DAMODARAM SANJIVYYA NATIONAL LAW UNIVERSITY

Visakhapatnam

COURSE OUTLINE

Title of the Subject: Labour Law-I

Name of the Faculty: R.Bharat Kumar Total No. of Hours: 60-65

Course Description

Protection of labour is a constitutional mandate. A constitution inspired by the vision

of social justice is committed to the cause of upliftment of labour. Well balanced
industrial development leads to increased productivity which in turn is a factor of
national progress. Labour makes significant contribution in this respect.

Is labour merely a commodity? Is it only a factor in production? There may be

different approaches towards this question. One fact is certain. Today's labour is
engaged in a battle for position of honour and status equal with management. The law
and practice relating to labour is the story of this battle. In this context, the study of
labour law has its aim on the societal impulses on, and state reactions to, the complex
socio-economic, human and political problems arising out of the constant conflicts
between different classes.

The student should get an insight into the mechanics of socio-legal control of labour
relations and should be aware of the history, the present norms, the emerging areas
and possible future techniques of labour jurisprudence.

Course Aims and Intended Outcomes

This course deals with different aspects of Labour Law and aims to foster an
understanding of the:

• necessity of studying labour law

• importance of protection of labour
• theoretical concepts involved in the course, their interaction with each other, and
with different labour laws
• principal laws dealing with labour laws and the interaction between them

Unit UNIT 1 No. of

No. CASES FOR REFERENCE Hours
Topic: INTRODUCTION (List of Cases are not
TO LABOUR exhaustive – Faculty may
discuss or indicate any

1
 additional Cases)
1. 1. Historical perspectives on • Niemla Textile Mills v The 5
labour 2nd Punjab Tribunal AIR
1957 SC 329
2. Evolution of labour laws • Excel Wear v Union of India
3. Constitutional framework (1978) 4 SCC 224
and industrial relations • PUDR v Union of India
(1982) 2 LLJ 454 (SC)
• Guy Davidov, The
(Changing?) Idea of Labour
Law, 146 (3-4) International
Labour Review 311 (2007)
• Sankaran, Kamala, Labour
laws in South Asia: The need
for an inclusive approach
(2007), International Institute
for Labour Studies, Geneva

UNIT 2 15
Topic: Trade Unions Act, 1923

2.1 History and Development of • Jay Engineering Works v

Trade Union law in India State of West Bengal AIR
1968 Cal 407 - gherao
2.2 Definitions • Rangaswami v Registrar of
Trade Unions AIR 1962 Mad
2.3 Registration of Trade Unions; 231 - registration
2.4 Rights and Liabilities of
Registered Trade Union; • Bokajan Cement Corpn
2.5 Immunity of Registered Trade Employees’ Union v Cement
Union Corpn of India Ltd. (2004) 1
2.6 Amalgamation and SCC 142 - membership
Dissolution of trade Unions • Balmer Lawrie Workers
2.7 Recognition of Trade Union Union, Bombay v Balmer
2.8 Penalties and procedure under Lawrie and Company Ltd
the Act (1985) I LLJ 314 –
2.9 Collective bargaining recognition
• Vidyasagar Institute of
Mental Health v Hospital
Employees Union (2006)
ILLJ 781 (Del) –
demonstration, immunity,
strike
• Bharat Kumar v State of
Kerala AIR 1997 Ker 292 –
bandh
• Communist Party of India v
Bharat Kumar (1998) 1 SCC

2
 201
• Kameshwar Prasad v State of
Bihar AIR 1962 SC 1166
• O.K.Ghosh V.Ex Joseph,
AIR 1963 SC 812.
• Rookes V.Barnard, 1964 AC
1129
UNIT 3 10
Topic: Industrial Employment Standing Orders Act, 1948
3.1 Concept and nature of standing • Management, Shahdera
orders (Delhi) Saharanpur Light
3.2 Certification Process Railway Co. V.SS Railway
Work Union AIR 1969 SC
3.2.1 Condition for
certification
573.

• Agr ElectricalSupply Co.

3.2.2 Procedure for
V.Sri Alladin-AIR
certification
1970SC512.
3.2.3 Appeal against
certification
• Associates Cement Co.Ltd.
V.PD. Vyas AIR 1969
3.2.4 Date of operation of SC665.
standing orders
• Guest Keen Williams P Ltd
3.2.5 Register of standing V.P J Sterling, AIR 1959 SC
orders 1279

3.2.6 Posting of standing

orders

3.2.7 Modification of standing

orders

3.2.8 Temporary Application

of Model Standing orders

3.3 Penalties and procedure

3.4 Interpretation of standing orders

UNIT 4 30
Topic: The Industrial Disputes Act, 1947
4.1 Industrial Dispute and individual • Bangalore Water Supply and
dispute Sewerage Board V.A.Rajjapa
AIR 1978 SC 548.
4.2 Definition of Industry
• General Manager, Telecom
4.3 Arena of interaction and V.A.Srinivasa Rao 1997 (8)
Participants-Industry, workman

3
 and employer SCC 767

4.4 Settlement of Industrial Dispute • Coir Board Eranakulam

V.Indira Devi PS (I), AIR
4.4.1 Works Committee 1998 SC2801.
4.4.2 Conciliation Machinery
• State of U.P. V.J.P.Singh
4.4.3 Court of Enquiry (2005) 5 SCC1.

4.4.4 Voluntary Arbitration • Gujrat SteelTubes Ltd

V.Gujrat Steel Tubes
4.4.5 Adjudication- Labour Mazdoor Sabha (1980) 2
Court, Tribunal, National SCC 593.
Tribunal
• B.R.Singh V. Union of India
5 Notice of Change (1989) 4 SCC 710.

6 Strike and Lock-outs • Syndicate Bank v.K.Umesh

Nayak (1994) 5 SCC 572.
7 Lay-off and Retrenchment • Workmen of Dimakuchi Tea
Estate v DTE AIR 1958 SC
8 Clouser
353
9 Disciplinary action and domestic • Workmen v Dharampal
enquiry Premchand (Saughandi) AIR
1966 SC 182
10 Unfair Labour Practice • Dharangadhara Chemical
Works v Management AIR
11 Penalties 1957 SC 264
• Diwan Mohideen Sahib v
Industrial Tribunal, Madras
AIR 1966 SC 370
• Workmen of Nilgiri
Cooperative Marketing
Society v State of Tamil
Nadu (2004) 3 SCC 514
• HussainBhai v Alath Factory
Employees Union (1978) 4
SCC 257
• SK Verma v Mahesh
Chandra (1983) II LLJ 429
1983 (4) SCC 214
• HR Adhyantaya v Sandoz
(India) Ltd. (1994) 5 SCC
737
• SK Maini v M/S Carona
Sahu Company Ltd. (1994) 3
SCC 510
• Heavy Engineering
Corporation v Presiding
Officer, Labour Court (1996)

4
 11 SCC 236
• Workmen of Dewan Tea
Estate v Their Management
AIR 1964 SC 1458
• Workmen of Firestone Tyre
and Rubber Co. v The
Firestone Tyre and Rubber
Co. (1976) I LLJ 493 (SC)
• Associated Cement
Companies v Their Workmen
AIR 1960 SC 56
• Kairbetta Estate v
Rajamanickam AIR 1960 SC
893
• Hariprasad Shiv Shankar
Shukla v A.D. Divelkar AIR
1957 SC 121
• Uptron v Shammi Bhan
(1998) 6 SCC 538
• Anand Bihari and others v
RSRTC and another 1991
Lab IC 494
• Orissa Textiles & Stell Ltd.
V State of Orissa 2002 Lab
IC 570(SC)
• Rohtas Industries v Union
(1976) 2 SCC 82 sec 10A ID
Act, not an industrial dispute
- strike
• Gujarat Steel Tubes v
Mazdoor Sabha AIR 1980
SC 1896 - strike
• Vidyasagar Institute of
Mental Health v Hospital
Employees Union (2006)
ILLJ 781 (Del) –
demonstration, immunity,
strike
• TK Rangarajan v Govt of
Tamil Nadu AIR 2003 SC
3032 – strike by govt
employees

Books for Reference

Sl. Author Title of the Book Publisher
No.
1. S.C. Srivastava Industrial Relations and Vikas Publishing House,
Labour Law 6th Edn-2012 New Delhi

5
 2. SN Mishra Labour and Industrial Central Law Publications,
Laws, 28th Edn.-2013 Allahabad
3. K M Pillai Labour and Industrial Allahabad Law Agency,
Law, 10th Edn- 2005 Allahabad
4. Dr. V G Goswami Labour Industrial Laws, Central Law Agency,
10th Edn. – 2015 Allahabad
G M Kothari A Study of Industrial Wadhwa and Co., Nagpur
5. Law, 5th Edn.-2000
S M Chaturvedi Labour and Industrial Central Law Agency,
6. and Dr. Indrajeet Laws, 13th Edn.-2006 Allahabad
Singh

Evaluation Criteria Marks

Mid Semesters Examination 25
Project (15- Written Submission & 10-Viva) 25
End- Semester Examination 50
Total 100

6
 Case Index

I. Trade Unions Act

1. Rangaswami v. Registrar of Trade Union AIR 1962 Mad. 231

2. The Tamil Nadu Non-Gazetted Government Officers’ Union, Madras v. The
Registrar of Trade Unions (AIR 1962 Mad. 234)
3. R.S. Ruikar v. Emperor
4. Rohtas Industries Staff Union v. State of Bihar AIR 1963 Pat. 170

II. Industrial Disputes Act

5. Bangalore Water Supply & Sewerage Board v. A. Rajappa (AIR 1978 SC 548)
6. State of U.P. v. Jai Bir Singh (2005) 5 SCC 1
7. Workmen of Dimakuchi Tea Estate v. Dimakuchi Tea Estate (AIR 1958 SC 353 :
1958 SCR 1156)
8. Municipal Corporation of Delhi v. Female Workers (Muster Roll) (AIR 2000 SC
1274)
9. J.H. Jadhav v. Forbes Gokak Ltd (2005) 3 SCC 202
10. Dharangadhara Chemical Works Ltd. v. State of Saurashtra AIR 1957 SC 264 :
1957 SCR 152
11. A. Sundarambal v. Government of Goa, Daman & Diu AIR 1988 SC 1700
12. H.R. Adyanthaya v. Sandoz (India) Ltd. (1994) 5 SCC 737
13. Management of Chandramalai Estate v. Its Workmen AIR 1960 SC 902
14. Syndicate Bank v. K. Umesh Nayak (1994) 5 SCC 572
15. Essorpe Mills Ltd. v. Presiding Officer, Labour Court (2008) 7 SCC 594
16. Punjab Land Development and Reclamation Corporation Ltd. v. Presiding
Officer, Labour Court (1990) 3 SCC 682
17. The Workmen v. Firestone Tyre & Rubber Co. (1976) 3 SCC 819
18. U.P.State Brassware Corpn. Ltd. v. Uday Narain Pandey (2006) 1 SCC 479

III. Employment Standing Orders Act

19 Management, Shahdera (Delhi) Saharanpur Light Railway Co. V.SS Railway

Work Union AIR 1969 SC 573.
20. Agr ElectricalSupply Co. V.Sri Alladin-AIR 1970SC512.
21. Associates Cement Co.Ltd. V.PD. Vyas AIR 1969 SC665.
22. Guest Keen Williams P Ltd V.P J Sterling, AIR 1959 SC 1279

23. TK Rangarajan v Govt of Tamil Nadu AIR 2003 SC 3032

24. Vidyasagar Institute of Mental Health v Hospital Employees Union (2006) ILLJ
781 (Del)
25. Gujarat Steel Tubes v Mazdoor Sabha AIR 1980 SC 1896
26. Rohtas Industries v Union (1976) 2 SCC 82
27. Anand Bihari and others v RSRTC and another 1991 Lab IC 494
28. Uptron v Shammi Bhan (1998) 6 SCC 538
29. Kairbetta Estate v Rajamanickam AIR 1960 SC 893
30. Associated Cement Companies v Their Workmen AIR 1960 SC 56

7
1. Rangaswami v . Registrar of Trade Unions (AIR 1962 Mad. 231

RAMACHANDRA IYER, J. – This is a petition under S. 11 of the Trade Unions

Act seeking to set aside the order of the Registrar of Trade Unions, Madras refusing
to register the union of employees of the Madras Raj Bhavan as a trade union under
the Trade Unions Act XVI of 1926, which for the sake of brevity I shall hereafter
refer to as the Act.‘
2. In the Raj Bhavan at Guindy, a number of persons are employed in various
capacities such as household staff, peons, chauffers, tailors, carpenters, maistries,
gardeners, sweepers etc. There are also gardeners and maistries employed at the Raj
Bhavan at Ootacamund. Those persons are employed for doing domestic and other
services and for the maintenance of the Governor‘s household and to attend to the
needs of the Governor, the members of his family, staff and State guests. There are
two categories of employees: (1) those whose services are more or less of a domestic
nature. They number 102. The services of these persons are pensionable and are
governed by certain rules framed by the Governor of Madras; and (2) those who
formed part of the work charge establishment consisting of maistries and gardeners.
There are 33 such persons employed at Guindy and 35 at Ootacamund. Their duties
consist in maintaining the gardens. Their service is not pensionable but they would be
entitled to gratuity at certain rates. There are separate rules prescribing the conditions
of their service framed under the proviso to Art. 309 of the Constitution. Both the
categories of the staff are appointed by and are under the disciplinary control of the
Comptroller.
With the object of securing better service conditions and to facilitate collective
bargaining with the employer, the employees formed themselves into a union called
the Madras Raj Bhavan Workers‘ Union. On 9.2.1959, seven of the employees
applied to the Registrar of Trade Unions, Madras, for registration of their union as a
trade union under the Trade Unions Act of 1926. The applicants did not however
claim before the Registrar that the employees were engaged in either a trade or an
industry; the claim was that their services could not be held to be purely domestic
services and therefore their union would be entitled to the benefits of registration
under the Trade Unions Act. The Registrar was of the view that before a union can be
registered, the members thereof must be connected with a trade or industry or business
of an employer, and that condition not being fulfilled in the present case, the
employees could not be held to be workmen within the meaning of the Act to entitle
them to the registration; the application for registration was rejected.
3. Mr. Ramsubramaniam, who appeared for the petitioners, impugned the
correctness of the view taken by the Registrar. His argument ran thus. The term
‗workman‘ under the Act would include one employed in an industry. Although there
is no definition of the term industry in the Act itself, the definition of the term given in
the Industrial Disputes Act should be adopted for ascertaining its meaning as both the
enactments related to the same subject, viz., the betterment of the conditions of labour
in the country. If that were done, the term ―industryǁ which is defined to include an
undertaking would be comprehensive enough to cover the case of employees like
these engaged in services at the Raj Bhavan who systematically do material service
for the benefit of not merely the members of the Governor‘s household but also to
visitors and guests as well. Therefore, the employees in the present case should be
held to be employed in an undertaking by the employer within the meaning of that

8
term. Further, as the Comptroller directs the sale of unserviceable articles as well as
surplus produce of the gardens in the Raj Bhavan, the activity of the employer should
be held to partake the character of a trade or business as well.
4. I am however unable to accept the argument. The question whether
Government servants who form an association amongst themselves would have their
union registered under the Trade Unions Act, was considered by me in O.P. No. 312
of 1958. I expressed the opinion that employees under Government whose service
was regulated by statutory rules could not form themselves into a union so as to have
it registered as a trade union. I am informed that the judgment in that case is the
subject-matter of an appeal which is pending. It is, however, unnecessary to decide
this case on the basis of that judgment as I am of the view that the claim of the
petitioners has to fail on an independent ground as well, a ground which was not dealt
with by me in the former case.
5. Under Sec. 4 of the Trade Unions Act, a trade union could apply for and
obtain registration therefor. That provision states:
Any seven or more members of a trade union may by subscribing their
names to the rules of the trade union and by otherwise complying with the
provisions of this Act with respect to registration apply for registration of
the trade union under this Act.
6. It is therefore necessary to consider what would be a trade union. Section 2(h)
defines a trade union thus:
Trade union means any combination whether temporary or permanent,
formed primarily for the purpose of regulating the relations between
workmen and employers or between workmen or workmen or between
employers and employers or for imposing restrictive conditions on the
conduct of any trade or business, and includes any federation of two or
more Trade Unions.
The term ―workmenǁ has not been independently defined in the Act. But in the
definition of the term ―trade disputeǁ (which defines such dispute as one between
employers and workmen etc.), the definition of the term ―workmenǁ is found. That
runs:
‗workman‘ means all persons employed in trade or industry whether or
not in the employment of the employer with whom the trade dispute
arises.
The term ―trade union as defined under the Act contemplates the existence of the
employer and the employee engaged in the conduct of a trade or business. The
definition of the term ―workmenǁ in Sec. 2(g) would prima facie indicate that it was
intended only for interpreting the term ―trade dispute. But even assuming that that
definition could be imported for understanding the scope of the meaning of the term
―trade unionǁ in S. 2(h), it is obvious that the industry should be one as would
amount to a trade or business, i.e., a commercial undertaking. So much is plain from
the definition of the term ―trade unionǁ itself. I say this because the definition of
―industryǁ in the Industrial Disputes Act is of wider significance. Section 2(j) of the
Industrial Disputes Act which defines ―industryǁ states its meaning as
Any business, trade undertaking, manufacture or calling of employers and
includes any calling, services, employment, handicraft or industrial
occupation or avocation of workmen.

9
 7. An undertaking which is not of a commercial nature will come within the scope
of that enactment [vide State of Bombay v. Hospital Mazdoor Sabha , AIR
1960 SC 610]. The object behind the Industrial Disputes Act is to secure industrial
peace and speedy remedy for labour discontent or unrest. A comprehensive meaning
of the term ―industryǁ was evidently thought necessary by the legislature in regard to
that Act. But the same thing cannot be said of the Trade Unions Act. The history and
object of that enactment show that it was intended purely to render lawful
organisation of labour to enable collective bargaining. The provisions of the Act
contemplate the admission of even outsiders as members and participation in political
activities. That would itself dictate that the benefits conferred by the act should be
enjoyed by a clearly defined category of unions. I am very doubtful whether at all it
could be said that the Industrial Disputes Act and the Trade Unions Act form as it
were a system or code of legislation so that either could be read together as in pari
materia, that is, as forming one system and interpreting one in the light of another.
8. There can be no doubt that if a trade union is interpreted as one connected with
a trade or a business, it cannot be said that the employer in the present case is having
such a trade or business. This however is subject to the consideration of the question
whether the sale of unserviceable materials and surplus garden produce will amount to
a trade or business activity. I shall refer to it a little later.
9. Let me assume however that the definition of the term industry in S. 2(j) of the
Industrial Disputes Act will apply to the Trade Unions Act. It has then to be seen
whether the authorities of the Raj Bhavan could be held to be employers engaged with
the workmen in any undertaking within the meaning of the term ―industryǁ in the
Industrial Disputes Act.
10. In State of Bombay v. Hospital Mazdood Sabha , the question arose
whether the employees in a hospital run by the State could be held to be engaged in an
undertaking of the State so as to entitle them to raise an industrial dispute. The
Supreme Court observed:
It is clear, however, that though S. 2(j) (Industrial Disputes Act) 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 used are given their widest meaning all 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 ―serviceǁ is intended to include service howsoever
rendered in whatsoever capacity and for whatsoever reason.
11. The Supreme Court held that the definition of the term ―industryǁ in S. 2(j)
was wider than the conception of trade or business as commonly understood. But an
undertaking in order to come within that definition would be an activity which
involves the co-operation of the employer and the employees with the object of the
satisfaction of material human needs, if organised or arranged in a manner in which a
trade or business is generally organised or arranged, and if it were not of a casual
nature nor one for oneself or for pleasure. It is well known that in an industry, capital
and organisation, on the one hand, and labour, on the other, co-operate to achieve
industrial production. Therefore, a mere personal service, however much it might have
been organised, would not possibly be an undertaking within the meaning of the Act;
the essential condition is only personal service given to the employer.

