) voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or (c) termination of the service of a workman on the ground of continued ill-health. In Hariprasad Shivshankar Shukla vs A. D. Divakar,30 the Supreme Court took the view that the word ‘retrenchment’ as defined in Section 2(oo) did not include termination of services of all workmen on a bona fide closure of an industry or on change of ownership of management of the industry. In order to provide for the situations which the Supreme Court held were not covered by the definition of the expression ‘retrenchment’, the Parliament added Section 25-FF and Section 25-FFF providing for the payment of compensation to the workmen in case of transfer of undertakings and in case of closure of undertakings respectively. If the definition of ‘retrenchment’ is looked at unaided and unhampered by precedent, one is at once struck by the remarkably wide language employed and particularly by the use of the words ‘termination..... for any reason whatsoever’. The definition expressly excludes termination of service as a ‘punishment inflicted by way of disciplinary action’. The definition does not include, so it expressly says, voluntary retrenchment of the workmen or retrenchment of the workmen on reaching the age of superannuation or termination of the service of the workmen on the ground of continuous ill-health. Voluntary retrenchment of a workman or retrenchment of the workman on reaching the age of superannuation can hardly be described as termination, by the employer, of the service of a workman. Yet, the Legislature took special care to mention that they were not included within the meaning of ‘termination by the employer of the service of a workman for any reason whatsoever’. This, in our opinion, emphasizes the broad interpretation to be given to the expression ‘retrenchment’. In our view if due weight is given to the words ‘the termination by the employer of the service of a workman for any reason whatsoever’ and if the words ‘for any reason whatsoever’ are understood to mean what they plainly say it is difficult to escape the conclusion that the expression ‘retrenchment’ must include every termination of the service of a workman by an act of the employer. The underlying assumption, of course, is that the undertaking is running as an undertaking and the employer continues, as an employer but where either on account of transfer of the undertaking or on account of the closure of the undertaking the basic assumption disappears, there can be no question of

478 Social Justice and Labour Jurisprudence ‘retrenchment’ within the meaning of the definition contained in Section 2(oo). This came to be realised as a result of the decision of this Court in Hariprasad case.31 The Parliament then stepped in and introduced Sections 25-FF and 25-FFF by providing that compensation shall be payable to workmen in case of transfer of undertaking or closure of undertaking as if the workmen had been retrenched. We may rightly say that the termination of the service of a workman on the transfer or closure of an undertaking was treated by Parliament as ‘deemed retrenchment’. The effect was that every case of termination of service by act of employer even if such termination was a consequence of transfer or closure of the undertaking was to be treated as ‘retrenchment’ for the purposes of notice, compensation etc. Whatever doubts might have existed before Parliament enacted Section 25-FF and 25-FFF about the width of Section 25-F there cannot be any doubt that the expression ‘termination of service’ for any reason whatsoever’ now covers every kind of termination of service except those not expressly included in Section 25-F or not expressly provided for by other provisions of the Act such as Sections 25-FF and 25-FFF. In interpreting these provisions i.e., Sections 25-F, 25-FF and 25-FFF, one must not ignore their object. The manifest object of these provisions is to so compensate the workmen for loss of employment as to provide him the wherewithal to subsist until he finds fresh employment. The non-inclusion of ‘voluntary retirement of the workmen’, ‘retirement of workmen on reaching the age of superannuation’, ‘termination of the service of a workman on the ground of continued ill-health’ in the definition of ‘retrenchment’ clearly indicate and emphasize what we have said about the true object of 25-F, 25-FF and 25-FFF and the nature of the compensation provided by those provisions. The nature of retrenchment compensation has been explained in Indian Hume Pipe Co. Ltd. vs Workmen,32 as follows: As the expression ‘retrenchment compensation’ indicates it is compensation paid to a workman on his retrenchment and it is intended to give him some relief and to soften the rigour of hardship which retrenchment inevitably causes. The retrenched workman is, suddenly and without his fault, thrown on the street and has to face the grim problem of unemployment. At the commencement of his employment a workman naturally expects and looks forward to security of service spread over a long period; but retrenchment destroys his hopes and expectations. The object of retrenchment compensation is to give partial protection to the retrenched employee and his family to enable them to tide over the hard period of unemployment. Once the object of Sections 25-F, 25-FF and 25-FFF is understood and the true nature of the compensation which those provisions provide is realised it is difficult to make any distinctions between termination of service for one reason and termination of service for another. Dr Anand Prakash wants us to hold that notwithstanding the comprehensive language of the definition of ‘retrenchment’ in Section 2(oo), the expression continues to retain its original meaning which was, according to the counsel, discharge from service on account of ‘surplusage’. It is impossible to accept his submission. If the submission is right, there was no need to define the expression ‘retrenchment’, and in such wide terms. We cannot assume that the Parliament was undertaking an exercise in futility to give a long-winded definition and merely to say that the expression means what it always meant. Let us now examine the precedents of this Court to discover whether the true position in law is to what has been stated by us in the previous paragraphs. The earliest of the cases of this Court to which our attention was invited was Hariprasad case.33 That was a case which was decided before Sections 25-FF and 25-FFF were brought on the statute book. In fact it was a consequence of that decision that the Industrial Disputes Act had to be amended and these two provisions came to be introduced into the Act. The question which arose for a decision in that case was stated by the learned Judges themselves as follows: The question, however, before us is—does this definition merely give effect to the ordinary, accepted notion of retrenchment in an existing or running industry by embodying the notion

Lay-off and Retrenchment 479 in apt and readily intelligible words or does it go so far beyond the accepted notion of retrenchment as to include the termination of services of all workmen in an industry when the industry itself ceases to exist on a bona fide closure or discontinuance of his business by the employer. The question so stated was answered by the learned Judges in the following way: In the absence of any compelling words to indicate that the intention was even to include a bona fide closure of the whole business, it would, we think, be divorcing the expression altogether from the context to give it such a wide meaning as is contended for by learned counsel for the respondents... it would be against the entire scheme of the Act to give the definition clause relating to retrenchment such a meaning as would include within the definition termination of service of all workmen by the employer when the business itself ceases to exist. It is true that there are some observations which, if not properly understood with reference to the question at issue, seemingly support the submission of Dr Anand Parkash that ‘termination of service for any reason whatsoever’ means no more and no less than discharge of a labour force which is a surplusage. The misunderstanding of the observations and the resulting confusion stem from not appreciating (1) the real question which was posed and answered by the learned Judges and (2) that the reference to ‘discharge on account of surplusage’ was illustrative and not exhaustive and by way of contrast with discharge on account of transfer or closure of business. Management of Willcox Buckwell India Ltd. vs Jagannath34 and Employers in Relation to Digwadih Colliery vs Their Workmen35 were both cases where the termination of the workmen from service was on account of ‘surplusage’ and, therefore, the cases were clear cases of retrenchment. They do not throw any light on the question now at issue. In State Bank of India vs Shri N. Sundara Money,36 a Bench of three Judges of this Court consisting of Chandrachud, J. (as he then was), Krishna Iyer, J., and Gupta, J., considered the question whether Section 25-F of the Industrial Disputes Act was attracted to a case where the order of appointment carried an automatic cessation of service, the period of employment working itself out by efflux of time and not by an act of employer. Krishna Iyer, J., who spoke for the Court observed: ‘Termination’... for any reason whatsoever’ are the key words. Whatever the reason, every termination spells retrenchment. So the sole question is, has the employee’s service been terminated? Verbal apparel apart, the substance is decisive. A termination takes place where a term expires either by the active step of the master or the running out of the stipulated term. To protect the weak against the strong this policy of comprehensive definition has been effectuated. Termination embraces not merely the act of termination by the employer, but the fact of termination howsoever produced... True, the section speaks of retrenchment by the employer and it is urged that some act of volition by the employer to bring about the termination is essential to attract Section 25-F and automatic extinguishment of service by effluxion of time cannot be sufficient... Words of multiple import have to be winnowed judicially to suit the social philosophy of the statute. So screened, we hold that the transitive and intransitive senses are covered in the current context. Moreover, an employer terminates employment not merely by passing an order as the service runs. He can do so by writing a composite order, one giving employment and the other ending or limiting it. A separate, subsequent determination is not the sole magnetic pull of the provision. A pre-emptive provision to terminate is struck by the same vice as the post-appointment termination. Dexterity of diction cannot defeat the articulated conscience of the provision.

480 Social Justice and Labour Jurisprudence In Hindusthan Steel Ltd. vs Presiding Officer, Labour Court, Orissa,37 the question again arose whether termination of service by efflux of time was termination of service within the definition of retrenchment in Section 2(oo) of the Industrial Disputes Act. Both the earlier decisions of the Court in Hariprasad Shivshankar Shukla vs A.D. Divikar 38 and State Bank of India vs N. Sundara Money39 were considered. There was also a request that N. Sundara Money 40case conflicted with the decision in Hariprasad Shivshankar Shukla vs A. D. Divikar41 and therefore required reconsideration. A Bench of three Judges of this Court consisting of Chandrachud J. (as he then was), Goswami, J. and Gupta, J., held that there was nothing in Hariprasad Shivshankar Shukla vs A.D. Divikar42, which was inconsistent with the decision in N. Sundara Money43 case. They held that the decision in Hariprasad Shivshankar44 case was that the words ‘for any reason whatsoever’ used in the definition of retrenchment would not include a bona fide closure of the whole business because it would be against the entire scheme of the Act. The learned Judges then observed that, on the fact before them to give full effect to the words “for any reason whatsoever” would be consistent with the scope and purpose of Section 25 of the Industrial Disputes Act and not contrary of the scheme of the Act. In Delhi Cloth & General Mills Ltd. vs Shambhu Nath Mukherjee,45 Goswani, Shinghal and Jaswant Singh, JJ. held that striking off the name of a workman from the rolls by the management was termination of the service which was retrenchment within the meaning of Section 2(oo) of the Industrial Disputes Act. Dr Anand Parkash cited before us the decision of a Full Bench of the Kerala High Court in L. Robert D’Souza vs Executive Engineer, Southern Rly.46 and some other cases decided by other High Courts purporting to follow the decision of this Court in Hariprasad Shivshankar Shukla vs A.D. Divikar47 case. Shukla48 case, we have explained. The ratio of Shukla49 case, in fact, has already been explained in Hindusthan Steel Ltd. vs The Presiding Officer, Labour Court Orissa.50 The decisions in Hindusthan Steel Ltd. vs The Presiding Officer, Labour Court, Orissa,51 and State Bank of India vs N. Sundara Money52 have, in our view, properly explained Shukla53 case and have laid down the correct law. The decision of the Kerala High Court in L. Robert D’Souza vs Executive Engineer, Southern Rly.54 and the other decisions of the other High Courts to similar effect, viz. Managing Director, National Garage vs J. Gonsalves, Goodlass Nerolac Paints (P) Ltd. vs Chief Commissioner,55 and Rajasthan S.E.B. vs Labour Court,56 are, therefore, overruled. We held, as a result of our discussion, that the discharge of the workman on the ground [that] she did not pass the test which would have enabled her to be confirmed was ‘retrenchment’ within the meaning of Section 2(oo) and, therefore, the requirements of Section 25-F has to be complied with. The order of the Presiding Officer, Central Government Industrial Tribunalcum-Labour Court, New Delhi, is set aside and the appellant is directed to be reinstated with full back wages. The appellant is entitled to her costs.

The Procedure for Retrenchment: The Approach Sections 25G and 25H of the Act provide for the manner in which retrenchment has to be carried out and the manner in which the re-employment of retrenched workmen has to be considered. Any deviation from this principle must be on coherent reasons only, which are to be substantiated with all the necessary evidence before the tribunal and not before the appellate court. The Supreme Court reiterated this view in a clear manner in the following case.

Lay-off and Retrenchment 481

Workmen of Sudder Workshop of Jorehaut Tea vs Management of Jorehaut Tea57 THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER These two appeals, turning on the validity of the retrenchment of 23 workmen way back in 1966, are amenable to common disposal. Mr Phadke, appearing for the Management, argued straight to the point, so did Shri Mridul, with the result that we could get the hang of the case without much wrestling with time or getting paper-logged. Since, in substance, we are inclined to leave undisturbed the award of the Industrial Tribunal, affirmed, as it were, by the High Court, both these appeals will be given short shrift with brief reasons. The facts, to the extent necessary to appreciate the issues canvassed, are brief. The Management of a tea plantation by the name Jorehaut Tea Co. Ltd. retrenched 23 workmen, 16 of whom were paid retrenchment compensation allegedly in terms of Section 25-F of the Industrial Disputes Act (for short, the Act) and in the order of ‘last come, first go’, while the services of the other seven were terminated, although on payment of retrenchment compensation, allegedly in breach of Section 25-G of the Act, i.e., out of turn. The dispute that was raised was decided by the Tribunal who upheld the validity of the retrenchment of the 16 but set aside the termination of the other 7. Consequently it directed their reinstatement with some back wages. The award granted the following relief: In respect of the workmen, viz., Sri Bhogeswar Saikia, Sri Kandeswar Bora, Sri Gunai Bora, Sri Pramodhar Sarma, Sri Allauddin Ahmed, Sri Devan Sarma and Sri Harlalal Biswas whose retrenchment has been found to be not justified, they are entitled to reinstatement with continuity of service. Those workmen have not come forward to say that they remained unemployed from the date of their retrenchment. In the circumstances of the case, I think they may be given wages at half the rate from the date of retrenchment till the date of publication of the award in the Gazette. We may first dispose of the workers’ appeal. In all, 23 persons were retrenched. In respect of 16 the rule of ‘last come, first go’ was applied. Thus homage was paid to Section 25-G of the Act. But then, the workmen in their appeal contended before us that Section 25-F had been breached and, therefore, the termination was bad in law. The management’s case is that, as a fact, all or most of them had been reinstated when fresh vacancies has arisen, although neither party is able to assert with certainty this case of reinstatement. That apart, if there be noncompliance with Section 25-F, the law is plain that the retrenchment is bad. However, when probed further as to how Section 25-F had been violated, Shri Mridul argued that the amount paid by way of retrenchment compensation envisaged in Section 25-F fell short of what was legally due and hence there was non-compliance. Under more searching interrogation, Shri Mridul stated that the compensation had been computed on the basis of wages previously paid and in derogation of the Wage Board Award which had been implemented by the Management with effect from 1 April 1966. The retrenchment was on 5 November 1966, i.e., months after 1 April 1966. Therefore, the revised pay-scales as per the Wage Board Award should have been adopted in calculating the retrenchment compensation. This spinal flaw rendered the tender of compensation insufficient and, therefore, the retrenchment itself was invalid. May be, there is apparent force in this contention. But Shri Phadke countered it by saying that it was not open to the workmen to spring a surprise on the Management especially when the question was one of fact. He urged that before the tribunal no plea

482 Social Justice and Labour Jurisprudence based on the Wage Board Award was made and it was quite possible that the Management would have adequately met the contention if such a plea had been raised. The fact is that before the tribunal the contention pressed before us was neither pleaded nor proved. There is no hint of it in the award. In the High Court this new plea based on the facts was not permitted. Had there been some foundation laid at least in the written statement of the workmen, we might have been inclined to explore the tenability of the plea, especially because there is no dispute about the Wage Board Award and the fact that it had been given effect to from April 1, 1966 and the further fact that in the retrenchment notice the wages were not calculated according to the Wage Board’s Award. It must be remembered, however, that the Wage Board’s Award was subsequent to the retrenchment although retrospectively applied and the workmen had accepted the retrenchment compensation on the wages prevalent at the time of the retrenchment. In the absence of any basis for this new plea we are unable to reopen an ancient matter of 1966 and, agreeing with the High Court, dismiss the appeal. But the 16 workmen, being eligible admittedly for the Wage Board scale, will be paid the difference for the period between 1 April 1966 to 5 November 1966. Now, we will take up the merits of the Management’s appeal which relates to the retrenchment of seven workmen. Admittedly, the rule in Section 25-G of the Act, which postulates that ordinarily ‘last come, first go’ will be the methodology of retrenchment, has not been complied with, provided we treat all the workmen in the category as one group. It makes for better appreciation of the point if we read Section 25-G at this stage: Where any workman in an industrial establishment, who is a citizen of India, is to be retrenched and he belongs to a particular category of workmen in that establishment, in the absence of any agreement between the employer and the workman in this behalf, the employer shall ordinarily retrench the workman who was the last person to be employed in that category unless for reasons to be recorded the employer retrenches any other workman. The keynote thought of the provision, even on a bare reading, is evident. The rule is that the employer shall retrench the workman who came last, first, popularly known as ‘last come, first go’. Of course, it is not an inflexible rule and extraordinary situations may justify variations. For instance, a junior recruit who has a special qualification needed by the employer may be retained even though another who is one-up is retrenched. There must be a valid reason for this deviation, and obviously, the burden is on the Management to substantiate the special ground for departure from the rule. Shri Phadke brought to our notice the decision in Om Oil & Oilseeds Exchange Ltd., Delhi vs Their Workmen58 to make out that it was not a universal principle which could not be departed from by the Management that the last should go first. The Management had a discretion provided it acted bona fide and on good grounds. Shah, J., in that very ruling, while agreeing that a breach of the rule could not be assumed as prompted by mala fides or induced by unfair labour practice merely because of a departure or deviation, further observed that the tribunal had to determine in each case whether the Management had acted fairly and not with ulterior motive. The crucial consideration next mentioned by the learned Judge is that the Management’s decision to depart from the rule must be for valid and justifiable reasons, in which case ‘the senior employee may be retrenched before his junior in employment’. Surely, valid and justifiable reasons are for the Management to make out, and if made out, Section 25-G will be vindicated and not violated. Indeed, that very decision stresses the necessity for valid and good grounds for varying the ordinary rule of ‘last come, first go’. There is none made out here, nor even alleged, except the only plea that the retrenchment was done in compliance with Section 25-G grade wise. Absence of mala fides by itself is no absolution from the rule in Section 25-G. Affirmatively, some valid and justifiable grounds must be proved by the Management to be exonerated from the ‘last come, first go’ principle.

Lay-off and Retrenchment 483 It must be remembered that the above provision which we have quoted insists on the rule being applied category wise. That is to say, those who fall in the same category shall suffer retrenchment only in accordance with the principle of last come first go. The short point raised is that the seven workmen are not in the same category. The finding of the tribunal, concurred in by the High Court is that they fell in the same category. We quote the award: It will be seen that when there is no trade test or anything to mark efficiency, there is no basis for placing the workmen in different grades and when all the workmen of the same category are to do the same work inasmuch as by the management’s own evidence there is no grade wise allocation of duty within the same category. Although in the evidence the Management wanted to justify their departure from the principle of ‘last come first go’ there is nothing to show that such a reason was recorded for deviating from the principle. In the circumstances of the case it cannot be said that the Management’s selection of persons to be retrenched leaving the junior most in some category was justified and the reason now adduced for deviating from the principle cannot be accepted in the absence of the reason being not recorded at the time of retrenchment. Further it will be also noticed that although there is classification of workman into grades (?) within the category, there is nothing to distinguish one workman of one grade from another workman of another grade inasmuch as there is no allocation of duties amongst the workmen of different grades in the category. The seniority list is the same, which is a telling circumstance to show that they fell in the same category. Grading for purposes of scales of pay and like considerations will not create new categorisation. It is a confusion or unwarranted circumvention to contend that within the same category if grades for scales of pay, based on length of service, etc., are evolved, that process amounts to creation of separate categories. This fallacy has been rightly negatived by a detailed discussion in the award. The High Court has avoided the pitfall and we decline to accept the submission. The result is that the award must hold good in regard to the illegally retrenched seven workmen. What remains to be considered is the last submission of Shri Phadke that the engineering establishment wherein those seven workmen are to be reinstated is no longer in existence. Further, he pleads that on account of long lapse of time on account of the pendency of the appeal in this Court the compensation payable by way of full wages may amount to a huge sum disproportionate to the deviance from the law. He, therefore, pleads for moulding the relief less harshly. We cannot sympathise with a party who gambles in litigation to put off the evil day and when that day arrives prays to be saved from his own gamble. The award had given convincing reasons for reinstatement and even reduced the back wages to half. Still, the workmen were dragged to the High Court and, worse, when worsted there, were driven from Assam to Delhi to defend their pittance. The logistics of litigation for indigent workmen is a burden the Management tried to use any a convert blackmail through the judicial process. Misplaced sympathy is mirage justice. We cannot agree. When so, we take note of the inordinate delay due to long pendency which is part of the pathology of processual justice in the Supreme Court. So we direct that half the back wages between the date of retrenchment and the publication of the award shall be paid, as directed in the Award itself. For the post-award period, full wages will be paid until the High Court’s judgment on 13 April 1971 and thereafter 75% of the wages will be paid until 30 April 1980. Counsel contends that the workshop is not in existence now and reinstatement is physically impossible. Sri Mridul, for the workmen, states that a just solution by the court in the given circumstances is acceptable. We direct that, in lieu of reinstatement, one year’s wages, calculated on the scale sanctioned by the Wage Board recommendations, for each such workman be paid.

484 Social Justice and Labour Jurisprudence All the sums, if not paid before 15 May 1980, shall carry 12% interest. And upto 15 May 1980 they shall carry 9% interest in suppression of the interim order dated 5 May 1972. Rough and ready justice, for want of full information, is not satisfactory but cannot be helped. We dismiss the workmen’s appeal. No costs. We dismiss the Management’s appeal, subject to the above directions, with costs quantified at Rs 5,000.

NOTES 1. Under Section 25M of the Act, the employer must obtain post facto permission from the appropriate government if the lay-off is due to shortage of power or a natural calamity, and in the case of a mine, if the lay-off is due to a fire, flood, excess of inflammable gas or explosion. 2. Under Section 2(kkk) of the Act, ‘lay-off ’ 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 a natural calamity or any other connected 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. 3. Section 25C of the Act provides that:whenever a workman (other than a badli workman or a casual workman) whose name is borne on the muster rolls of an industrial establishment and who has completed not less than one year of continuous service under an employer is laid-off, whether continuously or intermittently, he shall be paid by the employer for all days during which he is so laid-off, except for such weekly holidays as may intervene, compensation which shall be equal to fifty per cent, of the total of the basic wages and dearness allowance that would have been payable to him had he not been so laid-off. Provided that if during any period of twelve months, a workman is so laid-off for more than forty-five days, no such compensation shall be payable in respect of any period of the lay-off after the expiry of the first forty-five days, if there is an agreement to that effect between the workman and the employer… 4. AIR 1976 SC 1775. This case was heard by V.R. Krishna Iyer and N.L. Untwalia. 5. 1952 2 Lab LJ 37. 6. 1 SCR 476:AIR 1959 SC 1342. 7. 3 SCR 448:AIR 1970 SC 1494. 8. AIR 1957 Bom. 100:(1976) 1 Lab LJ 547. 9. (1964) 5 SCR 548:AIR 1964 SC 1458. 10. (1969) 1 SCC 366:AIR 1969 SC 530. 11. (1969) 1 SCC 366:AIR 1969 SC 530. 12. (1967) 2 LLJ 761 (All). 13. (1972) 1 LLJ 284. 14. AIR 1963 Bom 146. 15. AIR 1979 SC 170. 16. 2 SCR 866 P. 871:AIR 1960 SC 610 p. 612, 613. 17. 3 SCR 528:AIR 1960 SC 923. 18. AIR 1976 SC 1111. 19. 3 SCR 303:AIR 1973 SC 878. 20. (1978) 3 SCR 207:AIR 1978 SC 548. 21. AIR 1976 SC 1111. This case was heard by V.R. Krishna Iyer, Y.V. Chandrachud and A.C. Gupta. 22. ILR (1973) 2 Delhi 673 at 676:AIR 1975 Delhi 77 at 79. 23. 1960 2 SCR 866, 871–872:AIR 1960 SC 610, 613. 24. After the judgement of the Supreme Court in this case, the definition of the term ‘retrenchment’ in Section 2(oo) of the Act underwent amendment in the year 1982, and now reads as follows: ‘retrenchments’ means the termination by the employer of the service of a workman for any reason whatsoever, otherwise than as a punishment inflicted by way of disciplinary action, but does not include(a) voluntary retirement of the workman; or (b) retirement of the workman on reaching the age of superannuation if the contract of employment between the employer and the workman concerned contains a stipulation in that behalf; or

Lay-off and Retrenchment 485 ([bb] termination of the service of the workman as a result of the non-renewal of the contract of employment between the employer and the workman concerned on its expiry or of such contract being terminated under a stipulation on that behalf contained therein) or (c) termination of the service of a workman on the ground of continued ill-health; 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58.

1973 2 All ER 103. (1974) 4 SCC 710:AIR 1974 SC 923. AIR 1979 SC 1981. This case was heard by V.R. Krishna Iyer and R.S. Pathak. AIR 1957 SC 121:(1957) 1 LLJ 243:(1956–57) 11 FJR 317. AIR 1980 SC 1219. This case was heard by V.R. Krishna Iyer and O. Chinnappa Reddy. 1957 SCR 121. 1957 SCR 121. AIR 1960 SC 251:(1960) 2 SCR 32. 1957 SCR 121. AIR 1964 SC 1166. (1965) 3 SCR 448:AIR 1966 SC 75. AIR 1976 SC 1111. (1977) I SCR 586:AIR 1977 SC 31. 1957 SCR 121. AIR 1976 SC 1111. AIR 1976 SC 1111. 1957 SCR 121. 1957 SCR 121. AIR 1976 SC 1111. 1957 SCR 121. (1976) I SCR 591:AIR 1978 SC 8. (1979) I LLJ 211 (Ker). (1957) SCR 121. (1957) SCR 121. (1957) SCR 121. (1977) 1 SCR 586:AIR 1977 SC 31. (1957) 1 SCR 586:AIR 1977 SC 31. AIR 1976 SC 1111. (1957) SCR 121. (1979) I LLJ 211 (Ker). (1967) ILLJ 545 (Pun). (1966) I LLJ 38 (Raj). AIR 1980 SC 1454. This case was heard by V.R. Krishna Iyer and O. Chinappa Reddy. (1966) Supp. SCR. 74:AIR 1966 SC 1657.

Chapter 13

Labour Employed through Middlemen—their Rights The system of employment of labour on a contract basis through a middleman is not a new phenomenon in India. The Contract Labour (Regulation and Abolition) Act, 1970, was enacted with the dual object of prohibiting employment of labour through middlemen wherever practicable and in cases where the system could not be altogether abolished, of regulating the system by ensuring certain minimum welfare amenities to the workmen. But this Act applies only to establishments where 20 or more persons are employed as contract labour. In cases where contract labour is employed within the scope of the provisions of the Act, the power to abolish the system lies only with the appropriate government specified under the Act.1 The relevant issue that stands for consideration is the absorption of the erstwhile contract labour as regular employees of the principal employer when once the system is abolished.

The Entitlement of Contract Labour to be Absorbed as Regular Employees Hussain Bhai vs the Alath Factory Thezhilali Union, Kozhikode and Others 2 As far as the absorption of contract labour as regular employees of the principal employer is concerned, in a situation where either the provisions of the Contract Labour (Regulation & Abolition) Act, 1970, are defeated in the employment of such labour or have no application, a clear ratio exists as laid down by the apex Court. In this case, speaking for the majority, Justice V.R. Krishna Iyer propounded a valuable point of jurisprudence regarding situations where labour is employed by a principal employer through a middlemen. Even today, this judgement remains an authority for deciding cases relating to the employment of contract labour either outside the scope of the provisions or defeating the provisions of the Contract Labour (Regulation & Abolition) Act, 1970. THE FACTS OF THE CASE The petitioner is a factory-owner manufacturing ropes. A number of workmen were engaged to make ropes from within the factory, but these workmen, according to the

Labour Employed through Middlemen—their Rights 487

petitioner, were hired by contractors who had executed agreements with the petitioner to get such work done. Therefore, the petitioner contended that the workmen were not his workmen but the contractors’ workmen. The industrial award, made on a reference by the state government, was attacked on this ground. The learned single judge of the High Court, in an elaborate judgement, rightly held that the petitioner was the employer and the members of the respondent union were employees under the petitioner. A Division Bench upheld this stand and the petitioner has sought special leave from this Court. THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER It is not in dispute that 29 workmen were denied employment which led to the reference. It is not in dispute that the work done by these workmen was an integral part of the industry concerned; that the raw material was supplied by the Management; that the factory premises belonged to the Management; that the equipment used also belonged to the Management and that the finished product was taken by the Management for its own trade. The workmen were broadly under the control of the Management and defective articles were directed to be rectified by the Management. This concatenation of circumstances is conclusive of the question. Nevertheless, this issue is being raised time and again and so we proceed to pass a speaking order. We should have thought that even cases where this impressive array of factors were not present, would have persuaded an industrial court to the conclusion that the economic reality was employer-employee relationship and, therefore, the industrial law was compulsively applicable. Even so, let us look at the issue afresh. Who is an employee, in Labour Law? That is the short, die-hard question raised here but covered by this Court’s earlier decisions. Like the High Court, we give short shrift to the contention that the petitioner had entered into agreements with intermediate contractors who had hired the respondent-Union’s intermediate workmen and so no direct employer-employee vinculum juris existed between the petitioner and the workmen. This argument is impeccable in laissez faire economics ‘red in tooth and claw’ and under the Contract Act rooted in English Common Law. But the human gap of a century yawns between this strict doctrine and industrial jurisprudence. The source and strength of the industrial branch of Third World Jurisprudence is social justice proclaimed in the Preamble to the Constitution. This Court in Ganesh Beedi’s case has raised on British and American rulings to hold that mere contracts are not decisive and the complex of considerations relevant to the relationship is different. Indian Justice, beyond Atlantic liberalism, has a rule of law which runs to the aid of the rule of life. And life, in conditions of poverty aplenty, is livelihood, and livelihood is work with wages. Raw societal realities, not fine-spun legal niceties, not competitive market economics but complex protective principle, shape the law when the weaker, working class sector needs succour for livelihood through labour. The conceptual confusion between the classical law of contracts and the special branch of law sensitive to exploitative situations accounts for the submission that the High Court is in error in its holding against the petitioner. The true test may, with brevity, be indicated once again. Where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the workers’ subsistence, skill, and continued employment. If he, for any reason, chokes off, the worker is, virtually, laid off. The presence of intermediate contractors with whom alone the workers have immediate or direct relationship ex contractu is of no consequence when, on lifting the veil or looking at the conspectus of factors governing employment, we discern the naked truth, though draped in different perfect paper arrangement, that the real employer is the Management, not the immediate contractor. Myriad devices, half-hidden in fold after fold of legal form depending on the

488 Social Justice and Labour Jurisprudence 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 43-A of the Constitution. The court must be astute to avoid the mischief and achieve the purpose of the law and not be misled by the maya of legal appearances. If the livelihood of the workmen substantially depends on labour rendered to produce goods and services for the benefit and satisfaction of an enterprise, the absence of direct relationship or the presence of dubious intermediaries or the make-believe trappings of detachment from the Management cannot snap the real life-bond. The story may vary but the inference defies ingenuity. The liability cannot be shaken off.

Of course, if there is total dissociation in fact between the disowning Management and the aggrieved workmen, the employment is, in substance and in real-life terms, by another. The management’s adventitious connections cannot ripen into real employment. THE HUSSAIN BHAI RATIO IN SUBSEQUENT DECISIONS This judgement and the observations made thereunder by Justice V.R. Krishna Iyer were cited as authority and relied upon by the Supreme Court in the cases of the Secretary, Haryana State Electricity Board vs Suresh and others,3 and in Bharat Heavy Electricals vs the State of Uttar Pradesh and Others.4 In the case of the Secretary, Haryana State Electricity Board,5 it was held that the doctrine of equality as enshrined in the Constitution promised an egalitarian society and the Contract Labour (Regulation & Abolition) Act, 1970, is the resultant effect of such a Constitutional mandate having its due focus in the perspective. The draconian concept of law is no longer available for the purpose of interpreting a social and beneficial piece of legislation, especially on the wake of the new millennium. The democratic polity ought to survive with full vigour: socialist status as enshrined in the Constitution ought to be given its full play and it is in this perspective the question arises—is it permissible in the new millennium to decry the cry of the labour force desirous of absorption after working for more than 240 days in an establishment and hav-ing their working supervised and administered by an agency within the meaning of Article 12 of the Constitution. The answer cannot possibly be in the affirmative. In this context, the Supreme Court recalled the observation of this Court in the Hussainbhai case. The true test may, with brevity, be indicated once again. Where a worker or group of workers labours to produce goods or services and these goods or services are for the business of another, that other is, in fact, the employer. He has economic control over the worker’s subsistence, skill, and continued employment. If he, for any reason, chokes off, the worker is, virtually, laid off. The presence of intermediate contractors with whom alone the workers have immediate or direct relationship ex contractu is of no consequence when, on lifting the veil or looking at the conspectus of factors governing employment, we discern the naked truth, though draped in different perfect paper arrangement, that the real employer is the Management, not the immediate contractor. Myriad devices, half-hidden in fold after fold of legal form 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 43-A of the Constitution. The court must be astute to avoid the mischief and achieve the purpose of the law and not be misled by the maya of legal appearances. Had there been any genuine contract labour system prevailing with the appellant board, then obviously it would have to be abolished as per Section 10 of the Act, after following the procedure laid down therein. However, on the facts of the present case, there was no genuine

Labour Employed through Middlemen—their Rights 489 contract system prevailing at the relevant time wherein the Board could have acted as only the principal employer and a licensed contractor employing labour on his own account, more when the Board at the relevant time was not a principal employer and the so-called contract was not with a licensed contractor under the Act. The inevitable conclusion is that the so-called contract system was a mere camouflage, a smoke screen, and disguised in an almost transparent veil, which could easily be pierced, and the real contractual relationship between the Board on the one hand and the employees on the other could be clearly visualized. In the case of Bharat Heavy Electricals,6 then, it was held that where a workman–labour is engaged to produce goods or services and these goods or services are for the business of another, that other is the employer. The work of the respondent workmen is not totally disassociated in fact between them and the appellant to say that they were not employees of the appellant. If the respondent workmen as a matter of fact were employed with the appellant to work in his premises—and which in fact is found established after removing the mask or façade of makebelieve employment under the contractor, the appellant cannot escape its liability.

NOTES 1. Section 10 of the Act provides: (1) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case may be a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process, operation or other work in any establishment. (2) Before issuing any notification under sub-section (1) in relation to an establishment, the appropriate Government shall regard to the condition of work and benefits provided for the contract labour in that establishment and other relevant factors, such as (a) whether the process, operation or other work is incidental to, or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment; (b) whether it is of perennial nature, that is to say, it is of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment; (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; (d) whether it is sufficient to employ considerable number of whole-time workmen.

2. 3. 4. 5. 6.

Explanation: If a question arises whether any process or operation or of work is of perennial nature, the decision of the appropriate Government thereon shall be final. (1978) 4 SCC 257. The case was heard by V.R. Krishna Iyer, D.A. Desai and O. Chinnappa Reddy, and the majority judgement was delivered by Justice V.R. Krishna Iyer. AIR 1999 SC 116. The case was presided over by two judges. (2003) 6 SCC 528. The case was presided over by two judges. AIR 1999 SC 116. (2003) 6 SCC 528.

Chapter 14

Wages and Monetary Benefits The most controversial issue in industrial relations is that of wages. Wages form the pivot around which all industrial conflicts revolve. As far as workers in the organised sector are concerned, legislation pertaining to wages deals only with the regulation1 aspect, leaving the determination of actual wage levels to the parties themselves. Of course, the Minimum Wages Act, 1948, by and large is confined to the sweated industries. This Act empowers the appropriate government to fix and to revise the minimum rates of wages for employments specified in the Schedule of the Act.2 The Act, under Section 4, provides the constituents of such minimum wages.3

Payment of Tips to Hotel Staff: Whether a Part of the Dearness Allowance In the following case, the Supreme Court had to consider whether the tips paid by customers to workers in hotels forms part of their dearness allowance or not.

The Rambagh Palace Hotel, Jaipur, vs the Rajasthan Hotel Workers Union, Jaipur4 THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER The appellant the Management of the Rambagh Palace Hotel, Jaipur has attacked the award made by the Industrial Tribunal, Rajasthan in favour of the workers of the hotel in the dispute raised on the score that the price index having gone up the workers were entitled to adequate compensation by way of dearness allowance. Very fairly, advocate appearing for the appellant has confined his ground of challenge to one point. He states that the Industrial Tribunal while it has reduced the award of dearness allowance considerably vis-à-vis the demand put forward, after taking into consideration various circumstances like free food and accommodation, the Tribunal has failed to bear in mind the circumstance that tips in the shape of half the salary are also being distributed by the Management to the workers. He has brought to the notice the decision of this court in Management of Wenger and Co. vs Workmen,5 where it has been pointed out that while the right to treat the tips received by the waiters may not be wholly irrelevant to the decision of the question about the matter of D.A., it would not be right either to make a calculation about the tips received and treat the said amount as a substitute either wholly or partially for the D.A. itself. The proper approach, according to this court, is for the tribunal to

Wages and Monetary Benefits 491 bear in mind the fact that tips are received and make some suitable adjustment in that behalf. According to counsel, the payment of tips has been lost sight of by the tribunal and therefore the order making award by way of dearness allowance should be interfered with and modified to some extent. We regret and are unable to agree with the counsel on this point. It is well known that in important hotels in the country—the appellant is now a five star hotel—the customers are of the affluent variety and pay tips either to the waiters directly or in the shape of service charges or otherwise to the Management along with the bill for the items consumed. In short, the true character of tips cannot be treated as any payment made by the Management out of its pocket but a transfer of what is collected to the staff as it is intended by the payer to be so distributed. It may also happen that more money comes in by way of tips into the pockets of the Management than is distributed by it. We cannot therefore consider the receipt of the tips by the staff as anything like a payment made by the Management to its employees warranting consideration by the Tribunal to depress the award of dearness allowance. Of course, it is a factor which may perhaps be in the mind of the Tribunal when it finalized the actual figures. There is no reason for us to think that although not specifically put down in his order, the Tribunal has lost sight of this circumstance. For this reason, we think that there is no ground for interference with the award of the Industrial Tribunal. The appeal was dismissed and there was no order as to the costs.

Running Allowance: Whether Wages The Payment of Wages Act, 1936, was enacted with the sole intention of eliminating the evil of illegal deductions and delay in payment of wages by employers in certain establishments. The Act contains a detailed mechanism that defines the term ‘wages’ and provides the authorised deductions to be made by the employer from the wages of employed persons. In the event of any grievance, the Act provides an authority for the redressal of such grievances pertaining to the payment of wages. Often the judiciary has come across the issues pertaining to the scope of the powers of such an authority and the scope of the term ‘wages’ as defined in the Act.

Dilbagh Rai Jerry vs Union of India6 In this case, the Supreme Court had to deal with certain issues relating to question of law under the Payment of Wages Act. The beauty of this case lies in the concurring (with the majority judgement) but special observation made by Justice V.R. Krishna Iyer with regard to the conduct of the State as an entrepreneur in dragging the matter ultimately to the summit Court. THE FACTS OF THE CASE The appellant was a Guard ‘C’ grade in the Northern Railway. He was confirmed in that post in 1952. On 3 April 1955, an incident took place at the railway station, Kalka, as a result of which he was prosecuted for an offence under Section 509 of the Penal Code. The Additional District Magistrate, Ambala, convicted him on 29 December 1955 to three months’ simple imprisonment. His appeal was dismissed by the Court of Sessions. In revision, the High Court of Punjab, on 5 March 1956, maintained his conviction but reduced the sentence.

492 Social Justice and Labour Jurisprudence On 2 April 1956, the appellant received a communication from the Divisional Personnel Officer, Northern Railway that he had been dismissed from service by the Divisional Superintendent with effect from 31 March 1956. In an appeal by special leave, this Court, set aside the conviction of the appellant and acquitted him by its judgement dated 7 March 1957. Thereafter, the appellant filed a writ petition in the High Court of Punjab under Article 226 of the Constitution, impugning the order of his dismissal. The High Court, by its judgement dated 2 September 1958, issued a writ directing the respondents to treat the dismissal of the appellant wholly void and ineffective. Pursuant to that direction, on 26 December 1958, the appellant received a letter from Divisional Personnel Officer that he had been reinstated in the post of a guard of ‘C’ grade and that the matter of his back wages for the period between the date of his dismissal and the date of reinstatement would be decided later on. By another letter of 13 February 1959, the same officer informed the appellant that the period from the date of his dismissal to the date of his reinstatement would be treated as leave due. The appellant on 11 March 1959 was paid Rs 81.51 as his entire wages for the period ending 7 March 1959. On 13 August 1959, the appellant made an application under Section 15(2) of the Payment of Wages Act (hereafter referred to as ‘the Act’) before the prescribed authority, claiming a sum of Rs 9015.60 plus 12 times the said amount as compensation from the respondents. In addition, travelling allowance was claimed. Later an attempt was made to amend the application and replace ‘travelling allowance’ with ‘running allowance’. The authority did not permit the appellant to do so, as he had failed to amend in time despite the order of the court. The respondent resisted the appellant’s claims on various grounds, including that of limitation. By an order dated 7 August 1963, the authority directed respondent No. 1 (the Union of India), in its capacity as employer, to refund the sum of Rs 4863.20 (plus Rs 100 as costs) to the appellant, holding that the same had been illegally deducted from his wages. The authority disallowed the remaining claims, including that for the running allowance. Against the order of the authority, two appeals were carried to the appellate authority (the Additional District Judge)— one by the appellant and the other by the respondent. The appellate authority held that the appellant’s claim was barred by time as limitation had commenced from the date of dismissal from service and not from the date of reinstatement, or the date on which it was decided to treat the period of dismissal as leave due. It upheld the dismissal of the appellant’s claim to the running allowance, inter alia, for the reason that he had, despite the order of the authority, failed to amend the petition within the period indicated in O.6, Rule 18 of the Code of Civil Procedure. The appellate authority further found that the railway administration was competent to treat the period of the appellant’s inactive service from 1 April 1956 to 17 February 1959 as leave due and to deduct his wages for that period in accordance with Rule 2044 of the Railways Establishment Code and held that in view of Section 7(2)(h) of the Act, no refund of the deducted wages could be allowed. It further held that in the case of the railway administration, the divisional superintendent named as paymaster was responsible for the payment of wages to the railway employees and, consequently, the direction of the authority requiring the Union of India to make payment to the claimant was illegal. As a result, the appellate authority allowed the respondent’ appeal and dismissed the appellant’s claim. The appellant’s writ petition impugning this order of the appellate authority was, as already stated, dismissed by the High Court. Hence this appeal.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE SARKARIA The first question that falls to be considered is, whether the claim application filed by the appellant under Section 15(2) of the Act was time barred?

Wages and Monetary Benefits 493 Mr Bishan Narain, learned Counsel for the appellant contends that the case falls under the first part of the proviso (1) to Section 15(2) which relates to deduction of wages and limitation would start from 11 March 1959 when the wages for the period of the appellant’s inactive service were actually deducted and he was paid Rs 81/51 only for the entire period ending 7 March 1959. Even on a stricter view according to the learned Counsel, limitation would not start earlier than the date, 13 February 1959, when constructive deduction took place and it was decided to treat the period of his inactive service as leave due (which meant leave without pay), Since the appellant’s claim application had been presented within six months of either of these dates, it was well within time. Learned Counsel for the respondents does not dispute that this is a case of deduction of wages. His argument, however, is that irrespective of whether the case was one of deduction or of non-payment of wages, the starting point of limitation would be the same viz, the date on which the wages fell due or accrued. The argument is that the concept of ‘deducted wages’ and ‘delayed wages’ are so integrated with each other that the events relatable to them always synchronise furnishing the same cause of action and the same start of limitation. It is pointed out that the wages of a railway employee fall due every month; wages of one month being payable by the 10th of the succeeding month. Since the dismissal of the appellant was declared void and non est by the Punjab High Court—it is urged—his right to claim wages continued to accrue every month even during the period of dismissal. In the view propounded by the learned Counsel, limitation for making the application under Section 15(2) started from 3 January 1956, the date of the dismissal and the application made by the appellant more than three years thereafter, was clearly time barred. Reference has been made to this Court’s decision in Jai Chand Sawhney vs Union of India.7 We shall presently see that while the contentions of the learned Counsel for the respondents cannot, those canvassed by the learned Counsel for the appellant must prevail. The material part of Section 15 of the Act reads: Section 15(2) where contrary to the provisions of this Act any deduction has been made from the wages of an employed person, or any payment of wages has been delayed, such person himself, or any legal practioner or any official of a registered trade union authorised in writing to act on his behalf, or any inspector under this Act, or any other person acting with the permission of the authority appointed under sub-section (1) may apply to such authority for a direction under sub-section (3): Provided that every such application shall be presented within (twelve months) from the date on which the deduction from the wages was made or from the date on which the payment of the wages was due to be made, as the case may be: Provided further that any application may be admitted after the said period of twelve months when the applicant satisfies the authority that he had sufficient cause for not making the application within such period. 15(3) When any application under sub-section (2) is entertained, the authority shall hear the applicant and the employer or other person responsible for the payment of wages under Section 3, or give them an opportunity of being heard, and after such further inquiry (if any) as may be necessary, may, without prejudice to any other penalty to which such employer or other person is liable under this Act, direct the refund to the employed person of the amount deducted, or the payment of delayed wages, together with the payment of such compensation as the authority may think fit, not exceeding ten times the amount deducted in the former case and not exceeding twenty five rupees in the latter, and even if the amount deducted or the delayed wages are paid before the disposal of the application, direct the payment of such compensation, as the authority may think fit, not exceeding twenty-five rupees…

494 Social Justice and Labour Jurisprudence The question of limitation turns on an interpretation of the first proviso to sub-section (2) of Section 15. This proviso ex facie indicates two alternative termini a quo for limitation, namely: (I) the date on which deduction from wages was made, or, (II) the date on which the payment of the wages was due to be made. From a reading of Section 15, it is clear that the legislature has deliberately used, first, in subsection (2), and then in sub-section (3), the expressions ‘deduction of wages’ and ‘delay in payment of wages’ as two distinct concepts. Terminus a quo (I) in the proviso expressly relates to the deduction of wages, while (II) is referable to the delayed wages. If both these termini were always relatable to the same point of time, then there would be no point in mentioning terminus a quo (I), and the Legislature could have simply said that limitation for a claim under Section 15(2) would always start from the date on which the wages ‘fall due’ or ‘accrue’ as has been done under Article 102 of the Limitation Act which applies only to the suits for recovery of wages. The very fact that two distinct starting points of limitation referable to two distinct concepts have been stated in the proviso shows that the Legislature had visualised that the date of deduction of wages and the due date of delayed wages, may not always coincide. Conjunction ‘or’, which in the context means ‘either’ and the phrase ‘as the case may be’ at the end of the proviso are clinching indicia of this interpretation. They are not mere surplusages and must be given their full effect. The legislature is not supposed to indulge in tautology; and when it uses analogous words or phrases in the alternative, each may be presumed to convey a separate and distinct meaning, the choice of either of which may involve the rejection of the other. To hold that the two expressions ‘wages deducted’ and ‘wages delayed’, though used in the alternative, carry the same meaning, and in the proviso are always referable to one and the same point of time would be contrary to this primary canon of interpretation. ‘[D]eduction from wages’ has not been defined in the Act. Some illustrations of such deductions are, however, to be found in Sections 7 and 13. One of them in Section 7(2)(b) is ‘deductions for absence from duty’ which indicate that such deduction can be a total deduction also. That is to say, ‘deduction from wages’ may be the same thing as ‘deduction of wages’. The deduction in the instant case is akin to this category covering the entire deficiency for the period of absence, the only difference being that here, the appellant’s absence from duty was involuntary. Such absence in official parlance is euphemistically called ‘inactive service’ if the employee is later on reinstated. The point to be considered further is, when did such deduction of wages take place? Ordinarily in a case like the present where the employee was dismissed on one date and reinstated on a later date, the deduction of wages may synchronise with the act of reinstatement. But on the peculiar and admitted facts of this case, the deduction did not take place on the date of reinstatement (26-12-1958) because the order of reinstatement expressly stated that ‘decision with regard to his wages to be paid for that period will be taken later on’. In the case in hand, therefore, the ‘deduction’ will coincide with the decision impliedly or expressly deducting the wages. Such a decision was taken and put in a course of communication to the appellant on Feb 18, 1959 whereby he was informed that the period from 3-1-1956 to 17-2-1959, would be treated as ‘leave due’ which, it is conceded, meant leave without pay. Thus, deduction from his wages for the entire period of his ‘inactive service’ took place on Feb 16, 1959, and limitation under the first part of the proviso commenced from that date. The application was made on 13 August 1959, within six months of that date and was thus within time. In Jai Chand Sawhney’s8 case the interpretation of the first proviso to Section 15(2) never came up for consideration. Therein, the court was concerned only with the construction of the expression ‘accrue/due’ in Article 102 of the Limitation Act, 1908 which does not govern applications under Section 15(2) of the Act. That case, therefore, is of no assistance in determining the precise issue before us. It may be observed in passing that the rule in Sheo Prasad vs Addl. District Judge, Moradabad,9 relied on by the Additional District Judge, was not followed by the same High Court in Ram

Wages and Monetary Benefits 495 Kishore Sharma vs Addl. District Judge, Saharanpur10 as it had ceased to be good law in view of the decision of this court in Divisional Supt. Northern Rly. V. Pushkar Dutt Sharma.11 In Pushkar Dutt’s case,12 the application under Section 15(2) of the Act was filed within six months of the date in which the dismissal of the employee was set aside by the court in second appeal. The employee’s application would have been within time irrespective of whether his case was treated as one of the ‘wages deducted’ or ‘wages delayed’. Therefore, the necessity of examining the comparative meaning and distinction between ‘deduction from wages’ or ‘delay in payment of wages due’ and the two alternative starting points of limitation relatable to these expressions, did not arise in that case. In the light of the above discussion, we reverse the finding of the Additional District Judge and hold that the application filed by the appellant under Section 15(2) of the Act having been made within six months of the date of deduction from his wages, was within time. The second ground on which the Order of the Additional District Judge proceeds, is that since the deduction of the wages for the period of his inactive service from 1 April 1956 to Feb 17, 1959, had been made under the order of a competent authority passed in accordance with rule 2044 of the Railway Establishment Code, in view of Section 7(2)(h) of the Act no order could be made for the refund of the deducted amount. Both the learned Counsel before us are agreed that in view of the pronouncement of this Court in Devendra Pratap Narain Raj Sharma vs State of U.P.,13 this ground is not sustainable. In Sharma’s14 case, this Court was construing rule 54 of the U.P. Government Fundamental Rules, the language of which is substantially the same as that of rule 2044 of the Railway Establishment Code. It was held therein, that rule 54 enables the State Government to fix the pay of a public servant when his dismissal is set aside in departmental appeal. But that rule has no application to cases in which dismissal is declared invalid by a decree of a civil court and he is, in consequence, reinstated. Mr Bishan Narain next contends that the prescribed Authority had wrongly disallowed the claim of the appellant to ‘Running Allowance’ which he had misdescribed as ‘Travelling Allowance’ in his claim application. The point pressed into argument is, that once the Authority had allowed the appellant to amend his application for converting the claim of ‘Travelling Allowance’ into ‘Running Allowance’, it had no discretion left thereafter to prevent him from carrying out the amendment, on the technical ground that the period indicated under Order 6, Rule 18, Code of Civil Procedure, for this purpose, has expired. The Code of Civil Procedure, it is urged, does not govern amendment of applications under Section15(2) of the Act. The contention is untenable. While it is true that Rules 17 and 18 of Order 6 of the Code of Civil Procedure do not, in terms, apply to amendment of an application under Section 15(2), the Authority is competent to device, consistently with the provisions of the Act and the rules made thereunder, its own procedure based on general principles of justice, equity and good conscience. One of such principles is that delay defeats equity. The Authority found that the applicant was guilty of gross negligence. He took no steps whatever to carry out the amendment for several months after the order permitting the amendment, and thereafter, when the case was at final stage, he suddenly woke up, as it were, from slumber, and sought to amend his application. In the circumstances, the Authority rightly refused to put a premium on this delay and laxity on the part of the appellant. In the view we take on the claim to running allowance we need not pronounce finally on whether an amendment to the relief once granted requires to be formally carried out in the petition, as in a pleading in Court, less rigidity being permissible in quasi Judicial proceedings. Mr Bishan Narain further contends that Running Allowance was a part of the pay or substantive wages. In support of this argument he has invited our attention to rule 2003 of the Railway Establishment Code, clause 2 of which defines ‘average pay’. According to the second proviso to this clause, in the case of staff entitled to running allowance, average pay for the purpose of leave salary shall include the average running allowance earned during the 12 months immediately preceding the month in which a railway servant proceeds on leave subject to a

496 Social Justice and Labour Jurisprudence maximum of 75 percent of the average pay for the said period, the average running allowance once determined remaining in operation during the remaining part of the financial year in cases of leave not exceeding one month. The crucial words, which have been underlined, show that such running allowance is counted towards ‘average pay’ in those cases only where the leave does not exceed one month. It cannot, therefore, be said that running allowance was due to the appellant as part of his wages for the entire period of his inactive service. Travelling allowance or running allowance is eligible if the officer has travelled or run, not otherwise. We therefore negative this contention. For the foregoing reasons, we allow this appeal, set aside the order of the Appellate Authority and restore that of the prescribed Authority. The appellant shall have his costs throughout.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE KRISHNA IYER The judgment just delivered has my full concurrence but I feel impelled to make a few observations not on the merits but on governmental disposition to litigation, the present case being symptomatic of a serious deficiency. In this country the State is the largest litigant to-day and the huge expenditure involved makes a big draft on the public exchequer. In the context of expanding dimensions of State activity and responsibility, is it unfair to expect finer sense and sensibility in its litigation policy, the absence of which, in the present case, has led the railway callously and cantankerously to resist an action by its own employee, a small man, by urging a mere technical plea which has been pursued right up to the summit court here and has been negatived in the judgment just pronounced. Instances of this type are legion as is evidenced by the fact that the Law Commission of India in a recent report15 on amendments to the Civil Procedure Code has suggested the deletion of S. 80, finding that wholesome provision hardly ever utilised by Government, and has gone further to provide a special procedure for Government Litigation to highlight the need for the activist policy of just settlement of claims where the State is a party. It is not right for a welfare State like ours to be Janus-faced, and while formulating the humanist project of legal aid to the poor, contest the claims of poor employees under it pleading limitation and the like. That the tendency is chronic flows from certain observations I had made in a Kerala High Court decision, P.P. Abubacker vs Union of India16 which I may usefully excerpt here: The State under our Constitution undertakes economic activities in a vast and widening public sector and inevitably gets involved in disputes with private individuals. But it must be remembered that the State is no ordinary party trying to win a case against one of its own citizens by hook or by crook; for, the State’s interest is to meet honest claims, vindicate a substantial defence and never to score a technical point or overreach a weaker party to avoid a just liability or secure an unfair advantage, simply because legal devices provide such an opportunity. The State is a virtuous litigant and looks with unconcern on immoral forensic successes so that if on the merits the case is weak, government shows a willingness to settle the dispute regardless of prestige and other lesser motivations which move private parties to fight in court. The lay-out on litigation costs and executive time by the State and its agencies is so staggering these days because of the large amount of litigation in which it is involved that a positive and wholesome policy of cutting back on the volume of law suits by the twin methods of not being tempted into forensic show-downs where a reasonable adjustment is feasible and ever offering to extinguish a pending proceeding on just terms, giving the legal mentors of government some initiative and authority in this behalf. I am not indulging in any judicial homily but only echoing the dynamic national policy on State litigation evolved at a Conference of Law Ministers of India way back in 1957. This second appeal strikes me as an instance of disregard of that policy.

Wages and Monetary Benefits 497 All these words from the Bench, hopefully addressed to a responsive Government, may, if seasonable reactions follow, go a long way to avoidance of governmental litigiousness and affirmance of the image of the State as deeply concerned only in just—Social Justice. The pyrrhic victory of the poor appellant in this case is a sad justification for the above observations.

Grant of Additional Dearness Allowances: Principles for Consideration The Supreme Court, right from the time of its inception, has in a number of cases clearly laid down the principles to be followed by the wage-fixing authorities, such as industrial tribunals, whenever a wage-related issue comes before it. Any deviation from this normal rule would always meet with a warning from the apex Court.

Precision Bearings India vs Baroda Mazdoor Sabha17 In this case, the Supreme Court was called upon to decide the correctness of the view taken by the industrial tribunal in disposing of a matter related to a claim for additional dearness allowance. THE JUDGEMENT DELIVERED BY JUSTICE GOSWAMI This appeal by Special leave is directed against the award of the Industrial Tribunal, Gujarat, of 8 October 1976. Although it is a composite award disposing of two references by the State Government, we are concerned in this appeal with reference (IT) No. 11 of 1975 as per the State Government notification of 21 January 1975 and even out of the two questions referred to therein only with regard to one of these regarding dearness allowance. The relevant issue which arises for consideration in this appeal may be quoted below: All workmen should be paid dearness allowance at the rate of 100% dearness allowance paid to the workers of the Cotton Textile Mills at Ahmedabad. Before we advert to the submission of Mr H.R. Gokhale, appearing on behalf of the appellant, it will be appropriate to indicate that there is no dispute about granting dearness allowance of the pattern of what is known as the Ahmedabad Textile D.A. The question to be determined by the tribunal was only with regard to the percentage of the textile D.A. to be paid to the employees of the company. The tribunal has noticed that the recent trend in the several industries—textile, engineering and others, in Ahmedabad, Baroda and in some other parts of the State of Gujarat, is to make a demand for dearness allowance on the lines of the dearness allowance paid to the workers of the cotton textile mills at Ahmedabad, with a varying percentage. The tribunal describes this as what in ordinary parlance is called the ‘Textile D.A.’ and reckons it ‘as before the revision of the basic wage in the mills prior to 1-1-1974’.

498 Social Justice and Labour Jurisprudence The company is manufacturing high precision ball and roller bearings in collaboration with a West German company. It has its plant in the district of Baroda with a manufacturing capacity of 24 lakh pieces of bearings per annum upto 1973 and 28.82 lakh pieces per annum from 1974. The company was incorporated in April, 1962 and went into commercial production from June 1965. Its registered office is in Bombay and has its sales office in Bombay, Calcutta, Delhi and Madras. The plant is being operated almost to full capacity from June 1965 onwards. The production has also increased progressively. The number of workers on 31-8-1974 was about 630. The company is said to be the third largest unit in the ball bearing industry in the country, the other two concerns being Antifriction Bearings and the Associated Bearings, the next one to the company being Shriram Bearings. Two questions are raised before us by Mr Gokhale. Counsel is conscious of his limitations in an appeal by special leave under Article 136 of the Constitution and has, therefore, fairly enough confined his submissions within narrow bounds and we fully appreciate this stand. The first submission of Mr Gokhale in the forefront of his argument is that the Industrial Tribunal has failed to consider the impact of the rise in dearness allowance granted by it on the financial capacity of the appellant to bear the burden. It is true that in considering the question of dearness allowance the capacity to pay of the company is one of the most important considerations. Mr Gokhale has pointed out that the additional liability as a result of the award would be Rs 8,29,312 in 1975, Rupees 7,42,563 in 1976 and Rs 12,42,395 in 1977 and the percentage increase over the annual wage bill will respectively be 36.76%, 32.91% and 55.07% for the said three years. He has also pointed out that the company was able to declare 8% dividend for the first time in the year 1970–71 and has been incurring loss for the earlier years from 1962–63. He also points out that although dividends have been progressively increasing from 8% to 12% from 1970–71 to 1974–75, only 8% dividend was declared in the year 1975–76. Besides, the company has to spend huge sums for replacement costs which according to counsel, the Tribunal has not properly taken into account. It is true that the Tribunal has mentioned in the award that this could be done in a phased manner. Mr Gokhale submits with some justification that this was purely a management function and the Tribunal should have taken the figures as furnished by the management in making reserves for replacement costs. We have, however, seen that although a substantial sum was kept as reserve towards the replacement costs, only a fraction of it was actually utilised. The company therefore, cannot make any grievance about the manner in which the tribunal has dealt with this aspect. Mr Garg, on behalf of the respondents, also drew our attention to paragraph 4 of the company’s written statement (p. 62, Volume 1) where after having referred to certain offers made by it the company was prepared to the ‘increase of about Rs 15 lacs in the employee cost in the very first year…’. We find that the Tribunal has exhaustively gone into the whole matter with care and kept in view the five principles laid down by this Court in the Bengal Chemical & Pharmaceutical Works Ltd. vs Its Workmen,18 the 5th one being the additional financial burden which dearness allowance would impose upon the employer and his ability to bear such burden. We are unable to find any infirmity in the Tribunal dealing with the point of the financial capacity of the employer to bear the burden. The tribunal finally observed as follows:— On a careful consideration of all the relevant factors, in my opinion, the dearness allowance paid to the PBI (Precision Bearing India) workmen at the minimum level of basic pay from Rs 26—upto Rs 100—should be from 80 percent, of the Textile D.A. phased over a period of three years. The dearness allowance in the higher pay scale of Rs 101–Rs 200—should be 40 percent and the still higher slab of Rs 201 and above, should be 20 percent, the percentage for the higher two slabs remaining the same.

Wages and Monetary Benefits 499 The 40 percent and 20 percent of the basic wages in the higher slabs were in addition to the Ahmedabad Textile Dearness Allowance granted in the award. This takes us to the second objection of Mr Gokhale. It is submitted that in the charter of demands of the union there were two specific demands with regard to dearness allowance. These were as follows: 1:1. It is demanded that the existing minimum dearness allowance of Rs 146 should be modified and that all the workers including workers known as staff should be paid minimum dearness allowance at the rate of full dearness allowance that is being paid to the textile workers at Ahmedabad, i.e. 100% of Ahmedabad Textile rate. 1:2. With the above minimum dearness allowance the workers and workers known as staff should be further continued the higher dearness allowance as under— Below Rs 100 pay Pay range between Rs 100 to Rs 200 Pay above Rs 200

— — — —

100% Ahmedabad Textile Dearness Allowance. 100% Ahmedabad Textile Dearness Allowance + 40% of Basic. 100% Ahmedabad Textile Dearness Allowance + 20% of Basic.

Even though the demand for dearness allowance was as above, the State Government referred the dispute only in the form set out at the outset. The Government did not entertain the claim of dearness allowance in addition to the 100% D.A. paid to the workers of the cotton textile mills at Ahmedabad. In other words, while the claim of the union was Ahmedabad Textile D.A. plus, the Government did not entertain the dispute between the parties in that form. We find great force in the above submission of Mr Gokhale. The Tribunal in view of the content of the dispute referred to it had no jurisdiction in this reference to grant anything more than 100% of the Ahmedabad Textile D.A. on the outside. Since the tribunal after having given appropriate consideration to all aspects of the matter granted varying percentages from 80% to 89% phased in a particular way, it had virtually rejected the union’s claim for 100% of Textile D.A. Having done so, there was no scope for allowing to the higher brackets of wage earners in addition 40% and 20% of basic wages as dearness allowance. This part of the award is, therefore, beyond the scope of the reference and must be quashed which we hereby do. If the Government at a future time intends to entertain a dispute of this nature with regard to higher brackets of wage earners that will be a different dispute but such a claim could not be entertained by the tribunal in the present reference. We may observe that during the course of the proceedings before the tribunal the clerical and the supervisory staff seem to have withdrawn from the reference and even an application was filed by some of them before the tribunal to confine the dispute as pertaining to the manual and technical workers. The Tribunal, however, did not accede to this request and proceeded on the footing that all the members of the staff were included in the reference. We should not be taken to suggest that the 40% and 20% plus is either wrong or excessive by way of high cost allowance. Indeed, we even felt that the lowest bracket upto Rs 100 needed full neutralisation of the rise in the cost of living as has been held in Killick Nixon Limited vs Killick & Allied Companies Employees Union.19 Nor do we fail to see the force of Shri Garg’s submission that social justice perspectives being integral to industrial jurisprudence, the high cost allowance as a component of D.A. is not impermissible in principle. It is a legitimate item. But we disallow because there is a deliberate omission to make a reference of that item and so falls outside the jurisdiction of the tribunal. That is why we have expressly observed that such a dispute may well be referred by Government, if it considers fit, and this decision will not bar such a course.

500 Social Justice and Labour Jurisprudence In the result the appeal is partly allowed. The award of the Tribunal with regard to the 40% and 20% for the higher two slabs is set aside. In all other aspects the award of the Tribunal stands. The appellant will pay the costs (one set) of the respondents as ordered at the time of granting the special leave and will also pay interest as ordered therein. The arrears calculated in terms of the Award now upheld will be paid to the respondents in two equal instalments the first instalment within three months from today and the final instalment within three months thereafter.

Interpretation of an Industrial Truce Agreement Relating to Wage Structure: The Approach K. Savanth vs the Mysore State Road Transport Corporation and Another 20 This appeal by special leave, which was directed against the judgement and order dated 14 December 1970 of the High Court, Mysore, at Bangalore, allowing the writ petition 1176 of 1967 filed before it by the first respondent under Articles 226 and 227 of the Constitution and quashing the orders dated 30 September 1966 and 1 January 1967 of the Labour Court, Bangalore, made in the appellant’s application 171 of 1965, raises an interesting question as to the scope and ambit of clause 4 of the industrial truce agreement arrived at on 10 January 1958 between the management of the Mysore Government Road Transport Department and the representatives of the State Transport Employees’ Federation. EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE JASWANT SINGH It appears that the appellant entered the service of the Bangalore Transport Company Ltd. on 1 September 1950 as a Probationary Traffic Supervisor on a salary of Rs 80 per mensem. On completion of his probationary period, he was confirmed in the said post on a salary of Rs 100 in the pay scale of Rs 100-10-150. By virtue of the powers vested in it under the Bangalore Road Transport Services Act No. 8 of 1956, the Government of Mysore acquired the Bangalore Transport Company Ltd. with effect from 1 October 1956 with the result that along with other employees of the Company, the appellant became a civil servant in the Transport Department of the Government of Mysore which catered to the transport requirements of the public. In course of time, the appellant was appointed as Assistant Traffic Superintendent and was given a higher pay scale of Rs 150-10-200. On 1 April 1957 when he held that post, he was in the pay scale of Rs 150-10-200 and was drawing a salary of Rs 150 P.M. With the re-organisation of the States and the formation of the enlarged Mysore State as well as the expansion of the Mysore Government Road Transport Department (hereinafter referred to as ‘Transport Department’) comprising of the Hubli Region of the ex-Bombay State Road Transport Corporation, the Raichur Section of the ex-Hyderabad State Road Transport Department and the Bangalore Transport Service of the ex-Bangalore Transport Company Ltd. having their respective pay scales, service conditions, etc., it was considered necessary by the members of the State Transport Employees’ Federation as well as the Management of the Transport Department to have uniform pay scales, service conditions, etc. for the entire organisation of the Transport Department. Accordingly, on 10 January 1958, an Industrial Truce Agreement was concluded between the

Wages and Monetary Benefits 501 Management of the Transport Department and the representatives of the State Transport Employees’ Federation which was given a retroactive effect from 1 April 1957. Clause 4 of this Agreement which was intended to bring about uniformity of pay scales in all the divisions of the Transport Department provided as follows:— Weightage in the revised pay scales will be admissible only to the regular employees of the Government Road Transport Department of ex-State of Mysore and the Bangalore Transport Service Unit. (a) The pay of an employee shall be fixed in the new scale at a stage next above his pay in the existing scale on 1 April 1957, and, if, his present pay is less than the minimum of the revised scale, his pay shall be fixed at such minimum in the revised scale. Note: The pay in the existing scale on 1 April 1957 includes the increment, if any, accruing on that date. (b) After fixing the pay as above i.e. (a) he shall be granted advance increments in the revised scale as under: (1) For 3 completed years of service (2) For 4 completed years of service (3) For 6 or more completed years of service

(c)

(d) (e) (f )

1 increment 2 increments 3 increments

Note: Service means, the entire service of the employee irrespective of the grade held by him. In cases where the minimum pay in the new scale has to be granted under sub-clause (a) of Clause 4, the benefit of advance increments according to sub-clause (b) above shall not accrue when the increase of the minimum pay in the new scale over the pay in the existing scale exceeds Rs 25 plus one increment in the new scale. In other cases where the initial pay has to be fixed above the minimum, the total benefit under sub-clauses (a) and (b) above shall be uniformly limited to Rs 25 plus one increment in the revised scale subject to a minimum of Rs 5. The above principles shall apply in fixing the initial pay both in substantive and officiating appointments. When the weightage under sub-clause (b) above takes the total pay beyond the scale, the difference is treated as personal pay. The future increments will accrue from 1 April 1958.

After the conclusion of the aforesaid Industrial Truce Agreement, the then Management of the Transport Department fixed the initial pay of the appellant in the new scale at Rs 190. Dissatisfied with this fixation, the appellant made a representation to the Management urging that his initial pay in the revised scale ought to have been fixed at Rs 220 and that it had been wrongly fixed at Rs 190. On 1 August 1961, a Corporation styled as the ‘Mysore State Road Transport Corporation’ (hereinafter referred to as ‘the Corporation’) was constituted under Section 3 of the Road Transport Corporation Act (Act 34 of 1951). By virtue of a notification issued by the Government of Mysore under Section 34 of the Act, the Corporation took over the business of the Transport Department together with all its liabilities as the sole successor of the Department. In view of the fact that said notification protected the service conditions of the employees of the erstwhile Transport Department, the appellant opted for service under the Corporation and kept on pursuing the earlier representation made by him for fixation of his initial pay as on 1 April 1957 at Rs 220 in terms of the first part of sub-clause (c) of clause 4 of the Industrial Truce Agreement. The efforts made by him in this behalf having proved ineffective, the appellant made an application on 20 December 1965 before the Labour Court under Section 33(2) of the Industrial

502 Social Justice and Labour Jurisprudence Disputes Act, 1947 claiming that his initial pay as on 1 April 1957 had been wrongly fixed by the Management of the Transport Department at Rs 190, as against Rs 220 to which he was entitled by virtue of clause 4 of the Industrial Truce Agreement. The appellant also claimed increase in his dearness allowance in terms of the said Agreement. Holding that the appellant’s pay had to be fixed at Rs 220 p.m. in the pay scale of Rs 175-15-325 with a dearness allowance of Rs 50 P.M. as on 1 April 1957, the Labour Court by its order dated September 30, 1966 allowed the claim of the appellant and directed the Corporation to pay him a sum of Rs 3345.29 p. on account of the benefits claimed by him. This order was challenged by the Corporation before the High Court of Mysore by means of a writ petition under Articles 226 and 227 of the Constitution. By its aforesaid judgment and order dated 14 December 1970, the High Court allowed the petition and held that the erstwhile Management of the Transport Department was right in fixing the initial pay of the appellant at Rs 190. It is against this judgment and order that the appellant has come up in appeal to this Court by special leave, as already stated. In the absence of the appellant who has chosen not to appear despite service, the learned Attorney General has taken us through the material on the record and has urged that the High Court was right in reversing the order of the Labour Court and upholding the contention of the Corporation that the initial pay of the appellant could be fixed only at Rs 190 and not at Rs 220 as claimed by the appellant. We have given our careful consideration to the submissions made by the learned Attorney General but are unable to agree with him. A plain reading of clause 4 of the Industrial Truce Agreement reproduced above makes it crystal clear that the pay of the appellant as on 1 April 1957 in the then existing scale of Rs 150-10-200 being admittedly Rs 150 i.e. less than the minimum pay of the revised scale of Rs 175-15-325, it had, according to clause 4(a) of the Agreement, to be fixed at Rs 175 which is the minimum of the aforementioned revised scale. Now the appellant having put in more than six years’ service and his case being clearly outside the pale of the prohibition envisaged by the first part of sub-clause (c) of clause 4 of the Agreement, he had to be granted the benefit of three advance increments in terms of the formula contained in sub-clause (b) of clause 4 of the Agreement which would take his initial pay to Rs 220. The second part of sub-clause (c) of clause 4 of the Agreement which is heavily relied upon on behalf of the Corporation has no applicability to the present case as that part would operate only in those cases which fall within the prohibition contemplated by the first part of sub-clause (c) of clause 4 i.e. where the increase in the minimum pay in the revised scale over the pay in the scale which existed on 1 April 1957 exceeds Rs 25 plus one increment in the new scale i.e. if it exceeds Rs 25 plus Rs 15 totalling Rs 40. As in the instant case the increase of the minimum pay in the new scale does not exceed Rs 40, the second part of sub-clause (c) of clause 4 which is residuary cannot be invoked by the Corporation. The High Court was, therefore, patently in error in holding that the case of the appellant was covered not by the first part of sub-clause (c) of clause 4 but by the second part thereof. In so holding, it obviously overlooked the significance of the words ‘in other cases’ occurring at the commencement of the second part of sub-clause (c) of clause 4. The said words make it abundantly clear that it is only where a case does not fall within the purview of the first part of sub-clause (c) of clause 4 that it would be governed by the second part of the sub-clause. As the case of the appellant was not covered by the ban imposed by the first part of sub-clause (c) of clause 4 of the Industrial Truce Agreement, he could not have been denied the benefit of the advance increments which accrued to him under sub-clause (b) thereof. Accordingly, the order of the High Court which suffers from a patent error cannot be sustained. In the result, we allow the appeal, set aside the judgment and order of the High Court and restore that of the Labour Court. In view of the fact that the appellant has failed to appear, we make no order as to costs.