10
 12. Two distinctive features of an industry therefore are (1) that the employer as
well as the employees should be engaged in the industry, however wide the meaning
of the term might be; and (2) there should be co-operation between both of them for
achieving the particular result. The first of the two attributes of an industry is
succintly stated by Isaacs, J., in Jambunna Coal Mine No Liability v.
Victorian Coal Miners Association [6 CLR 309,
370] thus:
An industry contemplated by the Act is apparently one in which both
employers, and employees are engaged, and not merely industry in the
abstract sense, or in other words the labour of the employees given in
return for the remuneration received from his employer. As suggested, not
only the words defining ―industryǁ itself but also by Schedule B and by
such a phrase in the definition of ―industrial disputeǁ as employment in
industries carried on by or under the control of the Commonwealth etc., an
―industryǁ as intended by Parliament seems to be a business etc., in
which the employer on his own behalf is engaged as well as the employees
in his employment. Turning to the specific definition of ―industry,ǁ it
rather appears to mean a business (as merchant), a trade (as cutler), a
manufacturer (as a flour miller), undertaking (as a gas Company), calling
(as an engineer) or service (as a carrier) or an employment (a general term
like ‗calling‘ embracing one of the others, and intended to extend to
vocations which might not be comprised in any of the rest) all of these
expressions so far indicating the occupation in which the principal, as I
may call him, is engaged whether on land or water. If the occupation so
described is one in which persons are employed for pay, hire, advantage,
or reward, that is, as employees, then, with the exceptions stated, it is an
industry within the meaning of the Act.
13. There can thus be no industry where the employer is not engaged in common
with the employees with the definite objective of the achievement of the material
needs of humanity and that in an organised manner. In the definition of the term
―trade unionǁ to which I made reference earlier, the regulation of the relationship
contemplated is in regard to the condition of service of employees which postulates
the existence of an employer who is concerned in the business, trade or industry. It
has therefore to be seen whether in the circumstances of the case it can be said that
persons in control of the Raj Bhavan can be held to be an employer in an industry
however widely that term may be understood. The answer to that question presents no
difficulty and can only be in the negative.

11
 14. The decision in State of Bombay v. Hospital Mazdood Sabha ,
emphasised that the activity contemplated by term ―industryǁ in section 2(j) of the
Industrial Disputes Act involved the co-operation of the employer and the employees.
15. I cannot agree with the learned counsel for the petitioners, that the mere fact
that employees serve the visitors and State guests of Raj Bhavan, nor the fact that
unserviceable materials and surplus produce of the gardens of the Raj Bhavan are
occasionally sold would show that there was co-operation between the employer and
the employees for the purpose of a trade or business. The services rendered to the
State guests are personal services to them and indirectly to the employer. The
occasional sales of unserviceable articles and garden products are incidents of the
ordinary administration of Government property. They are done in accordance with
certain rules framed by the Government. They would not amount to a trade or
business.
17. To sum up, even apart from the circumstance that a large section of employees
at Raj Bhavan are Government servants who could not form themselves into a trade
union, it cannot be stated that the workers are employed in a trade or business carried
on by the employer. The services rendered by them are purely of a personal nature.
The union of such workers would not come within the scope of the Act so as to entitle
it to registration thereunder.
18. The order of the Registrar of Trade Unions rejecting the application of the
petitioners is, therefore, correct. This petition is dismissed with costs.

2. The Tamil Nadu Non-Gazetted Government Officers’ Union, Madras v. The

Registrar of Trade Unions (AIR 1962 Mad. 234)

ANANTANARAYANAN, J. – The Tamil Nadu Non-Gazetted Government

Officers‘ Union is a Services Association which has been recognised by Government,
and the membership of which is open, according to Rule 7 of its constitution, to all
Non-Gazetted Government Officers employed under the Government of Madras
except the Executive Officers of the Police and Prisons Departments and the last
grade Government servants. The objects of this Association are set forth in Rule 4 of
the Constitution, and it is seen that they are beneficent and ameliorative in character,
designed along the lines of promoting the welfare of the members in multiple
directions. The Association represented by ten of its members applied on 23-12-1957
to the Registrar of Trade Unions, Madras, for registration as a Trade Union, under
section 5 of the Indian Trade Unions Act (Act XVI of 1926). In a brief order, the
Registrar rejected this application, in which, after a reference to Secs. 2 (g) and 2 (h)
of the Act, he held that such an Association of ministerial employees of the
Administrative Departments of offices of the Government of Madras could not claim
to be a Trade Union at all and was not eligible for registration under the Act.
Admittedly, against such an order declining registration an appeal is provided for
under section 11 of the Act and this was duly preferred. The learned Judge who dealt
with the proceeding (Rama Chandra Iyer, J., as he them was) delivered a judgment in
which he had occasion to trade, in some detail, the history of the Trade Union
movement in the United Kingdom, in order to elucidate certain fundamental

12
principles. This appeal is before us as preferred by the Union and its secretary, from
the order of the learned Judge.
(2) We shall set forth, a little subsequently, the relevant definitions and provisions
of the Indian Trade Unions Act, as well as certain definitions in the Industrial
Disputes Act XIV of 1947; though the learned Judge was definitely of the view that
these two enactments are not in pari materia and do not together constitute any code
or legislation it is at least indisputable that sections of the Industrial Disputes Act,
1947, are also very relevant for purposes of comparative analysis. But before doing
this, it is essential for an appreciation of the basic issues, to summarise the grounds
upon which the learned Judge (Rama Chandra Iyer, J.,) rejected the petition before
him. After referring to the definition of ―Trade Unionǁ in section 2
(h) of the Trade Unions Act, the learned Judge pointed out that a vital consideration
would be the content or significance of the word ―workmenǁ as occurring in section
2 (h) and he was of the view that this word primarily signify only manual labourers or
workers of that class. This was one ground upon which the learned Judge ultimately
concluded that civil servants of the present Association could not be considered as
workmen at all. Next the learned Judge pointed out that the concept of ―collective
bargainingǁ, which is the rationale behind the
Trade Union movement and the existence of the Trade Unions was wholly
inappropriate when applied to Government servants.
This was all the more so in this country where the civil service was not a mere
tenure at the pleasure of the Crown, as in the United Kingdom, but where
constitutional safe-guards were themselves the subject of elaborate statutory rules.
The Indian Trade Unions Act contemplated not merely collective bargaining, but also
the permeation of the Trade Union by outside influences to a certain extent (Secs. 21
and 22) and definite participation in politics (Sec. 16). These were elements that had
to be totally eschewed, in the public interest itself, with regard to the civil services. A
strike, the acknowledged weapon of Labour organisations, must be considered
inconceivable as a normal feature of the relationship between the State and its civil
servants, at least with regard to essential state functions. This was another vital ground
on which the learned Judge considered that this Services Association was not a trade
union and could not be registered as such. Finally, the learned Judge referred to the
Memorandum of Association and the objects as specified in Rule 4, to which we have
made earlier reference. He stressed that those objects were benevolent and
ameliorative and that they could not sustain the interpretation that the association
existed for ―regulating the relations between workmen and employers (State)ǁ or, in
brief, for ―collective bargainingǁ with the State. Upon all these grounds, the petition
was dismissed.
(4) As we have stated earlier, section 5 of the Act entitles a Trade Union to apply
for registration, and provides that the application shall be accompanied by a copy of
the rules of the Trade Union, and statement of specified particulars. Under section 5
(2), where a Trade Union has been in existence for more than one year before the
making of the application for its registration, a further general statement of assets and
liabilities is required to be submitted. Under section 7 (1) of the Act the Registrar may
call for further information, for the purpose of satisfying himself that an application
complied with the provisions of sections 5 and 6 of the Act and that the Trade Union
is entitled to registration. The Registrar may refuse to register a Trade Union until
such information is supplied. Section 8 relates to registration proper, and section 11
provides for an appeal by a person aggrieved by any refusal of the Registrar to register

13
a Trade Union. This may be the convenient context for nothing an argument of the
learned counsel for the appellant Union (Sri A. Ramachandran). The learned counsel
argues that where as in this case the Registrar did not call for any further information
under section 7. He has really no jurisdiction to decline registration. This argument is
obviously unsustainable.
The very terms of section 8 are that the Registrar has to register the Union ―on
being satisfied that the Trade Union has complied with all the requirements of this
Actǁ; this shows that where the definitions under sections 2 (g) and 2 (h) are
themselves inapplicable to the so-called Union, the Registrar has every power to
decline the registration. It is for the specified purpose of granting redress against the
erroneous exercise of such power that the appeal is provided for under section 11.
Section 16 of the Act, as noted by us earlier, enables the Union to constitute a separate
fund for political purposes and objects and to pursue those purposes, enumerated in
section 16 (2). Sections 17 and 18 refer to the immunity of the members of a
registered Trade Union from criminal prosecution in certain respects, and similarly
from civil suits in certain cases. Under sections 21 and 22, there is room for the
introduction of outsiders as office bearers into the executive of a registered Trade
Union, or of outsiders as members, after registration.
(5) Turning now to the Industrial Disputes Act (Act XIV of 1947), we find the
very important definition of ―industryǁ in section 2 (j) of the Act in the following
terms –
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.
An equally important definition is that of ―workmenǁ in section 2 (s) in the following
term:-
With regard to the present appeal, section 9-A concerning notice of change in the
conditions of service is important; clause (b) of the proviso specifically exempts from
such notice, workmen who are
Persons to whom the Fundamental and Supplementary rules, Civil
Services (Classification Control and Appeal) Rules … apply.
This certainly suggests that at least employees of the quasi-Government organisations,
such as the Industrial undertakings or Insurance corporations are persons to whom the
Industrial Disputes Act may apply. We may further note that under section 36 (1) of
this Act, a workman who is a party to an industrial dispute is entitled to be represented
in a proceeding under the Act by ―an officer of a registered Trade Union of which is
a memberǁ. Learned counsel (Sri Ramchandran) argues that the appellant Union is
keen upon registration under the Trade Unions Act, not merely for the privileges or
immunities conferred under sections 17 and 18 of the Act, which we have noticed
earlier, but even more importantly for this power or being represented in an industrial
dispute, by the Union.
(7) Upon one ground, we do not think that it is really necessary to follow the
learned Judge into the analysis that he has made. The learned Judge refers to the
definitions of
―workmenǁ in the Concise Oxford Dictionary and Wharton‘s Law Lexion, and
concludes that the term could only fairly characterise persons engaged in manual
labour semi-skilled occupations for wages, and could certainly not include civil
servants of the State. It is certainly true that such a restrictive interpretation appears to

14
have prevailed at one time, and to have found expression in several Acts in the United
Kingdom, such as the Bankruptcy Act 1883, Employers and Workmen Act, 1875,
Truck Acts 1887 etc., (see Burrows Words and Phrases, Vol. 5, page 527). But, more
and more as the industrial structure expanded, such a limited definition became out of
place; further, it was clearly impossible to sustain, him a logical point of view, a
distinction between brain-workers and manual workers, in relation to ‗industry‘
broadly conceived. One instance suggested to us may be significant. It would be
difficult to hold that a typist does not do manual labour; literally his work is executed
with his hands conforming to the etymological sense of the definition. But equally, it
would be impossible to deny that a typist is also a brain-worker, or to deny that he is a
―workmanǁ in industry. Obviously, springing from such causes, we find that the
earlier attitude is no longer maintained, particularly in Industrial law in the United
States of America. For instance, in Corpus Juris Secundum (Vol. 98 page 834),
―workmanǁ is defined as – ―a tailer, a worker, one who works in any department of
physical or mental labourǁ. Also see the definition furnished by Bouvier cited in
―Works and Phrasesǁ Permanent Edn. Vol. 45, page 508 as ―one who labours; one
who is employed in some business for another.ǁ Finally in N. A. Citrine‘s (now Lord)
―Trade Union Law ǁ (1960 Edn.) the learned author observes (page 312) ―It is
suggested that a similar wide interpretation of the definition of ―workmenǁ will be
adopted by courts.ǁ In the United Kingdom, Association of variety artistes and
Musicians have been recognised as unions of workmen, and the old distinction of the
restrictive meaning no longer holds the field.
(8) Apart from this, as far as the present judgment is concerned, the learned Judge
appears to have overlooked the definition of ―workmanǁ in section 2 (g) of the Trade
Unions Act itself in the form - ―means all persons employed in trade or industry.ǁ
The learned Advocate-General has placed certain arguments before us with regard to
this definition, and the implication of the word ―meansǁ, as occurring therein. We
shall dilate upon this a little later.
It is here pertinent to observe that this definition, if considered integrally with the
definition of
―Trade Unionǁ in section 2 (h) renders otiose and even inadmissible any arguments
founded upon the distinction between manual labour and brain-labour, in the context
of the word ―workmenǁ. It is here important to take note of another judgment of the
learned Judge (Ramachandra Iyer, J., himself) in Rangaswami v. Registrar of
Trade Unions [AIR 1962 Mad. 231], a similar petition with regard to the order of
the Registrar of Trade Union refusing to register the Union of Employees of the
Madras Raj Bhawan, as a Trade Union under the Act. This judgment has really to be
read as supplementing the judgment in appeal, with regard to the broad perspective of
approach and the learned Judge herein specifically refers to the definition of
―workmenǁ which occurs in section 2 (g). Upon these grounds, it is not essential to
explore further the argument based upon the distinction as one of the factors justifying
the order of the Registrar declining to register the appellant Union.
(9) Next, it is argued by learned counsel for the appellant Union, that as noted by
the learned Judge himself, such Unions of civil servants of the State are recognised as
Trade Unions in the United Kingdom. It is stressed that this recognition should also
become part of the Industrial law of this country; particularly as Trade Unions of the
workmen in the railways, which are now State concerns, already exist. There is no
doubt about the situation in the United Kingdom, and a single sentence from a passage

15
in the ―History of Trade Unions ǁ by Sydney and Beatrice Webb (1950 Edn., p.
507) cited by the learned Judge himself, will suffice.
Practically no one below the rank of an Under Secretary of State is held to
be outside the scope of the Society of Civil servants.
It is strenuously contended that the same principle should apply here, that any
distinction between tenure at the pleasure of the Crown, in the United Kingdom, and
tenure subject to constitutional safeguards, as in this Country, is really invalid for the
purpose of applying the criterion under the Trade Unions Act, and that, in brief, the
learned Judge was in error in holding that the appellant Union was not entitled to
registration. Sri Ramachandran further contends that recent case-law has been in the
opposite direction, namely, the direction of recognising even Governmental activities
as part of ―industryǁ, and the employees of such branches of administration as
―workersǁ entitled to form Trade Unions, subject of course, to well-recognised
exceptions) section 2(s) of Act XIV of 1947), categories (i) to (iv); the cases relied on,
chiefly are State of Bombay v. Hospital Mazdoor Sabha [AIR 1960 SC 610],
Banerji v. Mukherjee [AIR 1953 SC 58] and Nagpur Corporation v . Its
Employees [AIR 1960 SC 675]. These arguments certainly deserve careful
consideration at our hands.
(10) We think it is clear that there are two broad grounds upon which the claim of
the appellant Union to registration as a Trade Union could be properly resisted. The
first ground is inherent to the very constitution of the Union, and the admitted facts of
its structure, in relation to a basic principle stressed by the Supreme Court; we do not
see how this ground of objection can in any manner be negatived. The second ground
is more open to controversy, but even here we are inclined to the view that at least as
relative to the core of the civil services entrusted with the implementation of the
essential and sovereign functions of Government, the ground of objection is valid. But
the first ground alone is really sufficient to dispose of the present appeal.
(11) As the learned Advocate-General contends, the word ―meansǁ when it
occurs in a definition, and occurs without the complementary expression ―and
includesǁ, is restrictive and explanatory in character. The matter was put thus by Lord-
Esher M. R. in Gough v. Gough , 1891-3 QB 665, at p. 674:
It is a hard and fast definition, and the result is that you cannot give any
other meaning to the word landlord in the Act than that which is mentioned in
the definition.
Also see Burrows – Words and Phrases , Vol. 3, page 347, and page 49 of
Supplement, where Canadian case-law on the matter is cited. Hence, the word
―workmenǁ as occurring in the Trade Unions Act, means ―all persons employed in
Trade or industryǁ without any other criterion or reference. The question therefore is
whether such persons as Sub Magistrate in the Judiciary, Tahsildars, Officers of the
Treasuries and Home department of Government, who are all members of the
appellant-Union according to its constitution, could, by any stretch of imagination, be
regarded as ―workmen employedǁ in ―tradeǁ or ―industryǁ. Learned Counsel for
the appellant Union (Sri Ramachandran) draws our attention to the observation of
Lord Wright in National Association of Local Govt. Officers v. Bolton
Corporation [1943 AC 166], to the effect that:
Indeed Trade is not only in etymological or dictionary sense, but in the
legal usage, a term of the widest scope.

16
He points out that in (AIR 1960 SC 610), a hospital subsidised and run by
Government was held to be ―industryǁ within the scope of the wide definition of
section 2 (j) of the Industrial Disputes Act. But this very case furnishes us with a point
of departure in the direction of excluding the core of the civil services from the
definition of ―workmenǁ.
However wide the term ―tradeǁ might be, in all the authorities cited before us, the
Supreme Court has approved of the dictum that those activities of the Government
which should be properly described as regal or sovereign activities were outside the
scope of ―industryǁ,
―These are functions which a constitutional Government can and must undertake
for governance, and which no private citizen can undertakeǁ (AIR 1960 SC 610 at p.
615). Their Lordships also quoted the reference of Lord Watson in Coomber v.
Justices of Berks , [(1883) 9 AC 61] to ―the primary and inalienable functions of a
Constitutional Government.ǁ Again, the dicta of Issacs, J., in Federated State
School Teachers’ Association of Australia v. State of Victoria , [(1929) 41
CLR 569], were quoted with approval by the Supreme Court in AIR 1960 SC 675,
namely,
Regal functions are inescapable, and inalienable. Such are the legislative
power, the administration of laws, the exercise of the judicial power.
The Supreme Court added –
It could not have been, therefore, in the contemplation of the Legislature
to bring in the regal functions of the State within the definition of ―industryǁ
and thus confer jurisdiction on industrial courts to decide disputes in respect
thereof.
Also see the observations of this Court in Govindarajulu Naidu v. Secy. of
State [AIR 1927 Mad 689], repelling an argument based on the wording in clause 12
of the Letters Patent, that the business of Government being to govern, Government
must also be deemed, within the meaning of the section, to carry on business at its
head-quarters. This court observed :
The business intended by the section is a commercial business and not a
business of State or Government.
(12) But if this criterion is to be applied, it is evident that the very basis of the
structure of the appellant Union would exclude its registration as a Trade Union. The
appellant Union purports to include among its members Sub Magistrates of the
Judiciary, Tahsildars entrusted with the powers of enforcement of the tax-machinery
(Revenue Recovery Act etc.), officers in charge of Treasuries and Sub-treasuries
officers of civil court establishment, and of the Home Department of Government. It
is impossible to contend that these are not civil servants engaged in the tasks of the
sovereign and regal aspects of Government, which are its inalienable functions; they
cannot be included within the definition of ―workmenǁ in an ―industryǁ to whom
either section 2 (g) or 2 (h) of the Trade Unions Act can apply. Learned counsel points
out that the Association equally includes members of the State Transport organisation,
the Cinchona factory of Government, etc., who could well be regarded as person in an
―industryǁ since these are specific industrial undertakings of Government, certainly
not part of its essential and regal functions. This may well be so. As the learned
Advocate-General has conceded, there are three categories to be regarded here, the

17
middle of which shares the characteristics of the other two, and is hence debatable in
its scope.
Firstly, we have the core of the civil services integrated with the inalienable and
regal functions of government; those aspects of governmental activities cannot be an
―industryǁ; not can such civil servants be ―workmenǁ. As opposed to this, we have
those independent corporations which are quasi-Government agencies, or subsidised
undertakings, which are purely industrial in character; these may be such concerns as
a Machine Tool factory, Insurance Corporation etc. Here there would appear to be
little room for doubt, upon the authority of (AIR 1960 SC 610), that these are
industrial undertakings, whose employees are ―workmenǁ at least as defined in the
Industrial Disputes Act XIV of 1947. The learned Judge considers that the Trade
Unions Act is not in pari materia but however this might be, it may be difficult in
principle to claim that such employees could not raise ―industrial disputesǁ or form
Trade Unions for the conduct of such disputes. But we have the intermediate category,
forming as the learned Advocate general phrased it, a kind of penumbra where light
and shadow are mixed. Here, differences of view are certainly possible. Certain
welfare, educational or ameliorative departments of Government might or might not
be regarded as liable to exclusion; the employees in those departments might or might
not hence be regarded as ―workmenǁ in an ―industryǁ. But we have no doubt that
the appellant Union, with its wide and unqualified basis cannot claim to consist of
―workmenǁ in an ―industryǁ. Sri Ramachandran argues that as the learned Judge
himself has explicitly stated in a portion of his judgment ―The test for a Trade Union
is its object, and not its personnel. But that does not imply that persons who are not
workmenǁ in an ―ǁindustryǁ can form a Trade Union at all; obviously they cannot, for
the definitions in sections 2 (g) and 2 (h) could not apply to them, and they could
neither raise a ―trade disputeǁ nor form a ―trade unionǁ. It is noteworthy that, as we
have pointed out-siders can come into the picture only after the registration of the
Trade Union. On this clear ground, the appellant Union must fail.
(13) Even upon the second ground, we consider that the appellant Union is not
entitled to succeed, at least with reference to the members of the civil services who
form part of the essential and regal administrative machinery of Government. Under
Article 310 of the Constitution even in this country, the tenure of office of a civil
servant is during the pleasure of the Head of the Union or the State, as the case may
be, and Article 311 provides for statutory safeguards against certain penalties, such as
dismissal removal or reduction in rank.
To such a relationship, the concept of ―collective bargainingǁ is utterly inappropriate
and foreign. ―Collective bargainingǁ is a right conceded to Labour Organisations
within the contractual field of the employer and employee relationship. It would
become a grotesque anomaly that if civil services, for instance, were permitted to raise
a ‗trade disputeǁ with regard to the dismissal of a civil servant it may be for activities
against the State itself, and at the same breath to claim that the constitutional
safeguards under Article 311, which are wholly irrelevant to the field of contract and
to the employer-labour nexus, should be maintained intact for the benefit of the civil
services. Hence, whatever might be the developments in the United Kingdom, it is
difficult for us to conceive of ―collective bargainingǁ as governing the State in its
relations to civil services. It is not necessary for us to express any view whether, in the
event of the employee of those branches of Government, which do partake of the
character of ―industryǁ organising themselves into an Association of this kind, they
would be eligible for registration as a trade Union, or otherwise.

18
 (14) We are therefore of the view, on a careful consideration of the grounds urged
before us, that the order of the learned Judge (Ramachandra Iyer, J.,) was correct, and
that this appeal has to fail. We accordingly direct that it be dismissed but, under the
circumstances, without costs.

3. R.S. Ruikar v. Emperor (AIR 1935 Nag. 149)

J.C. GRILLE, J. – This is an application in revision by R.S. Ruikar who has been
convicted of the abetment of the offence of molestation defined in S. 7, Criminal Law
Administration Act (23 of 1932). He was sentenced to six months‘ rigorous
imprisonment, and the sentence was upheld on appeal. The facts found are as follows:
The Nagpur Textile Union of which the applicant is the President had determined on a
strike of textile workers in Nagpur, the ground being that certain conditions in the
terms of settlement of a strike in the previous year 1933 had been evaded by the
Empress Mills in Nagpur. The strike was ordered, but did not at first meet with the
response which the union desired and consequently a system of picketing was
inaugurated. On 3rd, 4th and 6th May 1934 the applicant made speeches supporting the
strike and in the course of his speeches advocated and encouraged the picketing of the
mills and called for volunteers to carry on the picketing. On the morning of 5th May as
a result of a complaint made by some of the strike committee that two women
picketers had been harassed by the police and driven away, the applicant brought his
wife to one of the mill gates and posted her there with instructions to beat, with her
slippers, any one who interfered with her. Charges were framed under four heads,
three relating to the speeches delivered on 3rd, 4th and 6th May 1934 and the fourth
relating to the incident of the abetment of picketing by his wife on 5th May.
Proceedings were taken against the applicant on 7th May under S. 107, Criminal P.C.,
and it is admitted that after that there were no further activities on his part. He was not
however arrested for the offences of which he has been charged and of which he has
been convicted until the 16th May. The proceedings under S. 107, Criminal P.C., are
in abeyance.
The principal contention on behalf of the applicant is that on the facts found
against him in trial and in appeal no offence has been committed as S. 7, Criminal
Law Amendment Act (23 of 1932) can have no application to purely industrial
disputes.
In order to support the view that S. 7, Criminal Law Amendment Act, has no
reference to picketing in the course of trade disputes, I am asked to refer to the
statement of objects and reasons accompanying the Criminal Law Amendment Act on
its introduction, and the decision in Shantanand Gir v. Basudevanand Gir [AIR 1930
All 225] has been cited as authority for the proposition that such reference is
permissible, and old cases from the C.P. Law Reports have been cited to show that
Judges have made references to Statement of Objects and Reasons in the past for the
purpose of interpreting the law. The only other case cited by the applicant is
Administrator General of Bengal v. Premlal Mullick [AIR 1922 Cal 788] and it is
contended that their Lordships of the Privy Council, when holding that proceedings of
the legislature in passing a statute are excluded from consideration on the judicial
construction of Indian statutes, thereby implied that a reference to the Statement of
Objects and Reasons is permissible. I am unable to read any such implication in the
judgment of their Lordships. The latest C.P. case cited was Balaji v. Govinda [(1888)
CPLR 111] and in that, as in the previous cases, there was doubt as to the exact
meaning or intention of a particular section. In Shantanand Gir v. Basudevanand Gir

19
which the applicant cites, theJudges of the High Court of Allahabad were equally
divided on the question whether it was permissible to refer to the Statement of Objects
and Reasons appended to an Act as introduced and published and the three learned
Judges who held that such a reference was permissible qualified their observations by
the limitation that such a reference could be made when there was an ambiguity. As
the wording of the section under consideration is entirely plain and unambiguous, it
seems to me unprofitable and unnecessary to enter into a discussion of the question
whether such a reference is permissible at all. The section itself makes no limitation in
respect of the parties disputing or the nature of the disputes giving rise to a situation
where picketing is employed, and from the wording of the section itself I am unable to
see that its application is anything but universal.
It is next contended that a perusal of the Act as a whole without any reference to
the Statement of Objects and Reasons would indicate that S. 7, Criminal Law
Amendment Act is to be utilised only on occasions of combating undertakings which
are subversive to the Government. Now it is true that the bulk of the sections in the
Criminal Law Amendment Act (23 of 1932) do refer to activities subversive to
Government and that the Act is a consolidation of some ordinance which had been
issued from time to time and which the legislature considered necessary to embody as
part of the law, but that in itself does not show that S. 7 cannot be of universal
application. There are other sections which are equally of universal application. I cite
S. 10 of the Act which gives the Local Government power to declare offences
committed under certain sections non-bailable and cognizable despite the provisions
of the Criminal Procedure Code. The Local Government may publish the requisite
notification required by this section at any time when it considers that such
proclamation is necessary in the interests of law and order, but once such a
notification has been issued the section would become operative in law whether the
offences falling under these sections were committed with a subversive object or not.
The same criterion would apply to S. 7 of the Act, the effectiveness of which depends
on the publication of the notification by the Government that the section shall come
into force. The requisite notification was published in August 1933.
It is urged that at the time the Criminal Law Amendment Act was passed by the
Central Legislature, assurances were given that S. 7 would not be employed in the
case of industrial disputes. In interpreting the section this Court is precluded from
considering any statements made in the Legislative Assembly or elsewhere on behalf
of Government. It is no duty of the Courts of law to examine, criticise or interpret
anything that may be said on behalf of Government in debate or elsewhere, and it is
beyond the competence of this Court to examine the correctness of the applicant‘s
assertions. The duty of the Court is to interpret the law as enacted. Had it been the
intention of the legislature to exclude the application of S. 7 from cases arising out of
industrial disputes, it would have said so in explicit terms, more particularly in view
of the nature of the majority of the other sections of the Act which have their origin in
other ordinances. It is next argued that the ordinance out of which S. 7 arose was
enacted with the particular purpose of combating the Civil Disobedience Movement.
It is no doubt true that this was the occasion, but neither the ordinance nor the present
Act lays down any limitation as to the circumstances in which molestation becomes
an offence. At the time of the Civil Disobedience Movement of 1930 certain persons
discovered a gap in the Indian Penal Code whereby they were enabled to commit acts
of intimidation which were not punishable by law. Proceedings taken to remedy this
deficiency were not directed personally against such persons who were influenced by
motives hostile to Government, but remedied the defect in law which left open the

20
 way for any person who so chose to bring unwarranted pressure on another person
whatever his motive might be. The absence of any provision preventing molestation
was recognised as a definite lacuna in the Criminal law and an enactment was made to
remedy it. That the defect was discovered by the ingenuity of persons taking part in
the Civil Disobedience Movement does not limit the universal applicability of the
remedy, and I am unable to read, as the applicant desires me to read the opening word
of the section ―whoeverǁ as ―whoeverǁ may be disaffected towards the Government.
The next contention is that there is a definite conflict between S. 7, Criminal Law
Amendment Act and the Trade Unions Act of 1926. It is contended that the valuable
right given to Trade Unions to declare a strike and their immunity from liability for
criminal conspiracy or to civil suits in connection with the furtherance of a strike is
taken away if S. 7, Criminal Law Amendment Act, is held to be applicable to trade
disputes. I am unable to see any conflict. Trade Unions have the right to declare strike
and to do certain acts in furtherance of trade disputes. They are not liable civilly for
such acts or criminally for conspiracy in the furtherance of such acts as Trade Unions
Act permits, but there is nothing in that Act which apart from immunity from criminal
conspiracy allows immunity from any criminal offences. Indeed any agreement to
commit an offence would, under S. 17, Trade Unions Act, make them liable for
criminal conspiracy. S. 7, Criminal Law Amendment Act, is part of the Criminal law
of the land and an offence committed as defined in that section is an offence to which
the concluding sentence of S.17, Trade Unions Act, applies as much as it would do to
an agreement to commit murder. The applicant has cited several passages from
Maxwell on the Interpretation of Statutes which are all eminently acceptable
propositions of law, but have no application to the case in hand. S. 7, Criminal Law
Amendment Act defines a criminal offence of universal application without restriction
and it must be interpreted according to its plain and obvious meaning, and as it defines
a criminal offence it is not in conflict with the provisions of the Trade Unions Act,
which remains unimpaired by S. 7, Criminal Law Amendment Act. In abetting the
commission of this offence, an offence which was undoubtedly committed, the
applicant has been correctly convicted.

4. Rohtas Industries Staff Union v. State of Bihar AIR 1963 Pat. 170

RAMASWAMI, C.J. – In Miscellaneous Judicial Case No. 498 of 1959, petitioner

No. 1 is a registered trade union, called the Rohtas Industries Mazdoor Sangh.
Petitioners Nos. 2 and 3 are employees of respondent No. 2, the Rohtas Industries
Limited, which have many units of production at Dalmianagar, namely, cement,
paper, sugar, etc. etc., and a large number of workers are employed therein. For
disputes regarding non-payment of bonus and non-implementation of Shree Jee Jee
Bhoy‘s award, there was a strike notice served by petitioner No. 1 on respondent No.
2. The strike was started in the factories of the Rohtas Industries Limited on the 3 rd

September, 1957, and it was called off on the 3 October, 1957, on the basis of an
rd

agreement between the management and the workers dated the 2 October, 1957.
nd

By this agreement the parties agreed to refer certain matters in dispute to

arbitration. Under Section 10-A of the Industrial Disputes Act the Government of
Bihar published the arbitration agreement in the Bihar Gazette. The arbitration
agreement is to the following effect:

21
 ―Agreement under Section 10-A of the Industrial Disputes Act, 1947,
between Rohtas Industries Limited and its workmen.
Representing Employers – Rohtas Industries, Ltd., Dalmianagar.
Representing Workmen – (1) Rohtas Industries Mazdoor Sangh, Dalimianagar;
(2) Rohtas Industries Staff Union, Dalmianagar;
(3) Dalmianagar Staff Employees‘ Union, Dalmianagar.
(4) Dalmianagar Mazdoor Seva Sangh, Dalmianagar.
It is hereby agreed between the parties to refer the following industrial
disputes to the arbitration of Shri J.N. Mazumdar, Ex. Judge, Calcutta High Court,
and Ex. Chairman, Labour Appellate Tribunal of India, and Shri R.C. Mitter, Ex.
Judge, Calcutta High Court and Ex. Chairman, Labour Appellate Tribunal of
India:
(i) Specific matters in dispute – Issues arising out of paragraph 7 of the
Agreement dated 2n October, 1957, reproduced below:
d

―The employees claim for wages and salaries for the period of
strike and the Company‘s claim for compensation for losses due to
strike shall be submitted for arbitration of Shri J.N. Mazumdar and
Shri R.C. Mitter, Ex. High Court Judges 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.ǁ
(ii) Details of the parties to the dispute – The Rohtas Industries Ltd.,
Dalmianagar and their workmen.
(iii) Name of the Unions representing the workmen – (1) Rohtas
Industries Mazdoor Sangh, Dalmianagar, (2) Rohtas Industries Staff Union,
Dalmianagar, (3)
Dalmianagar Staff Employees‘ Union, Dalmianagar, and (4) Dalmianagar Mazdoor
Seva Sangh, Dalmianagar.
(iv) Total number of workmen employed in Rohtas Industries Limited – About
5,500.
(v) Estimated number of workmen likely to be affected by the dispute – About
5,500.ǁ
According to clause 7 of the agreement, the claim of the workers for wages and
salaries for the period of the strike and the claim of the Company for compensation
for loss of production due to strike were to be submitted for arbitration of Shri J.N.
Mazumdar and Sri R.C. Mitter, former High Court Judges and Ex. Members of the
Labour Appellate Tribunal of India, as joint arbitrators. On the 20 April, 1959, the
th

arbitrators gave an award and sent the same for publication to the Government of
Bihar. In this award the arbitrators decided all the issues against the trade unions and
held that compensation should be paid by the workers who had gone on strike to the
Rohtas Industries Limited to the extent of Rs. 6,90,000/- and to the Ashoka Cement
Works Limited to the extent of Rs. 80,000/-. The arbitrators also decided that the cost
of arbitration should be divided equally between the employers and the trade unions
concerned.
The petitioners have obtained a rule from the High Court asking the respondents
to show cause why the award of the arbitrators dated the 20 April, 1959, should not
th

be quashed by a writ in the nature of certiorari under Article 226 of the Constitution.
Cause has been shown by the Additional solicitor General of India on behalf of

22
respondent No. 2, to whom notice of the rule was ordered to be given. On behalf of
respondent No. 1, the State of Bihar, the Additional Government Pleader, supported
the contention of the petitioners that the award of the arbitrators is ultra vires and
illegal in so far as it directs compensation to be paid by the workmen going on strike
to the management of the company for loss of production and business due to the
strike.
(2) In Miscellaneous Judicial Case No. 475 of 1959, petitioner No. 1 is a
registered trade union, called the Rohtas Industries Staff Union, and respondents Nos.
2, 3, 3, 5 and 6 are the Rohtas Industries Limited, Ashoka Cement Limited, Sri
Krishna Gyanoday Sugar Limited, Ashoka Marketing Limited and Bharat Collieries
Limited. The material facts in this case are identical to those in Miscellaneous Judicial
Case No. 498 of 1959, and the question of law presented for determination in this case
is of the same character.
(3) It was submitted on behalf of the petitioners that compensation by the
workmen to the employer has no direct connection with the employment or non-
employment or the condition of employment of any workman and so does not come
within the definition of Section 2(k) of the Industrial Disputes Act.
The opposite view point was presented by the Additional Solicitor General and it
was contended that the definition of Section 2(k) of the Industrial Disputes Act was
wide enough to cover the question of compensation to be paid to the employer by the
workmen for the loss caused to business by the launching of the strike. Reference was
made by the Additional Solicitor General to the decision of the Federal Court in
Western India Automobiles Association v. Industrial Tribunal, Bombay
[AIR 1949 FC 111], where it was held by the Federal Court that the question of
reinstatement of a workman is covered by the definition of ―industrial disputeǁ in
Section 2(k) of the Industrial Disputes Act. I consider that there is much force in the
contention put forward on behalf of the petitioners that the question of compensation
payable by the workmen to the employer for the loss caused by a strike does not come
within the purview of Section 10-A of the Industrial Disputes Act, and such a claim of
the employer cannot fall within the definition of ―industrial disputeǁ under Section
2(k) of the statute.
It should be noticed that Section 25-C of Chapter VA provides for compensation
to workmen who are laid-off. Section 25-FF similarly provides for compensation to
workmen in case of transfer of understandings. Section 25-FFF in the same manner
provides for compensation in case of closing down of undertakings. There is no
similar provision in the Act for compensation payable to employers by workmen for
interference with the business. It is true that the language of section 2(k) is wide, but it
is a well established canon of construction that the language of any section must be
interpreted in the setting and in the context of other sections of the Act. In other
words, the meaning of the section must be subject to the qualifying effect of subjectae
materies. I do not propose, however, to express any concluded opinion on this
question in the present case. I shall proceed on the assumption that the claim of the
employers for compensation from the workmen falls within the scope of Section 2(k)
of the Industrial Disputes Act, and the reference to arbitration under Section 10-A of
the Industrial Disputes Act of this question is intra vires.
(4) I shall now consider the main argument addressed on behalf of the petitioners
that the award of the Arbitrators is illegal and ultra vires because they committed a
mistake of law apparent on the face of the record. It was contended by learned counsel
on behalf of the petitioners that the arbitrators were erroneous in holding that the

23
workers had committed the tort of conspiracy and were accordingly liable for paying
compensation to the Companies concerned. It was also submitted that the arbitrators
had committed an error of law in holding that the workers were not protected by the
immunity granted under Section 18 of the Trade Unions Act. It was submitted on
behalf of the petitioners that the award of the arbitrators so far as the question of
compensation is concerned is vitiated by error of law and must be quashed by grant of
a writ in the nature of certiorari under Art. 226 of the Constitution.
(5) The law with regard to the tort of conspiracy is now well established.
Conspiracy as a tort must arise from a combination of two or more persons to do an
act. It would be actionable if the real purpose of the combination is the inflicting of
damage on A, as distinguished from serving the bona fide and legitimate interests of
those who so combine and there is a resulting damage to A. In the leading case of
Sorrell v. Smith [1925 AC 700], Lord Cave, L.C. remarked as follows:
I deduce as material for the decision of the present case two propositions
of law which may be stated as follows: (1) A combination of two or more
persons wilfully to injure a man in his trade is unlawful and, if it results in
damage to him, is actionable, (2) If the real purpose of the combination is, not
to injure another, but to forward or defend the trade of those who enter into it,
then no wrong is committed and no action will lie, although damage to
another ensues. The distinction between the two classes of case is sometimes
expressed by saying that in cases of the former class there is not, while in
cases of the latter class there is, just cause or excuse for the action taken.