Wages and Monetary Benefits 503

Computation of Dearness Allowance: Validity The issue pertaining to the entitlement of dearness allowance is a very complicated aspect of labour law which the industrial tribunal has to confront. The tribunal, as per the ratio of the apex Court, has handled the issue from various perspectives, such as the prevailing rate of the dearness allowance with comparable concerns and the accepted rate of dearness allowance prevailing in the region—if necessary, going beyond the region for the purpose of comparision.

Tata Chemicals vs its Workmen21 In this case, the Supreme Court dealt clearly with these aspects while upholding the award of the industrial tribunal. THE FACTS OF THE CASE This appeal by special leave was directed against the award dated 21 February 1977, of the Industrial Tribunal, Gujarat, on 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 (XIV of 1947) (hereafter called ‘the Act’) for adjudication of a dispute relating to five demands—washing allowance, woollen jersey, unclean allowance, transport allowance and variable dearness allowance linked with the Ahmedabad cost of living index and adequate dearness allowance equal to that of the 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 order dated 3 April 1973). On 18 June 1973, the Employees’ Union submitted a charter of demands to the appellant, which included inter alia a demand for dearness allowance at 100 percent 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 strike for 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,

504 Social Justice and Labour Jurisprudence 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 the same 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 notice board 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 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 variable dearness allowance, as also the right of the government to refer the demand for adjudication, alleging that earlier in 1968, when it raised a demand for 100 percent 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 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.

EXCERPTS FROM THE JUDGEMENT DELIVERED BY JUSTICE JASWANT SINGH It is a matter of common knowledge that the spiral of prices has been constantly rising and the basket of goods and services has been costing more and more day after day since the outbreak of the Second World War in September, 1939. It is equally well known and indeed is not disputed that in the relevant years the prices of essential commodities and cost of living have been comparatively higher at Mithapur than at other places in the district like Jamnagar, Dharangadhra, Porbandar, Bhavnagar, etc. and the appellant Company had not been maintaining uniform standard of dearness allowance and had been paying higher dearness allowance to the workmen in its Head Office at Bombay than to its workmen at Mithapur. The statistics extracted from various annual reports, etc. exhibited in the case (particularly Exhibit 15[6]) go to show that the appellant Company which was established more than 40 years ago besides being a highly integrated chemical complex based on the solar evaporation of sea water in India is the largest solar salt producing concern in the country. The statistics also show that production of soda ash in diverse forms by the appellant Company for the relevant years is considerably higher than the combined production of soda ash of Dharangadhra Chemicals and Saurashtra Chemicals— the two other concerns in the Saurashtra region. The statistics also establish that there is no other heavy chemicals concern in the region which can be favourably compared to the appellant Company in so far as the nature and extent of business, capital outlay, percentage of gross and net profits, strength of labour force, reserves, dividends on equity shares, prospects of future business are concerned. Again Chart (Ex. 13[26]) shows that the percentage of wages in the appellant Company is the lowest amongst the even companies listed therein. Considering all the relevant factors which are to be borne in mind in fixing the dearness allowance, it is evident that the appellant Company holds a unique position in heavy chemicals in the region. It is in these circumstances that the Industrial Tribunal was constrained to turn to similar industries in Gujarat and found in the light of the aforesaid guiding factors that Sarabhai Chemicals,

Wages and Monetary Benefits 505 Baroda was the nearest similar industry which could legitimately serve as a comparable concern. The statistics also establish that besides Sarabhai Chemicals, Baroda, Anil Starch, Ahmedabad, Alembic Chemicals Works, Baroda, Atul Products, Bulsar and Ahmedabad Manufacturing and Calico Printing Co. Ltd. which are included in the list of heavy chemical factories covered by the Wages Board were paying 100% of Textile Dearness Allowance to its workmen. It is also evident from Exhibit 23 that the total pay packet paid to Mithapur workers was much less as compared to the total pay packet of the workers in other chemical and pharmaceutical companies alluded to in Exhibit 23. The material on the record also makes it abundantly clear that the appellant Company has been making huge profits over the years and its financial position is so stable that it could not only give variable dearness allowance on the basis of what was being paid to the workmen in the textile industry but could pay even higher allowance as was being paid to its workmen in the Head Office at Bombay. The Tribunal was, therefore, justified in linking the dearness allowance in question to the Textile Dearness Allowance paid to the industrial workers at Ahmedabad which is based on the Report of Family Living Survey among Industrial Workers at Ahmedabad, 1958–59, compiled as a result of the joint investigation carried on in a rational and scientific manner by several institutions viz. Labour Bureau, Ministry of Labour and Employment, Government of India, Technical Advisory Committee on Cost of Living Index Numbers consisting of representatives of the Ministry of Labour and Employment, Food and Agriculture, Finance, Planning Commission, the National Sample Survey Directorate, the Department of Statistics (C.S.O.), the Indian Statistical Institute and the Reserve Bank of India, etc. leading to the construction of Consumer Price Index Number for the working class which was accepted as reliable by this Court in Ahmedabad Mill Owners’ Association vs The Textile Labour Association.22 We are, therefore, of the opinion that notwithstanding the implementation of the recommendations of the Wage Board, there was nothing wrong about the linking of the scheme of the dearness allowance with the Ahmedabad Cost of Living Index Number known as Textile Dearness Allowance as before the revision in 1974. The decision of this Court in Bengal Chemical & Pharmaceutical Works Ltd. vs Its Workmen23 no doubt shows that in fixing wages and dearness allowance, the industry-cum-region formula is inter alia to be kept in view. At the same time, it had to be borne in mind that there can be no comparison between a small struggling concern and a large flourishing unit. It follows, therefore, that when there is a large disparity between the two concerns engaged in the same line of business in a region with which the Industrial Court is dealing, it is not safe to fix the same wage structure for the large flourishing concern of long standing as obtains in a small struggling concern (see French Motor Car Company Ltd. vs Their Workmen).24 It cannot also be lost sight of that with the march of time, the narrow concept of industry-cum-region is fast changing and too much importance cannot be attached to region. The modern trends in industrial law seem to lay greater accent on the similarity of industry rather than on the region. It was observed by this Court in Workmen vs New Egerton Woollen Mills 25 that where there are no comparable concerns in the same industry in the region, the Tribunal can look to concerns in other industries in the region for comparison but in that case such concerns should be as similar as possible and not disproportionately large or absolutely dissimilar. On the parity of reasoning, it is reasonable to conclude that where there are no comparable concerns engaged in similar industry in the region, it is permissible for the Industrial Tribunal or Court to look to such similar industries or industries as nearly similar as possible in adjoining or other region in the State having similar economic conditions. As in the instant case there was no comparable concern engaged in the line of business similar to that of the appellant Company in the Saurashtra region, the Industrial Tribunal did not, in our opinion, commit any error in taking into consideration for the purpose of comparison the dearness allowance paid by Sarabhai Chemicals and other concerns of the like or approximately like magnitude in other parts of the State of Gujarat.

506 Social Justice and Labour Jurisprudence For the foregoing reasons, we do not find any force in this appeal which is dismissed with costs quantified at Rs 2,000.

Adjusting Payment of Customary Bonus under the Statute: The Guiding Principles In India, the claim for payment of bonus by industrial workers out of the profits made by an employer is a historical concept and recognised as a custom even prior to the enactment of the Payment of Bonus Act, 1965. The Payment of Bonus Act, 1965, as such has not created any new right for the industrial workers in claiming bonus from the employer. However, the law regulates the payment of bonus to the extent as recognised within the framework of the legislation. After the enactment of the statute in the year 1965, the claim for customary bonus has created problems in view of Sections 17 and 34 of the Act.26 Justice V.R. Krishna Iyer, through majority view almost forced a halt to this controversy in the following case.

Mumbai Kamgar Sabha, Mumbai, vs Abdulbhai Faizullabhai and Others27 THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER A narration of the skeletal facts, sufficient to get a hang of the four legal issues debated at the bar in this appeal, by special leave, will help direct the discussion along a disciplined course, although the broader social arguments addressed have spilled over the banks of the jural stream. Nag Devi, a locality in the city of Bombay, is studded with small hardware businesses where pipes and fittings, nuts and bolts, tools and other small products are made and/or sold. These establishments, well over a thousand, employ a considerable number of workmen in the neighbourhood of 5,000, although each unit has (barring four), less than the statutory minimum of 20 workmen. This heavy density of undertakings and workers naturally produced an association of employers and a union of workmen, each recognizing the other, for the necessary convenience of collective bargaining. Apparently, these hardware merchants huddled together in the small area, were getting on well in their business and in their relations with their workmen, and this goodwill manifested itself in ex gratia payments to them of small amounts for a number years prior to 1965, when trouble began. Although rooted in goodness and grace, the annual repetition of these payments ripened, in the consciousness of the workers, into a sort of right—nothing surprising when we see in our towns and temples a trek of charity seekers claiming benevolence as of right from shopkeepers and pilgrims, especially when this kindly disposition has been kept up over long years. The compensation of yesterday crystallizes as the claim of today, and legal right begins as that which is humanistically right. Anyway, the hardware merchants of Nag Devi, made of sterner stuff, in the year 1965, abruptly declined to pay the goodwill sums of the spread-out past and the frustrated workmen frowned on this stoppage by setting up a right to bonus averring considerable profits for the industry (if one may conveniently use that expression for a collective coverage of the conglomeration of hardware establishments). The defiant denial and the appointment of a Board of Arbitrators under Section 10A of the Industrial Disputes Act to arbitrate upon twelve demands put forward by the Mumbai Kamgar Sabha, Bombay (the union which represents the bulk of workers employed in the tiny, but numerous, establishments). The charter of demands

Wages and Monetary Benefits 507 included, inter alia, claim for 4 months’ wages as bonus for the year 1965. The arbitral board, however, rejected the demand for bonus. The respondent establishments discontinued these payments thereafter and the union’s insistence on bonus led to conciliation efforts. The Deputy Commissioner of Labour mediated but since his intervention did not melt the hardened mood of the employers, formal demands for payment of bonus were made by the Union and the Government was persuaded to refer the dis-pute for adjudication to an Industrial Tribunal. The Tribunal formulated two issues as arising from the statements of the parties and rendered his award dismissing the reference. At this stage, it may be useful to set out the terms of reference made under Section 10(1)(d) of the Industrial Disputes Act, 1947 (for short, the I.D. Act), for adjudication by the tribunal: 1. Whether the establishments (mentioned in the annexure) have been giving bonus to their workmen till 1965? If so, how long before 1965 have the employers been giving bonus to their workmen? And at what rate? 2. Whether payment of bonus by the employers to their workmen has become customs or usage or condition of service in these establishments? If so, what should be the basis on which employers should make payment of bonus to their workmen for the years ending on any date in 1966, 1967, 1968 and 1969? Following upon the statements of parties the Tribunal framed two issues which ran thus: 1. Whether the Award of the Arbitration Board made in Reference (VA) No. 1 of 1967 and published in M.G.G. Part I-1, dated 31 October 1968, pp. 4259–86, operates as res judicata to the demand of the workmen. 2. Whether the reference in respect of the demands is tenable and legal. He answered the first in the affirmative and the second in the negative. The union representing the workers in the mass has assailed the findings of the Tribunal, the reasonings he has adopted and the mis-direction he has allegedly committed. The Tribunal did not enter the merits of the claim but dismissed it in limine on the score that the demand for bonus was barred by res judicata the arbitral board’s decision negativing the bonus for 1965 being the basis of this holding. The second ground for reaching the same conclusion was that the Bonus Act was a comprehensive and exhaustive law dealing with the entire subject of bonus and its beneficiaries. In short, in his view, the Bonus Act was a complete Code and no species of bonus could survive outside contours of that statute. Admittedly, here the claim for bonus for the relevant four years was founded on tradition or custom or condition of service and, in that light, the Tribunal made short shrift of the workmen’s plea in these words: In my opinion, the demand pertaining to the practice or custom prevailing in the establishments before 1965 is not such a matter as has to be adjudicated and it also does not fall under the provisions of Bonus Act. I, therefore, find that the reference in that respect also is not tenable and legal. The submissions of Counsel may be itemized into four contentions which may be considered seriatim. They are: (a) Was the Industrial Tribunal competent to entertain the dispute at all? (b) Was the claim for bonus for the years 1966–69 barred by res judicata? (c) Was there, apart from profit-based bonus, customary bonus or bonus as a condition of service? (d) If answer to (c) is in favour of the workmen, does the Bonus Act interdict such a demand since it does not provide for those categories of bonus and confine itself to profit based

508 Social Justice and Labour Jurisprudence bonus, or does the Bonus Act speak on the topic of bonus of all species and, therefore, stands foursquare between a claim for bonus and its grant, unless it finds statutory expression in the provisions of that Act? The first contention which, curiously enough, has appealed to the Industrial Tribunal, need not be investigated as it is devoid of merit and has rightly been given up by counsel for the respondent. A casual perusal of the provisions bearing on the jurisdiction of the Labour Court and the Industrial Tribunal as well as the relevant schedules will convince anyone that this industrial dispute comes within the wider ambit of the Industrial Tribunal’s powers. It is unfortunate that the Tribunal has made this palpable error. It is right to give plausible reasons for one’s verdict and not mar it by bad, perfunctory supplementaries. Fairness to respondent’s Counsel constrains us to consider in limine a flawsome plea forcibly urged that the union figured as the appellant before us but being no party to the dispute (which was between the workers on the one hand and the establishments on the other) had no locus standi. No right of the union qua union was involved and the real disputants were the workers. Surely, there is terminological lapse in the cause title because, in fact, the aggrieved appellants are the workers collectively, not the union. But a bare reading of the petition, the description of parties, the grounds urged and grievances aired, leave us in no doubt that the battle is between the workers and employers and the union represents, as a collective noun, as it were, the numerous humans whose presence is indubitable in the contest, though formally invisible on the party array. The substance of the matter is obvious and formal defects, in such circumstances, fade away. We are not dealing with a civil litigation governed by the civil procedure but with an industrial dispute where the process of conflict resolution is informal, rough and-ready and invites a liberal approach. Procedural prescriptions are handmaids, not mistresses of justice, and failure of fair play is the spirit in which Courts must view processual deviances. 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 misdescriptions 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, representatives’ actions, pro bono publico and like broadened forms of legal proceedings in keeping with the current accent on justice to the common man and a necessary disincentive to those who wish to by pass the real issues on the merits by suspect reliance on peripheral, procedural shortcomings. Even Article 226, viewed in wider perspective, may be amenable to ventilation of collective or common grievances, as distinguished from assertion of individual rights although the traditional view, backed by precedents, has opted for the narrower alternative. Public interest is promoted by a spacious construction of locus standi in our socio-economic circumstances and conceptual latitudinarianism permits taking liberties with individualization of the right to invoke the higher Court where the remedy is shared by a considerable number, particularly when they are weaker. Less litigation, consistent with fair process, is the aim of adjectival law. Therefore, the decisions cited before us founded on the jurisdiction under Article 226 are inept and themselves somewhat out of tune with the modern requirements of jurisprudence calculated to benefit the community. Two rulings of this Court more or less endorse this general approach: Bar Council of Maharashtra vs M. V. Dabholkar,28 and Newabbganj Sugar Mills Co. Ltd. vs Union of India.29 All this apart, we are dealing with an industrial dispute which, in some respects, lends itself to more informality especially in the matter of union representation. Technically, the union cannot be the appellant, the workmen being the real parties. But the infelicity of drafting notwithstanding, the union’s role as merely representing the workers is made clear in the description of the parties. Learned Counsel took us through Section 36(1) and (4) of the Act, rules 29 and 36 of the Central Rules under that Act, Section 15(2) of the Payment of Wages Act and some rulings throwing dim light on the rule regarding representation in industrial litigation. We deem it

Wages and Monetary Benefits 509 needless to go deeper into this question, for in industrial law, collective bargaining, union representation at conciliations, arbitrations, adjudications and appellate and other proceedings is a welcome development and an enlightened advance in industrial life. Organized labour, inevitably involves unionization. Welfare of workers being a primary concern of our Constitution (Part IV), we have to understand and interpret the new forms of procedure at the prelitigative and litigative stages, conceptually recognizing the representative capacity of labour unions. Of course, complications may arise where inter-union rivalries and kilkenny cat competitions impair the peace and solidarity of the working class. It is admitted, in this case, that there is only one union and so we are not called to visualize the difficult situations counsel for the respondents invited us to do where a plurality of unions pollute workers’ unity and create situations calling for investigation into the representative credentials of the party appearing before the Tribunal or Court. It is enough, on the facts of this case, for us to take the union as an abbreviation for the totality of workmen involved in the dispute, a convenient label which, for reasons of expediency, converts a lengthy party array into a short and meaningful one, group representation through unions being familiar in collective bargaining and later litigations. We do not expect the rigid insistence on each workman having to be party eo nomine. The whole body of workers, without their names being set out, is, in any case, sufficient, according to the counsel for the respondents, although strictly speaking, even there an amount of vagueness exists. For these reasons, we decline to frustrate this appeal by acceptance of a subversive technicality. We regard this appeal as one by the workmen compendiously projected and impleaded through the union. Next we come upon the plea of res judicata, as a roadblock in the way of the appellant. But we will deal with it last, as was done by counsel, and so straight to the piece de resistance of this lis. Points (b) and (c) bearing on bonus, therefore, claim our first attention and, in a sense are integrated and amenable to common discussion. Shri G.B. Pai appearing for the respondents, contended that the claim put forward by the appellant before the tribunal was, on the face of it, unsustainable on the short ground that what was pleaded was profit-based bonus only and, therefore, fell squarely within the Bonus Act. That Act being a complete Code, it expressly excluded by Section 1(3) all establishments employing less than 20 workmen and all but four of the respondents were admittedly such small undertakings, with the result that the death knell to the plea of bonus was tolled by the Act itself. Therefore, the conclusion was irresistible, argued Counsel for the respondents, that the plea for a profit-based bonus, being negatived by the statute, stands self-condemned. This argument drives us into an enquiry as to whether the claim before the tribunal was for profit-based bonus. ‘Yes’ was his holding and so he said ‘no’ to the workmen. The answer is the same, if the claim is founded on a similar basis. Shri Tarkunde, for the appellant, countered this seemingly fatal submission by urging that whatever might have been the species of bonus demanded in 1965, the present dispute referred by the State Government related to totally different type of bonus, namely, customary bonus or one which was a term of the employment itself. Even if this be true, Shri G.B. Pai has his case that the Bonus Act is all-comprehensive and no kind of bonus can gain legal recognition if it falls outside the sweep and scope of the Bonus Act itself. No brand of bonus has life if it does not find a place in the oxygen tent of the complete Code called the Bonus Act. What thus first falls for our examination is the reference by the State Government to the tribunal, the pleading of the workmen before the tribunal and the counter statement by the employers before the tribunal with a view to ascertain the character of the bonus demanded by the workers and covered by the dispute. It must be remembered that the award has rejected the claim not substantively but on the ground of two legal bars and care must be taken not to mix up maintainability with merits. A short cut is a wrong cut often times and the tribunal’s easy recourse to dismissal on preliminary grounds may well lead—and it has, as will be presently

510 Social Justice and Labour Jurisprudence perceived—to a reopening of the case many years later if the higher Court reverses the legal findings. Be that as it may, let us test the validity of the plea that only a profit based-bonus has been claimed by the workers. The demands referred by the State Government under Section 10(1)(d) specifically speak of payment of bonus by the employers which ‘has become custom or usage or a condition of service in the establishments’. The subsidiary or rather consequential point covered by the reference is ‘if so what should be the basis on which employers should make payment of bonus to their workmen for the years…’. It is plain that the subject-matter of the dispute, as referred by the Government, deals with bonus based on custom or condition of service. The Tribunal is, therefore, bound to investigate this question, the terms of reference being the operational basis of its jurisdiction. The workmen, in their statement, have asserted that bonus had been paid for several years and what transpired at the conciliation stages is clear from the letter of the Commissioner of Labour who adverts of the ‘usual custom and practice of payment of bonus’. The colour of the workers’ claim has been clarified further in paragraphs 10 to 12 of their statement before the tribunal. While they do mention that the hardware merchants of Nag Devi have been making large profits during the years in question and, therefore, can afford to pay bonus according to the standards and criteria applicable to larger and prosperous industrial establishments, the real foundation of their claim is set out in indubitable language as attributable to ‘custom, usage and condition of service’. Surely, they have no case of bonus dependent upon the quantum of profits of the establishments nor of uniformity region wise. On the other hand, the amount of bonus, the time of payment, etc., vary from establishment to establishment. The constant factor, however, is allegedly that there is ‘consistency, predictability and uniformity’, continuity and payment ‘without reference to the fluctuations in the financial performance and profits of each firm’. The Sabha does not mince words when, in praying for relief, it states that the tribunal ‘be pleased to restore the custom, usage and conditions of service represented by the payment of bonus in these firms’. In short, the bedrock of the bonus claim of the workers is custom and usage and/or implied condition of service. Nor have the establishments, who are the respondents before the tribunal and before us, made any mistake about the nature of the demand. In their statement before the tribunal they have urged that a scrutiny of the accounts of the firms is unnecessary ‘since the demand is not based on the profits or the financial results of the employers but is based on custom’. The contentions of the Sabha that the conditions of service under all these employers should be governed by one standard and one criteria, is not tenable. Since all the shops are not owned by one person and since every shop is a different entity there is no question of uniformity of service conditions. Moreover, there is no law which lays down that the service conditions of the employees under all these employers should be uniform. It is submitted that the reference to the capital-turnover ratio in this paragraph is irrelevant. It is also submitted that the Sabha’s demand that a sample scrutiny of the accounts of the firms should be made by the tribunal is irrelevant in this respect since the demand is not based on the profits or the financial results of the employers but is based on custom. Moreover, ex gratia payments for the pre-Bonus Act period are admitted by the respondents. They seek sanctuary on the counter-plea that few acts of grace, even if repeated, can neither amount to a custom, usage or condition of service. In sum, a study of the pleadings, the terms of reference and the surrounding circumstances supports the only conclusion that, peripheral reference to the profits of the establishments notwithstanding, the core of the cause of action or the kernel of the claim for bonus is custom and/or term of service, not sounding in or conditioned by profits. Shri G.B. Pai did urge that the precedents of this Court have linked custom-based bonus with some festival or other and that bonus founded on custom de hors some festival is virtually unknown to case-law on the point. From this he argues that since the bonus has not been related

Wages and Monetary Benefits 511 by reference to any festival by the workmen in their pleadings (reference to Diwali as the relevant festival in the statement of the case in this Court is an ingenious innovation to fit into the judge made law according to Shri Pai) the claim must fail. Legal life is breathed into customary bonus only by nexus with Puja or other festival. We are unable to agree with this rather meretricious submission. Surely, communal festivals are occasions of rejoicing and spending and employers make bonus payments to employees to help them meet the extra expenses their families have to incur. Ours is a festival ridden society with many religions contributing to their plurality. That is why our primitive practice of linking payment of bonus with some distinctive festival has sprouted. As we progress on the secular road, may be the Republic Day or the Independence Day or the Founder’s Day may well become the occasion for customary bonus. The crucial question is not whether there is a festival which buckles the bonus and the custom. What is legally telling is whether by an unbroken flow of annual payments a custom or usage has flowered, so that a right to bonus based thereon can be predicated. The custom itself precipitates from and is proved by the periodic payments induced by the sentiment of the pleasing occasion, creating a mutual consciousness, after a ripening passage of time, of an obligation to pay and a legitimate expectation to receive. We are therefore, satisfied that the omission to mention the name of a festival, as a matter of pleadings, does not detract from the claim of customary bonus. The impact of this omission on proof of such custom is a different matter with which we are not concerned at this stage since the tribunal has not yet enquired into the merits. Shri Pai urged that the custom, even if true, stood broken in 1965 and, therefore, during the post-1965 period, customary bonus stood extinguished. The effect of the arbitral board’s negation of the profit-based bonus claim in 1965 or custom-based bonus for the subsequent period is again relevant, if at all, as evidence, which falls outside our consideration at present. In the event of the tribunal having to adjudicate upon the question, may be this rather anaemic circumstances will be urged by the employer and explained by the employees. There is hardly any doubt that custom has been recognized in the past as a source of the right to bonus as the several decisions cited before us by Shri Tarkunde make out and Section 17(a) of the Bonus Act, in a way, recognizes such a root of title. In Management of Churakulam Tea Estate vs Workman,30 this Court surveyed the relevant case law at some length. M/s. Ispahani Ltd. vs Employees’ Union31 implied as a term of the contract the payment of bonus from an unbroken, long spell. [Justice] Vaidialingam, in Churakulam32 referring to some of the precedents, observed: In Ispahani’s33 case this Court had to consider a claim for Puja bonus, in Bengal, and the essential ingredients, for sustaining such a claim when it is based on an implied agreement. After stating that the claim, for Puja bonus, can be based either as a matter of implied agreement between the employers and employees, creating a term of employment of payment of Puja bonus, or that even where no implied agreement can be inferred, it may be payable as a customary bonus, this Court, in the said decision, specifically dealt with a claim for payment of bonus as an implied condition of service. This Court further accepted as correct the tests laid down by the Appellate Tribunal in Mahalaxmi Cotton Mills Ltd., Calcutta vs Mahalaxmi Cotton Mills Workers Union34 for inferring that there is an implied agreement for grant of such bonus. The three circumstances, laid down by the Appellate Tribunal, were: (1) that the payment must be unbroken; (2) that it must be for a sufficiently long period; and (3) that the circumstances, in which payment was made should be such as to exclude that it was paid out of bounty… This Court, again, had to consider the essential ingredients to be established when payment of bonus, as customary or traditional, is claimed—again related to a festival—in Graham Trading Co. (India) Ltd. vs Its Workmen35 and dealt with the question as follows: In dealing with Puja bonus based on an implied term of employment, it was pointed out by us in Messrs. Ispahani Ltd. vs Ispahani Employees’ Union36 that a term may be implied, even

512 Social Justice and Labour Jurisprudence though the payment may not have been at a uniform rate throughout and the Industrial Tribunal would be justified in deciding what should be the quantum of payment in a particular year taking into account the varying payments made in previous years. But when the question of customary and traditional bonus arises for adjudication, the considerations may be somewhat different. In such a case, the Tribunal will have to consider: (i) whether the payment has been over an unbroken series of years; (ii) whether it has been for a sufficiently long period though the length of the period might depend on the circumstances of each case; even so the period may normally have to be longer to justify an inference of traditional and customary Puja bonus than may be the case with Puja bonus based on an implied term of employment; (iii) the circumstance that the payment depended upon the earning of profits would have to be excluded and, therefore, it must be shown that payment was made in years of loss. In dealing with the question of custom, the fact that the payment was called ex gratia by the employer when it was made, would, however, make no difference in this regard because the proof of custom depends upon the effect of the relevant factors enumerated by us; and it would not be materially affected by unilateral declarations of one party when the said declarations are inconsistent with the course of conduct adopted by it; and (iv) the payment must have been at a uniform rate throughout to justify an inference that the payment at such and such rate had become customary and traditional in the particular concern. It will be seen that these tests are in substance more stringent than the tests applied for proof of Puja bonus as an implied term of employment. It will be seen from the above extract that an additional circumstance has also been insisted upon, in the case of customary or traditional bonus, that the payment must have been at a uniform rate throughout to justify an inference that the payment at such and such a rate had become customary and traditional in the particular concern. (pp. 936–37). In Management of Bombay Co. Ltd. vs Workmen,37 this Court, after pointing out the distinction in the ingredients of customary and contractual bonus affirmed the existence of categories like customary bonus which are different from and unconnected with profit-based bonus. The learned Judge discussed Jardine Henderson Ltd. vs Workmen,38 and other rulings, but the judicial chorus of legally claimable customary or contractual bonus is not marred by any discordant note. It may be otiose to refer to holdings of High Court when this Court has laid down the law. Even so, two decisions, one of Patna and the other of Calcutta, deserve mention. One of us (Untwalia J., as he then was), speaking for the Division Bench observed in Howrah-Amta Light Railway Co. Ltd. vs Central Government Industrial Tribunal 39 thus: Apart from the profit bonus, the sense of social justice has led to the recognition in law of the right of the workmen to get other kinds of bonus which do not depend upon nor are necessarily connected with the earnings of profits by the industrial concern. One such kind of bonus is that which is paid on the occasion of special festival well celebrated in particular parts of India, as [,] for example, Puja bonus in Bengal and Diwali bonus in Western India. The Court, referring to Tulsidas Khimji vs Workmen,40 restated the tests for the claim of customary bonus and rightly held that these tests are but circumstances and not conditions precedent, that it is not necessary to show that such bonus has been paid even in years of loss. The grounds to be made out for customary, as distinguished from contractual, bonus overlap in many respects but differ in some aspects. Justice P.B. Mukharji, as he then was, in M. Tilak & Co. vs Third Industrial Tribunal,41 observed: Akin to this conception of bonus is the case of a bonus annexed to the employment by custom or social practices such as customary bonus and Puja or festivity bonus. In case of such customary and traditional bonus, the question of profit may or may not arise at all and such

Wages and Monetary Benefits 513 customary and traditional bonus will depend on the content and terms of that custom or the tradition on which the claim for bonus is made. Each claim for bonus must depend on the facts of such claim. No doctrinaire view about bonus is possible or desirable. This much, however, is judicially settled that bonus is not deferred wages. It is narrow and static view that considers bonus as always an ex gratia payment or a glorified tip or ‘Bakshish’ or a mere cash patronage payable at the pleasure of the employer. In the industrial jurisprudence of a modern economic society, it is a legal claim and a legal category, whose potentialities are not as yet fully conceived, but whose types and boundaries the Courts in India are struggling to formulate. It is a vital instrument of industrial peace and progress, dynamic in its implication and operation. Since we are not called upon to investigate the veracity of the claim we stop with stating that the employers’ awareness of social justice, which fertilizes the right of his employees for bonus, blooms in many ways of which profit based bonus is but one—not the only one. All this is the indirect bonanza of Part IV of the Constitution, which bespeaks the conscience of the nation, including the community of employers. Law is not petrified by the past, but responds to the call of the changing times. So too the social consciousness of employers. Of course, Labour has its legal-moral duty to the community of a disciplined contribution to the health and wealth of the industry. Law is not always an organizer of one-way traffic. This general survey of the case law conclusively makes out that Labour’s claim for bonus is not inflexibly and solely pegged to profit as the one and only right. Bonus is a word of many generous connotations and in the Lord’s mansion there are many houses. There is profit-based bonus which is one specific kind of claim and perhaps the most common. There is customary or traditional bonus which has its emergence from long, continued, usage leading to a promissory and expectancy situation materializing in a right. There is attendance bonus, production bonus and what not. An examination of the totality of pertinent materials drives us to the inevitable result that what has been claimed by the workmen in the present case is bonus based on custom and service condition—not one based on profit. But the critical question pops up: Is the Bonus Act a killer of every other kind of bonus not provided for by it? We have thus to move on to a study of the scheme of the Bonus Act in order to ascertain whether it extinguishes claims founded on customary bonus or contractual bonus. In one sense, a bonus may be a mere gift or gratuity as a gesture of goodwill or it may be something which an employee is entitled to on the happening of a condition precedent and is enforceable when the condition is fulfilled. Any extra consideration given for what is received, or something given in addition to what is ordinarily received by, or strictly due to the recipient is a bonus (Black’s Legal Dictionary). But when industrial jurisprudence speaks of ‘bonus’, it enters the area of right and claim to what is due beyond strict wages. Viewed from this angle, prima facie one is led to the conclusion that if the Bonus Act deals wholly and solely with profit bonus, it cannot operate as a bar to different species of claim merely because word bonus is common to both. Of course, if the statute has spoken so comprehensively, as it can, effect must be given to it. The cosmos of bonus is expanding as working class contentment and prosperity become integral components of industrial peace and progress. The bone of contention between the parties before us is as to whether the Bonus Act is the alpha and omega of all extra claims, outside wages and salaries, labelled bonus with separate adjectives demarcating the identity of each species. But this issue has to be sized up not in vacuo but against the backdrop of the progressive change around us. Today it is accepted doctrine that Labour is the backbone of the nation, particularly in the area of economic self reliance. This means the welfare of the working classes is not only a human problem but a case where the success of the nation’s economic adventures depends on the cooperation of the working classes to make a better India. Indeed, on the national agenda is the question of labour participation in Management. Against such a perspective of developmental

514 Social Justice and Labour Jurisprudence jurisprudence there is not much difficulty in recognizing customary bonus and contractual bonus as permissible in Industrial Law, given proper averments and sufficient proof. Shri G.B. Pai has raised what he regards as a lethal infirmity in the claim of the Sabha. In his submission the Bonus Act is a complete Code and what is not covered by its provisions cannot be awarded by the Tribunal. It is true that if the Bonus Act is a complete code and is exhaustive of the subject, whatever the species of bonus, there may be a bar, but it is quite conceivable that the codification may be of everything relating to profit bonus in which case other types of bonus are left untouched. Merely calling a statute a code is not to silence, the claimant for bonus under heads which have nothing to do with the subject-matter of the Code. On listening to the intricate argument about implicit codification of the law of bonus by this Act, one is reminded of Professor Gilmore who put the case against codification thus (Aspects of Comparative Commercial Law, 1969 Edn., Siegel and Foster, pp. 449–50—Modern Law Review, 1975 January part, p. 30): The law, codified, has proved to be quite as unstable, unpredictable, and uncertain—quite as mulishly unruly—as the common law, uncodified, had ever been. The rules of law, purified, have remained the exclusive preserve of the lawyers; the people are still very much in our coils and clutches as they ever were if not more so. The argument of the Bonus Act being an all inclusive code is based on the anatomy of the Act and the ruling in Ghewar Chand.42 So the judicial task is to ascertain the history and object of the Act, the relevant surrounding circumstances leading upto it, its scheme and the prohibitions, exclusions, exemptions and savings which reveal the intent and ambit of the enactment. Long ago, Plowden, with Sibylline instinct, pointed out that the best way to construe the scope of an Act of Parliament is not to stop with the words of the sections. ‘Every law 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 by mere implication from a statute unless there are compulsive provisions constraining the Court to the conclusion. From this perspective, let us examine the exclusionary contention based on the body and soul of the Bonus Act. If the Bonus Act is a complete Code, on a true decoding of its scheme and spirit, the industrial Court cannot take off the ground with any other forms of bonus—yes, that is the implication of ‘a complete Code’. Bonus has varying conceptual contents in different branches of law and life. We are here concerned with its range of meanings in industrial law but, as expatiated earlier, there is enough legal room for plural patterns of bonus, going by lexicographic or judicial learning. It implies no disrespect to legal dictionaries if we say that precedents notwithstanding, the critical word ‘bonus’ is so multiform that the Judges have further to refine it and contextually define it. Humpty Dumpty’s famous words in Through the Looking Glass, ‘When I use a word…it means just what I choose it to mean…neither more nor less’ is an exaggerated cynicism. We have to bring in some legal philosophy into this linguistic problem as it incidentally involves doctrinal issues where the Constitution is not altogether non-aligned. Statutory interpretation, in the creative Indian context, may look for light to the lodestar of Part IV of the Constitution, e.g. Article 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. In Jalan Trading Co. Pvt. Ltd. vs Mill Mazdoor Union,43 Shah, J., gave a synopsis of the development of the branch of industrial law relating to bonus from the days of the First World War to the report of the Bonus Commission culminating in the Bonus Act, 1965. The story of ‘war bonus’, the Full Bench formula and this Court’s view that ‘bonus is not a gratuitous payment made by the employer to his workmen, nor a deferred wage, and that where wages fall short of the living standard and the industry makes profit part of which is due to the contribution of

Wages and Monetary Benefits 515 labour, a claim for bonus may be legitimately made by the workmen are set out in that decision. The Full Bench formula was based on profits and the terms of reference to the Commission put profit in the forefront as the foundation of the scheme to define the concept of bonus, to consider in relation to industrial employments the question of payment of bonus based on profits and to recommend principles for computation of such bonus and methods of payment…’ A glance at the various chapters of the report brings home the point that bonus based on profits is its central theme. The conclusions and recommendations revolve round the concept of profit bonus. Little argument is needed to hold that the bonus formula suggested by the Commission was profit-oriented. Indeed, that was its only concern. The Act, substantially modelled on these proposals, has adopted a blue print essentially worked out on profits. The presiding idea being a simplified version of bonus linked to profits over a period, shedding the complex calculations in the Full Bench formula, the statute did not cover other independent species like customary or contractual bonus which had become an economic reality and received judicial recognition. There were marginal references to and accommodation of other brands of bonus but they were for better effectuating the spirit and substance of profit-based bonus. The question then is: Was the Bonus Act only a simpler reincarnation of the Full Bench formula, as argued by Sri Tarkunde, or was it, going by the provisions and precedents, a full codification of multiform bonuses, thus giving a knock-down blow to any customary but illegitimate demand for bonus falling outside the statute, as contended by Sri Pai? Indeed, we were taken through the well-known categories of bonus vis-à-vis the statutory provisions with impressive and knowledgeable thoroughness by Shri Pai with a view to strengthen his perspective that the Act encompassed the whole law and left nothing outside its scope. To begin with, the history of the Act, the Full Bench formula which was its judicial ancestor, the Commission Report which was its immediate progenitor and the statutory milieu as also the majuscule pattern of bonus prevalent in the Indian industrial world, converge to the point that the paramount purpose of the Payment of Bonus Act was to regulate profit bonus, with incidental incursions into other allied claims like customary or attendance bonus. If such be the design of the statute, its scheme cannot be stretched to supersede what it never meant to touch or tackle. The objects and reasons of the Bonus Act indicate that the subject-matter of the statute is ‘the question of payment of bonus based on profit to employees employed in establishments’. The report of the Commission is also referred to in the objects and reasons and the tenor is the same. The long title of the Act is noncommittal, but the concept of ‘Profit’ as the basis for bonus oozes through the various provisions. For instance, the idea of accounting year, gross profit and the computation thereof, the methodology of arriving at the available surplus and the items deductible from gross profits, have intimate relevance to profit bonus—and may even be irrelevant to customary or traditional bonus or contractual bonus. Similarly, the provision for set-on and set-off of allocable surplus and the like are pertinent to profit-based bonus. Schematically speaking, statutory bonus is profit bonus. Nevertheless, there is provision for avoidance of unduly heavy burden under different heads of bonus. For this reason it is provided in Section 17 that where an employer has paid any Puja bonus or other customary bonus, he will be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him under the Act. Of course, if the customary bonus is thus recognised statutorily and, if in any instance it happens to be much higher than the bonus payable under the Act, there is no provision totally cutting off the customary bonus. The provision for deduction in Section 17, on the other hand, indicates the independent existence of customary bonus although, to some extent, its quantum is adjustable towards statutory bonus. Again, Section 34 provides for giving effect to the Bonus Act thus: Notwithstanding anything inconsistent therewith contained in any other law…or in the terms of any award, agreement, settlement or contract of service made before 29th May 1965.