In a subsequent case, Crofter Hand-woven, Harris Tweed Co. v. Veith

[1942-1 All ER 142] the House of Lords applied the principle of the Mugul case
[Mogul S.S. Co. v. Mc Gregor Gov. and Co., 1892 AC 25] to labour relations.
It was observed by Viscount Simon, L.C. in this case as follows:
(T)he predominant object of the respondents in getting the embargo
imposed was to benefit their trade union members by preventing under-cutting
and unregulated competition, and so helping to secure the economic stability
of the island industry. The result they aimed at achieving was to create a better
basis for collective bargaining, and thus directly to improve wage prospects. A
combination with such an object is not unlawful, because the object is the
legitimate promotion of the interests of the combiners…
In the course of his judgment in the same case, Lord Wright observed as follows:
It cannot be merely that the appellants‘ right to freedom in conducting
their trade has been interfered with. That right is not absolute or
unconditional. It is only a particular aspect of the citizen‘s right to personal
freedom, and, like other aspects of that right, is qualified by various legal
limitations, either by statute or by common law. Such limitations are
inevitable in organized societies, where the rights of individuals may clash. In
commercial affairs, each trader‘s rights are qualified by the right of others to
compete. Where the rights of labour are concerned, the rights of the employer
are conditioned by the right of the men to give or withhold their services. The
right of workmen to strike is an essential element in the principle of collective
bargaining.
(6) In the case of a ―mixed motiveǁ or a ―mixed purposeǁ for the conspiracy, the
test is what is the dominant motive or the dominant purpose of the conspiracy. The

24
test to be applied in a case of this description is – was the dominant motive of the
combiners to benefit the funds of the Union or was the dominant motive to cause the
injury to the employer? The test is not what is the natural result to the employers of
such combined action or what is the resulting damage to the employers, but what is in
truth the object in the minds of the workmen when they acted as they did. It is well
established that if there is more than one purpose actuating a combination, the liability
must depend on ascertaining what is the predominant purpose is.
The matter is clearly put by Viscount Simon, L.C. in 1942-1 All ER 142 as follows:
The test is not what is the natural result to the plaintiff of such combined
action or what is the resulting damage which the defendants realise, or should
realise, will follow, but what is in truth the object in the minds of the
combiners when they acted as they did. It is not consequence that matters, but
purpose. The relevant conjunction is not, ‗so that,‘ but ‗in order that.‘ Next, it
is to be borne in mind that there may be cases where the combination has
more than one ‗object‘ or ‗purpose‘. The combiners may feel that they are
killing two birds with one stone, and, even though their main purpose may be
to protect their own legitimate interests notwithstanding that this involves
damage to the plaintiffs, they may also find a further inducement to do what
they are doing by feeling that it serves the plaintiffs right. The analysis of
human impulses soon leads us into the quagmire of mixed motives, and, even
if we avoid the words ‗motive‘, there may be more than a single purpose or
object. It is enough to say that, if there is more than one purpose actuating a
combination, liability must depend on ascertaining the predominant purpose.
If the predominant purpose is to damage another person and damage results,
that is tortious conspiracy. If the predominant purpose is the lawful protection
or promotion of any lawful interest of the combiners, it is not a tortious
conspiracy, even though it causes damage to another person.
(7) In the present case the arbitrators have failed to apply this principle in
adjudicating the liability of the workers to pay compensation. It is conceded by the
arbitrators that the workers commenced the strike because their demands for payment
of bonus had not been complied with. It is also stated by the arbitrators in the award
that the reason for the strike was the non-implementation of Shri Jee Jee Bhoy‘s
award with regard to the wages of casual workmen and also non-implementation of
the settlement dated 2 May, 1957. But the arbitrators have said that the strike was
nd

resorted to by each of the Unions ―for ulterior objects of their own.ǁ The arbitrators
have not found what were the ―ulterior objectsǁ for which the Unions entered into a
strike. Even assuming that there were ulterior objects impelling the Unions to enter
into a strike, it was the duty of the arbitrators to go into the question as to what was
the dominant purpose of the strike and whether the dominant purpose was not
promotion of the legitimate interest of the Trade Unions for better wage conditions for
the workers concerned. In failing to apply the principle of law laid down by the House
of Lords in 1942-1 All ER 42, the arbitrators have misdirected themselves in law, and
the award of compensation to the Companies granted by the arbitrators must be
quashed on this ground.
(8) I shall then proceed to consider the argument of Counsel for the petitioners
that the arbitrators have committed an error of law in holding that the workers were
not protected by Section 18(1) of the Trade Union Act, which is to the following
effect:

25
 It is manifest that the question whether the strike was legal or illegal under
Section 24(1) of the Industrial Disputes Act has no bearing on the question of
immunity furnished by Section 18 of the Trade Unions Act.
The view I have expressed is borne out by a comparison of the English law on this
point. S. 4 of the Trade Disputes Act, 1906, provides that no action for a tort of any
kind shall lie against a trade union so as to charge the union funds. It is also provided
by Section 3 of the Act that
An act done by a person in contemplation or furtherance of a trade dispute
shall not be actionable on the ground only that it induces some other person to
break a contract of employment or that it is an interference with the trade,
business, or employment of some other person, or with the right of some other
person to dispose of his capital or his labour as he will.
With regard to the interpretation of S. 3 of the Trade Disputes Act it was held by
the Court of Appeal in Dallimore v. Williams and Jesson [(1914) 30 TLR 432]
that if there is an existing trade dispute the act need not be done solely or even
honestly in contemplation or furtherance thereof to obtain the protection of that
section. It was further held in Fowler v. Kibble [(1922) 1 Ch 487] that an act is not
deprived of the protection of S. 3 of the Trade Disputes Act because it is punishable
under S. 7 of the Conspiracy and Protection of Property Act, 1875. It is manifest in
the present case that the striking workmen are not prevented from taking recourse to
the protection of S. 18 of the Trade Unions Act mainly because the strike was illegal
under S. 24(1) of the Industrial Disputes Act. It was still the duty of the arbitrators to
find whether the strike was undertaken by the workmen in furtherance of a trade
dispute within the meaning of S. 18 of the Trade Unions Act.
It was pointed out by the Government Advocate on behalf of the respondents that
there was a finding of the arbitrators in paragraphs 21 and 27(c) of the award that the
strike was not resorted to in furtherance of a trade dispute. But this finding is vitiated
in law because the arbitrators do not say upon what evidence this finding is based. As
I have already said, the arbitrators have said in their award that the strike was resorted
to because the demand for payment of bonus was not complied with and also because
there was non-implementation of Shri Jee Jee Bhoy‘s award relating to wages of
casual workmen. It is true that in paragraph 21 of the award the arbitrators have said
that the Unions have resorted to a strike with ulterior objects of their own. But the
arbitrators have not mentioned anywhere as to what these ulterior objects were. The
arbitrators have not also analysed the question as to whether the predominant purpose
of the workmen in resorting to the strike was not the furtherance of a trade dispute. As
I have already pointed out, the arbitrators have misdirected themselves in law in
holding that the workmen cannot claim immunity under S. 18 of the Trade Unions Act
because the strike is illegal under S. 24(1) of the Industrial Disputes Act. I consider
that the award of the arbitrators regarding payment of compensation to the employers
is vitiated by this fundamental mistake of law.
(9) On behalf of the petitioners learned Counsel submitted that the Companies had
no right of civil action for damages against the workers who had taken part in an
illegal strike. It was submitted that the only remedy open to the Companies was
criminal prosecution under S. 26(1) of the Industrial Disputes Act, which is in the
following terms:
26. (1) Any workman who commences, continues or otherwise acts in
furtherance of, a strike which is illegal under this Act, shall be punishable

26
 with imprisonment for a term which may extend to one month, or with fine
which may extend to fifty rupees, or both.
The submission of the learned counsel was that special penalty has been attached
to the breach of Ss. 23 and 24 of the Industrial Disputes Act, and that remedy is
exclusive and the companies have no civil remedy in addition to the remedy expressly
provided by the statute.
The opposite view point was put forward on behalf of the respondent-Companies
and it was contended that apart from the express penalty provided under S. 26(1) of
the Industrial Disputes Act the Companies had a right to civil action for breach of Ss.
23 and 24 of the Act.
The question raised depends upon the intention of the Legislature in the enactment
of the Industrial Disputes Act. Was it intended to make the duty imposed upon the
employees and the employers by Ss. 23 and 24 of the Act a duty owed to the
individuals aggrieved, or was it intended to be a public duty only?

In the approach to this question it is necessary to have regard to certain principles

which afford guidance in ascertaining the legislative intent. For example, if a statutory
duty is prescribed but no remedy by way of penalty or otherwise for its breach is
imposed, it can be assumed that a right of civil action accrues to the person who is
damnified by the breach, for, if it were not so, the statute would be wholly ineffective.
But ―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 mannerǁ (Lord Tenterdoan, C.J. in Doe D. Rochester v. Bridges [(1831) 1
B and Ad. 847, 859]. This passage was cited with approval by the Earl of Halsbury,
L.C. in Pasmore v. Oswaldtwistle Urban Council [1898 AC 387, 394]. But this
general rule is subject to exceptions. It may be that, though a specific remedy is
provided by the Act yet the person injured has a personal right of action in addition.
That depends on the scope of language of the particular statute.
(12) In the application of this principle, it is necessary to consider the scope and
object of the Industrial Disputes Act and to ascertain for whose benefit the protection
of Sections 22 and 23 are intended. These sections undoubtedly imposed a duty on the
employees, but the important question is to whom was the duty owed? Was it
intended by the framers of the Act to make the duty one which was owed to the
employers, or was it a duty owed to the public? The preamble of the Act stated:
It is expedient to make provision for the investigation and settlement of
industrial disputes, and for certain other purposes.
There is nothing in the title or preamble of this Act to suggest that it is a charter
for the employers or the employees or that it is enacted solely for the benefit of any
particular class of employers or employees. On the contrary, the preamble suggests
that the object of the Act is the proper adjustment of relations between capital and
labour, preservation of law and order, and the increase of industrial production.
(14) Upon the consideration of the various provisions of the Act it is manifest that
the overriding purpose of the Act is the benefit of the community and not the benefit
of the employees or the employers. It is true that S. 24 imposes a statutory duty on the
employees not to commence or declare an illegal strike. But it is manifest that if there
is a breach of this statutory duty on the part of the employees, the employer has no
right of Civil action against the employees in default apart from the statutory penalty
provided by Section 26(1). Similarly, if the employer declares an illegal lock-out,

27
there is a breach of the statutory obligation created by S. 24, but the employees have
no right of civil action. The exclusive remedy open to them is criminal prosecution
under Section 26(2) of the Act. For these reasons I hold that the duties imposed by Ss.
22, 23 and 24 of the Act are statutory duties owed by the employees not to the
employers concerned but duties owed to the public which can be solely enforced by
criminal prosecution under S. 26(1) of the Act. It follows, therefore, that the
employers have no right of civil action for damages against the employees
participating in an illegal strike within the meaning of S. 24(1) of the Industrial
Disputes Act.
(18) For these reasons I hold that the award of the arbitrators in all the five
references under Section 10-A of the Industrial Disputes Act must be held to be ultra
vires and illegal so far as the arbitrators have granted compensation to the employees
by the workmen participating in the strike for the losses due to the strike. In my
opinion the petitioners are entitled to grant of a writ in the nature of certiorari under
Article 226 of the Constitution for quashing the award of the arbitrators in all the five
references so far as they granted compensation to the employers by the workmen
concerned for the losses due to the strike.
(19) I would accordingly allow these applications, but I do not propose to make
any order as to costs.

5. Bangalore Water Supply & Sewerage Board v. A. Rajappa (AIR 1978 SC

548)

V.R. KRISHNA IYER, J. - 25. 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 of ‗industry‘ under the Industrial
Disputes Act, 1947 (for short, the Act). This bizarre situation, 30 years after the Act
was passed and industrialisation had advanced on a national scale, could not be
allowed to continue longer. So, the urgent need for an authoritative resolution of this
confused position which has survived - indeed, has been accentuated by - the
judgment of the six-member Bench in Safdarjung (Management of Safdar Jang
Hospital, New Delhi v. Kuldip Singh Sethi [AIR 1970 SC 1407)] if we may
say so with deep respect, has led to a reference to a larger Bench of this die-hard
dispute as to what an ‗industry‘ under Section 2(j) means.
26. Legalese and logomachy have the genius to inject 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?
32. 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 this Court have drawn on Australian cases as on English dictionaries.
But India is India and its individuality, in law and society, is attested by its National

28
Charter, so that statutory construction must be home-spun even if hospitable to alien
thinking.
33. 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 ―industryǁ, and, if we may add
―workmanǁ. 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 by 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. Counsels on both sides have chosen to rely
on Safdarjung 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.
(T)he 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.
34. So, the long and short of it is what is an industry? Section 2(j) defines it:
―industryǁ 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 to the
historical background, objects and reasons, international thoughtways, popular
understanding, contextual connotation 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 (D.N. Banerji v. P.R.
Mukherjee [AIR 1953 SC 58], decided a silver jubilee span of years ago, we have 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.
37. A look at the definition, dictionary in hand, decisions in head and Constitution
at heart, leads to some sure characteristics of an ‗industry‘, narrowing down the twilit
zone of turbid controversy. An industry is a continuity, is an organized 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

29
‗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 characteristic shared by
the society of words before and after. 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 Banerji to Safdarjung and beyond, this limited criterion has passed
muster and we see no reason, after all the marathon of argument, to shift from this
position.
38. Likewise, an ‗industry‘ cannot exist without co-operative 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 statutory resolution thereof.
39. An industry is not a futility but geared to utilities in which the community has
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 collective good. Today, not tomorrow, is
the first charge of pragmatic law of western heritage. So we are confined to material,
not ethereal end products.
40. 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.
41. 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
collectively of workmen co-operating 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.
42. The penumbral area arrives as we move on to the other essentials needed to
make an organized, 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 rcductio 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 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 judgment of legislative bodiesǁ.
[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

30
‗have-nots‘, and naive, fugitive and illogical cutbacks on the import of ‗industry‘
may do injustice to the 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 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 management 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. 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 or 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
Directive Principles of State Policy which must guide the judiciary, like other
instrumentality, 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.
43. 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 v. P.
R. Mukherjee . But before setting sail, let us map out briefly the range of dispute
around the definition.
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 better than bland affirmatives and so marginal omissions
notwithstanding, we will string the points together in a few questions on which we
have been addressed.
44. 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 adjective ‗socialist‘ added to the
Republic by the Constitution (Forty-second 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 functions, 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

31
clever capitalism and hierarchical social structure, shows up as inhibitions transmuted
as 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.
45. 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 thought ways that law is value-loaded, that social philosophy
is an inarticulate interpretative tool? This is inescapable in any school of
jurisprudence.