516 Social Justice and Labour Jurisprudence This does not mean that there cannot be contractual bonus or other species of bonus. This provision only emphasizes the importance of the obligation of the employer, in every case, to pay the statutory bonus. The other sub-sections of Section 34 also do not destroy the survival of other types of bonus than provided by the Bonus Act. Shri G.B. Pai used the provisions of the Coal Mines Provident Fund and Bonus Scheme Act, 1948, referred to in Section 35 of the Bonus Act, for the purpose of making good his thesis that the Bonus Act has comprehensive coverage except where it expressly saves any other scheme of bonus. Our understanding of Section 35 is different. Coal mines are extremely hazardous undertakings and they are largely located in agrarian areas where the agricultural workers absent themselves for long periods to attend to agricultural work and do not report themselves for mining work. Coal mines have many peculiarities and the workmen employed there have to be treated separately from the point of view of incentive for attendance. Therefore, attendance bonus for a miner is a separate subject attended with peculiarities deserving of special treatment and has been expressly saved from the Bonus Act. This does not mean that whatever has not been expressly saved is, by necessary implication, included in the Bonus Act. Of course, there are provisions for exemptions and exclusions in the Bonus Act itself, particularly, vis-à-vis small establishments and public sector undertakings. There is also marginal reference in Section 2(21) to Section 2(21)(iv) to other kinds of bonus, including incentive production and attendance bonus. The heart of the statute, plainly read from its object and provisions, reveals that the Act has no sweep wider than profit bonus. There was reference to the Payment of Bonus (Amendment) Ordinance, 1975 by counsel on both sides. We find that the long title has been expanded and now covers bonus, ‘On the basis of profit or on the basis of production or productivity’. This amendment itself implies that formerly a narrower species of bonus, namely, that based on profit had alone been dealt with. The limits on contractual bonus also tends to feed our conclusions. The implications of the ceiling set by the recent amendment to the law falls outside our scope and we keep away from determining it. Sufficient unto the day is the evil thereof. It is clear further from the long title of the Bonus Act of 1965 that it seeks to provide for bonus to persons employed ‘in certain establishments’ not in all establishments. Moreover, customary bonus does not require calculation of profits, available surplus, because it is a payment founded on long usage and justified often by spending on festivals and the Act gives no guidance to fix the quantum of festival bonus; nor does it expressly wish such a usage. The conclusion seems to be fairly clear, unless we strain judicial sympathy contrariwise, that the Bonus Act dealt with only profit bonus and matters connected therewith and did not govern customary, traditional or contractual bonus. The end-product of our study of the anatomy and other related factors is that the Bonus Act spreads the canvas wide to exhaust profit-based bonus but beyond its frontiers is not void but other cousin claims bearing the caste name ‘bonus’ flourish—miniatures of other colours’. The Act is neither proscriptive nor predicative of other existences. The trump card of Shri G.B. Pai is the ruling in Ghewar Chand.44 If the ratio there is understood the way Shri Pai would have it, the workmen have no case to present. For establishments employing less than 20 workers are excluded from the benignant campus of the Act and the appellants fall outside the grace of the statute for that reason alone. Does the decision exhaust the branch of jurisprudence on every kind of bonus or merely lays down that profit-based bonus—the most common one and complicated in working out on the mathematics of the Full Bench Formula—has been picked out for total statutory treatment and for that pattern of bonus the Act operates as a complete Code? The tribunal understood the former way and followed it up with a rejection, on the ground of a legal bar, of the admittedly non-profit-based claim for bonus. Shri Tarkunde argues the reasoning to be a misunderstanding of the meaning of the ruling. We hold that the Bonus Act speaks, and speaks as a whole code, on the sole subject of profit-based

Wages and Monetary Benefits 517 bonus but is silent on, and cannot, therefore, annihilate by implication, other distinct and different kinds of bonus such as the one oriented on custom. We confess that the gravitational pull on judicial construction, of Part IV of the Constitution, has, to some extent, influenced our choice. It is trite, going by anglophonic principles, that a ruling of superior court is binding law. It is not of scriptural sanctity but is of ratio-wise luminosity within the edifice of facts where the judicial lamp plays the legal flame. Beyond those walls and de hors the milieu we cannot impart eternal vernal value to the decision, exalting the doctrine of precedents into a prisonhouse of bigotry, regardless of varying circumstances and myriad developments. Realism dictates that a judgment has to be read, subject to the facts directly presented for consideration and not affecting those matters which may lurk in the record. Whatever be the position of subordinate Court’s, causal observations, generalizations and sub-silentio determinations must be judiciously read by courts of coordinate jurisdiction and, so viewed, we are able to discern no impediment in reading Ghewar Chand 45 as confined to profit-bonus, leaving room for non-statutory play of customary bonus. The case dealt with a bonus claim by two sets of workmen, based on profit of the business but the workmen fell outside the ambit of the legislation by express exclusion or exemption. Nothing relating to any other type of bonus arose and cannot be impliedly held to have decided. The governing principle we have to appreciate as a key to the understanding of Ghewar Chand 46 is that it relates to a case of profit bonus urged under the Industrial Disputes Act by two sets of workmen, employed by establishments which are either excluded or exempted from the Bonus Act. The major inarticulate premise of the statute is that it deals with—and only-profit-based bonus as has been explained at some length earlier. There is no categorical provision in the Bonus Act nullifying all other kinds of bonus, nor does such a conclusion arise by necessary implication. The ruling undoubtedly lays down the law thus: 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 comprehensive 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. But this statement, contextually construed, means that profit-bonus not founded on the provisions of the Bonus Act and by resort to an adventure in industrial dispute under the Industrial Disputes Act is no longer permissible. When Parliament has expressly excluded or exempted certain categories from the Bonus Act, they are bowled out so far as profit-based bonus is concerned. You cannot resurrect profit-bonus by a backdoor method, viz., resort to the machinery of the Industrial Disputes Act. The pertinence of the following observations of Shelat, J., becomes self-evident, understood in this setting: We are not impressed by the argument that Parliament in excluding such petty establishments could not have intended that employees therein who were getting bonus under the Full Bench formula should lose that benefit. As aforesaid, Parliament was evolving for the first time a statutory formula in regard to bonus and laying down a legislative policy in regard thereto as to the classes of person who would be entitled to bonus, thereunder. It laid down the definition of an ‘employee’ for more wider than the definition of a ‘workman’ in the Industrial Disputes Act and the other corresponding Acts. If, while doing so, it expressly excluded as a matter of policy certain petty establishments in view of the recommendation of the Commission in that regard, viz., that the application of the Act would lead to harassment of petty

518 Social Justice and Labour Jurisprudence proprietors and disharmony between them and their employees, it cannot be said that Parliament did not intend or was not aware of the result of exclusion of employees of such petty establishments. Likewise, reference to agreements and settlements providing for bonus being exempted from the applicability of the Act does not militate against the survival of the contractual bonus (we are not referring to the impact of the latest amendment by Ordinance of 1975). Viewed thus and in the light of the observations earlier extracted, the followed passage fits into the perspective we have outlined: Section 32(vii) exempts from the applicability of the Act (the Bonus Act) those employees who have entered before May 29, 1965 into an agreement or settlement with their employers for payment of bonus linked with production or productivity in lieu of bonus based on profits and who may enter after that date into such agreement or settlement for the period for which such agreement or settlement is in operation. Can it be said that in cases where there is such an agreement or settlement in operation, though this clause expressly excludes such employees from claiming bonus under the Act during such period, the employees in such cases can still resort to the Industrial Disputes Act and claim bonus on the basis of the Full Bench formula? The answer is obviously in the negative for the object in enacting clause (vii) is to let the parties work out such an agreement or settlement. It cannot be that despite this position, Parliament intended that those employees had still the option of throwing aside such an agreement or settlement, raise a dispute under the Industrial Disputes Act and claim bonus under the Full Bench formula. The contention, therefore, that the exemption under Section 32 excludes those employees from claiming bonus under the Act only and not from claiming bonus under the Industrial Disputes Act or such other Act is not correct. The core question about the policy of the Parliament that was agitated in that case turned on the availability of the Industrial Disputes Act as an independent method of claiming profit bonus de hors the Bonus Act and the Court took the view that it would be subversive of the scheme of the Act to allow an invasion from the flank in that manner. The following observations strengthen this approach: Surely, Parliament could not have intended to exempt these establishments from the burden of bonus payable under the Act and yet have left the door open for their employees to raise industrial disputes and get bonus under the Full Bench formula which it has rejected by laying down a different statutory formula in the Act. For instance, it is to be contemplated that though the Act by Section 32 exempts institutions such as the Universities or the Indian Red Cross Society or hospitals, or any of the establishments set out in clause (ix) of that section, they would still be liable to pay bonus if the employees of those institutions were to raise a dispute under the Industrial Disputes Act and claim bonus in accordance with the Full Bench formula? The Legislature would, in that case, be giving exemption by one hand and taking it away by the other, thus frustrating the very object of Section 32. Where, on the other hand, Parliament intended to retain a previous provision of law under which bonus was payable, or was being paid it has expressly saved such provision. Thus, under Section 35 of the Coal Mines Provident Fund and Bonus Schemes, 1946 and any scheme made thereunder are saved. If, therefore, Parliament wanted to retain the right to claim bonus by way of industrial adjudication for those who are either excluded or exempted from the Act, it would have made an express saving provision to that effect as it has done for employees in coal mines. A discerning and concrete analysis of the scheme of the Act and the reasoning of the Court leaves us in no doubt that it leaves untouched customary bonus.

Wages and Monetary Benefits 519 The plea of constructive res judicata is based on the ‘might and ought’ doctrine. Shri Pai’s argument is that before the Arbitration Board no case of customary or contract bonus was urged for the year 1965 and so, in later years, such a ground is barred by the general principles of res judicata. Sections 10A, 18 and 19(3) of the Industrial Disputes Act were pressed before us to demonstrate the prior award was binding on the workers and reading it in the light of Bombay Gas Co. Ltd. vs Jagannath Pandurang,47 the bar was spelt out. It is clear law, so long as the above ruling stands, that industrial litigation is no exception to the general principle underlying the doctrine of res judicata. We do entertain doubt about the extension of the sophisticated doctrine of constructive res judicata to industrial law which is governed by special methodology of conciliation, adjudication and considerations of peaceful industrial relations, where collective bargaining and pragmatic justice claim precedence over formalized rules of decision based on individual contests, specific causes of action and findings on particular issues, but we are convinced that Pandurang48 does not apply at all to our case. There, overtime wages were claimed earlier under the Factories Act and the case was rejected by the Tribunal. After this rebuff, a like claim was repeated but sustaining it on the Bombay Shops and Establishments Act. This new ground to support the same claim was held to be barred because the workmen could and ought to have raised the issue that the Factories Act failing, the Shops Act was available to them to back up their demand. The fallacy in invoking this decision lies in the fact that as early as 1950 there was a binding award of the industrial tribunal relating to the claim, which had not been put an end to, and so this Court took the view that so long as that award stood, the same claim under a different guise (the Shops Act) could be subversive of the rule of res judicata. The decisive circumstance which distinguishes that case is contained in the observation: If the workers are dissatisfied with any of the items in respect of which their claim has been rejected it is open to them to raise a fresh industrial dispute. That is to say, if a fresh dispute had been raised, after terminating the prior award, no bar of res judicata could have been urged. Here the Arbitration Board dealt with one dispute; the industrial tribunal, with a fresh dispute. The Board enquired into one cause of action based on profit bonus; the tribunal was called upon, by the terms of reference, to go into a different claim. This basic difference was lost sight of by the tribunal and so he slipped into an error. The dangers of constructive res judicata in the area of suits vis-à-vis writ petitions under Article 226 and as between proceedings under Article 226 and Article 32 are such as to warrant a closer study. To an extent the Law Commission of India in its Report49 has touched on this topic. Industrial disputes are as a fortiori case. Dispute-processing is not by court litigation alone. Industrial peace best flourishes where non-litigative mechanisms come into cheerful play before tensions develop or disputes brew. Speaking, generally, an alternative of the longish litigative process is a joyous challenge to the Indian activist jurist and no field is in need of the role of avoidance as a means of ending or preempting disputes as industrial life. Litigation, whoever wins or loses, is often the funeral of both. We are a developing country and need techniques of maximising mediatory methodology as potent processes even where litigation has erupted. This socially compulsive impulse promoted the setting in motion of a statesmanlike effort by the senior counsel on both sides, with helpful promptings from the Bench, to advise their clients into a conciliatory mood. Should we have at all hinted to the advocates to resolve by negotiation or stick to our traditional function of litigative adjudication? In certain spheres, ‘judicious irreverence to judicialised argumentation is a better homage to justice’. Regrettably, the exercise proved futile and we have to follow up our conclusions with necessary directions. The findings we have reached may now be formally set down. We hold that the Bonus Act (as it stood in 1965) does not bar claims to customary bonus or those based on conditions of service. Secondly, we repel the plea of res judicata. There is no merit in the view that the industrial

520 Social Justice and Labour Jurisprudence tribunal has no jurisdiction to try the dispute referred to it. We set aside the award and direct the tribunal to decide on the merits the subject-matter of the dispute referred to it by the State Government. The appeal is hereby allowed but, having regard to the overall circumstances, the parties will bear their costs.

Effects of Agreements which are Inconsistent with the Payment of Bonus Act, 1965: The Interpretation

Basti Sugar Mills vs the State of Uttar Pradesh and Another 50 In this case, the Supreme Court had to consider the effect of an agreement with regard to payment of bonus, which was implemented under Section 3(b) of the U.P. Industrial Disputes Act, 1947, in view of Section 34 of the Payment of Bonus Act, 1965.51 THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Undaunted by a direction of the State Government under the Uttar Pradesh Industrial Disputes Act, 1947 (the U.P. Act, for short), unsuccessfully attacked before a learned Single Judge and in appeal from his judgment, the appellant-owner of two sugar factories in Uttar Pradesh—has secured special leave to reach this Court and press before us a few jurisdictional points which, if valid, are deprivatory of the impugned notification under Section 3(b) of the Act. Before we open the discussion, and, indeed, as paving the way for it, we may remind ourselves of a jural fundamental articulated elegantly in a different context by Mr Justice Cardozo:52 More and more we lawyers are awaking to a perception of the truth that what divides and distracts us in the solution of a legal problem is not so much uncertainty about the law as uncertainty about the facts—the facts which generate the law. Let the facts be known as they are, and the law will sprout from the seed and turn its branches towards the light. Social realities mould social justice and the compulsions of social justice, in the context of given societal conditions, constitute the basic facts from which blossom law which produces order. The search for the social facts behind Section 3 of the U.P. Act takes us to the Objects and Reasons set out therein: Following the lapse of Rule 81-A of the Defence of India Rules, the Government of India enacted the Industrial Disputes Act, 1947, but this Act was found inadequate to deal with the spate of strikes, lock-outs and industrial disputes occurring in the province. Government were, therefore, compelled to promulgate the United Provinces Industrial Disputes Ordinance, 1947, as an emergency measure till more comprehensive Legislation on the subject was enacted. Although more than two years have passed since the termination of the war, normal life is still far from sight. There is a shortage of food grains and all other essential commodities and necessities of life. Maximum production is required to relieve the common want and misery. Prices continue to be rising and life has become very difficult for the common man. The loss of every working hour adds to the suffering of the community. In these circumstances, it is

Wages and Monetary Benefits 521 essential that Government should have powers for maintaining industrial peace and production and for the speedy and amicable settlement of industrial disputes. The bill, which is similar to the ordinance already in force, provides for such powers. The immediate concern of the Court in this case is with Section 3 which, in its opening part, luminously projects the State control obligated by community well-being. Even here, we may read the relevant part of Section 3: Power to prevent strikes, lock-outs, etc.—If, in the opinion of the State Government it is necessary or expedient so to do for securing the public safety or convenience or the maintenance of public order or supplies and services essential to the life of the community, or for maintaining employment, it may, by general or special order, make provision (a) for prohibiting, subject to the provisions of the order, strikes or lock-outs generally, or a strike or lock-out in connection with any industrial dispute; (b) for requiring employers, workmen or both to observe for such period, as may be specified in the order, such terms and conditions of employment as may be determined in accordance with the order; (c) for appointing committees, representative both of the employer and workmen for securing amity and good relations between the employer and workmen and for settling industrial disputes by conciliation; for consultation and advice on matters relating to production, organisation, welfare and efficiency; (d) for constitution and functioning of Conciliation Board for settlement of industrial disputes in the manner specified in the order; ... Provided that no order made under clause (b) (i) shall require an employer to observe terms and conditions of employment less favourable to the workmen than those which were applicable to them at any time within three months preceding the date of the order. ... The testimony from these texts, which are part of the legislative package, is the critical factor underlying governmental order in our constitutional system. An insight into it is worthwhile as a tool of interpretation of Section 3 of the U.P. Act and its harmonization with Section 34 of the Payment of Bonus Act, 1965 (the Bonus Act for brief ). A synthesis of these two statutes is the key to the problems posed by Shri Chitale before us arguing the case for the appellant. When crisis conditions grip the community the first imperative of good government, ‘order’, takes precedence; and the Executive transfixed between ‘govern’ or ‘get out’ and guided by value judgments resorts to firm action. Exigent solution of problems affecting the well-being of the have-nots, in a social justice setting, desiderates provisional directives to the haves to disgorge payments, not as final pronouncements on rights but as immediate palliatives to preserve the peace. This is police power at its sensitive finest when State and society are confronted by the dilemma of ‘do or die’. And, in a broader perspective, Governments of the Third World must hear the voice which moved the Objectives Resolution in the Constituent Assembly, while seeking light to keep loving peace: The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity. The ambition of the greatest man of our generation has been to wipe every tear from every eye. That may be beyond us, but as long as there are tears and sufferings, so long our work will not be over.53

522 Social Justice and Labour Jurisprudence The problems of law are, at bottom, projections of life: Law is a form of order and good law must necessarily mean good order.54 We touch these chords because the roots of jurisprudence lie in soil of society’s urges, and its bloom in the nourishment from the humanity it serves. To petrify statutory construction by pedantic impediments and to forget the law of all laws, viz. the welfare of the people, is to bid farewell to the grammar of our constitutional order. Its practical application arises in the present case. Before going further we sketch the facts of the present case and then on to the larger principles, an understanding of which will unlock the crucial questions arising in the case. The applicant, as stated earlier, runs two sugar factories at two different places. There are around 71 such factories in Uttar Pradesh whose economy, in large measure, depends on the sugar industry. Moreover, sugar is an essential commodity. Thus, these factories and the army of workers employed therein fall within the strategic sector of the State economy. It is but natural that Government is highly sensitive in the matter of maintenance of sugar supplies and the smooth working of the sugar factories. Any explosive situation in the shape of an industrial dispute and any disruptive factor throwing out of gear the employment in factories is sure to throw into disarray public safety, public order, public production and distribution system and public employment, using these expression in their social connotation. Roscoe Pound’s words are jurisprudentially apt [here]: Law is more than a set of abstract norms or legal order. It is a process of balancing conflicting interest and securing the satisfaction of the maximum wants with the minimum friction.55 And, Paton has set the tone for Part IV of our Constitution to be used as background music, if we may say so. the law itself can not be impartial . . . for its very raison d’etre is to prefer one social interest to another.56 As was the wont, presumably, there was apparently a clamour in 1968 for workers’ bonus which hotted up, threatening community tranquillity, smooth supplies essential to the life of the community and maintenance of employment and public safety. Every industrial dispute has a potential for large scale breach of the peace when the factories and workmen affected are numerous. But the general unrest induced by industrial demands and resistance may, on critical occasions, blow up unless quia timet action to defuse [the situation] are taken. This measure has necessarily to be at the administrative level, since the judicial process is prone to suffer from slow motion. The U.P. Legislature, with comprehensive vision, provided for long-range adjudicative resolution of industrial disputes and short-run executive remedies to pre-empt and contain outbreaks which may get out of control once ignited, and may even cost human lives in the ‘fire-fighting’ police actions: A Government ought to contain in itself every power requisite to the full accomplishment of the object committed to its care, and to the complete execution of the trusts for which it is responsible, free from every other control but a regard to the public good and to the sense of the people.57 From this angle, Section 3 has been designed as an emergency provision to be exercised in an excited phase of industrial collision. Using the power under Section 3(c) of the Act and based on the suggestion of the State Labour Conference (Sugar) the State Government appointed a tripartite committee in October, 1968

Wages and Monetary Benefits 523 consisting of three nominees of the Indian Sugar Mills Association and three representatives of the workmen, the Labour Commissioner being the Chairman of the Committee. The notification under Section 3(c) was issued with a view to— . . .consider and make its recommendations to Government on the question of grant of bonus for 1967–68 to workmen by the Vacuum Pan Sugar Factories of the state on the basis of the payment of Bonus Act, 1965. Subject to such modifications as may be mutually agreed upon.58 No one, at any stage, has assailed the presence of the statutory pre-conditions of social urgency. We proceed on the footing that a flare-up was in the offing and the State acted to pre-empt a breakdown. It is pertinent to note that the Association is a trade union registered under the Trade Unions Act, 1926. Its functions are indicated in the definition of ‘trade union’ in Section 2(h) of that Act and include regulating the relations ‘between workmen and employers’. Thus, the Association was functionally within its competence to nominate three representatives to sit on the Committee to regulate the relations between the member-employers and the workmen employed. The appellant is a member of the said Association. It is significant to remember that the State Government constituted the tripartite committee under Section 3(c) as an emergency measure before taking steps under Section 3(b) of the Act so that it may inform itself in a responsible way through the recommendations made by the Committee which represented both the wings of the industry. Although Section 3(b) does not depend, for coming into play, upon any report under Section 3(c) this was a measure to ensure fairness to the concerned elements. The committee held several sittings and, at some stages, the appellant or his representative did participate directly or indirectly in the deliberations. Equally relevant is the circumstance that the worker’s representatives actually accepted the formula put forward by the President of the Managements’ Association. We mention these circumstances to indicate that the scales, if at all, were tilted in favour of the mill owners and Government, on receipt of the recommendations and anxious to freeze the situation, issued an order under Section 3(b) incorporating and implementing those recommendations. That notification which was impugned before the High Court and is challenged before us reads: WHEREAS on the recommendations of the State Labour Tripartite Conference (sugar) held on 16, 1968,59 to consider the question of grant of bonus for the season 1967–68 to their workmen by the Vacuum Pan Sugar Factories of the State on the basis of the Payment of Bonus Act, 1965, subject to such modification as may be mutually agreed upon and to make its recommendations. AND WHEREAS, the said Committee has considered this question in various meetings, the last meeting having been held on June 5, 1969, and has submitted its recommendations to the State Government; AND WHEREAS, the said Committee has succeeded in bringing about an agreement in regard to the payment of bonus for the season 1967-68 between the representatives of employers and employees on the basis of Payment of Bonus Act, 1965, with certain modifications and adjustments and has made recommendations on the subject accordingly which have been accepted by the State Government; AND WHEREAS, in the opinion of the State Government it is necessary to enforce the recommendation of the said Committee for securing the public convenience and maintenance of public order and supplies and services essential to the life of the community and for maintaining employment; NOW, THEREFORE, in exercise of the powers under clause (b) of Section 3 of the U.P. Industrial Disputes Act, 1947 (U.P. Act No. XXVIII of 1947), the Government of Uttar Pradesh

524 Social Justice and Labour Jurisprudence is pleased to make the following order and to direct with reference to Section 19 of the said Act that the notice of this be given by publication in the official Gazette: Order 2. (a) All the Vacuum Pan Sugar Factories in the State whose names have been mentioned in the Annexure ‘A’ except the Kisan Co-operative Sugar Factory, Majhola (Pilibhit), shall pay bonus for the year 1967–68 to all their employees, permanent seasonal or temporary including contract labour who have worked for not less than 30 working days in the accounting year 1967–68. The High Court repelled the challenge and upheld the notification, taking the view that an agreement as recognised in Section 34 of the Bonus Act existed in this case and so the order which merely gave effect to that agreement was not bad in law. The main ground of attack before us is that the State Government cannot act in the area of bonus without breach of the embargo in Section 34 of the Bonus Act and so the impugned notification must fail for want of power. Although this is the thrust of the submission, Shri Chitale has trichotomised it, as it were. First, the Bonus Act being a complete Code covering profit-sharing bonus, no other law can be pressed into service to force payment of bonus by the managements. Secondly, Section 3(b) of the U.P. Act is independent of any agreement between the affected parties and the notification thereunder operates on its own and not by force of consensus or contract between the workmen and the managements. In this view, it was wrong for the High Court to have salvaged the notification under Section 3(b) as embodying an agreement to pay bonus. The third submission of counsel was that as a fact there was no agreement between the appellant and his workmen within the scope of Section 34 of the Bonus Act since the representatives of the Association had no power to bind its members by any agreement on bonus, having been appointed solely to make certain recommendations. Moreover, the appellant had specifically informed the representatives of the Association that it did not agree to any variation from the approved balance-sheet of the company and had withdrawn its consent to the formula which found favour with the Committee. Finally, though feebly, it was argued that if an agreements could be spelt out under Section 34 of the Bonus Act enforcement should be left to Section 21 of that Act and not to the punitive recovery provisions of the U.P. Act. The single Judge of the High Court dismissed the writ petition reading on agreement into the Committee’s recommendations and the eventual order under Section 3(b) of the Act. This agreement was valid under Section 34 of the Bonus Act. On appeal, the two Judges on the bench disagreed and the case went before a third Judge, who in an elaborate judgment, agreed with the learned Single judge and upheld the order of the Government as an agreement under Section 34 of the Bonus Act. We now proceed to discuss the merit of counsel’s contentions. We focus our attention on two principal facets of the question. They are (a) whether Section 3(b) is inconsistent with the Bonus Act; and (b) whether an agreement within the meaning of Section 34(1) (as the law then stood) could be spelt out of the facts of the present case. There is no challenge to the competence of the State Legislature to enact Section 3 of the Act. Indeed, more than one item in Lists II and III will embrace legislation of the pattern of Section 3. Even so, the short point sharply raised by Shri Chitale is that Parliament, having enacted the Bonus Act in 1965, occupied that part of industrial law, and Section 34 in terms contains a non obstante clause. That section reads: 34. Nothing contained in this Act shall be construed to preclude employees employed in any establishment or class of establishment from entering into an agreement with their employer for granting them an amount of bonus under a formula which is different from that of under this Act: Provided that any such agreement shall have effect unless it is entered into with the previous approval of the appropriate Government:

Wages and Monetary Benefits 525 Provided further that any such agreement whereby the employees relinquish their right to receive the minimum bonus under sub-section (2A) of Section 10 shall be null and void in so far as it purports to deprive them of such right: Provided also that such employees shall not be entitled to be paid bonus in excess of— (a) 8.33 percent of the salary or the wage earned by them during the accounting year if the employer has no allocable surplus in the accounting year or the amount of such allocable surplus is only so much that, but for the provisions of sub-section (2A) of Section 10, it would entitle the employees only to receive an amount of bonus which is less than the aforesaid percentage, or (b) twenty percent of the salary or wage earned by them during the accounting year. The effect of this provision is that anything inconsistent with the Bonus Act contained in any other law will bow and bend before it. Secondly, agreements made after 29 May 1965 will be valid regarding bonus even if they be inconsistent with the formulae in the Bonus Act. Shri Chitale did not dispute the proposition that if a concluded agreement could be read into the recommendations of the Tripartite Committee relating to bonus, it would be valid despite Section 34; but he urged before us that it was impossible to weave out of mere recommendations the web of a concluded contract on bonus. He canvassed before us, further, that if an agreement on bonus was necessarily inferable from the proceedings of the tripartite committee, the enforcement thereof could be only under Section 21 of the Bonus Act and not by reliance on the more drastic processes of the U.P. Act. A torrent of objective circumstances has emerged in this case to wash out these submissions. This Court is rarely disposed to reverse a factual affirmation concurrently reached by the High Court at two tiers. Even so, we may rush past the more potent circumstances which have a compulsive force in arriving at the conclusion aforesaid. Shri Chitale stressed the fact that the Committee itself had a functional limitation writ on the face of the order under Section 3(c). Its authority was limited to making recommendations on the grant of bonus 1967–68 on the basis of the Bonus Act, subject to such modifications as mutually agreed upon. Formally, this is correct. But why could the committee which had representatives of both the wings of the industry not mutually agree upon a bonus formula? There was nothing in the notification prohibiting it. There was everything in the notification promoting it. The whole process was geared to mutually agreed solutions. Of course, once the representatives of managements and labour reached an agreement, substantially on the basis of the Bonus Act, they would proceed to recommend to Government the acceptance of that agreement. The notification under Section 3(c) contemplated mutual agreement upon bonus as the first step and the recommendation of the formula so reached as the second step. The good offices of the Labour Commissioner were also available. In short, the first notification did not shut out, but on the other hand, welcomed mutual agreement. As between the two wings, an agreement materialized. Then it became Government’s responsibility effectively to resolve the crisis and beyond it to put teeth into the agreement by making it a binding order under Section 3(b). Thereafter, the arm of the law, as provided in the U.P. Act, went into action if there was violation. The object of the Government being to keep the peace and to interdict disruption, it did not rest content with an agreement within the meaning of Section 34 and resort to the leisurely processes of Section 21. Exigent situations demand urgent enforcement; and therefore government went a step further than the agreement and embodied it in an order under Section 3(b). This incorporation in a notification under Section 3(b) did not negate the anterior agreement between the parties. The order of Government under Section 3(b) makes the dual stage perfectly plain. For instance, there is the following tell-tale recital: ‘Whereas the said committee has succeeded in bringing about an agreement in regard to the payment of bonus for the season 1967–68

526 Social Justice and Labour Jurisprudence between the representatives of the employers and employees on the basis of Payment of Bonus Act, 1965, with certain modification and adjustments’. In unmincing language, the notification states that an agreement on the payment of the bonus has been successfully brought about substantially on the lines of the Bonus Act. In the same notification, Government proceeds to state that the said agreement has been forwarded to it in the shape of recommendations, which have been accepted and enforced in exercise of the powers conferred by clause (b) of Section 3 of the Act. The anatomy of the order under Section 3(b) being what we have explained above, the inference is inevitable that there is a clear agreement in regard to the payment of bonus for the relevant season between the employers and employees and ingenious argument cannot erode that effect. The next limb of the argument of Shri Chitale is that in fact there is no evidence of his client having authorized the representatives of the Association to act on its behalf in agreeing to the bonus formula. On the contrary, he had withdrawn the authority originally conferred. We cannot agree with this specious, though plausible, submission. It admits of no doubt that the Association is a trade union registered under the Trade Unions Act and the functional competence of a trade union definitionally extends to regulating the relations between workmen and employers. Section 2(h) to negotiate on agreement on payment of bonus surely falls within the scope of regulation of the relations between the workmen and the employers. Secondly, the notification under Section 3(c) itself authorized the Committee to consider the grant of bonus on terms mutually agreed upon. Authority to reach agreement on behalf of the management is thus implicit in the notification under Section 3(c). More over the Association, having the capacity to represent all the members within the area of its authority, sat on the Committee through its representatives and become effective proxies of the members. Nay more. The Assistant Manager of the appellant was present in the Tripartite Conference at Naini Tal on June 16, 1968 and it was at that Conference the decision to set up the Committee was made and a resolution to that effect passed, leading to the notification of 17 October 1968. Moreover, throughout the several meetings and investigations of the Tripartite Committee, the appellant supplied all the facts and details sought concerning the formulation and the data for arriving at an acceptable solution. The formula of the Committee was based largely on the Bonus Act itself with some variation regarding the valuation of the closing stock. Importantly, what the employees’ representatives did was merely to accept the proposal of the president of the Association of Employers. There was a written agreement dated 5 June 1969 to which the representatives of both sides were signatories. To dismiss the whole consensual adventure and the culminating written agreement as nothing but an exercise in recommendatory or advisory futility is to bid farewell to raw realities. Industrial jurisprudence does not brook nice nuance and torture some technicalities to stand in the way of just solution reached in a rough and ready manner. Grim and grimy lifesituations have no time for the finer manners of elegant jurisprudence. Social justice is made of rugged stuff. Broad consensus between the two parties does exist here, as is emphatically underlined by the circumstance that all the mill owners except the appellant have stood by it—and all the workers. Where social justice is the touchstone, where industrial peace is the goal, where the weak and the strong negotiate to reach workable formulae unruffled by the rigidities and formalisms of the law of contract, it is impermissible to frown down the fair bonus agreement reached by the representatives of both camps and accepted by the employees in entirety and whole block of employers minus the appellant, on a narrow construction of the notification under Section 3(c) or Section 34 of the Bonus Act or Section 2(e) of the Contract Act. Labour law is rough hewn and social justice sings a different tune. We reject, without hesitation, the appellant’s submission that there was no agreement for payment of bonus within the meaning of Section 34 of the Bonus Act and affirm the concurrent finding of the High Court on that issue. The second seminal problem of power that falls for consideration here has deeper jurisprudential import and wider political constitutional portent, so much so [that] decisional elucidation becomes necessitous. We have stated earlier that Section 34 of the Bonus Act has a monopolistic

Wages and Monetary Benefits 527 tendency of excluding other laws vis-à-vis profit-sharing bonus. The basic condition for nullification of Section 3(b) of the U.P. Act is that, when it enters the area of bonus, it is inconsistent with the provisions of the Bonus Act. ‘Inconsistent’, according to Black’s Legal Dictionary, means mutually repugnant or contradictory; contrary, the one to the other so that both cannot stand, but the acceptance or establishment of the one implies the abrogation or abandonment of the other’. So we have to see whether mutual co-existence between Section 34 of the Bonus Act and Section 3(b) of the U.P. Act is impossible. If they relate to the same subject-matter, to the same situation, and both substantially overlap and are co-extensive and at the same time so contrary and repugnant in their terms and impact that one must perish wholly if the other were to prevail at all—then, only then, are they inconsistent. In this sense, we have to examine the two provisions. Our conclusion, based on the reasoning which we will presently indicate, is that ‘inconsistency’ between the two provisions is the produce of ingenuity and consistency between the two laws flows from imaginative understanding informed by administrative realism. The Bonus Act is a long-range remedy to produce peace; the U.P. Act provides a distress solution to produce truce. The Bonus Act adjudicates rights of parties; the U.P. Provision meets an emergency situation on an administrative basis. These social projection and operational limitations of the two statutory provisions must be grasped to resolve the legal conundrum. When ‘the sequestered vale of life’ is in imminent peril of disruption immediate tranquillisers are the desideratum. The escalating danger to law and order, to public safety, to maintenence of supplies essential to the life of the community, the breakdown of production and employment—these anti-social consequences of ‘the madding crowds’ ‘ignoble strife’ are sought to be controlled by a quick shot in the arm by the use of Section 3(b). It is a balm for the time, not a cure which endures. Indeed, it is an administrative action, not a quasi-judicial determination. We may easily visualize other explosive occasions which traumatize society and so attract Section 3(b). The specific fact-situation which confronted the State must be seen in perspective. Labour and capital are partners in production. When one of the partners, numerous but needy, demands a share in the profits, beyond wages, to better its lot, industrial legislation chalks out rights and limits, prescribes formulae, create adjudicatory machinery, awards are made, reviewed and enforced and parties seek social justice through the judicial process. The Bonus Act, read with the Industrial Disputes Act, codifies this branch of right and remedies. But it is a notorious infirmity of the noble judicative methodology that adherence to certain basic processual norms makes procrastinating delay a besetting sin and an inevitable evil. The end product is good were it delivered promptly but the operation tantalizes and sometimes self-defeats. The working class though a weaker class, when organized is militant. Their privations are too desperate to stand delay. Policy formulation by Government takes time, involves consultation; adjudication involves long hearing and appeal upon appeal. The discussion of legal prophylaxis as part of the dynamics of jurisprudence becomes relevant at this stage. Necessity is the mother of tension: tension frays temper and maddened men turn violent. When both sides are psyched up into frenzy, public safety, maintenance of essential supplies, people’s employment and societal order become casualties. A wise administration anticipates and acts before the flames spread. Once the industrial war is sparked off, the use of force becomes unavoidable. And police force pitted against mob fury may mean blood and tears. And Indian lives in free India, even though of workers, are more precious than the profits of the corporate sector. Confronted by escalating disorder, the wise ruler cannot afford to wait for lethargic legal justice to deliver its verdict but armed with crisis powers and anxious to arrest a blow-up adopts administrative nostrums which gives quick relief but do not frustrate ultimate justice. Prophylactic processes are not the enemy of normative law. Socially-oriented prompt action tranquillizes where drift, vacillation and inaction may traumatize. Section 3 serves this limited purpose of legalising administrative intervention to prevent disorder without prejudice judicial justice which will eventually be allowed to take its course. An order under Section 3(b) is administrative; a proceeding under the Bonus Act is judicial. The former manages a crisis, the latter

528 Social Justice and Labour Jurisprudence determines rights. Even when a direction under the exigency power involves payments towards bonus or other claim it never can possess finality and is subject to judicial decision—except, of course, where parties agree to settle their claims, and then the agreement gives it vitality. The jural scheme of Section 3 is dual, each operating in its own stage and without contradicting the power of the other. The first say, in crisis management, belongs to the administrator; the last word, in settlement of substantive rights belongs to the tribunal. The pragmatic dichotomy of the law is flexible enough not to put all its peace-keeping eggs in the judicial basket. Government acts when the trouble brews and when the storm has blown over judicial technology takes over. There are no rigid compartmentalizations. Sometimes, the judicial process itself has quickacting procedures. Likewise, sometimes the executive prefers to consult before going into action. Under our constitutional order guidelines are given by the statute to ensure reasonableness in administrative orders. And in a Government with social justice as the watchword, value judgments are essential to exclude arbitrariness. So it is that the executive power under Section 3 has the leading strings writ right at the top. The power shall be used only for ‘public safety or convenience or the maintenance of public order or supplies and services essential to the life of the community or for maintaining employment. It prevails for the nonce, produces (hopefully) tentative truce, and then the judicial process decides decisively. It is like an executive magistrate passing a prohibitory order regarding disputed possession or unruly assembly to prevent breach of the peace and making over [the dispute] to a judicial magistrate to hear and decide who is in actual possession or whether the restriction on movement was right. Or, maybe, it is like a magistrate quickly passing orders regarding a possessory dispute leaving it to the civil court to adjudicate on valid tile. No one can argue that preventive magisterial power, admittedly provisionally and reasonably, is inconsistent with the civil judicial machinery which speaks finally. Dealing with the identical provision in an identical situation where an appeal reached this Court and the parties were identical, Mudholkar, J, speaking for the court, explained the scheme of the same Section 360 and its scope which fits into the pattern we have explained. The learned Judge observed in State of U.P. vs Basti Sugar Mills Co. Ltd.61 The opening words of Section 3 themselves indicate that the provisions thereof are to be availed of in an emergency. It is true that even reference to an arbitrator or conciliator could be made only if there is an emergency. But then an emergency may be acute. Such an emergency may necessitate the exercise of powers under clause (b) and a mere resort to those under clause (d) may be inadequate to meet this situation. Whether to resort to one provision or other must depend upon the subjective satisfaction of the State Government upon which powers to act under Section 3 have been conferred by the legislature. Dealing with the canons of statutory construction the learned Judge observed: No doubt, this result is arrived at by placing a particular construction on the provisions of that section but we think we are justified in doing so. As Mr Pathak himself suggested in the course of his arguments, we must try and construe a statute in such a way where it is possible to so construe it, as to obviate a conflict between its various provisions and also so as to render the statute or any of its provisions constitutional. By limiting the operation of the provisions of clause (b) to an emergency we do not think that we are doing violence to the language used by the legislature. Further, assuming that the width of the language could not be not limited by construction it can be said that after the coming into force of the Constitution the provisions can, by virtue of Article 13, have only a limited effect as stated above and to the extent that they are inconsistent with the Constitution, they have been rendered void. In the strain, the court rebuffed the unreasonable argument based on ‘reasonableness’ in Article 19(6).

Wages and Monetary Benefits 529 In our view, therefore, the provisions of clause (b) of Section 3 are not in any sense alternative to those of clause (d) and that the former could be availed of by the State Government only in an emergency and as a temporary measure. The right of the employer or the employee to require the dispute to be referred for conciliation or adjudication would still be there and could be exercised by them [by] taking appropriate steps. Upon the construction we place on the provisions of clause (b) of Section 3 it is clear that no question of discrimination at all arises. Similarly the fact that action was taken by the Government in an emergency in the public interest would be a complete answer to the argument that that action is violative of the provisions of Article 19(1)(g). The restriction placed upon the employer by such an order is only a temporary one and having been placed in the public interest would fall under clause (6) of Article 19 of the Constitution. In a practical sense, this dichotomous reconciliation has humanistic value in administration. Let us take the case of bonus. A broad national policy on bonus, however admirable, needs negotiation, consultation, inter-state co-ordination, diplomacy and caused delay. Like wise, an industrial adjudication on bonus, with all the trappings of natural justice, appeal and writ proceedings, consumes considerable time. Hungry families of restive workers in militant moods urgently ask for bonus for Onam in Kerala, Pooja in Bengal, Diwali in Gujarat or other festival elsewhere, for a short spell of cheer in a long span of sombre life. The State Government, with economic justice and welfare of workers brooding over its head, is hard-pressed for public order and maintenance of essential supplies. Immediate action may take trigger-happy policing shape or emergency direction to make ad hoc payments, worked out in administrative fairness. This latter course may often be favored, given the correct orientation. But even here some governments may prefer to confer, persuade parties to concur and make binding order. This requires legislative backing. So Section 3. But such an improvised solution may leave one or the other or even both dissatisfied with regard to ultimate rights. While enforcing the ad interim directive by the authority of law, the door is left ajar for judicial take over of the industrial dispute. If workers have got more, the excess will have to be adjusted, if less, the employers will pay over. This will be taken care of by Section 3(e) (before amendment) and by the Bonus Act now. A crisis is best solved by this procedure at the State level on a fair administrative basis. But lasting policy solutions are best produced at the Central level and final rights crystallized at the tribunal level. The lengthy judicial process may, as here, be obviated if, by a tripartite arrangement, an agreement within the scope of Section 34 of the Bonus Act is reached. The ruling of this Court in State of U.P. vs Basti Sugar Mills Co. Ltd.62 supports the synthesis we have evolved. The only difference is that there is now no reference of a bonus dispute under Section 3(e) of the U.P. Act. Instead, the same dispute will—where no agreement or settlement stands in the way, as it does here—on application, be referred for adjudication under the Bonus Act read with the Industrial Disputes Act, 1947. The analysis shows the absence of basic inconsistency and presence of intelligent method in the U.P. and the Central provisions. We hold, after this long tour, that the goal of social justice and public peace, essential to good Government is best reached by reading [the two statutes] together and not apart. The High Court’s order is upheld and the appeal dismissed, of course, with costs.

Constitutional Validity of Section 10 of the Payment of Bonus Act, 196563 A landmark in the enactment of the Payment of Bonus Act, 1965, is the provision relating to the payment of minimum bonus by an employer to his workmen in every accounting

530 Social Justice and Labour Jurisprudence

year, whether there is an allocable surplus or not.64 This privilege to the workman has led to the very validity of the Act. At early stages of the commencement of this legislation, the Supreme Court, in Jalan Trading vs the Mill Mazdoor Union65 held that the plea of the invalidity of Section 10 on the ground that it infringes Article 14 of the Constitution must fail. The section is not open to attack on the ground that it infringes Article 31(1) of the Constitution. However, the Constitutional validity of Section 10 figured before the Supreme Court again.

Jalan Trading vs D.M. Aney and Another 66 THE JUDGEMENT DELIVERED BY V.R. KRISHNA IYER, P.S. KAILASAM AND A.D. KOSAL The short and only point, draped as a constitutional issue, urged before us, after having been repelled by the Bombay High Court against whose judgment this appeal is filed by certificate, is as to whether Section 10 of the Bonus Act is ultra vires of Article 19(1)(g) and Article 301 of the Constitution. We are satisfied that the restriction imposed by the Bonus Act in compelling the employer to pay the statutory minimum bonus even in years where there has been a loss sustained by the management is reasonable or in public interest within the meaning of Articles 19(6) and 302. What is reasonable depends on a variety of circumstances, but what is important is that the Directive Principles of State Policy in Part IV of the Constitution are fundamental to the governance of the country. Therefore, what is directed as State Policy by the founding fathers of the Constitution cannot be regarded as unreasonable or contrary to public interest even in the context of Articles 19 or 302. It follows that payment of bonus, being in implementation of Articles 39 and 43 of the Constitution, is reasonable. We agree with the High Court and dismiss the appeal with costs quantified at Rs 2,000.

Applicability of the Payment of Bonus Act, 1965: The Scope of Section 32(5)(c) Workmen of Tirumala Tirupathi Devasthanamas vs the Management and Another67 The Supreme Court, in this case, considered the scope of Section 32(5)(c) of the Act in order to test whether the workmen of Tirumala Tirupathi Devasthanamas were eligible for the bonus from the management.68 THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER The main issue raised in this appeal turns on a construction of Section 32(5) of the Payment of Bonus Act and its application to the facts of the present case. The Tirumala Tirupathi Devasthanam has a very wide circle of devotees who come from all over the country. The Devasthanam caters to their needs and provides the amenities since pilgrims flock to the shrine. One of those facilities is stated to be offering transport services for pilgrims to come to Tirupathi from distant places. Inevitably the Transport Department is operating under the Devasthanam and employs a large number of transport workers. These workmen raised an industrial dispute making a demand

Wages and Monetary Benefits 531 for bonus for the years 1965–1973. The reference was duly made to the Tribunal which considered inter alia the question as to whether Section 32 of the Act excluded from the operation of the bonus obligation, the respondent-institution. The plea was upheld and the reference was held to be invalid. The Tirumala Tirupathi Devasthanam, a vast and unique religious organisation in the country, is certainly not founded for making profit and attracts people who want to offer worship to Shri Venkateshwara but then the specific question with which we are concerned is whether the transport operation by the administration falls within the category of institutions within the meaning of Section 32(5)(c). Is the Transport Department so merged in and integrated with the Devasthanam as to be incapable of independent identity? Is the Transport Industry run by the Devasthanam sufficiently spread as to be treated as an institution in itself ? There is no doubt, as the Tribunal has rightly held, that it is an industry but the further question arises whether it is an institution in the context and within the text of the Payment of Bonus Act. This question has not been properly appreciated by the Tribunal. Secondly, assuming that it is an institution, it does not necessarily follow that Section 32 is excluded. On the other hand, there must be proof that the Transport Department (a) is an institution; and (b) established not for the purpose of profit. The Tribunal has not correctly appreciated the import of this latter requirement. It has been found that profits made in some years are ploughed back whatever that may mean. It is also found that the motive for running the industry of transport was to afford special facilities for the pilgrims. These by themselves do not clinch the issue whether the institution has been established not for purposes of profit, nor are we satisfied that merely because in the administrative report of the Devasthanam, there is mention of the transport establishment as a remunerative enterprise, that is decisive of the issue. The Tribunal has to decide whether the Transport Department, having regard to the features of its administration, the sources of its finance, the balance-sheet that is drawn up and the disposal of the profits, can be considered to be an institution in itself, whether it has nexus with the Devasthanam or not. The fact that it is run by the Devasthanarn, does not keep it out of its being an institution. This aspect has not been considered and must be decided de novo. Likewise, merely because it is an institution, the Transport Department does not cease to be one established ‘not for purposes of profit’, that has got to be made out on its merits. The institution may be designed for profit although it may make or may not make profit. The institution’s profits or earnings may be used for other charitable purposes. That also does not determine finally the character of the institution. Was the institution ‘not one for purposes of profit’, motives apart? If it was one, definitely not for earning profit, but merely as an ancillary facility for pilgrims to reach and to return, Section 32(5) will exclude the institution. If we may tersely put it, the dominant purpose of the Transport Department will be the decisive factor. We, therefore, set aside the findings of the Industrial Tribunal and direct it to decide the issue de novo. We sustain the other findings but permit parties to adduce further evidence on this question so as to enable the Tribunal to make the correct decision. We allow the appeal; remand the case to the Industrial Tribunal but parties will bear their own costs.

Veracity of the Balance Sheet: Powers of the Tribunal K.C.P. Employees Association, Madras, vs the Management of K.C.P., Madras, and Others69 In this case, the Supreme Court has considered the claim of the workers as to the correctness of the balanced sheets and profit-and-loss accounts for the years in question, after duly considering the provisions of the Payment of Bonus Act, 1965.

532 Social Justice and Labour Jurisprudence

THE FACTS OF THE CASE The subject matter is a bonus dispute between the management—the respondent—and the workmen’s union, revolving around the applicability of the proviso to Section 3 of the Payment of Bonus Act, 1965 (hereinafter referred to as ‘the Act’) for the years 1964–65 and 1965–66. A thumbnail sketch of the facts: K.C.P., a public limited company, carries on three business ventures viz. manufacture of sugar, of cement and of heavy engineering machinery. The concerned factories are in three different places in south India and employ workmen on different terms in the three different units. We are directly concerned with the engineering unit, known as the Central Workshops, run at Tiruvettiyur, Madras. When the Payment of Bonus Act, 1965, came into force, the workmen of this unit, which was financially faring ill, unlike the other two sister units, demanded bonus on the footing that the three different undertakings must be treated as one composite establishment and on the basis of the overall profits, bonus must be reckoned as provided in the Act. The respondent demurred on the ground that the Central Workshop was a separate undertaking to which the proviso to Section 3 applied and consequently the claim for bonus on the basis of a single establishment was untenably overambitious. Although the concerned unit was perhaps a losing proportion for relevant years (we do not know for certain), the tribunal upheld the claim of the workmen for both the years, but the two awards were challenged, by writ petition, in the High Court. The award relating to 1964–65 was upheld by a single judge of the High Court, who took the view that since all the three units, though divergent and located in different places, were owned by the same company and, therefore, without more were covered by the main part of Section 3 and the proviso stood repelled. Two other questions which had engaged the attention of the tribunal were scantily dealt with, the findings, if one may call them so, being adverse to the workmen. The management duly carried an appeal before a Division Bench of that court, which also called up and heard the writ petition against the award relating to the year 1965–66. Both the awards were set aside, the holdings on the substantial points being adverse to the workmen. However, certain follow-up inquiries had to be done by the tribunal to correct errors, for which limited purpose there was a direction by the High Court. The matter stood at that stage and the two appeals in this court are aimed against the decision of the Division Bench of the High Court.

EXCERPTS OF THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Affirming judgments need not speak elaborately, and so, in these two appeals where we do not disagree with the High Court, only a brief statement of reasons is called for. The first point that appealed to the learned Single Judge, but failed before the Division Bench, has admittedly no merit in the light of this court’s direct ruling on the point. The second point urged by Sri M.K. Ramamurthy that the Central Workshop has had no separate viable balance sheet and profit and loss accounts in respect of that undertaking, and that such is the finding of fact by the Tribunal, does not appeal to us. Nor is there life in the third limb of his argument that the respondent has failed to show that the workshop has not been treated as part of the common establishment for the purpose of computation of bonus. We agree with the appellate judgment that the proviso is attracted. Separate balance-sheet profit and loss accounts have been prepared and maintained in the past and during the relevant years of accounting also, although there is much force in the contention that they have not been properly maintained. Some items which may help enhance the bonus have, perhaps been omitted and the High Court is right in directing the Tribunal to re-enquire, rectify the balance-sheets and profit and loss accounts for the years in the question taken due note of the requirements of

Wages and Monetary Benefits 533 the Act as mentioned in the judgment of the Division Bench vis-à-vis Central Workshop. We are in respectful agreement with the decision in Alloy Steel Project v. The Workmen,70 but do not regard the ratio of that case as applicable to the present case on the facts. In industrial law, interpreted and applied in the perspective of Part IV of the Constitution, the benefit of reasonable doubt on law and facts, if there be such doubt, must go to the weaker section, labour. The tribunal will dispose of the case making this compassionate approach but without over-stepping the proved facts, correct the balance sheets and profit and loss accounts of the Central Workshop to the extent justified by the Act and the evidence and finish the list within three months of receipt of this order. The appeals are dismissed.

NOTES 1. The Payment of Wages Act, 1936, seeks to regulate the payment of wages both in the organised and unorganised sectors of employment. 2. See Section 3 of the Minimum Wages Act. 3. Section 4 of the Minimum Wages Act provides: (1) Any minimum rate of wages fixed or revised by the appropriate Government in respect of scheduled employments under Section 3 may consist of (i) a basic rate of wages and a special allowance at a rate to be adjusted, at such intervals and in such manner as the appropriate government may direct, to accord as nearly as practicable with the variation in the cost of living index number applicable to such workers (hereinafter referred to as the ‘cost of living allowance’); or (ii) a basic rate of wages with or without the cost of living allowance, and the cash value of the concessions in respect of supplies of essential commodities at concession rates, where so authorized; or (iii) an all inclusive rate allowing for the basic rate, the cost of living allowance and the cash value of the concessions, if any. (2) The cost of living allowance and the cash value of the concessions in respect of supplies of essential commodities at concession rates shall be computed by the competent authority at such intervals and in accordance with such directions as may be specified or given by the appropriate government. 4. AIR 1976 SC 2303. The case was heard by V.R. Krishna Iyer, A.C. Gupta and N.L. Untwalia. 5. AIR 1964 SC 864. 6. AIR 1974 SC 130. The case was heard by H.R. Khanna, R.S. Sarkaria and V.R. Krishna Iyer. The majority decision was delivered both by Justice Sarkaria and Justice Krishna Iyer separately. 7. (1969) 3 SCC 642. 8. (1969) 3 SCC 642. 9. AIR 1962 All 144. 10. 1969 All LJ 225:(1970 Lab IC 582). 11. (1967) 14 Fac LR 204. 12. (1967) 14 Fac LR 204. 13. 1962 Supp (1) SCR 315:AIR 1962 SC 1334. 14. 1962 Supp (1) SCR 315:AIR 1962 SC 1334. 15. Law Commission of India, 54th Report Civil Procedure Code. 16. AIR 1972 Ker 103, 107:para 5. 17. AIR 1978 SC 419. This case was heard by V.R. Krishna Iyer and P.K. Goswami. 18. (1969) 2 SCR 113:AIR 1969 SC 360. 19. (1975) Supp SCR 453:AIR 1975 SC 1778. 20. AIR 1978 SC 1133. The case was heard by V.R. Krishna Iyer and Jaswant Singh and the majority judgement was delivered by [Justice] Jaswant Singh. 21. AIR 1978 SC 828. The case was heard by V.R. Krishna Iyer and Jaswant Singh and the majority judgement was delivered by Justice Jaswant Singh. 22. 1965 (11) FLR 337:1950–67 1 SCLJ 253:(1966) 1 SCR 382.

534 Social Justice and Labour Jurisprudence 23. 24. 25. 26.

1969 (18) FLR 271:(1969) 1 LLJ 751 758. 1963 (6) FLR 80:(1050–67) SCLJ 4136:(1962) 2 LLJ 744. 1969 (18) FLR 228:(1969) 2 LLJ 782:(1967–68) 32 FJR 182. Section 17 of the Act provides that Where in any accounting year—(a) an employer had paid any puja bonus or other customary bonus to an employee; (b) an employer has paid part of the bonus payable under this Act to an employee before the date on which such bonus becomes payable, then the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of that accounting year and the employee shall be entitled to receive only the balance. Section 34 of the Act provides that subject to the provisions of Section 31-A, the provisions of this Act shall have effect notwithstanding anything inconsistent herewith contained in any other law for the time being in force or in terms of any award, agreement, settlement or contract of service.

27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51.

52.

53. 54. 55. 56. 57. 58. 59. 60. 61.

AIR 1976 SC 1455. This case was heard by V.R. Krishna Iyer and N.L. Untwalia. (1976) I SCR 306. (1976) I SCR 120. (1969) I SCR 931:AIR 1969 SC 998. (1960) I SCR 24:AIR 1959 SC 1147. (1969) I SCR 931:AIR 1969 SC 998. (1960) I SCR 24:AIR 1959 SC 1147. 1952 LAC 370. (1960) I SCR 107 (111):AIR 1959 SC 1151 at 1153. (1960) I SCR 24:AIR 1959 SC 1147. (1964) 7 SCR 277:AIR 1964 SC 1770. 1962 Supp (3) SCR 382:AIR 1963 SC 474. (1966) 2 LLJ 294, 302 (Pat HC). (1962) II LLJ 435:AIR 1963 SC 1007. AIR 1959 Cal. 797. (1969) I SCR 366:AIR 1969 SC 530. (1967) I SCR 15:AIR 1967 SC 691. AIR 1960 SC 530. AIR 1969 SC 530. AIR 1969 SC 530. (1975) II LLJ 345 (SC). (1975) II LLJ 345 (SC). Law Commission on India, 54th Report. AIR 1979 SC 262. This case was heard by V.R. Krishna Iyer and D.A. Desai. Section 34 of the Act provides that subject to the provisions of Section 31-A, the provisions of this Act shall have effect notwithstanding anything consistent therewith contained in any other law for the time being in force or in the terms of any award, agreement, settlement or contract of service. Benjamin Nathan Cardozo 1947. ‘What Medicine can do for Law,’ (Address before the New York Academy of Medicine, 1 Nov. 1928), in Margaret E. Hall (ed.) Selected Writings of Benjamin Nathan Cardozo. New York: Mathew Bender and Co. Austin, Granville. 1972. The Indian Constitution—Cornerstone of a Nation. Oxford: Clarendon Press, p. 26. Politica, Book VII, Chapter 4, Section 5. Interpretation of Legal History, p. 156, quoted in ‘Criminal Law—Principles of Liability’ by T.S. Batra, p. 612. A Text Book of Jurisprudence, p. 31, quoted in ‘Criminal Law—Principles of Liability by T.S. Batra, p. 612. Skies, Melvin P. ‘The Administration of Justice’, Pawns of Politics and of Power, p. 120. Notification dated 17-10-1968 of the U.P. Govt. Labour (C) Dept. A committee was constituted under Labour (C) Department, notification No. 7548(HI) XXXVI-C-109 (HI)/68, dated 17 October 1968. An amendment to Section 3(e) has since been made. (1961) 2 SCR 330 at pp. 242–343:AIR 1961 SC 420 at p. 426.

Wages and Monetary Benefits 535 62. AIR 1961 SC 420. 63. Section 10 of the Act provides that: subject to the other provisions of this Act, every employer shall be bound to pay to every employee in respect of the accounting year commencing on any day in the year 1979 and in respect of every subsequent accounting year, a minimum bonus which shall be 8.33 percent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, whether or not the employer has any allocable surplus in the accounting year: Provided that where an employee has not completed fifteen years of age at the beginning of the accounting year, the provisions of this section shall have effect in relation to such employee as if for the words ‘one hundred rupees’ the words ‘sixty rupees’ were substituted. 64. Section 36 provides that: if the appropriate government, having regard to the financial position and other relevant circumstances of any establishment or class of establishments, is of opinion that it will not be in public interest to apply all or any of the provisions of this Act thereto, it may, by notification in the Official Gazette, exempt for such period as may be specified therein and subject to such conditions as it may think fit to exempt, such establishment or class of establishments from all or any of the provisions of this Act. 65. 66. 67. 68.

AIR 1967 SC 691:1966 (2) LLJ 546:1966 (13) FLR 298. AIR 1979 SC 233:1979 (1) LLJ 162:1979 (38) FLR 58. AIR 1980 SC 604. This case was heard by V.R. Krishna Iyer, R.S. Pathak and O. Chinnappa Reddy. Section 32 of the Act provides that nothing in this Act shall apply to: (i) employees employed by any insurer carrying on general insurance business and the employees of the Life Insurance Corporation of India;… (v) employees employed by (a) the Indian Red Cross Society or any other institution of a like nature (including its branches) (b) universities and other educational institutions; (c) institutions (including hospitals, chambers of commerce and social welfare institutions) established not for purposes of profit;…

69. 1978 I LLJ 322:AIR 1978 SC 474. This case was heard by V.R. Krishna Iyer and Jaswant Singh. 70. 1971 (22) FLR 181:1971 (3) SCR 529.

Chapter 15

Social Security and Welfare In India, the law relating to social security owes its origin to the concept of social security envisaged by the International Labour Organization. The social security legislation in India, as far as its applicability and coverage is concerned, differs from other labour legislations that govern various aspects of industrial relations. The very premise of social security legislation in India is to maintain the purchasing capacity of a worker when he becomes unemployed, either temporarily or permanently.

Employees’ State Insurance Act, 1948: Applicability Royal Talkies, Hyderabad, and Others vs the Employees’ State Insurance Corporation1 In this case, the Supreme Court had to consider the scope of the definition of ‘employee’ in Section 2(9)2 and the employer’s liability to pay the contribution under Section 45A3 of the Employees’ State Insurance Act, 1948, respectively. THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Law is essentially the formal expression of the regulation of economic relations in society. That is the key note thought in this case, where the core question is: who is an employee? Secondly, to decide the meaning of a welfare measure a feeling for the soul of the measure is a surer guide than meticulous dissection with lexical tools alone. The definitional amplitude of ‘employee’ in Section 2(9) of the Employees’ State Insurance Act, 1948, (hereinafter referred to as the Act), is the sole contentious issue canvassed by counsel at the bar. We have heard Shri Chitale for the appellant and the learned Attorney General for the respondent-Corporation at some length, because a decision by this court as to the width of the definition and consequential fall-out of statutory obligations may cover a considerable number of establishments. We have granted leave to appeal on that basis and now proceed to study the anatomy of ‘employee’ as defined in Section 2(9) of the Act. A brief factual narration may help get a hang of the case. The High Court, before which the present appellants had filed these appeals, has summarised the facts succinctly thus: The appellants are owners of theatres in the twin cities of Hyderabad and Secunderabad, where films are exhibited. Within the same premises as the theatre, in every case, there is a canteen and a cycle stand. The canteen and the cycle stand are leased out to contractors

Social Security and Welfare 537 under instruments of lease. The contractors employ their own servants to run the canteen and the cycle stand. In regard to persons so employed by the contractors, the owners of the theatres were treated as ‘Principal Employers’ and notices of demand were issued to them calling upon them to pay contribution under the Employees’ State Insurance Act. Thereupon the owners of theatres filed application under Section 75 of the Employees’ State Insurance Act before the Employees Insurance Court for a declaration that the provisions of the Act were not applicable to their theatres and that they were not liable to any contribution in respect of the persons employed in the canteens and cycle-stands attached to the theatres. The Insurance Court, on a consideration of the relevant lease deeds and other evidence, noticed the following features in regard to the running of the canteens: (1) All these canteens are within the premises of the cinema theatres. (2) A few of these canteens have access directly from the abutting roads whereas the other canteens can be reached only through the open space inside the cinema theatres. (3) The persons running the canteens are themselves responsible for equipping the canteens with the necessary furniture and for providing the required utensils. (4) The Managements of all these cinema theatres pay the electricity charges due in respect of these canteens. (5) The persons working in these canteens are employed only by the contractors or tenants who run the canteens and they alone are responsible for the salaries payable to the persons. (6) The managements of the cinema theatres have absolutely no supervisory control over the persons employed in these canteens. (7) These canteens have to be run only during the show hours. This is made abundantly clear by Exhibits P-7 to P-10 and in the face of the recitals contained in these agreements, I am not prepared to accept P.W. 1’s evidence that the tenants of these canteens are at liberty to run them at other times also. In particular Exhibit P-10 provides that the lessee shall run the business only during the show hours and that it shall be closed as soon as the cinema shows are closed. (8) A few of the persons working in the canteens are allowed inside the auditorium during the interval for vending eatables and beverages. They can enter the auditorium a few minutes before the interval and can remain inside the auditorium for a few minutes after the interval. (9) It is seen from Exhibit P-10 that the management of the cinema theatre had reserved to itself the right to specify what types of things should be sold in the canteen. The canteens are expected to maintain a high degree of cleanliness and sanitation. (10) In some cases the managements of the theatres reserve the right to enter the canteen premises at all reasonable time for purposes of check and inspection. Exhibit P-9 contains a specific clause in that regard. These features led the Insurance Court to arrive at the following findings of fact: From the several circumstances mentioned above it is clear that these canteens are meant primarily for the convenience and comfort of those visiting the cinema theatres though in a few cases the persons in charge of canteens seem to be allowing the general public also to have access to the canteens taking advantage of the fact that the canteens can be reached directly from the abutting road. But this circumstance does not by itself indicate that these canteens are thrown open to the general public as other hotels, restaurants or eating houses. In regard to cycle stands, the Insurance Court held: Hence it may safely be concluded that these cycle stands are meant exclusively for the convenience of persons visiting the theatres. The Insurance Court found that the owners of theatres were principal employers with reference to the persons employed by contractors in the canteens and the cycle stands attached to the theatres and rejected the applications filed by the owners of theatres under Section 75 of the Act.