46. 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 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 Y. M. C. A.) whose general

32
 emphasis is not on profit-making but fellowship and self-service, fit into the
definitional circle?
(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 co-operation 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 chambers 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 an industry? If so, what impact does it make on the categories?
(b) Do domestic service drudges who slave without respite — become
‗industries‘ by this extended sense?
(4) Are governmental functions, stricto sensu, industrial and if not, what is the
extent of the immunity of 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
workmen become more light-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?
47. Back to Banerji , to begin at the very beginning. Technically, this Bench that
hears 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 , the law is 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 is in Queer Street 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

33
view, to reject everything ruled till date and fabricate new tests, aimed with lexical
wisdom 01 reinforced by vintage judicial thought from Australia. Banerji (supra) we
take as good, and, anchored on its authority, we will examine later decisions to
stabilize the law on the firm principles gatherable therefrom, 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, has 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 Banerji but to straighten and
strengthen it in its application, away from different deviations and aberrations.
48. Banerji: The Budge Budge Municipality dismissed two employees whose
dispute was sponsored by the Union. The award of the Industrial Tribunal directed re-
instatement 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.
49. A panoramic view of the statute and its jurisprudentially hearings 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)], workman
[Section 2(s)) 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., has 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 applies 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 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 dispute arising in connection with them might be settled

34
 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 the machinery of conciliation
officers, Boards and Tribunals for the effective settlement of disputes,
(emphasis, added)
50. The dynamics of industrial law, even if incongruous with popular
understanding, is this first proposition we derive from Banerji:
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.
51. 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 collection of words found in other statutes are scarcely of much value when
we have to deal with a specific statute of our own; they may persuade, but cannot
pressure.
52. We would only add that a developing country is anxious to preserve the
smooth flow of goods and services, and interdict undue exploitation and, towards
those ends, labour legislation is enacted and must receive liberal construction to fulfil
its role.
53. 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 dispute‘ 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 workmenǁ. ―Undertakingǁ in the first part of the
definition and ―industrial occupation or avocationǁ 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: (SCR p. 312)

35
 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
employers 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 a 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, (emphasis, added)
54. 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: (SCR p. 313)
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 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 the 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 services 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 industry though it
is carried on with the aid of taxation, and no immediate material gain by way
of profit is envisaged, (emphasis, added)
55. The contention that charitable undertakings are not industries is, by this token,
untenable.
56. Another argument pertinent to our discussion is the sweep of the expression
‗trade‘.
57. In short, ‗trade‘ embraces 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 v . Melbourne Corporation [26 CLR 508

36
(Aus.)] 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 argument 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 the term, although it
would generally speaking be carried on by the Councils themselves to save
contractors‘ 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 contracts,
gas-making for lighting streets and public halls, municipal building of houses
or halls, and many other similar industrial undertakings. Even coal-mining for
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.ǁ (emphasis added)
58. The negation of profit motive, as a telling test against ‗industry‘, is clear from this
quote.
59. All the indicia of ‗industry‘ are packed into the judgment 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 profit
motive, may well be industries. Professions are not ipso facto out of the pale of
industries. Any operation carried on in a manner analogous to trade or business may
legitimately be 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 the 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.
60. The limiting role of Banerji 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 businessǁ. As we proceed to the next
set of cases we come upon the connotation of other expressions like ‗calling‘ and get

37
to grips with the specific organisations which call for identification in the several
appeals before us.
61. At this stage, a close-up of the content and contours of the controversial words
‗analogous etc.‘, which have consumed considerable time of Counsel, may be taken.
To be fair to Banerji , the path-finding decision which 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 judgment has negatived the
necessity for 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, the comprehensive reach of
‗analogous‘ activities must be measured. The similarity stressed relates to ‗branches
of work‘; and more; the analogy will 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
co-operation in the carrying out of the work bear close resemblance to the
organization, 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.
62. The landmark Australian case of Melbourne Corporation , which was
heavily relied on in Banerji may engage us. That ruling contains dicta, early in the
century, which make
India in forensic fabianism, sixty years after in the ‗socialist‘ Republic, blush. The
apart, the discussion in the leading judgments 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‘; Highness, 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, 01 the labourers who build (for pa,)) 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 prejudicially affecting the workers are within the sphere of dispute.
64. Now, the cornerstone of industrial law is well laid by Banerji , supported by
Lord Mayor of the City of Melbourne.
65 A chronological survey of post-Banerji decisions of this Court, with accent on
the juristic contribution registered by them, may be methodical. Thereafter, 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 adaptation
breakdown outraging the good sense of even radical realists. After all, the Act has

38
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.
66. The two landmark cases, The Corporation of the City of Nagpur v. Its
Employees [AIR 1960 SC 675] and State of Bombay v. The Hospital
Mazdoor Sabha [AIR 1960 SC 610] may now be analysed in the light of what we
have just said. Filling the gaps in the Banerji decision and the authoritative
connotation of the fluid phrase ‗analogous to trade and business‘ were attempted in
these twin decisions. To be analogous is to resemble in functions relevant 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 Banerji is the
guide star. Partial similarity postulates selectivity of characteristics for comparability.
Wherein lies the analogy to trade or business, is then the query.
67. Sri Justice Subba Rao, with uninhibited logic, chases this thought and reaches
certain tests in Nagpur Municipality, 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
co-operation between employer and employees in the essential product of the
undertaking, of the need for the commercial motive, of service 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 judgment. And,
in this latter process, next to Banerji comes Corporation of Nagpur which
spreads the canvas wide and illumines the expression ‗analogous to trade or
business‘, although it comes a few days after
Hospital Mazdoor Sabha decided by the same Bench.
68. To be sure of our approach on a wider basis let us cast a glance at
internationally recognised concepts vis-a-vis industry. The International Labour
Organisation 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 fall outside the orbit of industrial conflict.
Convention 98 concerning the Application of the Principles of the Right to Organise
and to Bargain Collectively, in Article 6 states:
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 the public servants from the general category.
69. Incidentally, it may be useful to note certain clear statements made by ILO on
the concept of industry, workmen and industrial dispute, 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 decisions of the Freedom of Association Committee of the
Governing Body of the ILO:

39
 2. Civil servants and other workers in the employ 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.)
(251) Convention 98, which mainly concerns collective bargaining, permits
(Article
6) the exclusion of ―public servants engaged in the administration of the Stateǁ.
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 Committees, in the light of the principles contained in
Convention 98 draw 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 service. (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.)
70. 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 Corporation of Nagpur . 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 businessǁ. Municipal undertakings are ordinarily
industries as Baroda Borough Municipality [AIR 1957 SC 110] held. Even so
the scope of ‗industry‘ was investigated by the Bench in the

40
City of Nagpur which affirmed Banerji and Baroda. 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: (SCR p. 952)
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.
71. After referring to the rule in Heydon case [(1584) ER 637], Subba Rao, J.
proceeded to outline the ambit of industry thus:
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 shows 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 services which do not depend upon the
employment of a labour force.
72. Whether the exclusion of personal services is warranted may be examined a little
later.
73. 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, 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 ineptitude 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 Parliament to make law which governs 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 provision of law, it
may indubitably be assumed that the key aspects of public administration like public
justice stand out of the circle of industry. Even here, as has been brought out from the
excerpts of ILO documents, it is not every employee who is excluded but only certain
categories primarily engaged and supportively employed in the discharge of the

41
essential functions of constitutional government. In a limited way, this head of
exclusion has been recognised throughout.
74. 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.
75. The Court proceeded, in the Corporation of Nagpur 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 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‘.
77. It is useful to remember that the Court rejected the test attempted by Counsel in
the case:
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 Nagpur is to dispel the idea of profit-making.
Monetary considerations for service is, therefore, not an essential characteristic of
industry in a modern State.
78. 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.
79. 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 and has been answered in favour of employers by this Court in the Delhi
University [AIR 1963 SC 1873] case. But since Subba Rao, J., has supportively
cited Isaacs, J. in School Teachers’ Association [(1929) 41 CLR 569 (Aus)],
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.

42
 80. 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 disputeǁ cannot possibly occur except
where there is furnished to the public - the consumers - by the combined
efforts of employers and employed, wealth of that nature. Consequently, say
the employers, ―educationǁ not being ―wealthǁ in that sense, there never can
be an ―industrial disputeǁ 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 organization of the nations, not for the
production or distribution of material wealth, but for services, national
service, as the service of organized 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 ―productionǁ and ―wealthǁ when used in that connection. But it
further neglects the fundamental character of ―industrial disputesǁ 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 tramcar or motor-bus, piloting a
ship, lighting a lamp or showing a moving picture is more ―materialǁ 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 no 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 ―industrialǁ 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 reason 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 literature and pictures, because these are
considered to be ―wealthǁ. The doctrine would concede, for instance, that
establishments for the training of performing dogs, or of monkeys simulating
human behaviour, would be ―industrialǁ, because one would have increased
material wealth, that is, a more valuable dog or monkey, in the sense that one

43
 could exchange it for more money. If parrots are taught to say ―Pretty Pollyǁ
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 01 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.
81. 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.
82. More closely analysed, 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
viewǁ, says Isaacs, J. ―that education so provided constitutes in itself an independent
industrial operation as a service rendered to the communityǁ. Charles Dickens
evidently thought so when ninety years ago Squeers called his school ―the shopǁ and
prided himself on Nickleby‘s being ―cheapǁ at £ 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 Unionsǁ those called ―teachingǁ. It 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 1,94,946. 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 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 ―labourǁ
services, as there is to include insurance companies as ―capitalǁ services.
83. 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 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 highbrowism 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, embraces training for industry which, in turn ensconces all processes of
producing goods and services by employer-employee co-operation. Education is the
nidus of industrialization and itself is industry.
84. We may consider certain aspects of this issue while dealing with later cases of
our Court. Suffice it to say, the unmanning argument of Isaacs, J. has been
specifically approved in Corporation of Nagpur and Hospital Mazdoor Sabha
in a different aspect.

44
 85. Now we revert to the more crucial part of Corporation of Nagpur . It is
meaningful to notice that in that 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. This department satisfies the other tests. The employees of
this department coming under the definition of ―employeesǁ under the Act
would certainly be entitled to the benefits of the Act.
86. The substantial break-through 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 organized activity implicit in a trade or business is shared by them. (See
p. 960, the entire organisational activity). 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 aspect, the crucial industrial relations like
wages, leave and other service conditions as well as characteristic business methods
(not motives) in running the enterprise, govern the conclusion. Presence of 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.
87. Two seminal guidelines of great moment flow from this decision: (1) the
primary and predominant activity test; and (2) 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., the sum-up: (SCR p. 961)
The result of the discussion may be summarized thus: (1) The definition of
―industryǁ 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

45
 power. (4) If a service rendered by an individual or private person would 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 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.
88. By these tokens, which find assent from us, the tax department of the local body is
‗industry‘. The reason is this:
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 ―industryǁ, it would be illogical to exclude the tax department from the
definition. While in the case of private individuals or firms services are paid in
cash or otherwise, in the 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 ―industryǁ, we should hold that the
employees of the tax department are also entitled to the benefits under the Act.
89. 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:
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 ―industryǁ in the Act.
90. Even the General Administration Department is ‗industry‘. Why?
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 services 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
―industryǁ and if so, it follows that this department, dealing predominantly
with industrial departments, is also an industry. Hence the employees of this
department are also entitled to the benefits of this Act.
91. 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.

46
 It is said that the functions of this department are statutory and no private
individual can discharge those statutory functions. The question is not whether
the discharge of certain functions by the Corporation have 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 is 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 b-‘hind it and the other is governed by terms of
contracts.
Be it noted that even co-operatives are covered by the learned Judge although we may
deal with that matter a little later.

92. The same Bench decided both Corporation of Nagpur and Hospital
Mazdoor Sabha . This latter case may be briefly considered now. It repeals the
profit motive and quid pro quo theory as having any bearing on the question. The
wider import of Section 2(/) is accepted but it expels essential ‗sovereign activities‘
from its scope.
93. It is necessary to note that the hospital concerned in that case was run by
Government for medical relief to the people. Nay more. It had a substantial
educational and training role.
94. A conspectus of the clauses has induced Gajendragadkar, J. to take note of the
impact of provisions regarding 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 ―industryǁ 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 disputeǁ
given by Section 2(k), of ―wagesǁ by Section 2(rr), ―workmanǁ by Section
2(s), and of ―employerǁ 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
inapplicable in interpreting the definition prescribed by Section 2(j).
The positive delineation of ‗industry‘ is set in these terms:
(A)s 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 services 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

47
 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).
95. The ‗rub with the ruling‘, if we may with great deference say so, begins when the
Court inhibits itself from effectuating the logical thrust of its own crucial ratio: (SCR p.
876)
(T)hough 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 used are given their widest meaning, all
services and all 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 ―serviceǁ 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
principle derived from the statute if it is not to be sublimation of subjective phobia,
rationalization of interests or judicialisation of non-juristic negatives. And this hunch,
in our respectful view, has been proved true not by 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
96. 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 [AIR 1962 SC 1080] case. Before us too, a focal
point of contest was as to 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 co-operation 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:

48
 When in the Hospital case this Court referred to the organisation of the
undertaking involving the co-operation of capital and labour or the employer
and his employees, it obviously meant the co-operation essential and
necessary/or 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.
97. 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 ―industryǁ 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 it is a dispute arising between capital and labour in
enterprises where capital and labour combine to produce commodities or to
render service. This essential basis would be absent in the case of liberal
professions. A person following a 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 ―industryǁ under Section 2(j).
98. Let us examine these two tests. In the sophisticated, subtle, complex,
assembly-line operations of modern enterprises, the test of ‗direct‘ and ‗indirect‘,
‗essential‘ and ‗inessential‘, will snap easily. In an American automobile
manufactory, everything from shipping iron ore into and shipping cars out of the vast
complex takes place with 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 tailor a direct
contributory?

49
 99. 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 home work 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 co-operation is an improvisation which, with great respect,
hardly impresses.

100. Indeed, Hidayatullah, C.J., in Gymkhana Club Employees’ Union [AIR

1968 SC 554] scouted the argument about direct nexus, making specific reference to
the Solicitors ‟ case:
(T)he service of a solicitor was regarded as individual depending upon his
personal qualifications and ability, to which the employees did not contribute
directly or essentially. Their contribution, it was held, had no direct or
essential nexus with the advice or services. In this way learned professions
were excluded.
To nail this essential nexus theory, Hidayatullah, C.J., argued:
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 organisation 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 a 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.
101. Although Gajendragadkar, J. in Solicitors‟ case (supra) and Hidayatullah, J.
in Gymkhana 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 on this part of the case which has been articulated in the
Gymkhana Club Employees’ Union 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, every one 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 anyone 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 01 liberal profession, for that sole reason, can self-
exclude himself from operation of the Act.
102. The professional immunity from labour‘s demand for social justice because
learned professions have a halo also stands on sandy foundation and, perhaps,

50
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 ethic, monopoly, prestige, power and profit.
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.
108. 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‘.
109. 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 round the individual
doctor, lawyer, teacher or auditor. This reputation and quality of special service being
of the essence, the co-operation of the workmen in this core activity of professional
offices is absent. The clerks 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
ethic and intellectual proficiency, their contribution being peripheral and low-grade,
with no relevance to the 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
materialize 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 organizes
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 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 distilled 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 or 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 ―professionǁ and ―professionalǁ are sociological contributions to the
pile. Anyway, in the sophisticated organization of expert services, all occupations
have central skills, an occupational code of ethics, a group culture, some occupational
authority, and 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

51
the members of the professions. Even the judicial profession or administrative
profession cannot escape the winds of social change. We may add that the modem
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. Even so, the widest
import may still self-exclude the little mofussil lawyer, the small rural medic or the
country engineer, even though a hired sweeper or factotum assistant may work with
him. 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 by
the co-operative operations of several specialists, juniors and seniors. Likewise the
ancillary services of competent stenographers, paralegal 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 or definitional angle. The
flood-gates of exemption from the obligations under the Act will be opened if
professions flow out of its scope.
110. Many callings may clamour to be regarded as liberal professions. In an age
when traditions have broken down and the old would 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.
111. The result of this discussion is that the Solicitors’ 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/of 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 01 single little assistant or attendant. The latter category is
more or less like personal avocation for livelihood taking some paid or part-time from
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 bla ksmith 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 in 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 candle-stick maker, with an assistant or without, does not fall within
the definition of industry. In regular industries, of course, even a few employees are

52
enough to bring them within Section 2(7). Otherwise automated industries will slip
through the net.
Education

We will now move on to a consideration of education as an industry. If the triple tests of

systematic activity, co-operation between employer and employee and production of
goods and services were alone to be applied, a University, a college, a research institute
or teaching institution will be an industry. But in University of Delhi [AIR 1963 SC
1873] 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 judgment that the employer-employee test was satisfied
and co-operation between the two was also present. Undoubtedly, education is a sublime
cultural service, technological training and personality-builder. A man 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 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 contend 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 spoiled by the
commercial implications and the raucous voices of workmen? Two reasons are given
to avoid the conclusion that imparting 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 Delhi , proceeded on
that assumption viz. that 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-

53
 operation of teachers, the omission of the whole class of teachers from
the definition prescribed by Section 2(s) has an important bearing and
significance in relation to the problem which we are considering. It
could 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 Section 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.
113. The second argument which appealed to the Court to reach its conclusion
is that:
―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
form 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 without its scope.

54
 114. 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 emphasise 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
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.
115. The Court was confronted by the Corporation of Nagpur 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
(T)he 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.
116. We dissent, with utmost deference, from these propositions and are
inclined to hold, as the Corporation of Nagpur held, that education is
industry, and as Isaacs, J. held, in the Australian case, that education is pre-
eminently service.
117. The actual decision in University of Delhi 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.
118. 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. 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

55
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.
119. 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
karamcharis of various hues. As the Corporation of Nagpur has effectively
ruled, these operations, viewed in severally or collectively, may be treated as
industry. It would be strange, indeed, if a university has 50 transport buses,
hiring drivers, conductors, cleaners and workshop technicians. How are they
to be denied the benefits of the Act, especially when their work is separable
from academic teaching, merely because the buses are owned by the same
corporate personality? We find, with all defence, little force in this process of
nullification of the industrial character of the University‘s multi-form
operations.
120. The next argument which has appealed to the Court in that 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 an orchestra group which 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
that field. For that very reason, Gandhiji and Dr Zakir Hussain propagated
basic education which used work as modus operandus for teaching. We have
hardly any hesitation in regarding education as an industry.
121. 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

56
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 industry
and nothing can stand in the way of that conclusion.
122. 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 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.
123. 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 hapless nests of campus (industrial) unrest.
Imaginary assumptions are experiments with untruth.
124. Our conclusion is that the University of Delhi case was wrongly
decided and that education can be and is, in its institutional form, an industry.
Are charitable institutions industries?
125. 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 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 organizational diversity and motivational dexterity.
125-A. If we mull over the major decisions, we get a hang of the basic
structure of ‗industry‘ in its legal anatomy. Bedrocked on the grundnorms, 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, organized systematically and employing workmen, is
scientific.
126. 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

57
share the 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?
127. All industries are organized, 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 co-operation 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 Safdarjung , submits that, ex hypothesi, charity
frustrates commerciality and thereby deprives it of the character of industry.
128. It is common ground that the first category of charities is disqualified
for exemption. If a business is run for production and or supply of goods and
services with an eye on profit, it is plainly an industry. The fact that the whole
or substantial part of the profits so earned is diverted for purely charitable
purposes does not affect the nature of the economic activity which involves
the co-operation 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.
129. The second species of charity is really an allotropic modification of
the first. If a kind-hearted businessman or high-minded industrialist or service-
minded operator hires employees like his non-philanthropic counterparts and,
in co-operation 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
hardwork, 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-a-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 him 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

58
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.
130. 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
handicraft 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 look closely into
the character of the enterprise. If employees are hired and their services are
rewarded by wages - whether on cottage industry or 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.
131. We now move on to economic activities and occupations of an
altruistic character falling under the third category.
132. 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 money‘s worth of work from employees. If such be the nature of
operations and employer-employee relations which 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,
judged by what other similar undertakings and commercial adventures 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 for 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 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

59
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 wage-less 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, 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 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.
Research
135. 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 from fabulously
rich. It has been said that his brain had the highest cash value in history for he

60
made the world vibrate with the miraculous discovery of recorded sound.
Unlike most inventors, he did not have to wail to get his reward in heaven; he
received it munificently on this gratified and grateful earth, thanks to
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 which funded the institute itself, it can be regarded as an
organisation, propelled by systematic activity, modelled on co-operation
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 profit-motive, are industries.
Clubs
137. Are clubs industries? The wide words used in Section 2(j) if applied
without rational limitations, may cover every bilateral activity even spiritual,
religious, domestic, conjugal, pleasurable or political. But functional
circumscriptions spring from the subject-matter and other cognate
considerations already set out early in this judgment. Industrial law, any law,
may insanely run amok if limitless lexical liberality were to innate expressions
into bursting point or proliferate odd judicial arrows which 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 arises from the exploitative potential latent in organized
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
defunctionally exceed this object. The question is whether in a club situation -
or of a co-operative 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 co-operation between employer and
employee is necessary, conflict between them is on the cards, be it a social
club, mutual benefit society, panjarapole, public service or professional office.
Tested on this touchstone, most clubs will fail to qualify for exemption. For
clubs - gentlemen‘s clubs, proprietory clubs, service clubs, investment clubs,
sports clubs, art clubs, military clubs or other brands of recreational
associations - 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 co-
operation, 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 price paid by way of subscriptions or bills charged.
The club life, the warm company, the enrichment of the spirits and freshening
of the mind are there. But these blessings do not contradict the co-existence of
an ‗industry‘ in the technical sense. Even tea-tasters, hired for high wages, or
commercial art troupes or games teams remunerated fantastically, enjoy

61
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 organization 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 organization.
138. The only ground to extricate clubs from the coils of industrial law
(except specific statutory provision) is absence of employer-employee co-
operation 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
needs and pleasures of 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 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 undefused
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 and answer the doubtful test of serving
the community. They are industry.
141. 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 Gymkhana or Cricket Club
of India which reached this 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 organize 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 scanvenger or multi-purpose attendant may sometimes exist.
He may be an employee. This marginal element does not transform a little
association into an industry. 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
the members‘ role is to enjoy. The small man‘s Nehru Club, Gandhi
Granthasala, Anna Manram, Netaji Youth Centre, Brother

62
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, 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 hundred 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.
143. The Madras Gymkhana Club , 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, 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
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 running solely by the self-help of the participants, is
not. Hidayatullah, C.J., in Gymkhana 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, and 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 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-a-vis the members would take place. In
other words, the circumstances 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 member‘s 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.