538 Social Justice and Labour Jurisprudence The disappointed theatre owners appealed under Section 82, without avail, but undaunted, moved this Court for Special Leave to Appeal which we have granted, as stated earlier, so that we may discuss the facets of the definitional dispute in some detail and lay down the law on the main question. A conspectus of the statute, to the extent relevant, is necessary to appreciate the controversy at the Bar. The statutory personality and the social mission of the Act once projected, the resolution of the conflict of interpretation raised in this case is simple. Although, technically, the Act is a pre-Constitution one, it is a post-Independence measure and shares the passion of the Constitution for social justice. Articles 38, 39, 41, 42, 43 and 43-A of the Constitution show concern for workers and their welfare. Since Independence, this legislative motivation has found expression in many enactments. We are concerned with one such law designed to confer benefits on this weaker segment in situations of distress as is apparent from the Preamble. The machinery for state insurance is set up in the shape of a Corporation and subsidiary agencies. All employees in factories or establishments are sought to be insured against sickness and allied disabilities, but the funding, to implement the policy of insurance, is by contributions from the employer and the employee. In view of the complexities of modern business organisation the principal employer is made primarily liable for payment of contribution ‘in respect of every employee, whether directly employed by him or by or through an immediate employer’. Of course, where the employee is not directly employed by him but through another ‘immediate employer’, the principal employer is empowered to recoup the contribution paid by him on behalf of the immediate employer (Section 41). There is an Inspectorate to supervise the determination and levy of the contributions. There is a chapter prescribing penalties; there is adjudicating machinery and there are other policing processes for the smooth working of the benign project envisaged by the Act. The benefits belong to the employees and are intended to embrace as extensive a circle as is feasible. In short, the social orientation, protective purpose and human coverage of the Act are important considerations in the statutory construction, more weighty than mere logomachy or grammatical nicety. With this prefatory statement we may go straight to the crucial definition. The essential question is whether a cinema theatre manager, who has no statutory obligation to run a canteen or provide a cycle stand but, for the better amenities of his customers and improvement of his business, enters into an arrangement with another to maintain a canteen and a cycle stand and that other employs, on his own, workers in connection with the canteen and the cycle stand, can be held liable for contribution as the principal employer of the workmen although they are engaged independently by the owner of the canteen or the cycle stand. It is common ground that there is no statutory obligation on the part of the appellants to run canteens or keep cycle stand. It is common ground, again, that the workers with whom we are concerned are not directly employed by the appellants and, if we go by the master and servant relationship under the law of contracts, there is no employer-employee nexus. Even so, it has been held concurrently by the Insurance Court and High Court that ‘canteens are meant primarily for the convenience and comfort of persons visiting the theatres and the cycle stands are meant exclusively for the convenience of the persons visiting theatres’ and ‘that the persons employed in the canteens and cycle stands are persons employed on work which is ordinarily part of the work of the theatre or incidental to the purpose of the theatre. In relation to the person so employed, therefore, the owners of the theatres are principal employers’. The High Court proceeded further to affirm: By undertaking to run the canteen or the cycle stand the contractor has undertaken the execution of the whole or part of the work which is ordinarily part of the work of the theatre of the principal employer or is incidental to the purpose of the theatre. We have already held that the running of canteen or cycle stand is work carried on in connection with the work of the theatre, work which may be considered to be either ordinarily part of the work of the

Social Security and Welfare 539 theatre or incidental to the purpose of the theatre. If so, there is no reason why, the contractor should not come within the definition of ‘immediate employer’. Before us counsel have mainly focussed on the definition of ‘employee’ since the short proposition which creates or absolves liability of the appellants depends on the canteen workers and the cycle stand attendants being ‘employees’ vis-à-vis the theatre owners. There is no doubt that a cinema theatre is an ‘establishment’ and that the appellants, as theatre owners, are principal employers, being persons responsible for the supervision and control of the establishment. Admittedly, the canteens and cycle stands are within the theatre premises. Within this factual matrix let us see if the definition in Section 2(9) will fit. We may read the definition of ‘employee’ once again before analysing the components thereof: 2 (9) ‘employee’ means any person employed for wages in or in connection with the work of a factory or establishment to which this Act applies, and (i) Who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work, of the factory or establishment, whether such work is done by the employee in the factory or establishment or elsewhere; or (ii) Who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or (iii) Whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of service; and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment; but does not include: (a) any member of the Indian naval, military or air forces; or (b) any person so employed whose wages (excluding remuneration for overtime work) exceed five hundred rupees a month: Provided that an employee whose wages (excluding remuneration for overtime work) exceed five-hundred rupees a month at any time after and not before, the beginning of the contribution period, shall continue to be an employee until the end of that period. The reach and range of the definition is apparently wide and deliberately transcends pure contractual relationships. We are in the field of labour jurisprudence, welfare legislation and statutory construction which must have due regard to Part IV of the Constitution. A teleological approach and social perspective must play upon the interpretative process. Now here is a break-up of Section 2(9). The clause contains two substantive parts. Unless the person employed qualifies under both he is not an ‘employee’. Firstly, he must be employed ‘in or in connection with’ the work of an establishment. The expression ‘in connection with the work of an establishment’ ropes in a wide variety of workmen who may not be employed in the establishment but may be engaged only in connection with the work of the establishment. Some nexus must exist between the establishment and the work of the employee but it may be a loose connection. ‘[I]n connection with the work of an establishment’ only postulates some connection between what the employee does and the work of the establishment. He may not do anything directly for the establishment; he may not do anything statutorily obligatory in the establishment; he may not even do anything which is primary or necessary for the survival or

540 Social Justice and Labour Jurisprudence smooth running of the establishment or integral to the adventure. It is enough if the employee does some work which is ancillary, incidental or has relevance to or link with the object of the establishment. Surely, an amenity or facility for the customers who frequent the establishment has connection with the work of the establishment. The question is not whether without that amenity or facility the establishment cannot be carried on but whether such amenity or facility, even peripheral may be, has not a link with the establishment. Illustrations may not be exhaustive but may be informative. Taking the present case, an establishment like a cinema theatre is not bound to run a canteen or keep a cycle stand (in Andhra Pradesh) but no one will deny that a canteen service, a toilet service, a car park or cycle stand, a booth for sale of catchy film literature on actors, song hits and the like, surely have connection with the cinema theatre and even further the venture. On the other hand, a book-stall where scientific works or tools are sold or a stall where religious propaganda is done, may not have anything to do with the cinema establishment and may, therefore, be excluded on the score that the employees do not do any work in connection with the establishment, that is, the theatre. In the case of a five-star hotel, for instance, a barber shop or an arcade, massage parlour, foreign exchange counter or tourist assistance counter may be run by some one other than the owner of the establishment but the employees so engaged do work in connection with the establishment or the hotel even though there is no obligation for a hotel to maintain such an ancillary attraction. By contrast, not a lawyer’s chamber or architect’s consultancy. Nor, indeed, is it a legal ingredient that such adjunct should be exclusively for the establishment if it is mainly its ancillary. The primary test in the substantive clause being thus wide, the employees of the canteen and the cycle stand may be correctly described as employed in connection with the work of the establishment. A narrower construction may be possible but a larger ambit is clearly imported by a purpose-oriented interpretation. The whole goal of the statute is to make the principal employer primarily liable for the insurance of kindred kinds of employees on the premises, whether they are there in the work or are merely in connection with the work of the establishment. Merely being employed in connection with the work of an establishment, in itself, does not entitle a person to be an ‘employee’. He must not only be employed in connection with the work of the establishment but also be shown to be employed in one or other of the three categories mentioned in Section 2(9). Section 2(9)(i) covers only employees who are directly employed by the principal employer. Even here, there are expressions which take in a wider group of employees than traditionally so regarded, but it is imperative that any employee who is not directly employed by the principal employer cannot be eligible under Section 2(9)(i). In the present case, the employees concerned are admittedly not directly employed by the cinema proprietors. Therefore, we move down to Section 2(9)(ii). Here again, the language used is extensive and diffusive imaginatively embracing all possible alternatives of employment by or through an independent employer. In such cases, the ‘principal employer’ has no direct employment relationship since the ‘immediate employer’ of the employee concerned is some one else. Even so, such an employee, if he works (a) on the premises of the establishment, or (b) under the supervision of the principal employer or his agent ‘on work which is ordinarily part of the work of the establishment or which is preliminary to the work carried on in or incidental to the purpose of the establishment’, qualifies under Section 2(9)(ii). The plurality of persons engaged in various activities who are brought into the definitional net is wide and considerable; and all that is necessary is that the employee be on the premises or be under the supervision of the principal employer or his agent. Assuming that the last part of Section 2(9)(ii) qualifies both these categories, all that is needed to satisfy that requirement is that the work done by the employee must be (a) such as is ordinarily (not necessarily nor statutorily) part of the work of the establishment, or (b) which is merely preliminary to the work carried on in the establishment, or (c) is just incidental to the purpose of the establishment. No one can seriously say that a canteen or cycle

Social Security and Welfare 541 stand or cinema magazine booth is not even incidental to the purpose of the theatre. The cinema goers ordinarily find such work an advantage, a facility, an amenity and some times a necessity. All that the statute requires is that the work should not be irrelevant to the purpose of the establishment. It is sufficient if it is incidental to it. A thing is incidental to another if it merely appertains to something else as primary. Surely, such work should not be extraneous or contrary to the purpose of the establishment but need not be integral to it either. Much depends on time and place, habits and appetites, ordinary expectations and social circumstances. In our view, clearly the two operations in the present case, namely, keeping a cycle stand and running a canteen are incidental or adjuncts to the primary purpose of the theatre. We are not concerned with Section 2(9)(iii) nor with the rest of the definitional provision. Shri Chitale tried to convince us that on a minute dissection of the various clauses of the provision it was possible to exclude canteen employees and cycle stand attendants. May be, punctilious sense of grammar and minute precision of language may sometimes lend unwitting support to narrow interpretation. But language is handmaid, not mistress. Maxwell and Fowler move along different streets, sometimes. When, as in Section 2(9), the definition has been cast deliberately in the widest terms and the draftsman has endeavoured to cover every possibility so as not to exclude even distant categories of men employed either in the primary work or cognate activities, it will defeat the object of the statute to truncate its semantic sweep and throw out of its ambit those who obviously are within the benign contemplation of the Act. Salvationary effort, when the welfare of the weaker sections of society is the statutory object and is faced with stultifying effect, is permissible judicial exercise. In this view we have no doubt that findings assailed before us are correct and that the conclusion reached deserves to be affirmed. We do so. Learned Counsel for the appellants finally submitted that, in this event of our negativing his legal contention, he should be given the benefit of natural justice. We agree. The assessment of the quantum of the employers’ contribution has now been made on an ad hoc basis because they merely pleaded non-liability and made no returns. On the strength of Section 45A the contribution was determined without hearing. In the circumstances of the case—and the learned Attorney General has no objection—we think it right to direct the relevant Corporation authorities to give a fresh hearing to the principal employers concerned, if sought within 2 months from to-day, to prove any errors or infirmities in the physical determination of the contribution. Such a hearing, in tune with the ruling, of this Court in the Central Press4 case is fair and so we order that the assessment shall be reconsidered in the light of a de novo hearing to the appellants and the quantum of contribution affirmed or modified by fresh orders. Before we formally wind up we think it apt to make a critical remark of the cumbersome definition in Section 2(9) of the Act which has promoted considerable argument. This reminds us of the well-known dictum of Sir James Fitzjames Stephen ‘that in drafting it is not enough to gain a degree of precision which a person reading in good faith can understand, but it is necessary to attain if possible to a degree of precision which a person reading in bad faith cannot misunderstand’.5

Computation of Maternity Benefit under the Maternity Benefit Act, 1961 The maternity benefit for women employees employed in industrial establishments is provided through two legislations namely—the Employees’ State Insurance Act, 1948, and the Maternity Benefit Act, 1961. In cases of industrial establishments where the Employees’

542 Social Justice and Labour Jurisprudence

State Insurance Act, 1948, is not extended, the Maternity Benefit Act, 1961, is made applicable. On the whole, the Maternity Benefit Act, 1961, is more comprehensive in providing the benefits to a woman employee.

B. Shah vs the Presiding Officer, Labour Court, Coimbatore and Others6 In this case, the Supreme Court addressed the computation of maternity benefit, stressing that the Act is intended to achieve the object of ensuring social justice to women workers. This appeal by special leave, which is directed against the judgement and order dated 24 April 1974 of the letters patent bench of the High Court of Judicature at Madras, reversing the judgement and order dated 19 April 1971 of the single judge of that court passed in writ petition 3822 of 1969 presented under Article 226 of the Constitution, raises a complex but interesting question relating to the construction of the phrase ‘maternity benefit for the period of her actual absence immediately preceding and including the day of her delivery and for the six weeks immediately following that day,’ occurring in Section 5(1) of the Maternity Benefits Act, 1961 (Act LIII of 1961) (hereinafter referred to as ‘the Act’), which in view of Section 2(1) of the Act, is the law applicable even to women workers employed in plantations. THE JUDGEMENT DELIVERED BY JUSTICE JASWANT SINGH It appears that in October, 1967, Subbammal, respondent 2 herein, who is a woman worker employed in Mount Stuart Estate (hereinafter referred to as ‘the establishment’), which is carrying on plantation industry, was allowed leave of absence by the establishment on the basis of a notice given by her of her expected delivery which actually took place on 16 December 1967. After her delivery, the respondent was paid by her employers on account of maternity benefit an amount equivalent to what she would have earned on the basis of her average daily wage in 72 working days falling within twelve weeks of the maternity period. While calculating the aforesaid amount of maternity benefit, the establishment admittedly excluded twelve Sundays being wageless holidays, which fell during the period of the respondent’s actual absence immediately preceding and including the day of her delivery and the six weeks immediately following that day. Dissatisfied with this computation, the respondent made a representation to her employers claiming maternity benefit for the entire period of twelve weeks under the Act, i.e. for 84 days on the plea that a week consisted of seven days. As her demand did not evoke a favourable response, the respondent applied to the Labour Court, Coimbatore, under Section 33C (2) of the Industrial Disputes Act for redress of her grievance. The claim preferred by the respondent was resisted by the appellant herein who contended that the respondent was admittedly working and was being paid only for six days in a week and that a pregnant woman worker is entitled to maternity benefit for 72 days which are the normal working days in twelve weeks and not for 84 days, as no wage is payable for the seventh days of the week, i.e. Sunday, which is a non-working wageless holiday. By its order dated 26 February 1969, the Labour Court allowed the claim of the respondent. Thereupon the establishment moved the High Court at Madras under Article 226 of the Constitution challenging the decision of the Labour Court contending that the claim made by the respondent was untenable as normally a worker works only for six days in a week and the maternity benefit had to be computed only for 72 days. As against this, the respondent pleaded that the computation had to be made not with reference to the actual number of working days but with reference to total number of days covered by twelve weeks, i.e. 84 days. The single Judge of the High Court to whom the case was assigned allowed the petition holding that

Social Security and Welfare 543 twelve weeks for which maternity benefit is provided for in sub-section (3) of Section 5 of the Act must be taken to mean twelve weeks of work and the computation of the benefit had to be made with reference to the actual days on which the woman would have worked but for her inability. Aggrieved by this decision, the respondent filed an appeal under clause 15 of the Letters Patent which, as already stated, was allowed by the Letters Patent Bench of the High Court observing that the maternity benefit which the respondent was entitled to receive was for the period of her absence before delivery including the day of delivery and also six weeks thereafter, each week consisting of seven days including Sundays. Dissatisfied with this decision, the establishment has, as already stated, come up in appeal to this Court by special leave. We have heard Mr Pai, learned Counsel, for the appellant as also Mr Bhat, who in view of the default in appearance of respondent 2 and the importance of the point involved in the case was appointed as amicus curiae. We place on record our deep appreciation of the valuable assistance rendered to us by both of them. Assailing the judgment and order under appeal, Mr Pai has urged that since legislative intent, as revealed from the scheme of Section 5(1) of the Act is to compensate the woman worker who expects delivery for the loss that her forced absence from work on account of pregnancy and confinement may entail, the liability which has to be imposed on her employer cannot exceed the amount that she would have earned if she had not been compelled to avail of the maternity leave and since Sunday is a non-working wageless day, the employer cannot be made to pay for that day. He has further urged that since under Section 5(1) of the Act, the maternity benefit has to be computed with reference to the period of the worker’s actual absence thereby meaning absence to days on which there was work excluding Sundays and the term ‘week’ in the context of sub-sections (1) and (3) of Section 5 of the Act is to be understood as a week of work consisting of six days and in the instant case, respondent 2 was working and earning wages for six days in a week, the seventh days being a wageless holiday, her claim cannot be sustained. In support of his contention, Mr Pai has referred us to the Full Bench decision of the Kerala High Court in Malayalam Plantations Ltd., Cochin vs Inspector of Plantations, Mundakayam and to Convention 103 concerning Maternity Protection Convention (Revised), 1952 adopted by the General Conference of the International Labour Organisation. Mr Bhat has, on the other hand, urged that the scheme of Section 5 of the Act clearly indicates that a woman worker who expects delivery has to be paid maternity benefit for all the seven days of the week including Sundays falling within the ante-natal and post-natal periods specified in the section. For a proper determination of the question involved in the appeal, it would, we think, be useful to refer to certain provisions of the Act which have a bearing on the subject-matter of the controversy before us. Section 2(1) of the Act makes the Act applicable to every establishment being a factory, mine or plantation (including any such establishment belonging to Government and to every establishment wherein persons are employed for the exhibition of equestrian, acrobatic and other performance). Sub-section (2) of Section 2 of the Act specifically excludes the applicability of the provisions of the Act to any factory or other establishment to which the provisions of the Employees’ State Insurance Act, 1948 apply for the time being. Section 3(n) of the Act defines ‘wages’ as under: 3. (n) Wages means all remuneration paid or payable in cash to a woman, if the terms of the contract of employment, express or implied, were fulfilled and includes— (1) such cash allowances (including dearness allowance and house rent allowance) as a woman is for the time being entitled to; (2) incentive bonus; and (3) the money value of the concessional supply of food grains and other articles,

544 Social Justice and Labour Jurisprudence but does not include (i) any bonus other than incentive bonus; (ii) over-time earnings and any deduction or payment made on account of fines; (iii) any contribution paid or payable by the employer to any pension fund or provident fund or for the benefit of the woman under any law for the time being in force; and (iv) any gratuity payable on the termination of service. The above definition, it would be noted, does not restrict the meaning of the term ‘wages’ to contractual wages but gives the term a composite meaning covering all remunerations in the nature of cash allowances, incentive bonus and the money value of the concessional supply of food grains and other articles. Section 4 of the Act, which prohibits the employment of, or work by, women during certain period lays down: 4. Employment of, or work by, women prohibited during certain period— (1) No employer shall knowingly employ a woman in any establishment during the six weeks immediately following the day of her delivery or her miscarriage. (2) No woman shall work in any establishment during the six weeks immediately following the day of her delivery or miscarriage. (3) Without prejudice to the provisions of Section 6, no pregnant woman shall, on a request being made by her in this behalf, be required by her employer to do during the period specified in sub-section (4) any work which is of an arduous nature or which involves long hours of standing, or which in any way is likely to interfere with her pregnancy or the normal development of the foetus, or is likely to cause her miscarriage or otherwise to adversely affect her health. (4) The period referred to in sub-section (3) shall be (a) the period of one month immediately preceding the period of six weeks, before the date of her expected delivery; (b) any period during the said period of six weeks for which the pregnant woman does not avail of leave of absence under Section 6. Section 5 of the Act which confers right to payment of maternity benefit on a woman worker provides: 5. Right to payment of maternity benefit—(1) Subject to the provisions of this Act, every woman shall be entitled to, and her employer shall be liable for, the payment of maternity benefit at the rate of the average daily wage for the period of her actual absence immediately preceding and including the day of her delivery and for the six weeks immediately following that day. Explanation:—For the purpose of this sub-section, the average daily wage means the average of the woman’s wages payable to her for the days on which she has worked during the period of three calendar months immediately preceding the date from which she absents herself on account of maternity, or one rupee a day, whichever is higher. (2) No woman shall be entitled to maternity benefit unless she has actually worked in an establishment of the employer from whom she claims maternity benefit, for a period of not less than one hundred and sixty days in the twelve months, immediately preceding the date of her expected delivery: Provided that the qualifying period of one hundred and sixty days aforesaid shall not apply to a woman who has immigrated into the State of Assam and was pregnant at the time of the immigration.

Social Security and Welfare 545 Explanation: For the purpose of calculating under this sub-section, the days on which a woman has actually worked in the establishment, the days for which she has been laid off during the period of twelve months immediately preceding the date of her expected delivery shall be taken into account. (3) The maximum period for which any woman shall be entitled to maternity benefit shall be twelve weeks, that is to say, six weeks up to and including the day of her delivery and six weeks immediately following that day: Provided that where a woman dies during this period, the maternity benefit shall be payable only for the days up to and including the day of her death: Provided further that where a woman, having delivered of a child, dies during her delivery or during the period of six weeks immediately following the date of her delivery, leaving behind in either case the child, the employer shall be liable for the maternity benefit for the entire period of six weeks immediately following the day of her delivery but if the child also dies during the said period, then, for the days upto and including the day of the death of the child. Section 6 of the Act which deals with notice of claim for maternity benefit and payment thereof is to the following effect: 6. Notice of claim for maternity benefit and payment thereof—(1) Any woman employed in an establishment and entitled to maternity benefit under the provisions of this Act may give notice in writing in such form as may be prescribed, to her employer, stating that her maternity benefit and any other amount to which she may be entitled under this Act may be paid to her or to such person as she may nominate in the notice and that she will not work in any establishment during the period for which she receives maternity benefit. (2) In the case of a woman who is pregnant, such notice shall state the date from which she will be absent from work, not being a date earlier than six weeks from the date of her expected delivery. (3) Any woman who has not given the notice when she was pregnant may give such notice as soon as possible after the delivery. (4) On receipt of the notice, the employer shall permit such woman to absent herself from the establishment until the expiry of six weeks after the days of her delivery. (5) The amount of maternity benefit for the period preceding the date of her expected delivery shall be paid in advance by the employer to the woman on production of such proof as may be prescribed that the woman is pregnant, and the amount due for the subsequent period shall be paid by the employer to the woman within forty-eight hours of production of such proof as may be prescribed that the woman has been delivered of a child. (6) The failure to give notice under this section shall not disentitle a woman to maternity benefit or any other amount under this Act if she is otherwise entitled to such benefit or amount and in any such case, an Inspector may either of his own motion or on an application made to him by the woman, order the payment of such benefit or amount within such period as may be specified in the order. The provisions of Section 5 of the Act quoted above make it clear that a woman worker who expected a child is entitled to maternity benefit for a maximum period of twelve weeks which is split up into two periods viz. pre-natal and post-natal. The first one i.e. pre-natal or ante-natal period is limited to the period of woman’s actual absence extending upto six weeks immediately preceding and including the day on which her delivery occurs and the second one which is post-natal compulsory period consists of six weeks immediately following the day of delivery. The benefit has to be calculated for the aforesaid two periods on the basis of the average daily wage. According to the Explanation appended to Section 5(1) of the Act, the average daily wage

546 Social Justice and Labour Jurisprudence has to be computed taking into consideration the average of the woman’s wages payable to her for the days on which she has worked during the period of three calendar months immediately preceding the date from which she absents herself on account of maternity, or one rupee a day, whichever is higher. For fixing the average daily wage, it has therefore first to be ascertained whether the wages which were paid or were payable to the woman was for ‘time work’ or for ‘piece work’. It has next to be ascertained as to what were the cash wages paid or payable to her in terms of the definition contained in Section 3(n) of the Act for the days on which she worked during the period of three calendar months immediately preceding the date of delivery, reckoned according to the British calendar month. The total wages thus worked out are to be divided by the number of days in the aforesaid three calendar months in order to arrive at the average daily wage. After thus finding out the average daily wage, the liability of the employer in respect of the maternity benefit has to be calculated in terms of Section 5 of the Act for both pre-natal and post-natal period indicated above. The real though difficult question that calls for determination by us is as to what is the connotation of the term ‘week’ occurring in sub-sections (1) and (3) of Section 5 of the Act and whether the computation of the maternity benefit prescribed by the Act for the aforesaid two periods has to be made taking a ‘week’ as signifying a cycle of seven days including a Sunday or a cycle of seven days minus a Sunday which is said to be a wageless day. As the Act does not contain any definition of the word ‘week’, it has to be understood in its ordinary dictionary sense. In the Shorter Oxford English Dictionary (Third Edition), the word ‘week’ has been described as meaning ‘the cycle of seven days, recognized in the calendar of the Jews and thence adopted in the calendar of Christian, Mohammedan and various other peoples. A space of seven days, irrespective of the time from which it is reckoned. Seven days as a term for periodical payments (of wages, rent, or the like) or as a unit of reckoning for time of work or service’. In Webster’s New World Dictionary (1962 Edition), the meaning of the word ‘week’ is given as ‘a period of seven days, especially one beginning with Sunday and ending with Saturday; the hours or days of work in a seven-day period’. In Stroud’s Judicial Dictionary (Third Edition), it is stated that ‘(1) though a week usually means any consecutive seven days, it will sometimes be interpreted to mean the ordinary notion of a week reckoning from Sunday to Sunday and (2) probably, a week usually means seven clear days’. A ‘week’ according to Halsbury’s Laws of England (Third Edition) Volume 37 at p. 84 is strictly the time between midnight on Saturday and the same hour on the next succeeding Saturday, but the term is also applied to any period of seven successive days. Bearing in mind the above mentioned dictionary or popular meaning of the term ‘week’, we think that in the context of sub-sections (1) and (3) of Section 5 of the Act, the term has to be taken to signify a cycle of seven days including Sundays. The language in which the aforesaid sub-sections are couched also shows, that the Legislature intended that computation of maternity benefit is to be made for the entire period of the woman worker’s actual absence, i.e. for all the days including Sundays which may be wageless holidays falling within that period and not only for intermittent periods of six days thereby excluding Sundays falling within that period for if it were not so, the Legislature instead of using the words ‘for the period of her actual absence immediately preceding and including the day of her delivery and for the six weeks immediately following that day’ would have used the words ‘for the working days falling within the period of her actual absence immediately preceding and including the day of her delivery and the six weeks immediately following that day but excluding the wageless days’. Again the word ‘period’ occurring in Section 5(1) of the Act is a strong word. It seems to emphasize, in our judgment, the continuous running of time and recurrence of the cycle of seven days. It has also to be borne in mind in this connection that in interpreting provisions of beneficial pieces of legislation like

Social Security and Welfare 547 the one in hand which is intended to achieve the object of doing social justice to woman workers employed in the plantations and which squarely fall within the purview of Article 42 of the Constitution, the beneficent rule of construction which would enable the woman worker not only to subsist but also to make 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. The interpretation placed by us on the phraseology of sub-sections (1) and (3) of Section 5 of the Act appears to us to be in conformity not only with the legislative intendment but also with Paragraphs 1 and 2 of Article 4 of Convention 103 concerning Maternity Protection Convention (Revised), 1952 adopted by the General Conference of the International Labour Organisation which are extracted below for facility of reference: Article 4: 1. While absent for work on maternity leave in accordance with the provisions of Article 3, the woman shall be entitled to receive cash and medical benefits. 2. The rates of cash benefit shall be fixed by national laws or regulations so as to ensure benefit sufficient for the full and healthy maintenance of herself and her child in accordance with a suitable standard of living. Thus we are of opinion that computation of maternity benefit has to be made for all the days including Sundays and rest days which may be wageless holidays comprised in the actual period of absence of the woman extending upto six weeks preceding and including the day of delivery as also for all the days falling within the six weeks immediately following the day of delivery thereby ensuring that the woman worker gets for the said period not only the amount equalling 100 per cent of the wages which she was previously earning in terms of Section 3(n) of the Act but also the benefit of the wages for all the Sundays and rest days falling within the aforesaid two periods which would ultimately be conducive to the interests of both the woman worker and her employer. In view of what we have stated above, we cannot uphold the view of the law expressed by the Full Bench of Kerala High Court in Malayalam Plantations Ltd., Cochin vs Inspector of Plantations Mundakayam.7 In the result, the appeal fails and is hereby dismissed. Although costs have to be paid by appellate to respondent 2 in terms of the Court’s order dated 30 October 1975, yet in view of the fact that the said respondent has not chosen to appear at the hearing of the case and Mr K.N. Bhat has assisted the Court as amicus curiae, we direct the appellant to pay Rs 1000 to Mr Bhat as his fee.

The Employees Provident Fund and Miscellaneous Provisions Act, 1952: Interpretation of Section 14B Organo Chemical Industries and Another vs the Union of India and Others 8 In this case, the Supreme Court had to counter the contention that Section 14B of the Act was unguided in respect of the imposition of damages against a defaulting employer.9 In this case, both the judges delivered a concurring opinion, but on the request of the brotheren Justice A.P. Sen, a separate judgement was delivered by Justice V.R. Krishna Iyer.

548 Social Justice and Labour Jurisprudence

THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER Having had the advantage of reading my learned brother’s judgment I should have stopped mine with a single sentence, following the example of Diplock, L.J. who in Hughes vs Hughes merely said: ‘For the reasons given by my brother Harman I would dismiss the appeal’. But I respect brother Sen’s request that my concurrence notwithstanding I should, in a separate opinion, highlight the quintessential aspects and reinforce the legal conclusions which are interpretatively decisive and constitutionally validatory of Section 14-B of the Employees Provident Fund and Miscellaneous Provisions Act, 1952 (briefly, the E.P.F. and M.P. Act). That is the apology for this separate judgment of mine. Why an apology? Because exordiums are opprobriums and socioeconomic apercus are anathemas for some judicial psyches; and I should have, for that reason, abandoned my habitual deviance from the orthodox norm idealized by some that a judicial judgment ‘shall be a dry statement of facts, drier presentation of law and logomachy and driest in least communicating to the law-abiding community, which is the court’s constituency, the glow of life-giving principles rooted in social sciences and translated into juristic rules which legitimate our institution functionally’. The last consideration, in my humble view, is the elan vital of the justicing process and jettisoning it is judicial self-alienation from the nation. Of course, minds differ as rivers differ and habits die hard! The central issues in this civil appeal are whether Section 14-B of the E.P.F. and M.P. Act is unconstitutional and, if not, what is the semantic-juristic sweep of the expression ‘damages’ used therein. Other vital but peripheral matters may be side-stepped for the nonce, especially because my learned brother has neatly and rightly dealt with them. The factual setting of the case, without which the legal contentions argued lose their luscent relevance, have been stated by my brother [Justice] Sen, but I may project them in a single sentence to help focus on the vires of Section 14-B and the conceptual width of ‘damages’ in the given context. Is the imposition by the ‘speaking order’ of the Regional Provident Fund Commissioner, Chandigarh, of a heavy penalty of Rs 94,996.80 by way of damages under Section 14-B of the E.P.F. and M.P. Act, 1952 upon the writ petitioners-employers, for chronic and unjustified defaults in remittances of the provident fund contributions of themselves and their employees legally sustainable, if obviously in excess of the pecuniary loss of interest attributable to the non-payment? Briefly and broadly and lopping off aspects unnecessary for this case the scheme of the Act is that each employer and employee in every ‘establishment’ falling within the Act do contribute into a statutory fund a title, viz. 6¼ per cent of the wages to swell into a large Fund wherewith the workers who toil to produce the nation’s wealth during their physically fit span of life may be provided some retiral benefit which will ‘keep the pot boiling’ and some source wherefrom loans to face unforeseen needs may be obtained. This social security measure is a humane homage the State pays to Articles 39 and 41 of the Constitution. The viability of the project depends on the employer duly deducting the workers’ contribution from their wages, adding his own little and promptly depositing the mickle into the chest constituted by the Act. The mechanics of the system will suffer paralysis if the employer fails to perform his function. The dynamics of this beneficial statute derives its locomotive power from the funds regularly flowing into the statutory till. The pragmatics of the situation is that if the stream of contributions were frozen by employers’ defaults after due deduction from the wages and diversion for their own purposes, the scheme would be damnified by traumatic starvation of the fund, public frustration from the failure of the project and psychic demoralization of the miserable beneficiaries when they find their wages deducted and the employer get away with it even after default in his own contribution and malversation of the workers’ share. ‘Damages’ have a wider socially semantic connotation than pecuniary loss of interest on non-payment when a social welfare scheme suffers mayhem on account of the injury. Law expands concepts to embrace social needs so as to become functionally effectual.

Social Security and Welfare 549 We may read Section 14-B and Para 38 of the Scheme to vivify the discussion: 14-B. Power to recover damages.—Where an employer makes defaults in the payment of any contribution to the Fund (the Family Fund or the Insurance Fund) or in the transfer of accumulations required to be transferred by him under sub-section (2) of Section 15 (for subsection [5] of Section 15) or in the payment of any charges payable under any other provision of this Act or of (any scheme or Insurance Scheme) or under any of the conditions specified under Section 17 (the Central Provident Fund Commissioner, or such other officer as may be authorized by the Central Government by notification in the Official Gazette in this behalf ), may recover from the employer such damages, not exceeding the amount of arrear, as it may think fit to impose: Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard. Mode of payment of contribution—(1) The employer shall, before paying the member his wages in respect of any period or part of period for which contributions are payable, deduct the employee’s contribution from his wages which together with his own contribution as well as an administrative charge of such percentage of the total employer’s and employee’s contribution as may be fixed by the Central Government, he shall within fifteen days of the close of every month pay to the Fund by separate Bank drafts or cheques on account of contributions and administrative charge… (2) The employer shall forward to the Commissioner, within fifteen days of the close of the month, a monthly consolidated statement in such form as the Commissioner may specify, showing recoveries made from the wages of each employee and the amount contributed by the employer in respect of each such employee. Counsel for the petitioners has turned the constitutional fusillade on Section 14-B by charging it with many-sided, in-built arbitrariness and therefore liable to be fatally shot down by Article 14. The provision is simple and the contention is familiar. The offending words of Section 14-B are that ‘the Provident Fund Commissioner may recover from the employer such damages, not exceeding the amount of arrear, as it thinks fit to impose’. Within the limit of 100 per cent, the enforcing agency is vested with naked and unguided power to inflict any quantum of damages as he fancies and this blanket authority is instinct with discriminatory possibility, a vice to which Article 14 is very allergic. No reasons need be given, no appellate or revisional review is prescribed and no judicial qualification is required for the Commissioner. This tiny statutory tyrant must be slain if equal justice under the law were to be part of our fundamental rights package. So runs the argument—traditional, attractive and near-lethal. Indeed, if executive fiats released from legal restraints, were free to run amok, our freedoms would be frothy boasts! Sedulous scrutiny of this submission of counsel is our solemn duty since I share with him the pensive thought that arrogance of power dressed in little, brief authority is the undoing of our constitutional order. And yet, here the mini-Nero portrait is too naive to meet with approval. A shower of precedents has rained on Article 14 but the cardinal principles have sunk so deep into the constitutional consciousness of the juristic community that recapitulation of citations is an act of supererogation. I desist from it. The power to affect citizen’s rights, especially by way of punitive impost or damages for wrongdoing, is quasi-judicial in character even if exercised by executive echelons. This Court has underscored the importance of injecting the norms of natural justice when statutory functionaries affect the rights of a person. The most recent of the cases which lay bare the elementals of this branch of jurisprudence are: (1) Siemens Engineering and Manufacturing Co. of India Ltd. vs Union of India,10 Maneka Gandhi (Mrs.) vs Union of India,11 Mohinder Singh Gill vs Chief Election Commissioner, New Delhi.12

550 Social Justice and Labour Jurisprudence In Siemens13 case this Court observed: It is now settled law that where an authority makes an order in exercise of a quasi-judicial function, it must record its reasons in support of the order it makes. Every quasi-judicial order must be supported by reasons. That has been laid down by a long line of decisions of this Court ending with N.M. Desai vs Testeels Ltd. C.A. No. 245 of 1970, D/-17-12-1975 (SC). Fair play in administration is a finer juristic facet, at once fundamental and inviolable and natural justice is an inalienable functional component of quasi-judicial acts. Here, it is indubitable that the imposition of damages on a party, after a statutory hearing, is a quasi-judicial direction. This Court has impressed the requirements of natural justice on such jurisdictions and one such desideratum is spelling out reasons for the order made, in other words, a speaking order. The inscrutable face of a sphinx is ordinarily incongruous with a judicial or quasi-judicial performance. It is, in my view, an imperative of Section 14-B that the Commissioner shall give reasons for his order imposing damages on an employer. The constitutionality of the power, tested on the anvil of Articles 14 and 19, necessitates this prescription. Such a guarantee ensures rational action by the officer, because reasons imply relevant reasons, not capricious ink and the need for cogency rivets the officer’s mind to the pertinent material on record. Moreover, once reasons are set down, the order readily exposes itself to the writ jurisdiction of the court under Article 226 so that perversity, illiteracy, extraneous influence, mala fides and other blatant infirmities straight get caught and corrected. Thus, viewing the situation from the conspectus of requirements and remedies, statutory agencies may be inhibited and the scare of arbitrary behaviour allayed once reasons are required to be given. Nor is the plea of absence of guidelines or appellate review sound enough to subvert the validity of Section 14-B. It is attractive to hear the argument that an order passed by an authority, which becomes infallibly final in the absence of an appeal or revision, is apt to be arbitrary and bad. An appeal is a desirable corrective but not an indispensable imperative and while its presence is an extra check on wayward orders its absence is not a sure index of arbitrary potential. It depends on the nature of the subject-matter, other available correctives, possible harm flowing from wrong orders and a wealth of other factors. If a death sentence is allowed to become conclusive without so much as a single appeal, Articles 14 and 21 may imperil such a provision but if a fine of Rs 5 imposed for a minor offence in a summary trial by a First Class Magistrate is imparted a finality, subject, of course, to a constitutional remedy in the event of perverse or patent illegality we may still uphold that provision with an easy constitutional conscience. In the present case, a hearing is given to the affected party. Reasons have to be recorded in the order awarding damages. The writ jurisdiction is ready to review glaring errors. The maximum harm is pecuniary liability limited by the statute. A high official hears and decides. Under such circumstances the needs of the factual situation and the legal milieu are such that the absence of appellate review in no way militates against the justice and reasonableness of the provision. The argument of arbitrariness on this score is untenable. The section is not bad. Maybe, action under the section may be challenged in writ jurisdiction provided infirmities which attract such jurisdiction vitiate the order. The bogie of absence of guidelines in the provision and consequential possibility of the authority running berserk or acting hubristically does not frighten. Of course, the more bereft of explicit guidelines a statutory power is, the more searching must be the judicial invigilation to discover hidden injustice and masked mala fides. Even so, let us examine the ground that, absent detailed guidelines, the law is void. What is not explicit may still be implicit. What is not articulated at length may be spun out from a single phrase. What is not transparent in particularized provisions may be immanent in the preamble, scheme, purpose or subject-matter of the Act. What is real is not only the gross but also the subtle, if I may strike a deeper note. Such a perspective dispels the submission that Section 14-B is bad as uncircumscribed and over-broad.

Social Security and Welfare 551 The power under the section permits award of ‘damages’ and that word has a wealth of implications and limitations, sufficient to serve as guideline in fixing the impost. In Avinder Singh vs State of Punjab,14 this Court upheld an otherwise unbridled power to levy tax by importing a variety of factors gathered from the statute and relied on many precedents. Likewise, in C.S.T. v. Radhakrishan,15 this Court rejected the plea that a power in the Commissioner to choose one of the two remedies was invalid in the absence of guidelines and observed, on a review of the case-law: When power is conferred on high and responsible officers they are expected to act with caution and impartiality while discharging their duties and the circumstances under which they will choose either of the remedies available should be left to them. The vesting of discretionary power in the State or public authorities or an officer of high standing is treated as a guarantee that the power will be used fairly and with a sense of responsibility. It has been held by the Privy Council in Province of Bombay vs Bombay Municipal Corporation16 that every statute must be supposed to be for public good at least in intention and therefore of few laws can it be said that the law confers unfettered discretionary power since the policy of law offers guidance for the exercise of discretionary power. Although our democratic ethos is incongruous with the assumption that highly paid officials are more responsible than low-paid minions, the jurisprudence of power must be applied workably and not untouched by reality. More to the point is the decision in P.N. Kaushal vs Union of India.17 There this Court accepted the submission that the seemingly naked power under Section 59 of the Punjab Excise Act was guided by the requirement that it was to be exercised for control of consumption of intoxicants. (The whole scheme of the statute proclaims its purpose of control in time and space and otherwise observed the Court.) Here the conceptual limitations of ‘damages’ serve as guideline and barricade the exercise. The Commissioner cannot award anything more than or unrelated to ‘damages’. Nor can he go beyond 100% of the amount defaulted. Such limitations without further guidelines are not uncommon in taxing laws to penalise defaults and suppressions. What do we mean by ‘damages’? The expression ‘damages’ is neither vague nor over-wide. It has more than one signification but the precise import in a given context is not difficult to discern. A plurality of variants stemming out of a core concept is seen in such words as actual damages, civil damages, compensatory damages, consequential damages, contingent damages, continuing damages, double damages, excessive damages, exemplary damages, general damages, irreparable damages, pecuniary damages, prospective damages, special damages, speculative damages, substantial damages, unliquidated damages. But the essentials are (a) detriment to one by the wrongdoing of another, (b) reparation awarded to the injured through legal remedies and (c) its quantum being determined by the dual components of pecuniary compensation for the loss suffered and often, not always, a punitive addition as a deterrent-cum-denunciation by the law. For instance, ‘exemplary damages’ are damages on an increased scale, awarded to the plaintiff over and above what will barely compensate him for his property loss, where the wrong done to him was aggravated by circumstances of violence, oppression, malice, fraud, or wanton and wicked conduct on the part of the defendant, and are intended to solace the plaintiff for mental anguish, laceration of his feelings, shame, degradation, or other aggravations of the original wrong, or else to punish the defendant for his evil behaviour or to make an example of him, for which reason they are also called ‘punitive’ or ‘punitory’ damages or ‘vindictive’ damages, and (vulgarly) ‘smart-money’. It is sufficient for our present purpose to state that the power conferred to award damages is delimited by the content and contour of the concept itself and if the Court finds the Commissioner travelling beyond [this], the blow will fall. Section 14-B is good for these reasons.

552 Social Justice and Labour Jurisprudence The further submission is that damages being compensatory in character could not exceed the interest the amount defaulted would have carried during the period of delay. The respondent has gone beyond the mere quantum of interest and has rounded it off to a sum equal to the defaulted contribution. Is this excess an illegal extravagance or a legal levy? This turns on what is ‘damages’ in the setting of the Act. The measure was enacted for the support of a weaker sector viz. the working class during the superannuated winter of their life. The financial reservoir for the distribution of benefits is filled by the employer collecting, by deducting from the workers’ wages, completing it with his own equal share and duly making over the gross sums to the Fund. If the employer neglects to remit or diverts the moneys for alien purposes the Fund gets dry and the retirees are denied the meagre support when they most need it. This prospect of destitution demoralises the working class and frustrates the hopes of the community itself. The whole project gets stultified if employers thwart contributory responsibility and this wider fall-out must colour the concept of ‘damages’ when the court seeks to define its content in the special setting of the Act. For, judicial interpretation must further the purpose of a statute. In a different context and considering a fundamental treaty, the European Court of Human Rights, in the Sunday Times Case, observed: The Court must interpret them in a way that reconciles them as far as possible and is most appropriate in order to realise the aim and achieve the object of the treaty. A policy-oriented interpretation, when a welfare legislation falls for determination, especially in the context of a developing country, is sanctioned by principle and precedent and is implicit in Article 37 of the Constitution since the judicial branch is, in a sense, part of the State. So it is reasonable to assign to ‘damages’ a larger, fulfilling meaning. What are the strands which make the fabric of ‘damages’ under the Article? I have stated earlier that the composite idea of ‘damages’ includes more than pecuniary compensation. Moreover, the injured party is the Board of Trustees who administer the Fund. That Fund not merely loses the interest consequent on the non-payment but receives a shock in that its scarce resources are further famished by employers’ default. There is great social injury to the scheme when employers default in numbers. So the lash of the law is delivered when its object is frustrated. What is more denunciatory is the fact that the employer makes deductions from the poor wages of the workers (and makes them suffer to that extent) and diverts even those sums for his private purposes by failing to make prompt remittances. Thus, default in contributions is compounded by embezzlement, as it were. Naturally, damages will take an exemplary character and inflict a heavy blow on the shady defaulter. I am clearly of the view that ‘damages’, as imposed by Section 14-B, includes a punitive sum quantified according to the circumstances of the case. In ‘exemplary damages’ this aggravating element is prominent. Constitutionally speaking, such a penal levy included in damages is perfectly within the area of implied powers and the legislature may, while enforcing collections, legitimately and reasonably provide for recovery of additional sums in the shape of penalty so as to see that avoidance is obviated. Such a penal levy can take the form of damages because the reparation for the injury suffered by the default is more than the narrow computation of interest on the contribution. This Court has in R.S. Joshi, S.T.O., vs Ajit Mills Ltd,18 considered the constitutionality of a penal forfeiture and a bench of seven judges in that case has upheld it. A Patna decision R.B.H.N. Jute Mills vs Provident Fund Commissioner,19 where the levy of damages was attacked as violative of Article 20(2) has taken the view that the amount of damages imposed under Section 14-B is penal in character. Of course, the learned judges repelled the application of Article 20(2) of the Constitution to this situation but made some observations

Social Security and Welfare 553 which are misleading. The Court there took the view that the damages imposed under Section 14-B are transferred to the general revenues of the appropriate government and went on to observe: In other words, the infliction of the damages under Section 14-B is not meant to provide compensation or redress to the employees whose interest may be injured. It is not meant to provide reparation to such employees and the quantum of damages imposed has no relation to the amount of loss suffered by the employees. I consider that the infliction of the damages under Section 14-B is penal in its nature. It is a warning to employers in general not to commit a breach of the statutory rule. The above observations, in my view, are unsound and I am happy to record that my learned brother takes the same view, although in his separate judgment this aspect has not been expressly considered. I speak for both of us. The damages are levied under the Act. The authority levying penal damages is created by the Act and is responsible for the collection of contributions and damages for the Fund. It is not possible to dichotomize and hold that the contributions go into the Provident Fund but the rest of the damages go into the general revenues. This is not a fine under the criminal law. Nor is it recovery, on behalf of the Government of amounts under a general statute for purposes of revenue. A special statute creating a special fund, empowers special officers to recover specially designated contributions and special damages for default. The entire sum belongs to the Fund except perhaps the administrative charges which are usually (as in this case) separately indicated. In our view, therefore, it is wrong to credit the damages into the general revenues. To that extent it is a breach of the statutory scheme and a deprivation of what belongs to the workers’ Provident Fund. Indeed, employees are a needy community and if the Fund is replenished by damages the scheme can be improved and the benefits augmented. We, therefore, express the view that if any State is diverting damages under the Act into its own coffers, it is improper. Lazarus can ill-afford to lose even a little. State and citizen alone is subject to the rule of law. I am in full agreement with the concluding statement regarding the disposition of the damages made in my learned brother’s judgment. The learned Additional Solicitor General was fair enough to concede that the entire amount of damages awarded under Section 14-B, except for the amount relatable to administration charges must necessarily be transferred to the Fund constituted under the Act. We hope that those charged with administering the Act will keep this in view while allocating the damages under Section 14-B of the Act to different heads. The employees would, of course, get damages commensurate with their loss, that is, the amount of interest on delayed payment but the remaining amount should go to augment the Fund constituted under Section 5 for implementing the schemes under the Act. In this view I direct the appropriate Government to credit the sums allocable to the Fund so that the damages may reach where it belongs. I wholly agree with my learned brother, for the reasons I have given. The writ petition deserves to be and is hereby dismissed with costs.

THE CONCURRING BUT SEPARATE JUDGEMENT DELIVERED BY JUSTICE A.P. SEN This is a petition under Article 32 of the Constitution by M/s. Organo Chemical Industries, Sonepat directed against an order of the Regional Provident Fund Commissioner, Chandigarh, dated 12 October 1977, by which he imposed a penalty of Rs 94,996.80 on the petitioners as

554 Social Justice and Labour Jurisprudence damages under Section 14-B of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952, for delayed remittances of the Employees Provident Fund Family Pension Scheme contributions of their employees, including their own contributions, and the administrative charges thereon. Organo Chemical Industries, an ‘establishment’ within the meaning of Section 1(3) of the Employees’ Provident Funds and Miscellaneous Provisions Act, 1952 committed defaults in payments of Provident Fund and Family Pension Scheme dues for the period from March to October 1975 and again for the period from December 1975 to November 1976 to the extent of Rs 92,687.00 and of administrative charges amounting to Rs 2399.80 i.e. Rs 94,996.80 in all. The Regional Provident Fund Commissioner, Chandigarh, accordingly, issued a show cause notice dated 7 June 1977 requiring the petitioners to show cause why damages should not be levied under Section 14-B of the Act. The notice was accompanied by a statement showing a break-up of the various amounts in arrears and the extent of delay in respect of each payment and the details of damages proposed to be imposed on the belated payments. The period of delay in payment of the amounts remitted varied from a few months to a year. It was proposed to levy damages at a uniform rate of hundred per cent on each of the amounts in arrears. In response to the notice, the petitioners tried to explain away the delay by alleging that it was due to difficulties beyond their control and, therefore, the payments could not be made in time viz., the facts that there were disputes between the partners of the firm as a result of which, there was a loss of Rs 1,40,165.15, there was a power-cut of 60% by the Haryana Electricity Board w.e.f. 6 May 1974, which compelled the petitioners to purchase a generating set to tide over the difficulties and that the establishment had borrowed huge sums from the Haryana Financial Corporation and in payment of which it had defaulted for want of financial resources, etc. It was, accordingly, contended that the default, if any, was not wilful as they had no intention to commit a default. The Regional Provident Fund Commissioner after giving to the petitioners the opportunity of a hearing by his reasoned order dated 16 August 1977 considered in detail each of the grounds taken in mitigation of the defaults and came to the conclusion that none of the grounds alleged furnished a legal justification for the delay in making contributions in time. As regards the alleged dispute among the partners leading to a loss of Rs 1,40,165.15, he observed: Even if it is assumed that there was a loss as claimed it does not justify the delay in deposit of Provident Fund money which is an unqualified statutory obligation and cannot be allowed to be linked with the financial position of the establishment, over different points of time. Besides 50% of the contributions deposited late represented the employees’ share which had been deducted from the employees’ wages and was a trust money with employer for deposit in the statutory fund. The delay in the deposit of this part of the contribution amounted to breach of trust and does not entitle the employer to any consideration for relief. With respect to the plea that the petitioners had been subject to a power-cut of 60% w.e.f. 6 May 1974 by the Haryana Electricity Board, he negatived the plea by observing that this restriction was not exclusive to them and further that no cause had been shown as to how this prevented them from depositing the provident fund dues in time. Even if the power-cut had resulted in any substantial loss, it would have, reduced the liability on the amount of provident fund dues also. He went on to observe that where an employer can pay wages, it is not conceivable why it cannot pay the provident fund dues. As regards the stand taken that the establishment had borrowed huge sums from the Haryana Financial Corporation and in repayment of which it had defaulted, he held that even if it were so, the fact did not absolve the establishment of its statutory obligation for deposit of provident fund dues in time. Similarly, the other reasons furnished like the purchase of a new generating plant or internal dispute among the partners and the dissolution of the partnership firm, etc. did not constitute sufficient cause beyond the control of the petitioners to justify the late deposit of Provident Fund dues. He accordingly,

Social Security and Welfare 555 concluded that the petitioners had failed to carry out their obligation to contribute to the Employees’ Provident Fund and Family Pension Scheme within the time-limit provided therefor, and that no convincing case had been made out to justify the delay in making the deposits. He also on the material on record found, as a fact, that the petitioners, having regard to their past record, were ‘habitual defaulters’ and had, therefore, to be severely dealt with, and should be visited with the maximum penalty. The petitioners are guilty of suppressio veri and this, by itself, was sufficient to dismiss the writ petition, but, since it involves a point of importance which was argued at length, we will have to deal with the same. There can be no doubt that the petitioners have been habitual defaulters in the matter of making contributions to the Employees’ Provident Fund, Family Pension Scheme and payment of administrative charges from the very inception. They have deliberately concealed the facts pertaining to the earlier defaults and the attendant levy of damages under Section 14-B of the Act. For the period between November 1970 and January 1971, again for the periods between October 1971, February 1972, March and April 1973, August to October 1973, January and February 1974, then again for the period March 1974, May to August 1974, October and December 1974, and January 1975, they made delayed payments of the Employees’ Provident Fund and Family Pension Scheme Contributions and consequently the Regional Provident Fund Commissioner after notice to them under Section 14-B and after considering the objections raised and hearing the petitioners, imposed damages amounting to Rs 223.35, Rs 2,452.40 and Rs 15,214.05 for the periods in question respectively, which they deposited on 17 February 1972, 25 September 1975 and 13 December 1976. It would thus be manifest that the petitioners instead of making their contributions, deliberately made wilful defaults on one pretext or another and have been utilising the amounts deducted from the wages of their employees, including their own contributions as well as administrative charges, in running their business. The Regional Provident Fund Commissioner, therefore, rightly observed that the petitioners having regard to their past record must be visited with the maximum penalty. Taking an overall view, the Regional Provident Fund Commissioner, by his reasoned order dated 12 October 1977, adverted to the fact that the petitioners were habitual defaulters and, therefore, deserve to be dealt with sternly so as to bring home the deterrent effect of damages, under Section 14-B of the Act and, accordingly, directed recovery of Rs 94,996.80 at the rate of hundred per cent i.e. equivalent to the amount in arrears, for the delayed payment of contributions to the Employees’ Provident Fund, the Family Pension Fund and administrative charges, as detailed below: Damages on delayed payment of provident fund and family pension fund contributions required to be deposited under Section 6. Rs 92,687.00 (2) Damages on delayed payment of administrative charges. Rs 2,309.80 Rs 94,996.80 This was pre-eminently a fit case for imposition of punitive damages to ensure due compliance [with] the provisions of the Act. Before stating the contentions raised by learned counsel for the petitioners, we think it convenient to set out the scheme of the Act and the relevant provisions thereof having a bearing on the question to be determined. It would be relevant to take into account some of the provisions of the Provident Funds Act which have since its inception in 1952, been subjected to various amendments. The Provident Funds Act, 1952 as originally enacted, provides for

556 Social Justice and Labour Jurisprudence the institution of compulsory provident funds for employees in factories and other establishments. It applies to every establishment which is a factory engaged in any industry specified in Schedule I and in which twenty or more persons are employed and to any other establishment employing twenty or more persons or class of such establishments which the Central Government may specify in that behalf by notification in the Official Gazette. Under Section 4, the Central Government framed the Employees’ Provident Funds Scheme, 1952 by S.R.O. 1509, dated 2 September 1952. Section 6 of the Act enjoins on every employer to make contribution to the Employees’ Provident Fund at the rate of 6 1 4 % of the basic wages, dearness allowance, retaining allowance, if any, for the time being payable to each of the employees and the employee’s contribution shall be equal to the contribution by the employer in respect of him. The employee at his option may, however, increase the contribution to the extent of 8 1 3 per cent. The initial responsibility for making payment of the contribution of the employer as well as of the employee lies on the employer. Para 30 of the Scheme makes it incumbent on the employer that he shall, in the first instance, pay both the contribution payable by himself and also on behalf of the member employed by him. Under para 38, the employer is authorised before paying the member employee his wages in respect of any period or part of period for which contributions are payable, to deduct the employee’s contribution from his wages. It further provides that the deposit of such contribution shall be made by the employer within fifteen days of the close of every month, i.e., a contribution for a particular month has got to be deposited by the 15th day of the month following. A breach of any of these requirements is made a penal offence. Section 14 of the Act provides for penalties. Failure to comply with the requirements of Section 6 is punishable with various terms of imprisonment, which, may extend to a period of six months, or with fine which may extend to one thousand to two thousand rupees, under the provisions of Section 14, depending upon the nature of the breach, viz., failure to pay the contributions, or failure to submit the necessary returns, or failure to pay administrative charges. Section 14-A provides for offences by companies and other corporate bodies. Para 76 of the scheme provides for punishment for failure to pay contributions, etc., and in particular by clause (d), every employer guilty of contravention or of non-compliance with the requirements of the scheme, shall be punishable with imprisonment which may extend to six months or with fine of Rs 1,000. Parliament amended the Act by Act No. 16 of 1971, and it was re-entitled as the ‘Employees’ Provident Funds and Miscellaneous Provisions Act, 1952’. It inserted Section 6-A in the Act for the establishment of the Family Pension Fund. In exercise of the powers conferred by Section 6-A, the Central Government framed the Employees’ Family Pension Scheme, 1971 by GSR 315, dated 4 March 1971. Under para 4 of the Scheme, every employee who is a member of the Employees’ Provident Fund, is given the option to join the Family Pension Scheme. Para 9 created the Family Pension Fund and provides that from and out of the contributions payable by the employer and employees in each month under Section 6 of the Act, a part of the contribution, representing 1 1 6 % of the employees’ pay along with an equivalent amount of 1 1 6 % from out of the employer’s contribution, shall be remitted by the employer to the Family Pension Fund. In its working, the authorities were faced with certain administrative difficulties. An employer could delay payment of Provident Fund dues without any additional financial liability. Parliament accordingly, inserted Section 14-B for recovery of damages on the amount of arrears. The reason for enacting Section 14-B is that employers may be deterred and thwarted from making defaults in carrying out statutory obligations to make payments to the Provident Fund. The object and purpose of the section is to authorise the Regional Provident Fund Commissioner to impose exemplary or punitive damages and thereby to prevent employers from making defaults. Section 14-B, as originally enacted, provided for imposition of such damages,

Social Security and Welfare 557 not exceeding 25% of the amount of arrears. This, however, did not prove to be sufficiently deterrent. The employers were still making defaults in making contributions to the Provident Fund, and in the meanwhile utilising both their own contribution as well as the employees’ contribution, in their business. The provision contained in Section 14-B for recovery of damages, therefore, proved to be illusory. Accordingly, by Act No. 40 of 1973, the words ‘twentyfive per cent of ’ were omitted from Section 14-B and the words ‘not exceeding the amount of arrear’ were substituted. The intention is to invest the Regional Provident Fund Commissioner with power to impose such damages that the employer would not find it profitable to make defaults in making payments. In support of the petition, learned counsel for the petitioners assails the impugned order on two grounds, namely, (i) Section 14-B of the Act is violative of Article 14 of the Constitution as it confers unguided, uncontrolled and arbitrary power on the Regional Provident Fund Commissioner to impose damages which may be to the extent of 100% i.e., equal to the amount of arrears. The conferral of such unguided, uncanalised and arbitrary power on the Regional Provident Fund Commissioner to arrive at a decision, without any guidelines whatsoever, makes Section 14-B constitutionally invalid as offending against Article 14, and (ii) Section 14-B deals with the power to recover damages. It is not the power to impose penalties. The word ‘damages’ in Section 14-B must, therefore, be understood in the legal sense. Damages must have some co-relation with the loss suffered as a result of delayed payments. The authority imposing the penalty or damages must, therefore, apply its mind to this aspect of the matter. The defaulting employer under Section 14-B is, accordingly, liable to pay damages which represents the loss to the beneficiaries of the scheme, such as recovery of interest; but not anything more, as such recovery would amount to penalty, and that is not permitted under the section. There is no substance in any of the contentions. Section 14-B of the Act reads as follows: Power to recover damages.—Where an employer makes defaults in the payment of any contribution to the Fund (the Family Fund or the Insurance Fund) or in the transfer of accumulations required to be transferred by him under sub-section (2) of Section 15 (for subsection [5] of Section 17) or in the payment of any charges payable under any other provision of this Act or of (any scheme or Insurance Scheme) or under any of the conditions specified under Section 17 (the Central Provident Fund Commissioner, or such other officer as may be authorised by the Central Government, by notification in the Official Gazette in this behalf ), may recover from the employer such damages, not exceeding the amount of arrear, as it may think fit to impose: Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard. The contention that Section 14-B confers unguided and uncontrolled discretion upon the Regional Provident Fund Commissioner to impose such damages ‘as he may think fit’ is, therefore, violative of Article 14 of the Constitution, cannot be accepted. Nor can it be accepted that there are no guidelines provided for fixing the quantum of damages. The power of the Regional Provident Fund Commissioner to impose damages under Section 14-B is a quasi-judicial function. It must be exercised after notice to the defaulter and after giving him a reasonable opportunity of being heard. The discretion to award damages could be exercised within the limits fixed by the statute. Having regard to the punitive nature of the power exercisable under Section 14-B and the consequences that ensue therefrom, an order under Section 14-B must be a ‘speaking order’ containing the reasons in support of it. The guidelines are provided in the Act and its various provisions, particularly in the word ‘damages’, the liability for which in Section 14-B arises on the ‘making of default’. While fixing the amount of damages, the Regional Provident Fund

558 Social Justice and Labour Jurisprudence Commissioner usually takes into consideration, as he has done here, various factors viz. the number of defaults, the period of delay, the frequency of defaults and the amounts involved. The word ‘damages’ in Section 14-B lays down sufficient guidelines for him to levy damages. Learned counsel for the petitioners, however, contends that in the instant case, the period of arrears varies from less than one month to more than 12 months and, therefore, the imposition of damages at the flat rate of hundred per cent for all the defaults irrespective of their duration, is not only capricious but arbitrary. The submission is that if the intention of the legislature was to make good the loss caused by default of an employer, there could be no rational basis to quantify the damages at hundred per cent in case of default for a period less than one month and those for a period more than 12 months. It is urged that the fixation of upper limit at hundred per cent is no guideline. If the object of the legislation is to be achieved, the guidelines must specify a uniform method to quantify damages after considering all essentials like loss or injury sustained, the circumstances under which the default occurred, negligence, if any, etc. It is said that the damages under Section 14-B, which is the pecuniary reparation due, must be corelated to all these factors. In support of his contention, he drew our attention to Section 10-F of the Coal Mines Provident Fund and Bonus Schemes Act, 1958, which uses the words ‘damages not exceeding twenty-five per cent’ like Section 14-B of the Act, and also to a tabular chart provided under that Act itself showing that the amount of damages was co-related to the period of arrears. We regret, we cannot appreciate this line of reasoning. Section 10-F of the Act of 1958 came up for consideration before this Court in Commissioner of Coal Mines Provident Fund, Dhanbad vs J.P. Lalla.20 This Court observed, firstly, that the determination of damages is not ‘an inflexible application of a rigid formula’ and secondly, the words ‘as it may think fit to impose’ show that the authority is required to apply its mind to the facts and circumstances of the case. The contention that in the absence of any guidelines for the quantification of damages, Section 14-B is violative of Article 14 of the Constitution, must, therefore, fail. In this connection, it was also urged that the absence of any provision for appeal, leaves the defaulting employer with no remedy. The conferral of arbitrary and uncontrolled powers on the Regional Provident Fund Commissioner to quantify damages, it is said, without a corresponding right of appeal or revision, makes the provision contained in Section 14-B per se void and illegal and it is liable to be struck down on that ground. We are afraid the contention is wholly devoid of substance. Mere absence of provision for an appeal does not imply that the Regional Provident Fund Commissioner is invested with arbitrary or uncontrolled power, without any guidelines. The conferral of power to award damages under Section 14-B is to ensure the success of the measure. It is dependent on existence of certain facts; there has to be an objective determination, not subjective. The Regional Provident Fund Commissioner has not only to apply his mind to the requirements of Section 14-B but is cast with the duty of making a ‘speaking order’, after conforming to the rules of natural justice. This Court has repeatedly laid it down that where the discretion to apply the provisions of a particular statute is left with the Government or one of the highest officers, it will be presumed that the discretion vested in such high authority will not be abused. The Government or such authority is in a position to have all the relevant and necessary information in relation to each kind of establishment, the nature of defaults made by the employer, and the necessity to decide whether the damages to be imposed should be exemplary or not: Mohmedalli vs Union of India,21 it was stated in K.L. Gupta vs Bombay Municipal Corporation,22 that when power has to be exercised by one of the highest officers, the fact that no appeal has been provided for ‘is a matter of no moment’. The same view was reiterated in Chinta Lingam vs Government of India.23 There is always a presumption that public officials would discharge their duties honestly and in accordance with the rules of law. This was emphasised in Pannalal Binjraj vs Union of India,24 stress being laid on the power being vested not in any minor official but in top-ranking authority. In the circumstances, the absence of a provision for appeal or revision can be of no consequence.

Social Security and Welfare 559 Turning now to the main question, the contention is that Section 14-B of the Act does not authorise levy of any penal damages, i.e., a penalty or fine but deals with the power to recover damages. It is not the power to impose a penalty on the defaulting employer, though the maximum amount of damages that can be recovered has been indicated in the section, it is submitted that the damages must have some co-relation with the loss suffered as a result of delayed payments and the authority imposing damages must apply its mind to this aspect of the matter. The defaulter under Section 14-B is, therefore, liable to pay damages which represents the actual loss, but not anything more, as such recovery would amount to penalty and that is not permitted under the section. In support of his submissions, [counsel] has referred to certain authorities. It is argued that the damages referred to in Section 14-B is different from penalty or fine and is intended to compensate the loss to the beneficiaries of the scheme. It has only the ordinary legal meaning of the term ‘damages’ viz. actual loss as in law of Contract or Tort. Thus the award of damages under Section 14-B must be, in essence, the pecuniary reparation for loss or injury sustained by one person through the fault or negligence of another. There is a conflict of opinion between different High Courts as to the meaning of the word ‘damages’ in Section 14-B of the Act. According to some of the High Courts, the word ‘damages’ in Section 14-B means actual loss to the beneficiaries. The view is that Section 14-B clearly indicates that an employer is liable to pay damages, if he has made default in payment of the contribution. Any delay in paying the amount under Section 6 causes loss to the beneficiaries of the Scheme, such as loss of the interest and the like. This is the loss that is sought to be recovered from the defaulting employer for the purpose of indemnifying the beneficiaries of the Scheme, namely, the employees, to the extent of the loss suffered by them. The defaulter under Section 14-B is, therefore, liable to pay damages which represent the loss, but not anything more, as such recovery would amount to penalty, and that is not permitted under the section. It is, therefore, held by these High Courts that the damages to be imposed under Section 14-B should have co-relation with the loss suffered and that damages under Section 14-B are intended to compensate the loss to the beneficiaries of the Scheme. With respect, these High Courts have obviously fallen into an error in reading the word ‘damages’ in Section 14-B in isolation, by trying to construe the word in a purely legalistic sense. These High Courts have overlooked that we are not concerned in interpreting what damages means in the realm of Contract or Tort but the word had to be given its true meaning, in consonance with the objects and purpose of the legislation. The learned Additional Solicitor General brought to our notice the conflict of opinion between the different High Courts on the construction of the word ‘damages’ used in Section 14-B and submitted that this has given rise to confusion in the mind of those charged with the duty of administering the Act. He wants that the conflict should be resolved by placing a proper construction on the word ‘damages’ in Section 14-B, in the larger public interest, as the question is one of frequent occurrence. He rightly contends that the word ‘damages’ in Section 14-B must, in the context in which it appears, mean penal damages i.e., a penalty and not merely actual loss to the beneficiaries. He submits that if the word ‘damages’ appearing therein, were to mean actual loss to the beneficiaries and not anything more, as some of the High Courts have held, it would make the Act unworkable. He also points out that some of the High Courts have taken a view to the contrary. According to these High Courts, the expression ‘damages’ is, in substance, a penalty imposed on the employer for the breach of the statutory obligation. The object of the legislature in enacting Section 14-B is clearly to punish the recalcitrant employers. The traditional view of damages as meaning actual loss does not take into account the social content of a provision like Section 14-B contained in a socio-economic measure like the Act in question. The word ‘damages’ has different shades of meaning. It must take its colour and content from its context and it cannot be read in isolation, nor can Section 14-B be read out of context. The very object of the legislation would be frustrated if the word ‘damages’ appearing in Section 14-B of the Act was not construed to mean penal damages. The imposition of damages

560 Social Justice and Labour Jurisprudence under Section 14-B serves a two-fold purpose. It results in damnification and also serves as a deterrent. The predominant object is to penalise, so that an employer may be thwarted or deterred from making any further defaults. The expression ‘damages’ occurring in Section 14-B is, in substance, a penalty imposed on the employer for the breach of the statutory obligation. The object of imposition of penalty under Section 14-B is not merely ‘to provide compensation for the employees’. We are clearly of the opinion that the imposition of damages under Section 14-B serves both the purposes. It is meant to penalise defaulting employer as also to provide reparation for the amount of loss suffered by the employees. It is not only a warning to employers in general not to commit a breach of the statutory requirements of Section 6, but at the same time it is meant to provide compensation or redress to the beneficiaries i.e., to recompense the employees for the loss sustained by them. There is nothing in the section to show that the damages must bear relationship to the loss which is caused to the beneficiaries under the Scheme. The word ‘damages’ in Section 14-B is related to the word ‘default’. The words used in Section 14-B are ‘default in the payment of contribution’ and, therefore, the word ‘default’ must be construed in the light of Para 38 of the Scheme which provides that the payment of contribution has got to be made by the 15th of the following month and, therefore, the word ‘default’ in Section 14-B must mean ‘failure in performance’ or ‘failure to act’. At the same time, the imposition of damages under Section 14-B is to provide reparation for the amount of loss suffered by the employees. The construction that we have placed on the word ‘damages’ appearing in Section 14-B of the Act, is in accord with the intent and purpose of the legislation. It was brought on the statute book by Act 37 of 1953. The objects and reasons so far material, read: There are also certain administrative difficulties to be set right. There is no provision for inspection of exempted factories nor is there any provision for the recovery of dues from such factories. An employer… can delay payment of Provident Fund dues without any additional financial liability. No punishment has been laid down for contravention of some of the provisions of the Act. The object and purpose of the section is to authorise the Regional Provident Fund Commissioner to impose exemplary or punitive damages and thereby prevent employers from making defaults. The provision for imposition of damages at 25 per cent of the amount of arrear, however, did not prove to be effective. Accordingly, by Act 40 of 1973, the words ‘not exceeding the amount of arrear’ were substituted for the words ‘25 per cent’. The necessity for making this change is brought out in the objects and reasons, a material portion of which reads: STATEMENT OF OBJECTS AND REASONS (ACT 40 OF 1973) 1. The working of the Employees’ Provident Fund and Family Pension Fund Act, 1952 and the Employees’ Provident Fund Scheme has revealed that the present provisions of the Act and the Scheme are not effective in preventing defaults in payment of contributions to the Employees’ Provident Fund or in recovery of the dues on that account. The result is that the amount of Provident Fund arrears recoverable from the employers has been steadily increasing. In 1959-60, the arrears which amounted to Rs 3.65 crores, rose to Rs 5.96 crores as on 31st March 1967. The arrears stood at Rs 14.6 crores on 31st March 1970 and they have risen to Rs 20.65 crores as on 31st March 1972. 2. The National Commission on Labour has recommended that in order to check the growth of arrears, penalties for defaults in payment of Provident Fund dues should be made more stringent and that the default should be made cognisable. In its 116th Report presented to Parliament in April 1970, the Estimates Committee has endorsed the recommendations made by the National Commission on Labour and has further suggested that Government

Social Security and Welfare 561 should consider the feasibility of providing compulsory imprisonment for certain offences under the Act. Accordingly, it is proposed to amend the Act so as to render the penal provisions more stringent and to make defaults cognizable offences. Provision is also being made for compulsory imprisonment in cases of non-payment of contributions and administration or inspection charges. As recommended by the Estimates Committee, a further provision is being made to enable levy of damages equal to the amount of arrears from a defaulting employer. Each word, phrase or sentence is to be considered in the light of general purpose of the Act itself. A bare mechanical interpretation of the words ‘devoid of concept or purpose’ will reduce most of legislation to futility. It is a salutary rule, well established, that the intention of the legislature must be found by reading the statute as a whole. There appears to be a misconception that the object of imposition of penalty under Section 14-B is not ‘to provide compensation for the employees’ whose interest may be injured, by loss of interest and the like. There is also a misconception that the damages imposed under Section 14-B are not transferred to the Employees’ Provident Fund and the Family Pension Fund of the employees who may be adversely affected, but the amount is transferred to the General Revenues of the appropriate Government. We find that this assumption is wholly unwarranted. In assessing the damages, the Regional Provident Fund Commissioner is not only bound to take into account the loss to the beneficiaries but also the default by the employer in making his contributions, which occasions the infliction of damages. The learned Additional Solicitor-General was fair enough to concede that the entire amount of damages awarded under Section 14-B, except for the amount relatable to administrative charges, must necessarily be transferred to the Employees’ Provident Fund and the Family Pension Fund. We hope that those charged with administering the Act will keep this in view while allocating the damages under Section 14-B of the Act to different heads. The employees would, of course, get damages commensurate with their loss, i.e., the amount of interest on delayed payments; but the remaining amount should go to augment the ‘Fund’ constituted under Section 5, for implementing the Schemes under the Act. The result, therefore, is that this writ petition fails and is dismissed with costs.

The Payment of Gratuity Act, 1972: Applicability State of Punjab vs the Labour Court, Jullundur, and Others25 In this case, the Supreme Court considered the following issues under the Payment of Gratuity Act, 1972: 1. Whether the Hyder Upper Bari Doab Construction Project was covered by the provisions of the Act. 2. The scope of the definition of ‘retirement’ under Section 4(1) of the Act. 3. Whether Section 33C(2) of the Industrial Disputes Act, 1947, applied to the proceedings for the payment of gratuity due. In this appeal by special leave, the state of Punjab appealed against the judgement and order of the High Court of Punjab and Haryana refusing to quash an order under Section 33-C(2) of the Industrial Disputes Act, 1947, for payment of gratuity to the respondents under the Payment of Gratuity Act, 1972.