63
 144. Why is the club not an industry? It involves co-operation 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‘ clubǁ.
145. ‗This element‘? What element makes it analogous to trade? Profit
motive? No, says the learned Judge. Because it is a self-serving institution?
Yes? Not at all. For, if it is self-service then why the expensive establishment
and staff with high salary bills? It is plain as day-light that the club members
do nothing to produce the goods or services. They are rendered by employees
who work for wages. The members merely enjoy 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 membersǁ.
146. 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. A company belongs to the shareholders only; a co-
operative belongs to the members only; a firm of experts belongs to the
partners only. And yet, if they employ workmen with whose co-operation
goods and services are made available to a section of the community and the
operations are organised in the manner typical of 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 mattersǁ. We are
inclined to think that that just does not matter. The Gymkhana case, we
respectfully. hold, is wrongly decided.
147. The Cricket Club of India stands in a worse position. It is a huge
undertaking with activities wide-ranging, with big budgets, 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

64
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 co-operation
between employer and employees in this project. The plea of non-industry is
un-presentable and exclusion is possible only by straining law to snapping
point to salvage a certain class of socialite establishments. Presbyter is only
priest writ large. Club is industry manu brevi.
Co-operatives
Co-operative 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 co-operative enterprises deserve State encouragement the definition
cannot be distorted. Even if the society is worked by the 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. workers and workers or
between workers and employer. These societies - credit societies, marketing
co-operatives, producers‘ or consumers‘ societies or apex societies - are
industries.
148. Do credit unions, organised on a co-operative basis, scale the
definitional walls of industry? They do. There, a credit union, which was a co-
operative association which pooled the savings of small people and made
loans to its members at low interest, was considered from the point of view of
industry. Admittedly, they were credit unions incorporated as co-operative
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.
149. It is enough, therefore, if the activities carried on by credit unions can
accurately be described as incidental to industry or to the organized 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.
150. This was sufficient, in his view, to conclude that credit unions
constituted an industry under an Act which has resemblance to our own. In our
view, therefore, societies are industries.
The Safdarjung Hospital case
151. A sharp bend in the course of the law came when Safdarjung 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 our deviation from the decision in
Safdarjung.
152. Hidayatullah, C.J., considered the facts of the appeals, clubbed
together there and held that all the three institutions in the bunch of appeals

65
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 places 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.
153. 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. 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. 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 of the scope of industry.
154. Although the facts of the three appeals considered in Safdarjung
related only to hospitals with research and training component, the Bench
went extensively into a survey of the earlier precedents and crystallisation of
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 servicesǁ.
155. 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

66
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 servicesǁ 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.
156. 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 services as excluding professional
services. We have explained this position at some length elsewhere in this
judgment and do not feel the need to repeat. Nor are we convinced that
Gymkhana and Cricket Club of India are correctly decided. The learned
Judge placed accent on the non-profit making members‘ club as being outside
the pale of trade or industry.
We demur to this proposition.
157. Another intriguing reasoning in the judgment 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 senseǁ.
However, somewhat contrary to this reasoning we find, in the concluding part
of the judgment, emphasis on the non-profit making aspect of the institutions.
Equally puzzling is the reference to ―commercial senseǁ: what precisely does
this expression mean? It is interesting to note that the word ―commercialǁ 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 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 that case do not
follow. As a matter of fact, Hidayatullah, C.J., had in Gymkhana 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

67
necessarily commercial”. Indeed, while dealing with the reasoning in
Hospital Mazdoor Sabha 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 thereǁ. This facet suggests either 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 the judgment which 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 judgment 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-a-vis hospitals, Safdarjung was wrong and Hospital Mazdoor
Sabha was right.
158. Because of the problems of reconciliation of apparently contradictory
strands of reasoning in Safdarjung we find subsequent cases of this Court
striking different notes. In fact, one of us (Bhagwati, J.) in Indian Standards
Institution referred, even at the opening, to the baffling, perplexing question
which judicial ventures had not solved. We fully endorse the observations of
the Court in ISI:
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 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 to 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 a 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.
159. 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 Banerji which served as beacon
in later years - Ahmedabad Textile Research acted on it, Hospital
Mazdoor Sabha and Nagpur Corporation marched in its sheen. The law
shed steady light on industrial inter-relations and the country‘s tribunals and

68
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 . Indeed,
every great judgment 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 human-scape 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 tendencies to back-track.
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,
divers charities, disinclined to be charitable to their own weaker workmen,
made pious pleas and philanthropic appeals to be extricated. A procession of
decisions - Solicitors’ case, University of Delhi , Gymkhana Club ,
Cricket Club of India . Chartered Accountants climaxed by
Safdarjung , - carved out sanctuaries. The six-member 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. Pinjrapoles
sought salvation and succeeded in principle (Bombay Panjrapole), Chambers
of Commerce fought and failed, hospitals battled to victory [Dhanrajgirji
Hospital ], standards institute made a vain bid to extricate [ISI 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.
160. Banerji , amplified by Corporation of Nagpur , in effect met with
its Waterloo in Safdarjung . But in this latter case two voices could be heard
and subsequent rulings zigzagged and conflicted precisely because of this
built-in ambivalence. It behoves us, therefore, hopefully to abolish blurred
edges, illumine 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
quandary 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.
I
‗Industry‘, as defined in Section 2(j) and explained in Banerji (supra), has a wide
import.

69
 (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 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 e.g. making, on a large scale 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 the 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.
II
Although Section 2(j) uses words of the widest amplitude in its two limbs,
their meaning cannot be magnified to overreach itself.
(a) ‗Undertaking‘ must suffer a contextual and associational shrinkage
as explained in Banerji 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 the trade or business‘. All features, other
than the methodology of carrying on the activity viz. in organizing the co-
operation between employer and employee, may be dissimilar. It does not
matter, if on the employment terms there is analogy.
III
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 workmen, the range off 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-operatives 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

70
 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 undertakings
alone are exempt — not other generosity, compassion, developmental
passion or project.
IV
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 Delhi 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 Nagpur , 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.
V
We overrule Safdarjung. Solicitors’ case, Gymkhana , Delhi
University , Dhanrajgirji Hospital and other rulings whose ratio runs
counter to the principles enunciated above, and Hospital Mazdoor Sabha
is hereby rehabilitated.
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 re-structure the rather
clumsy, vapourous and tall-and-dwarf definition or tidy up the scheme
although judicial thesis and anti-thesis, 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 I.L.O. 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
the 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 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

71
 smaller Bench for disposal on the merits in accordance with the principles of
law herein laid down.

6. State of U.P. v. Jai Bir Singh (2005) 5 SCC 1

D.M. DHARMADHIKARI, J. - This present appeal along with other

connected cases has been listed before this Constitution Bench of five Judges
on a reference made by a Bench of three Hon‘ble Judges of this Court finding
an apparent conflict between the decisions of two Benches of this Court in the
cases of Chief Conservator of Forests v. Jagannath Maruti
Kondhare [(1996) 2 SCC 293] of three Judges and State of Gujarat v.
Pratamsingh Narsinh Parmar [(2001) 9 SCC 713] of two Judges.
2. On the question of whether ―Social Forestry Departmentǁ of State,
which is a welfare scheme undertaken for improvement of the environment,
would be covered by the definition of ―industryǁ 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 & Sewerage Board v. A.
Rajappa [(1978) 2 SCC 213] (shortly hereinafter referred to as Bangalore
Water Supply case). The Bench of three Judges in the case of Chief
Conservator of Forests v. Jagannath Maruti Kondhare based on the
decision of Bangalore Water Supply case came to the conclusion that
―Social Forestry Departmentǁ is covered by the definition of ―industryǁ
whereas the two-Judge Bench decision in State of Gujarat v.
Pratamsingh Narsinh Parmar took a different view.
3. 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 Supply , the present case along with the other
connected cases, in which correctness of the decision in the case of
Bangalore Water Supply is doubted, has been placed before this Bench.
4. Various decisions rendered by this Court prior to and after the decision
in Bangalore Water Supply on interpretation of the definition of the word
―industryǁ under the Industrial
Disputes Act, 1947 have been cited before us. It has been strenuously urged on
behalf of the employers that the expansive meaning given to the word
―industryǁ with certain specified exceptions carved out in the judgment of
Bangalore Water Supply is not warranted by the language used in the
definition clause. It is urged that the Government and its departments while
exercising its ―sovereign functionsǁ have been excluded from the definition
of ―industryǁ. On the question of ―what is sovereign functionǁ, there is no
unanimity in the different opinions expressed by the Judges in Bangalore
Water Supply 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 functionsǁ. To restrict
the meaning of ―sovereign functionsǁ to only specified categories of so-called
―inalienable functionsǁ like law and order, legislation, judiciary,
administration and the like is uncalled for. It is submitted that the definition of
―industryǁ given in the Act is, no doubt, wide but not so wide as to hold it to

72
include in it all kinds of ―systematic organised activitiesǁ undertaken by the
State and even individuals engaged in professions and philanthropic activities.

5. On behalf of the employers, it is also pointed out that there is no

unanimity in the opinions expressed by the Judges in Bangalore Water
Supply case on the ambit of the definition of ―industryǁ given in the Act.
Pursuant to the observations made by the Judges in their different opinions in
the judgment of Bangalore Water Supply 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
―industryǁ. The Act stands amended but the amended provision redefining
the word ―industryǁ 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 on the statute unenforced for a period now of more than 23 years.
6. 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
issuance of a notification, but the Amendment Act to the extent of its
substituted definition of ―industryǁ 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
Bangalore Water Supply case the legislature intervened and provided a
new definition of the word ―industryǁ with 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.
7. On behalf of the employees, learned counsel vehemently urged that the
decision in the case of Bangalore Water Supply 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 making a reference to a larger Bench
for its reconsideration. It is strenuously urged that upsetting the law settled by
Bangalore Water Supply is neither expedient nor desirable.
8. It is pointed out that earlier an attempt was made to seek enforcement of
the amended Act through this Court [see Aeltemesh Rein v. Union of
India [(1988) 4 SCC 54)]. 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.
9. 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 ―industryǁ
contained in Section 2(j) of the Act. We begin with a close examination of the

73
decision in the case of Bangalore Water Supply for considering whether a
reference to a larger Bench for reconsideration of that decision is required.

10. 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 ―industryǁ. After critically
examining the previous decisions, he has recorded his conclusions.
11. What is to be noted is that the opinion of Krishna Iyer, J. on his own
behalf and on behalf of Bhagwati and Desai, JJ. was only generally agreed to
by Beg, C.J. who delivered a separate opinion with his own approach on
interpretation of the definition of the word ―industryǁ. He agreed with the
conclusion that Bangalore Water Supply and Sewerage Board is an
―industryǁ and its appeal should be dismissed but he made it clear that since
the judgment was being delivered on his last working day which was a day
before the day he was to retire, he did not have enough time to go into a
discussion of the various judgments cited, particularly on the nature of
sovereign functions of the State and whether the activities in discharge of
those functions would be covered in the definition of ―industryǁ. What he
stated reads thus:
―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 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.ǁ
12. 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. See his observations contained in para 163:
―163. 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
Kesavananda Bharati case [(1973) 4 SCC 225] 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 here also inasmuch as the
Government has entered largely new fields of industry. Therefore,

74
 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.ǁ(emphasis supplied)

13. Since Beg, C.J. was to retire on 22-2-1978, the Bench delivered the
judgment on 21-2-1978 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
judgment was delivered i.e. as on 21-2-1978, had not prepared their separate
opinions. They only declared that they would deliver their separate opinions
later. This is clear from para 170 of the judgment which reads thus:
―170. 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.ǁ(emphasis supplied)
14. On the retirement of Beg, C.J., Chandrachud, J. took over as the Chief
Justice and he delivered his separate opinion on 7-4-1978 which was
obviously neither seen by Beg, C.J. nor dealt with by the other three Judges:
Krishna Iyer, Bhagwati and Desai, JJ. As can be seen from the 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
―industryǁ although of wide amplitude can be restricted to take out of its
purview certain sovereign functions of the State limited to its ―inalienable
functionsǁ and other activities which are essentially for self and spiritual
attainments. Chandrachud, C.J. seems to have projected a view that all kinds
of organised activities giving rise to employer and employee relationship are
covered by the wide definition of ―industryǁ and its scope cannot be restricted
by identifying and including certain types of industries and leaving some other
types impliedly outside its purview.
15. 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
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.
16. In the dissenting opinion of the two Judges, the definition covers only such
activities
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 State of Bombay v. Hospital Mazdoor Sabha 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 mannerǁ to exclude some callings of services or

75
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 collocation 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 v.
Hospital Mazdoor Sabha means that, when two or more words
which are susceptible of analogous meaning are coupled together they
are understood to be used in their 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 judgment, 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 professions 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 lines 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.
advice 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.ǁ
17. The Judges delivered different opinions in the case of Bangalore
Water Supply at different points of time and in some cases without going
through or having an opportunity of going through the opinions of 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 intervenes and clarifies the legal position
by simply amending the definition of
―industryǁ. The legislature did respond by amending the definition of
―industryǁ 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 Water Supply case as well.

76
 18. Krishna Iyer, J. himself, who delivered the main judgment in
Bangalore Water Supply 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 ―industryǁ is only a workable solution until a more
precise definition is provided by the legislature. See the following
observations:
―2. … Our judgment here has no pontifical flavour but seeks 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.ǁ(emphasis added)
It is to be noted further that in the order of reference made to the seven-
Judge Bench in Bangalore Water Supply and Sewerage Board 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.ǁ(emphasis supplied)

19. In the separate opinion of other Hon‘ble Judges in Bangalore Water

Supply case similar observations have been made by this Court to give some
precision to the very wide definition of ―industryǁ. It was an exercise done
with the hope of a suitable legislative change on the subject which all the

77
Judges felt was most imminent and highly desirable. See the following
concluding remarks:
―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.ǁ
20. The separate opinion of Beg, C.J. has the same refrain and he also
observes that the question can be solved only by more satisfactory legislation.
Chandrachud, C.J. (as he then was) in his separate opinion delivered on 7-4-
1978 concurred partly but went a step further in expanding the definition of
―industryǁ. 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.ǁ(emphasis added)
21. The dissenting opinion of Justice Jaswant Singh 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 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 aforesaid term rendering it necessary for
larger Benches of this Court to be constituted which are driven to the

78
 necessity of evolving a working formula to cover particular
cases.ǁ(emphasis added)
The above observations contained in the dissenting view of Jaswant Singh,
J. have proved prophetic. The legislature has intervened and amended the
definition of ―industryǁ 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 judgment of Bangalore Water Supply case rendered
as far back as in the year 1978.
22. In the case of Coir Board v. Indira Devai P.S. [(1998) 3 SCC
259], a two-Judge Bench of this Court speaking through Sujata Manohar, J.
surveyed all previous decisions of this Court including the seven-Judge Bench
decision in Bangalore Water Supply 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 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.
25. We do not 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 .ǁ
23. When the matter was listed before a three-Judge Bench [in the case of
Coir Board v. Indira Devai P.S., (2000) 1 SCC 224] the request for
constituting a larger Bench for reconsideration of the judgment in Bangalore
Water Supply case was refused both on the ground 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
Bangalore Water Supply 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 Coir Board
v. Indira Devai P.S. reads thus:

79
 ―1. We have considered the order made in Civil Appeals Nos.
1720-21 of 1990. The judgment in Bangalore Water Supply &
Sewerage Board v. A. Rajappa was delivered almost two decades
ago and the law has since been amended pursuant to that judgment
though the date of enforcement of the amendment has not been
notified.
2. The judgment delivered by seven learned Judges of this Court in
Bangalore Water Supply case does not, in our opinion, require
any reconsideration on a reference being made by a two-Judge Bench
of this Court, which is bound by the judgment of the larger Bench.
3. The appeals, shall, therefore, be listed before the appropriate
Bench for further proceedings.ǁ
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 this Court subsequently in the case of Central Board of Dawoodi
Bohra Community v. State of Maharashtra [(2005) 2 SCC 673] 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 Bangalore Water Supply case.
24. In any case, no such inhibition limits the power of this Bench of five
Judges which has been constituted on a reference made due to apparent
conflict between judgments of two Benches of this Court. As has been stated
by us above, the decision in Bangalore Water Supply is not a unanimous
decision. Of the five Judges who constituted the majority, three have given a
common opinion but two others have given 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 in Bangalore Water Supply
case.
25. In such a situation, it is difficult to ascertain whether the opinion of
Krishna Iyer, J. given on his own behalf and on behalf of Bhagwati 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 ―industryǁ 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.
26. Shri Andhyarujina, learned Senior Counsel appearing for M/s National
Remote Sensing Agency, which is an agency constituted by the Government
in discharge of its sovereign functions dealing with defence, research, atomic
energy and space falling in the excluded category in sub-clause (6) of the
amended definition of ―industryǁ in Section 2(j), relies on the following
decisions in support of his submission that where the unamended definition in
the Act is ambiguous and has been interpreted by the Court not exhaustively