562 Social Justice and Labour Jurisprudence

THE FACTS OF THE CASE: The Hydel Department of the Government of Punjab had undertaken a Project described as the “Hydel Upper Bari Doab Construction Project”. Respondents Nos. 2 to 8 were employed as work-charged employees. On completion of the work assigned to them they were retrenched, and retrenchment compensation was paid to them. The employee respondents claimed that they were also entitled to gratuity, bonus and certain other allowance and benefits. The gratuity was claimed under the Payment of Gratuity Act, 1972. The claim being disputed, the respondents applied under Section 33-C(2) of the Industrial Disputes Act, 1947 to the Labour Court, Jullundur. The Labour Court made an order dated 30 April 1975 that the employee-respondents were entitled to the gratuity claimed by them but not to bonus and the other allowances and benefits. A writ petition filed by the appellant has been dismissed in limine by the High Court of Punjab and Haryana.

EXCERPTS FROM THE JUDGMENT DELIVERED BY JUSTICE R.S. PATHAK In this appeal, the learned Additional Solicitor-General contends on behalf of the appellant that the Payment of Gratuity Act, 1972 cannot be invoked by the respondents because the Project does not fall within the scope of Section 1(3) of that Act. Section 1(3) provides that the Act will apply to: (a) every factory, mine, oilfield, plantation, port and railway company; (b) every shop or establishment within the meaning of any law for the time being in force in relation to shops and establishments in a State, in which ten or more persons are employed, or were employed, on any day of the preceding twelve months; (c) such other establishments or class of establishments, in which ten or more employees are employed, or were employed, on any day of the preceding twelve months, as the Central Government may, by notification, specify in this behalf.” According to the parties, it is clause (b) alone which needs to be considered for deciding whether the Act applies to the Project. The Labour Court has held that the Project is an establishment within the meaning of the Payment of Wages Act, Section 2(ii)(g) of which defines an ‘industrial establishment’ to mean any ‘establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on’. It is urged for the appellant that the Payment of Wages Act is not an enactment contemplated by Section 1(3)(b), of the Payment of Gratuity Act. The Payment of Wages Act, it is pointed out, is a Central enactment and Section 1(3)(b), it is said, refers to a law enacted by the State legislature. We are unable to accept the contention. Section 1(3)(b) speaks of ‘any law for the time being in force in relation to shops and establishments in a State’. There can be no dispute that the Payment of Wages Act is in force in the State of Punjab. Then, it is submitted, the Payment of Wages Act is not a law in relation to ‘shops and establishments’. As to that, the Payment of Wages Act is a statute which, while it may not relate to shops, relates to a class of establishments, that is to say, industrial establishments. But, it is contended, the law referred to under Section 1(3)(b) must be a law which relates to both shops and establishments such as the Punjab Shops and Commercial Establishments Act, 1958. It is difficult to accept that contention because there is no warrant for so limiting the meaning of the expression ‘law’ in Section 1(3)(b). The expression is comprehensive in its scope, and can mean a law in relation to shops as well as separately, a law in relation to establishments, or a law in relation to shops and commercial establishments and a law in relation to non-commercial establishments. Had Section 1(3)(b) intended to refer to a single enactment, surely the appellant would have been able to point to such a

Social Security and Welfare 563 statute, that is to say, a statute relating to shops and establishments, both commercial and noncommercial. The Punjab Shops and Commercial Establishments Act does not relate to all kinds of establishments. Besides shops, it relates to commercial establishments alone. Had the intention of Parliament been, when enacting Section 1(3)(b), to refer to a law relating to commercial establishments, it would not have left the expression ‘establishments’ unqualified. We have carefully, examined the various provisions of the Payment of Gratuity Act, and we are unable to discern any reason for giving the limited meaning to Section 1(3)(b) urged before us on behalf of the appellant. Section 1(3)(b) applies to every establishment within the meaning of any law for the time being in force in relation to establishments in a State. Such an establishment would include an industrial establishment within the meaning of Section 2(ii)(g) of the Payment of Wages Act. Accordingly, we are of opinion that the Payment of Gratuity Act applies to an establishment in which any work relating to the construction, development or maintenance of buildings, roads, bridges or canals, or relating to operations connected with navigation, irrigation or the supply of water, or relating to the generation, transmission and distribution of electricity or any other form of power is being carried on. The Hydel Upper Bari Doab Construction Project is such an establishment, and the Payment of Gratuity Act applies to it. The second contention on behalf of the appellant is that retrenchment does not fall within Section 4(1) of the Payment of Gratuity Act, under which gratuity is payable to an employee on the termination of his employment. The termination envisaged occurs either. (a) on his superannuation, or (b) on his retirement or resignation, or (c) on his death or disablement due to accident or disease. Having regard to the definition of ‘superannuation’ in Section 2(r) of the Act, it is clear that the case is not under clause (a). Nor, admittedly, is it a case which falls under clause (c). As regards clause (b), it is not a case of resignation. The only question is whether it can be regarded under clause (b) as a case of retirement. The expression ‘retirement’ has been defined by Section 2(q) to mean ‘termination of the service of an employee otherwise than on superannuation.’ The definition is framed in the widest terms. Except for superannuation, any termination of service would amount to ‘retirement’ for the purposes of the Act. Retrenchment is a termination of service. It is immaterial that the termination is occasioned by the need to discharge surplus labour. That retrenchment implies the discharge of surplus labour was explained in Barsi Light Railway Co. Ltd. vs K.N. Joglekar.26 Nonetheless, it amounts to termination of service. We are of opinion that the retrenchment of the employee respondents fall within the scope of Section 4(1) of the Payment of Gratuity Act, and the employee respondents are, therefore, entitled to gratuity under that provision. The third contention raised by the appellant is that the employee respondents were not entitled to apply under Section 33C(2) of the Industrial Disputes Act, 1947 for payment of the gratuity, and should have, if at all, applied under the provisions of the Payment of Gratuity Act. It is urged that the Payment of Gratuity Act is a self-contained code incorporating all the essential provisions relating to payment of gratuity which can be claimed under that Act, and its provisions impliedly exclude recourse to any other statute for that purpose. The contention has force and must be accepted. A careful perusal of the relevant provisions of the Payment of Gratuity Act shows that Parliament has enacted a closely knit scheme providing for payment of gratuity. The controlling authority is appointed by the appropriate government under Section 3, and Parliament has made him responsible for the administration of the entire Act. In what event gratuity will become payable and how it will be quantified are detailed in Section 4. Section 7(1) entitles a person eligible for payment of gratuity to apply in that behalf to the employer. Under Section 7(2), the employer is obliged, as soon as gratuity becomes payable and whether an application has or has not been made for payment of gratuity, to determine the amount of

564 Social Justice and Labour Jurisprudence gratuity and inform the person to whom the gratuity is payable specifying the amount of gratuity so determined. He is obliged, by virtue of the same provision, to inform the controlling authority also, thus ensuring that the controlling authority is seized at all times of information in regard to gratuity as, it becomes payable. If a dispute is raised in regard to the amount of gratuity payable or as to the admissibility of any claim to gratuity, or as to the person entitled to receive the gratuity. Section 7(4)(a) requires the employer to deposit with the controlling authority such amount as he admits to be payable by him as gratuity. The controlling authority is empowered, under Section 7(4)(b), to enter upon an adjudication of the dispute, and after due inquiry, and after giving the parties to the dispute a reasonable opportunity of being heard, he is required to determine the amount of gratuity payable. In this regard, the controlling authority has all the powers as are vested in a court while trying a suit under the Code of Civil Procedure, 1908 in respect of obtaining evidentiary material and the recording of evidence. The amount deposited by the employer with the controlling authority as the admitted amount of gratuity will be paid over by the controlling authority to the employee or his nominee or heir. Section 7(7) provides an appeal against the order of the controlling authority under Section 7(4) to the appropriate Government or such other authority as may be specified by the appropriate Government in that behalf. The appropriate government or the appellate authority is empowered under Section 7(8), after giving the parties to the appeal a reasonable opportunity of being heard, to confirm, modify or reverse the decision of the controlling authority. Where the amount of gratuity payable is not paid by the employer within the prescribed time, the controlling authority is required by Section 8, on application made to it by the aggrieved person, to issue a certificate for that amount to the Collector. The Collector thereupon is empowered to recover the amount of gratuity, together with compound interest thereon at the rate of nine percent per annum from the date of expiry of the prescribed time, as arrears of land revenue, and pay the same to the person entitled thereto. It is apparent that the Payment of Gratuity Act enacts complete Code containing detailed provisions covering all the essential features of a scheme for payment of gratuity. It creates the right to payment of gratuity, indicates when the right will accrue, and lays down the principles for quantification of the gratuity. It provides further for recovery of the amount, and contains an especial provision that compound interest at nine percent per annum will be payable on delayed payment. For the enforcement of its provisions, the Act provides for the appointment of a controlling authority, which is entrusted with the task of administering the Act. The fulfillment of the rights and obligations of the parties are made his responsibility, and he has been invested with amplitude of power of the full discharge of that responsibility. Any error committed by him can be corrected in appeal by the appropriate Government or an appellate authority particularly constituted under the Act. Upon all these considerations, the conclusion is inescapable that Parliament intended that proceedings for payment of gratuity due under the Payment of Gratuity Act must be taken under that Act and not under any other law. That being so, it must be held that the applications filed by the employee-respondents under Section 33-C(2) of the Industrial Disputes Act did not lie, and the Labour Court had no jurisdiction to entertain and dispose of them. On that ground, this appeal must succeed. In the circumstances, it is not necessary to notice the further submission on behalf of the appellant that where a serious dispute exists in regard to the basis of a claim for payment of gratuity, no proceedings will lie under Section 33-C(2) of the Industrial Disputes Act. The appeal is allowed, and the order dated 30 April 1975 of the Labour Court, Jullundur is quashed. Having regard to the terms on which special leave was granted by this court to the appellant, the appellant shall pay to the employee-respondents their costs of this appeal. At this stage we put to the learned Solicitor-General, who appeared for the State whether in the special circumstances it was not fair that the entire amount be paid by the appellant to the employees without driving them to a separate proceeding. He has fairly stated that the appellant

Social Security and Welfare 565 is willing to do so and the sole object of this litigation was to have the law clarified. We, therefore, direct the appellant to pay to the employee respondents within one month from today the amounts that may be due to them, if they have not already been paid.

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 With due respect and regard to the judges who have coordinated on the Bench with Justice V.R. Krishna Iyer, the following statement is summed up thus: The speciality of Justice V.R. Krishna Iyer in delivering the majority view in labour matters, especially the philosophical aspects of labour jurisprudence and the Constitutional implications, are clearly brought down in the judgement of such cases. The Straw Board Manufacturing Company vs Its Workmen27 is one such example, which was dealt by his lordship from this perspective.

The Straw Board Manufacturing Company vs Its Workmen THE JUDGEMENT DELIVERED BY JUSTICE V.R. KRISHNA IYER A dispute between the appellant mill (the Straw Board Manufacturing Company Ltd.) and its workmen, regarding a scheme of gratuity, was referred to the Industrial Tribunal, way back in February 1958; and, long 19 years later, this Court is pronouncing on the validity of the award made by the Tribunal in favour of the workmen! Small wonder the respondent workmen, after this tiring and traumatic tantalization, have not turned up to argue their cause, although Shri Parekh, as amicus curiae, has filled the gap. Such an unhappy and not infrequent phenomenon as considerable delay in adjudication and implementation is destructive of industrial peace and productive of disenchantment with labour jurisprudence. Naturally, even constitutional provisions and governmental decisions about labour and concern for its welfare cease to achieve the desired goals when the legal process limps and lingers and rights turn illusory when remedies prove elusive. The life of rights is remedies and a jurisprudence of ready reliefs alone can inhibit the weaker numbers of our land asking the disturbing question: ‘Is Law Dead?’ Dicey wrote long ago: The law ubi jus ibi remedium, becomes from this point of view something much more important than a mere tautological proposition. In its bearing upon constitutional law, it means that the Englishmen whose labours gradually formed the complicated set of laws and institutions which we call the Constitution, fixed their minds far more intently on providing remedies for the enforcement of particular rights or for averting definite wrongs, than upon any declarations of the Rights of Man or Englishmen.28 It is more than rhetoric to say that courts belong to the people. ‘Judges occupy the public’s 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 citizens’ exercise of their rights discouraged or frustrated. The vital aspects of the jurisprudence of remedies include speeding the pace of litigation ‘from the cradle to the grave’. We are reluctant to make these self-critical observations about putting our house in order, but when the consumers of justice like workmen

566 Social Justice and Labour Jurisprudence lose interest in the judicial process and are absent, legislative unawareness of research and development as to the needs of courts and simplification and acceleration of the judicative apparatus become matters of national concern. Law’s delays are in some measure, caused by legislative inaction in making competent, radical change in the procedural laws and sufficient financing and modernising of the justice system as a high priority programme. The chequered career of this lis and its zigzag, climb up the precipice of justice contextually deserves brief narration. The order of reference was made early in 1958, the usual processual exercise before the Tribunal resulted in an award on 1 May 1958 where the tribunal refused the relief bearing on gratuity. The disappointed workers challenged the award before the High Court which set it aside in November 1963—too long hibernation in the High Court for a labour dispute where prompt adjudication is the essence of industrial peace. Anyway, when the case came back to the tribunal, its decision took another six inscrutable years and, on 31 October 1969, a fresh award was made whereunder the tribunal framed a gratuity scheme and gave the guidelines thereof. This time the appellant mill straight came to the Supreme Court with the present appeal for which special leave was granted in a limited way, in the sense that it was confined to the question ‘whether the correct principles on which gratuity should be payable have been followed in this case or not’. It is a fact, though unfortunate, that this labour litigation arrived in this Court in 1970 but its final chapter is being written by this judgment only in 1977. And it is noteworthy that the facts are brief, the legal issues small, the arguments brief and this judgment, but for general observations and traditional reference to rulings cited at the bar, could have been judiciously abbreviated. The main battle at the bar has been over the correct principles in a scheme of gratuity for factory workers and further whether those principles have been departed from under the award assailed by the appellant. We may mention, at this stage, that the Parliament has enacted the Payment of Gratuity Act, 1972, which has come into force with effect from 16 September 1972. Section 4(5) of the said Act gives an option to the workers to choose between the gratuity scheme under the award and the one under the statute. Had the workers been represented before this Court it might have been possible for us finally to close this controversy or even produce a reasonable solution by discussion and negotiation and persuade them to opt for one or the other scheme. Early finality, credible certainty and mutually assented solutions, are the finer processes of conflict resolution—a pursuit which baffles us here because of labour’s absence. All that we can do, therefore, is to adjudicate upon the correctness or otherwise of the principles which have gone into the gratuity scheme prepared by the tribunal in the light of the rulings of this Court and the canons of industrial law. We now proceed to itemise the grounds of attack levelled by Shri I.N. Shroff for the appellant and assay their worth in the light of the submissions in defence of the award made by Shri P.N. Parekh appearing as amicus curiae. Even here we may place on record our appreciation of Shri Parekh’s services to the Court and the fairness of Shri Shroff in making his points on behalf of the appellant. The only dispute, which has ramified into a few issues, relates to the gratuity scheme the tribunal has framed. Shri Parekh is right in drawing our attention in limine to the financial insignificance, for the appellant, of the subject matter of this lis and the consequential disinclination we must display to disturb the award. He has urged that the total annual impact on the industry by the implementation of the award is of the order of Rs 3,000 to a substantial part of which the management has no objection. What is more, the appellant is prosperous enough to distribute dividends around 20% over the years. Further, since 1972 an obligatory statutory gratuity scheme has come into force with the result that the economic consequences of this litigation, even if the appellant loses, are marginal or nil. This makes us ponder whether, in matters of less than grave moment, this Court should, as part of high judicial policy to arrest the tidal flow of unsubstantial litigation, turn away at the portals those who invoke our jurisdiction to examine every case where some legal principle has been wrongly decided, regardless of a sense of ‘summit

Social Security and Welfare 567 court’ perspective and the rare use of its reserve power so as to pre-empt a docket explosion and the injustice of delayed justice and invest the High Courts and high tribunals with final legal wisdom. The amplitude of Article 136 is meant more for exceptional situations than to serve as hospitable basket to receive all challenges to seemingly erroneous judgments in the country. As stated earlier, we are confronted by an industrial dispute and are called upon to apply the principles of industrial jurisprudence with its primary concern for peace among the parties, contentment of the workers, the end product being increased production informed by distributive justice. Law, especially Labour Law, is the art of economic order sustained by social justice. It aims at pragmatic success, but is guided by value-realities. It believes in relativity and rejects absolutes. The recent constitutional amendment (Article 43A) which emphasizes the workers’ role in production as partners in the process, read in the light of the earlier accent on workers’ rights and social justice, gives 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-barred when societal ethos progresses. We are not called upon to interpret an Act since, in this area of law the Payment of Gratuity Act came in on a later date. Judge made law rues the roost. Even so, are we fettered by inflexible norms hallowed by dated decisions? Not in this jurisdiction. 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 back drop of the new, radical values implied in ‘social justice’ to labour, the production backbone of the nation, adjusted to the environs of the particular industry and its economics and kindred circumstances. The dynamics of labour law, rather than the bonded labour of old-time case-law answers questions of current justice. Cardozo had cautioned in his The Nature of the Judicial Process: That court best serves the law which recognizes that the rules of law which grew up on a remote generation may, in the fullness of experience, be found to serve another generation badly, and which discards the old rule when it finds that another rule of law represents what should be according to the established and settled judgment of society, and no considerable property rights have become vested in reliance upon the old rule. It is thus great writers upon the common law have discovered the source and method of its growth, and in its growth found its health and life. It is not and it should not be stationary. Change of this character should not be left to the legislature. If judges have woefully misinterpreted the mores of their day, or if the mores of their day are no longer those of ours, they ought not to tie, in helpless submission, the hands of their successors.29 Indeed, we are stating no new proposition since the profusion of decisions assiduously presented before us states, in sum, that each case has to be decided on the updated justice of the factsituations therein and the only law that we can reasonably discern from the rulings we have read is that there is no law but only justice, dependent on a variety of socio-economic variables, that the tribunal’s award, if his performance is not perverse in the process or the end product, must be left well alone by this Court even if some juristic failing or factual peccadillos can be discovered. A quest for error and an inclination for correction, frequently exercised by higher Courts, will do double injury. It will take away the necessary initiative of the tribunal to produce satisfactory results. It will delay the finality of industrial adjudication and thereby defeat the paramount purpose of early re-adjustment. Judicial decentralization claims its price and it must be paid by ignoring errors less than grave. Once this perspective is clear, our non-interference with this award is just. Moreover, an industrial tribunal must act on a legal horse sense, rather than on juristic abstractions, on rugged fairness rather than on refined legalisms. It is shop-floor justice, not five star loveliness. The weaker qualify for protective order, in the over-all view of the matter.

568 Social Justice and Labour Jurisprudence Gratuity for workers is no longer a gift but a right. It is a vague, humanitarian expression of distributive justice to partners in production for long, meritorious service. We have, therefore, to adopt a broad and generous approach to the problems posed before us by Shri Shroff without being mechanistically precedent-bound or finically looking into evidence. Speaking generally, Shri Shroff focussed his fire-power firstly on the qualifying period of five years for earning gratuity as against ten years sanctified in some earlier rulings and, secondly, on the basic wage, as contrasted with the ‘consolidated’ wage being treated as the base for the computation of gratuity. He did cite half-a-dozen or more cases of this Court in support which, on closer scrutiny and studied in the light of other citations Shri Parekh emphasized, stand neutralized. The Tribunal has itself referred to many rulings of this court, noted the features of the industry in question, the high dividends and the low wages and reached a via media which we may regard as a prudent judicial resolution of the simple conflict. The flavour of the social milieu, the raw realities of industrial conditions and the locale and life-style out there, are sensed by the tribunal better than a distant court of last resort primarily specialising in declaration of law. So we are loathe to upset the scheme unless the tribunal is grievously or egregiously in error. Shri Shroff staked his case on case-law alone and culled passages which upheld basic wages as basis and ten-year service for eligibility. Even here, we must mention that the basic wage at the relevant time (revised subsequently) was in the miserable range of Rs 20 per mensem and to calculate gratuity on this pitiful rate, when after ‘long and meritorious service’ the worker bids farewell to his labour life in the industry is to be callous to basic justice. The Human today cannot be held captive by the less-than-human yesterday in a crucial area of social justice. So viewed, we are constrained to negative the two preliminary contentions urged by Shri Shroff while agreeing with him on the smaller points of clarification sought. We reproduce at this stage, the decretal part of the award: The award, therefore, is that the employers should be required to frame a scheme of gratuity for their workmen. The details of the gratuity scheme are as under:— (a) On death of a workman while in continuous service or on attainment of the age of superannauation or on retirement or resignation due to continued ill health or on being incapacitated. (b) On voluntary abandonment of service by a workmen in case not falling under (a) or termination of service by employers.

15 days wages for each completed year of service subject to a maximum of 15 months.

15 days wages for each completed year of continuous service subject to the condition that no gratuity will be payable on a total service of less than 5 years. But this condition will not apply in case of resignation or discharge on the grounds of physical disablement or incapacity.

(i) For the purposes of gratuity a period of six months or over shall be reckoned as ‘one year’ while a period less than 6 months will be ignored. (ii) Gratuity shall be payable to the nominee of the workman in case of his death or to his legal heirs, if no one has been nominated by the workman in this behalf. (iii) ‘Wages’ shall mean and include basic wages and dear food allowance but shall not include bonus. (iv) Gratuity will not be allowed to a workman in case of a serious misconduct committed by him such as insubordination, acts involving moral turpitude, etc. In case of damage

Social Security and Welfare 569 to the property of employers or financial loss, the amount to the extent of loss shall be liable to be deducted from the amount of the gratuity. v) The basis of payment of gratuity shall be average earnings of a workman during the last three years. One of the leading cases both sides referred to is the Delhi Cloth & General Mills Co. vs Workmen.30 In this decision the Court did make the point: That gratuity is not in its present day concept merely a gift made by the employer in his own discretion. The workmen have in course of time acquired a right to gratuity on determination of employment provided the employer can afford, having regard to his financial conditions to pay it. [Justice] Shah, speaking for the Court, also emphasized what we have already adverted to: We consider it right to observe that in adjudication of industrial disputes settled legal principles have little play: the awards made by industrial tribunals are often the result of ad hoc determination of disputed questions, and each determination forms a precedent for determination of other disputes. An attempt to search for principle from the law built up on those precedents is a futile exercise. To the courts accustomed to apply settled principles to facts determinated by the application of the judicial process, an essay into the unsurveyed expenses of the law of industrial relations with neither a compass nor a guide, but only the pillars of precedents is a disheartening experience. The Constitution has however invested this Court with the power to sit in appeal over the awards of Industrial Tribunals which are, it is said, founded on the somewhat hazy background of maintenance of industrial peace, which secures the prosperity of the industry and the improvement of the conditions of workmen employed in the industry, and in the absence of principles, precedents may have to be adopted as guides—somewhat reluctantly to secure some reasonable degree of uniformity of harmony in the process. Several decisions, which were referred to at the bar have been touched upon in the above case. At the end of the consideration of these cases, the Court made two pregnant observations which we extract: We may repeat that in matters relating to the grant of gratuity and even generally in the settlement of disputes arising out of industrial relations, there are no fixed principles, on the application of which the problems arising before the Tribunal or the Courts may be determined and often precedents of cases determined ad hoc are utilised to build up claims or to resist them. It would in the circumstances be futile to attempt to reduce the grounds of the decisions given by the Industrial Tribunals, the Labour Appellate Tribunals and the High Courts to the dimensions of any recognized principle. … It is not easy to extract any principle from these cases; as precedents they are conflicting. These cautionary signals guide us too in the instant case. It is true that on account of the peculiar circumstances affecting the textile industry in the whole country the Court felt that the Tribunal was in error in relating gratuity to the consolidated wage instead of the basic wage. The emphasis in the ruling is on the facts and circumstances affecting the particular industry and the promotion of industrial peace in that field. Rightly, if we may say so with respect, did the Court highlight the view that determination of gratuity is not based on any definite rules and each case must depend upon the prosperity of the concern, needs of the workmen and the prevailing economic conditions, examined in the light of the

570 Social Justice and Labour Jurisprudence auxiliary benefits which the workmen may get on determination of employment. In short, the core of the matter is the totality of the circumstances and the stage of evolution of industrial relations at a given time. What held good a decade ago may be given the go by years later. Another leading case on the question of gratuity is the British Paints,31 where, after referring to the special features of the particular industry and the other benefit schemes enjoyed by the employees, the Court referred to May & Baker32 where basic wages were treated as the basis and British India Corporation33 where ‘gross salary, i.e., basic wages plus dearness allowance’ was held to be the basis. It may be noted that in this case the minimum qualifying service for gratuity was held to be five years except in case where termination resulted from resignation by the employee. In Hydro-Engineers,34 this Court apparently upheld the contentions now urged before us by Shri Shroff but stressed that no hard and fast rule could be laid down and each case must be decided on its own circumstances. In Hindustan Antibiotics35 again, this Court highlighted the relevant circumstances upon which the discretion of the Tribunal could play, viz., the stability of the concern, the profits made in the past, the future prospects and capacity, etc. This Court declined to disturb the gratuity scheme in that case even though the wages which formed the basis of the gratuity included dearness allowance. In Bengal Chemical & Pharmaceutical Works Ltd., Calcutta,36 a Bench of this Court entered the caveat which we have underscored in the earlier part of this judgment that …a free and liberal exercise of the power under Article 136 may materially affect the fundamental basis of such decisions, namely, quick solution to such disputes to achieve industrial peace. Though Article 136 is couched in [the] widest terms, it is necessary for this Court to exercise its discretionary jurisdiction only in cases where awards are made in violation of the principles of natural justice, causing substantial and grave injustice to parties or raises an important principle of industrial law requiring elucidation and final decision by this Court and discloses such other exceptional or special circumstances which merit the consideration of this Court. It was also mentioned, what is not oft remembered when interfering with awards, that the Industrial Disputes Act is …intended to be a self-contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration. Awards are given on circumstances peculiar to each dispute and the tribunals are, to a large extent, free from the restrictions of technical considerations imposed on courts. This approach is what we earlier described as the Tribunal’s legal hunch or horse sense. Even Gaziabad Engineering Co,37 on which Shri Shroff heavily relied, accepts the position that while gratuity is usually related to the basic wage, a departure by relating it to the consolidated wage may be made if there be some strong evidence or exceptional circumstances justifying that course. Calcutta Insurance Co. Ltd.38 also placed accent on the practical approach in industrial adjudication and did not interfere with the qualifying service of 5 years except in the case of resignation by the employee where the qualifying period was raised to 10 years. This survey of the cosmos of case-law can expand, but no service will be rendered by that exercise. All that we need say is that there is nothing fundamentally flawsome in the 5 year period being fixed as qualifying service. The real reason why some cases like British Paints39 required a qualifying period of 10 years was that a longer minimum period for earning gratuity in the case of voluntary retirement or resignation would ensure that workmen do not leave one concern for another after putting in the short minimum service qualifying for gratuity.

Social Security and Welfare 571 We think that current conditions must control the tribunal’s conscience in finalising the terms of the gratuity scheme. Taking things as they are, in our country presently there is unemployment at the level of workers—that being the category we are concerned with. Colossal unemployment means that the worker will not leave his employment merely because he has qualified himself for gratuity. In an economic situation where there is a glut of labour in the market and unemployment stares the working class in the face it is theoretical to contend that employees will hop from industry to industry unless the qualifying period for earning gratuity is raised to 10 years. The tribunal was realistic in fixing 5 years as the period of eligibility. Our industrial realities do not provide for easy mobility of labour. What is more, the sense of national consciousness in this field is reflected in the Payment of Gratuity Act which fixes a period of 5 years as the qualifying period for earning gratuity. Decisions have been brought to our notice some of which refer to basic wages and others to consolidated wages as the foundation for computation of gratuity. These are matters of discretion and the ‘feel’ of the circumstances prevalent in the industry by the Tribunal and, unless it has gone haywire in the exercise of its discretion the award should stand. We see that in the Payment of Gratuity Act also, not basic wages but ‘gross wages inclusive of dearness allowance’ have been taken as the basis. This, incidentally, reflects the industrial sense in the country which has been crystallised into legislation. All things considered, we are disinclined to alter the award on the two critical issues on which it was challenged. However, there are certain minor clarifications which will eliminate ambiguity and, on that, both sides are agreed. We clarify that wages will mean and include basic wages and dearness allowance and nothing else. This corresponds to Section 2(s) of the Act. Likewise, we declare that qualifying service is continuous service (counted with reference to completed years) as defined in Section 2(c). We hold that the award will operate as directed therein, i.e. from the date of reference of the dispute. Both sides agree, in their statement of the case, that in clause (a) of the award the expression ‘due to continued ill-health or on being incapacitated’ governs only resignation although we feel on compassionate grounds it should govern both situations. The ambiguity must be resolved in favour of the workers. In regard to the other conflicts of construction possible, as set out in grounds 7 and 8 of the appellant’s statement of [the] case, we resolve them in favour of the workmen, abandonment of service being too recondite and the amount involved too trivial for variation by this Court. Shri I.N. Shroff fairly stated that the Court may make an order regarding costs. We direct that the appellant do pay the respondents costs which we quantify at Rs 2000. Out of this sum Rs 1000 will be paid direct to Shri Parekh who has assisted the Court on behalf of the workers and the balance of Rs 1000 shall be drawn by the present President of the Respondent Union. Our parting thought is that negotiating settlements should be vigorously and systematically pursued even by tribunals since litigation, escalating from deck to deck upto this Court, defeats both, whoever wins or loses. This must be a sobering influence on Labour and Management and agencies of conflict-resolutions. That is a legal beacon that can brighten the dark tunnel of industrial conflict and promote national production cheered by shared wealth.

NOTES 1. AIR 1978 SC 1478. This case was heard by V.R. Krishna Iyer and D.A. Desai. 2. Section 2(9) of the Employees’ State Insurance Act of 1948 defines ‘employee’ means any person employed for wages in or in connection with the work of a factory or establishment of which this Act applies and— (i) who is directly employed by the principal employer on any work of, or incidental or preliminary to or connected with the work of, the factory or establishment, whether such work is done by the employee, in the factory or establishment or elsewhere; or

572 Social Justice and Labour Jurisprudence (ii) who is employed by or through an immediate employer on the premises of the factory or establishment or under the supervision of the principal employer or his agent on work which is ordinarily part of the work of the factory or establishment or which is preliminary to the work carried on in or incidental to the purpose of the factory or establishment; or (iii) whose services are temporarily lent or let on hire to the principal employer by the person with whom the person whose services are so lent or let on hire has entered into a contract of services; [and includes any person employed for wages on any work connected with the administration of the factory or establishment or any part, department or branch thereof or with the purchase of raw materials for, or the distribution or sale of the products of, the factory or establishment or any person engaged as an apprentice, not being an apprentice engaged under the Apprentice Act, 1961 (52 of 1961), or under the standing orders of the establishments; but does not include (a) any member of [the Indian] Naval, Military or Air Force; or (b) any person so employed whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government: Provided that an employee whose wages (excluding remuneration for overtime work) exceed such wages as may be prescribed by the Central Government at any time after (and not before) the beginning of the contribution period, shall continue to be an employee until the end of that period. 3. Section 45A of the Act provides: (1) Where in respect of a factory or a establishment no returns, particulars, registers or records are submitted, furnished or maintained in accordance with the provisions of Section 44 or any Inspector or other official of the Corporation referred to in sub-section (2) of Section 45 is prevented in any manner by the principal or immediate employer or any other person, in exercising his functions or discharging his duties under Section 45, the Corporation may, on the basis of information available to it, by order determine the amount of contributions payable in respect of the employees of that factory or establishment. Provided that no such order shall be passed by the Corporation unless the principal or immediate employer or the person in charge of the factory or establishment has been given reasonable opportunity of being heard; (2) An order made by the Corporation under sub-section (1) shall be sufficient proof of the claim of the Corporation under Section 75 or for recovery of the amount determined by such order as an arrear of land revenue under Section 45B (or for recovery under Section 45C to Section 45-I). 4. (1977) 3 SCR 35:(1977) LIC 884:AIR 1977 SC 1351. 5. Lux Gentium Lex-Then and Now 1799–1974, p. 7. 6. AIR 1978 SC 12. The case was heard by V.R. Krishna Iyer and Jaswant Singh. The majority judgement was delivered by Justice Jaswant Singh. 7. 1975 LIC 848: AIR 1975 (Ker) 86. 8. AIR 1979 SC 1803. The case was heard by V.R. Krishna Iyer and A.P. Sen. Two separate but concurring judgements were delivered by Justice V.R. Krishna Iyer and Sen. 9. Section 14B of the Act states: Where an employer makes default in the payment of any contribution to the Fund the Pension Fund or the Insurance Fund or in the transfer of accumulations required to be transferred by him under subsection (2) of Section 17, the Central Provident Fund Commissioner or such other officer as may be authorized by the Central Government, by notification in the Official Gazette, in this behalf may recover from the employer by way of penalty such damages, not exceeding the amount of arrears, as may be specified in the Scheme; Provided that before levying and recovering such damages, the employer shall be given a reasonable opportunity of being heard; Provided further that the Central Board may reduce or waive the damages levied under section in relation of which a scheme for rehabilitation has been sanctioned by the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986), subject to such terms and conditions as may be specified in the Scheme.

Social Security and Welfare 573 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39.

1976 Supp SCR 489. (1978) 2 SCR 621. (1978) 2 SCR 272. 1976 Supp SCR 489. (1979) 1 SCC 137. (1979) 2 SCC 249. AIR 1947 PC 34. (1978) 3 SCC 558. (1977) 4 SCC 98. 1958 1 LLJ 598 (Pat). (1976) 3 SCR 365. (1963) Supp I SCR 993. (1968) I SCR 674. (1971) 2 SCR 871. 1957 SCR 223. AIR 1979 SC 1981. This case was heard by V.R. Krishna Iyer and R.S. Pathak. AIR 1957 SC 121. AIR 1977 SC 941. This case was heard by V.R. Krishna Iyer and Jaswant Singh. (Jurisprudence of Remedies): University of Pennsylvania Law Review Vol. 117, November 1968. pp. 1, 16. Cardozo, The Nature of the Judicial Process, Yale University Press, pp. 151–52. AIR 1970 SC 919. AIR 1966 SC 732. (1961) 2 Lab LJ 94. (1965) 10 Fac LR 244 (SC). AIR 1969 SC 182. AIR 1967 SC 948. AIR 1959 SC 633. AIR 1970 SC 390. AIR 1967 SC 1286. AIR 1966 SC 732.

About the Authors I. Sharath Babu is Reader at the Post-Graduate Department of Studies in Law, Karnataka University, Dharwad. He was Fellow, Centre for Labour Studies, National Law School of India University, Bangalore from 2004 to 2006. He has a Ph.D in the area of norms related to fixation and quantification of the minimum wages for sweated labour under the Minimum Wages Act of 1948. He was appointed Chief Investigator by the Ministry of Labour, Government of Karnataka in 2004 to study the contract labour system in Karnataka, for which he submitted a comprehensive report in 2005. He prepared and presented a model for the Unorganized Sector Workers (Regulation of Employment, Welfare and Social Security) Bill, 2005 (for the Ministry of Labour, Government of India) in collaboration with the National Centre for Labour. He has published a number of research papers in various journals on the subject of minimum wages, contract labour claims and on issues pertaining to workers in the unorganised sector. Rashmi Shetty is Associate Country Director Secretariat at ActionAid India, New Delhi. She obtained a master’s degree in Law (Public Law and Policy) from the National Law School of India University, Bangalore. She worked as Visiting Faculty in the National Law School of India University, Bangalore, and taught labour laws from 2002 to 2004. She also worked as Research Officer in the Centre for Labour Studies, National Law School of India University, Bangalore from 2004 to 2005. She was a part of the study group on the Contract Labour System in Karnataka, constituted by the Ministry of Labour, Government of Karnataka.