80
but tentatively until the law is amended, the amendment actually brought into
the statute can be looked at for construction of the unamended provisions.
27. Shri Andhyarujina further argues that by the Industrial Disputes
(Amendment) Act of 1982, not only was the definition of ―industryǁ 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, appointǁ. It is
submitted that either the whole of the Act should have been notified for
enforcement or not at all. The Amendment Act does not contemplate a
situation where the Central Government may notify only some of the
provisions of the Amendment Act for enforcement and withhold from
enforcement other provisions of the Amendment Act. 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: Statutory Interpretation , 3rd
Edn. 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 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. Secy.
of State for the Home Deptt., ex p Fire Brigades Union [(1995)1
All ER 888] which was upheld by the House of Lords in the decision reported
in the same volume. 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 Appeal held:
―That Section 171(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 unlawful.ǁ
28. Senior Advocates Ms Indira Jaising and Mr Colin Gonsalves, counsel
appearing for the employees, very vehemently oppose the prayer made on
behalf of the employers for referring the matter to a larger Bench for
reconsideration of the decision in Bangalore Water Supply case. It is
submitted that even though the definition in the Industrial Disputes Act has

81
been amended in 1982, it has not been brought into force for more than 23
years and the reasons disclosed to the Court, when the enforcement of the
Amendment Act was sought in the case of Aeltemesh Rein v. Union of
India 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
Amendment Act which provided a new and restrictive definition of
―industryǁ. Learned counsel on behalf of the employees relied on A.K. Roy
v. Union of India [(1982) 1 SCC 271] 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 are conditions suitable to take out of the purview of the definition of
―industryǁ certain categories of ―industriesǁ in which the employees have
been provided separate forums for redressal of their industrial disputes.
29. 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 before us seeking issuance of mandamus to the
Government to publish notification in the Official
Gazette for enforcement of the amended definition of ―industryǁ 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 ―industryǁ in
Section 2(j) of the Act as it stands in its original form.
30. On behalf of the employees, it is submitted that pursuant to the
decision in Bangalore Water Supply case although the legislature
responded by amending the definition of
―industryǁ 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 redressal of their grievances. The
unamended definition of industry, as interpreted by Bangalore Water
Supply case has 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 ―definitionǁ could be made either by the legislature
or by the Indian Labour Organisation in its report.
31. After hearing learned counsel 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 ―industryǁ 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 Bangalore Water Supply & Sewerage Board .
The larger Bench will have to necessarily go into all legal questions in all
dimensions and depth. We briefly indicate why we find justification for a
reference although it is stiffly opposed on behalf of the employees.
32. In the judgment of Bangalore Water Supply, Krishna Iyer, J.
speaking for himself and on behalf of the other two Hon‘ble Judges agreeing

82
with him proceeded to deal with the interpretation of the definition of
―industryǁ 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.”
33. 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 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 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 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 both of employers, employees and in a
democratic society, people, who are the ultimate beneficiaries of the industrial
activities, have to be kept in view.
34. 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 judgment by Krishna Iyer, J. ―the court should be
guided not by ‗Maxwell‘ but ‗Gandhi‘ who advocated 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‘.ǁ 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.

35. In the case of Coir Board-I, Sujata passing an order of reference to the
larger
Bangalore Water Supply & Sewerage Board
―19. 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 & Sewerage Board it is necessary

that the decision in Bangalore Water Supply & Sewerage
Board 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

83
 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.ǁ
The abovequoted 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 in 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 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. 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. An over-expansive interpretation of the
definition of ―industryǁ might be a deterrent to private enterprise in India
where public employment opportunities are scarce. The people should,
therefore, be encouraged towards self-employment. To embrace within the
definition of ―industryǁ even liberal professions 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
necessarily, some employment is generated, that should not expose them to the
rigors 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.

36. If we adopt an ideological or philosophical approach, we would be

treading on the wrong path against which learned Shri Justice Krishna Iyer

84
himself recorded a caution in his inimitable style thus: [Bangalore Water
Supply case]
―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 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 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 judgment of legislative bodies‘.ǁ (emphasis in original)
37. 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.
38. We also wish to enter a caveat on confining ―sovereign functionsǁ to
the traditional so described as ―inalienable functionsǁ comparable to those
performed by a monarch, a ruler or a non-democratic government. The learned
Judges in Bangalore Water Supply & Sewerage Board case seem to
have confined only such sovereign functions outside the purview of
―industryǁ which can be termed strictly as constitutional functions of the
three wings of the State i.e. executive, legislature and judiciary. The concept
of sovereignty in a constitutional democracy is different from the traditional
concept of sovereignty which is confined to ―law and orderǁ, ―defenceǁ,
―law-makingǁ and ―justice dispensationǁ. 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 ―industryǁ. 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.
39. In response to Bangalore Water Supply & Sewerage Board
case Parliament intervened and substituted the definition of ―industryǁ by
including within its meaning some activities of the Government and excluding
some other specified governmental activities and
―public utility servicesǁ 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 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 ―industryǁ. The legislature should be allowed greater freedom to
come forward with a more comprehensive legislation to meet the demands of

85
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 ―industryǁ in Bangalore Water
Supply & Sewerage Board case need to be removed. The experience of
the working 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.
40. The word ―industryǁ seems to have been redefined under the
Amendment Act keeping in view the judicial interpretation of the word
―industryǁ in the case of Bangalore Water Supply . Had there been no
such expansive definition of ―industryǁ given in Bangalore Water
Supply 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 ―industryǁ in
Bangalore Water Supply 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.
41. In Bangalore Water Supply 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 that keeping in view the other provisions of the Act
and words used in the definition clause, although ―profit motiveǁ is
irrelevant, in order to encompass the activity within the word ―industryǁ, the
activity must be ―analogous to trade or business in a commercial senseǁ. We
also agree that the mere enumeration of ―public utility servicesǁ in Section
2(n) read with the First Schedule should not be held decisive. Unless the
public utility service answers the test of it being an ―industryǁ 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 ―industryǁ. 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: (SCC p.746, para 29)
―29. 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.ǁ

86
 The decision in the case of Safdarjung Hospital was a unanimous
decision of all the 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, distribution
and consumption of wealth and the production and availability of
material 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.ǁ(emphasis supplied)
The six Judges unanimously upheld the observations in Gymkhana Club
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 an
undertaking resulting in material goods or material services.ǁ
42. In construing the definition clause and determining its ambit, one has
not to lose sight of the fact that in activities like hospitals and education,
concepts like right of the workers to go on ―strikeǁ or the employer‘s right to
―close downǁ and ―lay offǁ are not contemplated because they are services
in which the motto is ―service to the communityǁ. If the 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.
43. We are respectfully inclined to agree with the observations of Shri
Justice P.B. Gajendragadkar in the case of Harinagar Cane Farm :
―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.ǁ
44. We conclude agreeing with the conclusion of the Hon‘ble Judges in the
case of
Hospital Mazdoor Sabha :
―[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.ǁ(emphasis supplied)
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-book.
45. We do not consider it 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

87
 amended definition of ―industryǁ 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.
46. 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 .

7. Workmen of Dimakuchi Tea Estate v . Dimakuchi Tea Estate (AIR 1958

SC 353 : 1958 SCR 1156)

S.K. DAS, J. - 2. The appellants before us are the workmen of the

Dimakuchi Tea Estate represented by the Assam Chah Karmachari Sangha,
Dibrugarh. The respondent is the management of the Dimakuchi tea estate,
District Darrang in Assam. One Dr K.P. Banerjee was appointed Assistant
Medical Officer of the Dimakuchi tea estate with effect from November 1,
1950. He was appointed subject to a satisfactory medical report and on
probation for three months. It was stated in his letter of appointment: ―While
you are on probation or trial, your suitability for permanent employment will
be considered. If during the period of probation you are considered unsuitable
for employment, you will receive seven days‘ notice in writing terminating
your appointment. If you are guilty of misconduct, you are liable to instant
dismissal. At the end of the period of probation, if you are considered suitable,
you will be confirmed in the garden‘s service.ǁ In February 1951 Dr Banerjee
was given an increment of Rs 5 per mensem, but on April 21, Dr Banerjee
received a letter from one Mr Booth, Manager of the tea estate, in which it was
stated: ―It has been found necessary to terminate your services with effect
from the 22nd instant. You will of course receive one month‘s salary in lieu of
notice.ǁ As no reasons were given in the notice of termination, Dr Banerjee
wrote to the Manager to find out why his services were being terminated. To
this Dr Banerjee received a reply to this effect: ―The reasons for your
discharge are on the medical side, which are outside my jurisdiction, best
known to Dr Cox but a main reason is because of the deceitful manner in
which you added figures to the requirements of the last medical indent after it
had been signed by Dr Cox, evidence of which is in my hands.ǁ

(O)n December 23, 1953, the Government of Assam published a

notification in which it was stated that whereas an industrial dispute had arisen
between the appellants and the respondent herein and whereas it was
expedient that the dispute should be referred for adjudication to a tribunal
constituted under Section 7 of the Act, the Governor of Assam was pleased to
refer the dispute to Shri U.K. Gohain, Additional District and Sessions Judge,
under clause (c) of sub-Section (1) of Section 10 of the Act. The dispute
which was thus referred to the Tribunal was described in these terms:
―(i) Whether the management of Dimakuchi Tea Estate was
justified in dismissing Dr K.P. Banerjee, A.M.O?

88
 (ii) If not, is he entitled to reinstatement or any other relief in lieu
thereof?ǁ
6. (T)he question whether Dr K.P. Banerjee is or is not a workman within
the meaning of the Act is no longer open to the parties and we must proceed
on the footing that Dr K.P. Banerjee was not a workman within the meaning
of the Act and then decide the question if the dispute in relation to the
termination of his service still fell within the scope of the definition of the
expression ―industrial disputeǁ in the Act.
8. (T)he question is whether a dispute in relation to a person who is not a
workman within the meaning of the Act still falls within the scope of the
definition clause in Section 2(k). If we analyse the definition clause it falls
easily and naturally into three parts: first, there must be a dispute or difference;
second, the dispute or difference must be between employers and employers,
or between employers and workmen or between workmen and workmen;
third, the dispute or difference must be connected with the employment or
non-employment or the terms of employment or with the conditions of labour,
of any person. The first part obviously refers to the factum of a real or
substantial dispute; the second part to the parties to the dispute; and the third
to the subject-matter of that dispute. That subject-matter may relate to any of
two matters - (i) employment or non-employment, and (ii) terms of
employment or conditions of labour, of any person. On behalf of the
appellants it is contended that the conditions referred to in the first and second
parts of the definition clause are clearly fulfilled in the present case, because
there is a dispute or difference over the termination of service of Dr K.P.
Banerjee and the dispute or difference is between the employer, namely, the
management of the Dimakuchi tea estate on one side, and its workmen on the
other, even taking the expression ―workmenǁ in the restricted sense in which
that expression is defined in the Act. The real difficulty arises when we come
to the third part of the definition clause. Learned counsel for the appellants has
submitted that the expression ―of any personǁ occurring in the third part of
the definition clause is an expression of very wide import and there are no
reasons why the words ―any personǁ should be equated with ―any
workmanǁ, as the tribunals below have done. The argument is that inasmuch as
the dispute or difference between the employer and the workmen is connected
with the non-employment of a person called Dr K.P. Banerjee (even though he
was not a workman), the dispute is an industrial dispute within the meaning of
the definition clause. At first sight, it does appear that there is considerable
force in the argument advanced on behalf of the appellants. It is rightly
pointed out that the definition clause does not contain any words of
qualification or restriction in respect of the expression ―any personǁ occurring
in the third part, and if any limitations as to its scope are to be imposed, they
must be such as can be reasonably inferred from the definition clause itself or
other provisions of the Act.
9. A little careful consideration will show, however, that the expression
―any personǁ 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 non-employment 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-

89
employee relation never existed or can never possibly exist cannot be the
subject-matter of a dispute between employers and workmen.
11. Thus, an examination of the salient provisions of the Act shows that
the principal objects of the Act are -
(1) the promotion of measures for securing and preserving amity and
good relations between the employer and workmen;
(2) an investigation and settlement of industrial disputes, between
employers and employers, employers and workmen, or workmen and
workmen, with a right of representation by a registered trade union or
federation of trade unions or association of employers or a federation of
associations of employers;
(3) prevention of illegal strikes and lock-outs;
(4) relief to workmen in the matter of lay-off and retrenchment; and
(5) collective bargaining.
The Act is primarily meant for regulating the relations of employers and
workmen — past, present and future. It draws a distinction between
―workmenǁ as such and the managerial or supervisory staff, and confers
benefit on the former only.
12. It is in the context of all these provisions of the Act that the definition
clause in Section 2(k) has to be interpreted. It seems fairly obvious to us that if
the expression ―any personǁ is given its ordinary meaning, then the definition
clause will be so wide as to become inconsistent not merely with the objects
and other provisions of the Act, but also with the other parts of that very
clause. Let us see how the definition clause works if the expression
―any personǁ occurring therein is given its ordinary meaning. The workmen
may then raise a dispute about a person with whom they have no possible
community of interest; they may raise a dispute about the employment of a
person in another industry or a different establishment - a dispute in which
their own employer is not in a position to give any relief, in the matter of
employment or non-employment or the terms of employment or conditions of
labour of such a person. In order to make our meaning clear, we may take a
more obvious example. Let us assume that for some reason or other the
workmen of a particular industry raise a dispute with their employer about the
employment or terms of employment of the District Magistrate or District
Judge of the district in which the industry is situate. It seems clear to us that
though the District Magistrate or District Judge undoubtedly comes within the
expression ―any personǁ occurring in the definition clause, a dispute about his
employment or terms of employment is not an industrial dispute; firstly,
because such a dispute does not come within the scope of the Act, having
regard to the definition of the words ―employerǁ, ―industryǁ, and
―workmanǁ and also to other provisions of the Act; secondly, there is no
possible community of interest between the District Magistrate or District
Judge on the one hand and the disputants, employer and workmen, on the
other. The absurd results that will follow such an interpretation have been
forcefully expressed by Chagla, C.J., in his decision in Narendra Kumar
Sen v. All India Industrial Disputes (Labour Appellate) Tribunal
[(1953) 55 Bom LR 125]:
―If ‗any person‘ were to be read as an expression without any
limitation and qualification whatsoever, then we must not put even any

90
 territorial restriction on that expression. In other words, it would be
open to the workmen not only to raise a dispute with regard to the
terms of employment of persons employed in the same industry as
themselves, not only to raise a dispute with regard to the terms of
employment in corresponding or similar industries, not only a dispute
with regard to the terms of employment of people employed in our
country, but the terms of employment of any workman or any labourer
anywhere in the world. The proposition has only to be stated in order
to make one realise how entirely untenable it is.ǁ
Take, for example, another case where the workmen raise an objection to the
salary or remuneration paid to a Manager or Chief Medical Officer by the
employer but without claiming any benefit for themselves, and let us assume
that a dispute or difference arises between the workmen on one side and the
employer on the other over such an objection. If such a dispute comes within
the definition clause and is referred to an Industrial Tribunal for adjudication,
the parties to the dispute will be the employer on one side and his workmen on
the other. The Manager or the Chief Medical Officer cannot obviously be a
party to the dispute, because he is not a ―workmanǁ within the meaning of the
Act and there is no dispute between him and his employer. That being the
position, the award, if any, given by the Tribunal will be binding, under clause
(a) of Section 18, on the parties to the dispute and not on the Manager or the
Chief Medical Officer. It is extremely doubtful if in the circumstances stated
the Tribunal can summon the Manager or the Chief Medical Officer as a party
to the dispute, because there is no dispute between the Manager or Chief
Medical Officer on one aide and his employer on the other. Furthermore,
Section 36 of the Act does not provide for representation of a person who is
not a party to the dispute. If, therefore, an award is made by the Tribunal in
the case which we have taken by way of illustration, that award, though
binding on the employer, will not be binding on the Manager or Chief Medical
Officer. It should be obvious that the Act could not have contemplated an
eventuality of this kind, which does not promote any of the objects of the Act,
but rather goes against them.
13. When these difficulties were pointed out to learned counsel for the
appellants, he conceded that some limitations must be put on the width of the
expression ―any personǁ occurring in the definition clause. He formulated
four such limitations:
(1) The dispute must be a real and substantial one in respect of which
one of the parties to the dispute can give relief to the other; e.g. when the
dispute is between workmen and employer, the employer must be in a
position to give relief to the workmen. This, according to learned counsel
for the appellants, will exclude those cases in which the workmen ask for
something which their employer is not in a position to give. It would also
exclude mere ideological differences or controversies.
(2) The industrial dispute if raised by workmen must relate to the
particular establishment or part of establishment in which the workmen are
employed so that the definition clause may be consistent with Section 18
of the Act.
(3) The dispute must relate to the employment, non-employment or the
terms of employment or with the conditions of labour of any person, but

91
 such person must be an employee discharged or in service or a candidate
for employment. According to learned counsel for the appellants, the
person about whom the dispute has arisen, need not be a workman within
the meaning of the Act, but he must answer to the description of an
employee, discharged or in service, or a candidate for employment.
(4) The workmen raising the dispute must have a nexus with the
dispute, either because they are personally interested or because they have
taken up the cause of another person in the general interest of labour
welfare. The further argument of learned counsel for the appellants is that
even imposing the aforesaid four limitations on the width of the expression
―any personǁ occurring in the definition clause, the dispute in the present
case is an industrial dispute within the meaning of Section 2(k) of the Act,
because (1) the employer could give relief in the matter of the termination
of service of Dr K.P. Banerjee,
(2) Dr K.P. Banerjee belonged to the same establishment, namely, the same
tea garden,
(3) the dispute related to a discharged employee (though not a workman)
and (4) the workmen raising the dispute were vitally interested in it by
reason of the fact that Dr Banerjee (it is stated) belonged to their trade
union and the dismissal of an employee without the formulation of a
charge and without giving him an opportunity to meet any charge was a
matter of general interest to all workmen in the same establishment.
14. We now propose to examine the question whether the limitations
formulated by learned counsel for the appellants are the only true limitations
to be imposed with regard to the definition clause. In doing so we shall also
consider what is the true scope and effect of the definition clause and what are
the correct tests to be applied with regard to it. We think that there is no real
difficulty with regard to the first two limitations. They are, we think, implicit
in the definition clause itself. It is obvious that a dispute between employers
and employers, employers and workmen, or between workmen and workmen
must be a real dispute capable of settlement or adjudication by directing one of
the parties to the dispute to give necessary relief to the other. It is also obvious
that the parties to the dispute must be directly or substantially interested
therein, so that if workmen raise a dispute, it must relate to the establishment
or part of establishment in which they are employed. With regard to limitation
(3), while we agree that the expression ―any personǁ cannot be completely
equated with ―any workmanǁ as defined in the Act, we think that the
limitation formulated by learned counsel for the appellants is much too widely
stated and is not quite correct. We recognise that if the expression ―any
personǁ means ―any workmanǁ within the meaning of the Act, then it is
difficult to understand why the legislature instead of using the expression
―any workmanǁ used the much wider expression ―any personǁ in the third
part of the definition clause. The very circumstance that in the second part of
the definition clause the expression used is
―between employers and workmen or between workmen and workmenǁ
while in the third part the expression used is ―any personǁ indicates that the
expression ―any personǁ cannot be completely equated with ―any workmanǁ.
The reason for the use of the expression ―any personǁ in the definition clause

92
is, however, not far to seek. The word ―workmanǁ as defined in the Act
(before the amendments of 1956) included, for the purposes of any
proceedings under the Act in relation to an industrial dispute, a workman
discharged during the dispute. This definition corresponded to Section 2(j) of
the old Trade Disputes Act, 1929 except that the words ―including an
apprenticeǁ were inserted and the words ―industrial disputeǁ were substituted
for the words ―trade disputeǁ. It is worthy of note that in the Trade Disputes
Act, 1929, the word ―workmanǁ meant any person employed in any trade or
industry to do any skilled or unskilled manual or clerical work for hire or
reward. It is clear enough that prior to 1956 when the definition of
―workmanǁ in the Act was further widened to include a person dismissed,
discharged or retrenched in connection with, or as a consequence of the
dispute or whose dismissal, discharge or retrenchment led to the dispute, a
workman who had been discharged earlier and not during the dispute was not
a workman within the meaning of the
Act. If the expression ―any personǁ in the third part of the definition clause
were to be strictly equated with ―any workmanǁ, then there could be no
industrial dispute, prior to 1956, with regard to a workman who had been
discharged earlier than the dispute, even though the discharge itself had led to
the dispute. That seems to be the reason why the legislature used the
expression ―any personǁ in the third part of the definition clause so as to put
it beyond any doubt that the non-employment of such a dismissed workman
was also within the ambit of an industrial dispute. There was a wide gap
between a ―workmanǁ and an ―employeeǁ under the definition of the word
―workmanǁ in Section 2(s) as it stood prior to 1956; all existing workmen
were no doubt employees; but all employees were not workmen. The
supervisory staff did not come within the definition. The gap has been reduced
to some extent by the amendments of 1956; part of the supervisory staff (who
draw wages not exceeding five hundred rupees per mensem) and those who
were otherwise workmen but were discharged or dismissed earlier have also
come within the definition. If and when the gap is completely bridged,
―workmenǁ will be synonymous with ―employeesǁ, whether engaged in any
skilled or unskilled manual, supervisory, technical or clerical work etc. But till
the gap is completely obliterated, there is a distinction between workmen and
non-workmen and that distinction has an important bearing on the question
before us. Limitation (3) as formulated by learned counsel for the appellants
ignores the distinction altogether and equates ―any personǁ with ―any
employeeǁ - past, present or future: this we do not think is quite correct or
consistent with the other provisions of the Act. The Act avowedly gives a
restricted meaning to the word ―workmanǁ and almost all the provisions of
the Act are intended to confer benefits on that class of persons who generally
answer to the description of workmen. The expression ―any personǁ in the
definition clause means, in our opinion, a person in whose employment, or
non-employment, or terms of employment, or conditions of labour the
workmen as a class have a direct or substantial interest — with whom they
have, under the scheme of the Act, a community of interest. Our reason for so
holding is not merely that the Act makes a distinction between workmen and
non-workmen, but because a dispute to be a real dispute must be one in which

93
the parties to the dispute have a direct or substantial interest. Can it be said
that workmen as a class are directly or substantially interested in the
employment, non-employment, terms of employment or conditions of labour
of persons who belong to the supervisory staff and are, under the provisions of
the Act, non-workmen on whom the Act has conferred no benefit, who cannot
by themselves be parties to an industrial dispute and for whose representation
the Act makes no particular provision? We venture to think that the answer
must be in the negative. Limitation (4) formulated by learned counsel for the
appellants is also too generally stated. We recognise that solidarity of labour
or general interest of labour welfare may furnish, in some cases, the necessary
nexus of direct or substantial interest in a dispute between employers and
workmen, but the principle of solidarity of the labour movement or general
welfare of labour must be based on or correlated to the principle of community
of interest; the workmen can raise a dispute in respect of those persons only in
the employment or non-employment or the terms of employment or the
conditions of labour of whom they have a direct or substantial interest. We
think that Chagla, C.J., correctly put the crucial test when he said in
Narendra Kumar Sen v. All India Industrial Disputes ( Labour
Appellate ) Tribunal :
―Therefore, when Section 2(k) speaks of the employment or non-
employment or the terms of employment or the conditions of labour of
any person, it can only mean the employment or non-employment or
the terms of employment or the conditions of labour of only those
persons in the employment or non-employment or the terms of
employment or with the conditions of labour of whom the workmen
themselves are directly and substantially interested. If the workmen
have no direct or substantial interest in the employment or non-
employment of a person or in his terms of employment or his
conditions of labour, then an industrial dispute cannot arise with
regard to such person.ǁ

19. More in point is the decision of the Full Bench of the Labour Appellate
Tribunal in a number of appeals reported in 1952 Labour Appeal Cases, p.
198, where the question now before us arose directly for decision. The same
question arose for decision before the All India Industrial Tribunal (Bank
Disputes) and the majority of members (Messrs. K.C. Sen and J.N. Majumdar)
expressed the view that a dispute between employers and workmen might
relate to employment or non-employment or the terms of employment or
conditions of labour of persons who were not workmen, and the words ―any
personǁ used in the definition clause were elastic enough to include an officer,
that is, a member of the supervisory staff. The majority view will be found in
Chapter X of the Report. The minority view was expressed by Mr N.
Chandrasekhara Aiyar, who said:
―It is fairly clear to my mind that ‗any person‘ in the Act means
any one who belongs to the employer class or the workmen class and
the cases in whose favour or against whom can be said to be
adequately presented by the group or category of persons to which he
belongs.

94
 As stated already it should be remembered that the cases relied
upon for the view that ‗any person‘ may mean others also besides the
workmen were all cases relating to workmen. They were discharged or
dismissed workmen and when their cases were taken up by the
Tribunal the point was raised that they had ceased to be workmen and
were therefore outside the scope of the Act. This argument was
repelled.
In my opinion, there is no justification for treating such cases as
authorities for the wider proposition that a valid industrial dispute can
be raised by workmen about the employment or non-employment of
someone else who does not belong and never belonged to their class or
category.
My view therefore is that the Act does not apply to cases of non-
workmen, or officers, if they may be so called.ǁ
Both these views as also other decisions of High Courts and awards of
Industrial Tribunals, were considered by the Full Bench of the Labour
Appellate Tribunal and the Chairman of the Tribunal (Mr J.N. Majumdar)
acknowledged that his earlier view was not correct and expressed his opinion,
concurred in by all the other members of the Tribunal, at p. 210 -
―I am, therefore, of opinion that the expression ‗any person‘ has
to be interpreted in terms of ‗workman‘. The words ‗any person‘
cannot have, in my opinion, their widest amplitude, as that would
create incongruity and repugnancy in the provisions of the Act. They
are to be interpreted in a manner that persons, who would come within
that expression, can at some stage or other, answer the description of
workman as defined in the Act.ǁ
23. To summarise. Having regard to the scheme and objects of the Act,
and its other provisions, the expression ―any personǁ in Section 2(k) of the
Act must be read subject to such limitations and qualifications as arise from
the context; the two crucial limitations are (1) the dispute must be a real
dispute between the parties to the dispute (as indicated in the first two parts of
the definition clause) so as to be capable of settlement or adjudication by one
party to the dispute giving necessary relief to the other, and (2) the person
regarding whom the dispute is raised must be one in whose employment, non-
employment, terms of employment, or conditions of labour (as the case may
be) the parties to the dispute have a

direct or substantial interest. In the absence of such interest the dispute cannot
be said to be a real dispute between the parties. Where the workmen raise a
dispute as against their employer, the person regarding whose employment,
non-employment, terms of employment or conditions of labour the dispute is
raised need not be, strictly speaking, a ―workmanǁ within the meaning of the
Act but must be one in whose employment, non-employment, terms of
employment or conditions of labour the workmen as a class have a direct or
substantial interest.
24. In the case before us Dr K.P. Banerjee was not a ―workmanǁ. He
belonged to the medical or technical staff - a different category altogether
from workmen. The appellants had no direct, nor substantial interest in his
employment or non-employment, and even assuming that he was a member of

95
 the same Trade Union, it cannot be said, on the tests laid down by us, that the
dispute regarding his termination of service was an industrial dispute within
the meaning of Section 2(k) of the Act.
The result, therefore, is that the appeal fails and is dismissed.

8. Municipal Corporation of Delhi v . Female Workers (Muster Roll)

(AIR 2000 SC 1274)

S. SAGHIR AHMAD, J. – Female workers (muster roll), engaged by the

Municipal Corporation of Delhi (for short ―the Corporationǁ), raised a
demand for grant of maternity leave which was made available only to regular
female workers but was denied to them on the ground that their services were
not regularised and, therefore, they were not entitled to any maternity leave.
Their case was espoused by the Delhi Municipal Workers Union (for short
―the Unionǁ) and, consequently, the following question was referred by the
Secretary (Labour), Delhi Administration to the Industrial Tribunal for
adjudication:
―Whether the female workers working on muster roll should be given
any maternity benefit? If so, what directions are necessary in this
regard?ǁ
2. The Union filed a statement of claim in which it was stated that the
Municipal Corporation of Delhi employs a large number of persons including
female workers on muster roll and they are made to work in that capacity for
years together though they are recruited against the work of perennial nature.
It was further stated that the nature of duties and responsibilities performed
and undertaken by the muster-roll, which have been working with the
Municipal Corporation of Delhi for years together, have to work very hard in
construction projects and maintenance of roads including the work of digging
trenches etc. but the Corporation does not grant any maternity benefit to
female workers who are required to work even during the period of mature
pregnancy or soon after the delivery of the child. It was pleaded that the
female workers required the same maternity benefits as were enjoyed by
regular female workers under the Maternity Benefit Act, 1961. The denial of
the benefits exhibits a negative attitude of the Corporation in respect of a
humane problem.
3. The Corporation in their written statement, filed before the Industrial
Tribunal, pleaded that the provisions under the Maternity Benefit Act, 1961 or
the Central Civil Services (Leave) Rules were not applicable to the female
workers, engaged on muster roll, as they were all engaged only on daily
wages. It was also contended that they were not entitled to any benefit under
the Employees; State Insurance Act, 1948. It was for these reasons that the
Corporation contended that the demand of the female workers (muster roll) for
grant of maternity leave was liable to be rejected.
4. The Tribunal, by its award dated 2-4-1996, allowed the claim of the
female workers (muster roll) and directed the Corporation to extend the
benefits under the Maternity Benefit Act, 1961 to muster-roll female workers
who were in the continuous service of the Corporation for three years or more.
The Corporation challenged this judgment in a writ petition before the Delhi
High Court which was dismissed by the Single Judge on 7-1-1997. The Letters

96
Patent Appeal (LPA No. 64 of 1998), filed thereafter by the Corporation was
dismissed by the Division Bench on 9-3-1998 on the ground of delay.
28. The Industrial Tribunal, which has given an award in favour of the
respondents, has noticed that women employees have been engaged by the
Corporation on muster roll, that is to say, on daily-wage basis for doing
various kinds of works in projects like construction of buildings, digging of
trenches, making of roads, etc., but have been denied the benefit of maternity
leave. The Tribunal has found that though the women employees were on
muster roll and had been working for the Corporation for more than 10 years,
they were not regularised. The Tribunal, however, came to the conclusion that
the provisions of the Maternity Benefit Act had not been applied to the
Corporation and, therefore, it felt that there was a lacuna in the Act. It further
felt that having regard to the activities of the Corporation, which had
employed more than a thousand women employees, it should have been
brought within the purview of the Act so that the maternity benefits
contemplated by the Act could be extended to the women employees of the
Corporation. It felt that this lacuna could be removed by the State Government
by issuing the necessary notification under the proviso to Section 2 of the
Maternity Act. This proviso lays down as under:
―Provided that the State Government may, with the approval of
the Central Government, after giving not less than two months‘
notice of its intention of so doing, by notification in the Official
Gazette, declare that all or any of the provisions of this Act shall
apply also to any other establishment or class of establishments,
industrial, commercial, agricultural or otherwise.ǁ
29. It consequently issued a direction to the management of the Municipal
Corporation, Delhi to extend the benefits of the Maternity Benefit Act, 1961 to
such muster-roll female employees who were in continuous service of the
management for three years or more and who fulfilled the conditions set out in
Section 5 of the Act.
30. We appreciate the efforts of the Industrial Tribunal in issuing the above
directions so as to provide the benefit of the Act to the muster-roll women
employees of the Corporation. This direction is fully in consonance with the
reference made to the Industrial Tribunal. The question referred for
adjudication has already been reproduced in the earlier part of the judgment. It
falls in two parts as under:
(i) Whether the female workers working on muster roll should be
given any maternity benefit.
(ii) If so, what directions are necessary in this regard.
32. Learned counsel for the Corporation contended that since the
provisions of the Act have not been applied to the Corporation, such a
direction could not have been issued by the Tribunal. This is a narrow way of
looking at the problem which essentially is human in nature and anyone
acquainted with the working of the Constitution, which aims at providing
social and economic justice to the citizens of this country, would outrightly
reject the contention. The relevance and significance of the doctrine of social
justice has, times out of number, been emphasised by this Court in several
decisions. In Crown Aluminium Works v. Workmen [AIR 1958 SC 30]

97
this Court observed that the Constitution of India seeks to create a democratic,
welfare Stae and secure social and economic justice to the citizens. In J. K.
Cotton spg. & Wvg. Mills Co. Ltd. v. Labour Appellate Tribunal
of India [AIR 1964 SC 737], Gajendragadkar, J., (as his Lordship then was),
speaking for the Court, said:
―Indeed, the concept of social justice has now become such an
integral part of industrial law that it would be idle for any party to
suggest that industrial adjudication can or should ignore the claims
of social justice in dealing with industrial disputes. The concept of
social justice is not narrow, or one-sided, or pedantic, and is not
confined to industrial adjudication alone. Its sweep is
comprehensive. It is founded on the basic ideal of socio-economic
disparities and inequalities; nevertheless, in dealing with industrial
matters, it does not adopt a doctrinaire approach and refuses to
yield blindly to abstract notions, but adopts a realistic and
pragmatic approach.ǁ
33. A just social order can be achieved only when inequalities are
obliterated and everyone is provided what is legally due. Women who
constitute almost half of the segment of our society have to be honoured and
treated with dignity at places where they work to earn their livelihood.
Whatever be the nature of their duties, their avocation and the place where
they work, they must be provided all the facilities to which they are entitled.
To become a mother is the most natural phenomenon in the life of a woman.
Whatever is needed to facilitate the birth of child to a woman who is in
service, the employer has to be considerate and sympathetic towards her and
must realise the physical difficulties which a working woman would face in
performing her duties at the workplace while carrying a baby in the womb or
while rearing up the child after birth. The Maternity Benefit Act, 1961 aims to
provide all these facilities to a working woman in a dignified manner so that
she may overcome the state of motherhood honourably, peaceably, undeterred
by the fear of being victimised for forced absence during the pre-or post-natal
period.
34. Next it was contended that the benefits contemplated by the Maternity
Benefit Act, 1961 can be extended only to workwomen in an ―industryǁ and
not to the muster-roll women employees of the Municipal Corporation. This is
too stale an argument to be heard. Learned counsel also forgets that the
Municipal Corporation was treated to be an ―industryǁ and, therefore, a
reference was made to the Industrial Tribunal, which answered the reference
against the Corporation, and it is this matter which is being agitated before us.
35. Now, it is to be remembered that the municipal corporations or boards
have already been held to be ―industryǁ within the meaning of ―the
Industrial Disputes Actǁ. In Budge Budge Municipality v. P.R.
Mukherjee [AIR 1953 SC 58] it was observed that the municipal activity
would fall within the expression ―undertakingǁ and as such would be an
industry. The decision was followed in Baroda Borough Municipality v.
Workmen [AIR 1957 SC 110] in which the Court observed that those
branches of work of the municipalities which could be regarded as analogous
to the carrying-on of a trade or business, would be ―industryǁ and the dispute
between the municipalities and their employees would be treated as an

98
―industrial disputerǁ. This view was reiterated in Corpn. of the City of
Nagpur v. Employees [AIR 1960 SC 675]. In this case, various
departments of the Municipality were considered and certain departments of
the Municipality were considered and certain departments including the
General Administration Department and the Education Department were held
to be covered within the meaning of ―industryǁ.
36. Taking into consideration the enunciation of law as settled by this
Court as also the High Courts in various decisions referred to above, the
activity of the Delhi Municipal Corporation by which construction work is
undertaken or roads are laid or repaired or trenches are dug would fall within
the definition of ―industryǁ. The workmen or, for that matter, those employed
on muster roll for carrying on these activities would, therefore, be
―workmenǁ and the dispute between them and the Corporation world have to be
tackled as an industrial dispute in the light of various statutory provisions of the
industrial law, one of which is the Maternity Benefit Act, 1961. This is the
domestic scenario. Internationally, the scenario is not different.
37. Delhi is the capital of India. No other city or corporation would be
more conscious than the city of Delhi that India is a signatory to various
international covenants and treaties. The Universal Declaration of Human
Rights, adopted by the United Nations on 10-12-1948, set in motion the
universal thinking that human rights are supreme and ought to be preserved at
all costs. This was followed by a series of conventions. On 18-12-1979, the
United Nations adopted the ―Convention on the Elimination of all Forms of
Discrimination against Womenǁ.
Article 11 of this Convention provides as under:
“Article 11
1. States/parties shall take all appropriate measures to eliminate
discrimination against women in the field of employment in order to
ensure, on a basis of equality of men and women, the same rights, in
particular:
(a) the right to work as an inalienable right of all human beings;
(b) the right to the same employment opportunities, including the
application of the same criteria for selection in matters of
employment;
(c) the right to free choice of profession and employment, the
right to promotion, job security and all benefits and conditions of
service and the right to receive vocational training and retraining,
including apprenticeships, advanced vocational training and
recurrent training;
(e) right to equal remuneration, including benefits, and to equal
treatment in respect of work of equal value, as well as equality of
treatment in the evaluation of the quality of work;
(f) the right to social security, particularly in cases of
retirement, unemployment, sickness, invalidity and old age and other
incapacity to work, as well as the right to paid leave;

99
 (g) the right to protection of health and to safety in working
conditions, including the safeguarding of the function of
reproduction.
2. In order to prevent discrimination against women on the
grounds of marriage or maternity and to ensure their effective right to
work, States/parties shall take appropriate measures:
(a) to prohibit, subject to the imposition of sanctions, dismissal
on the grounds of pregnancy or of maternity leave and
discrimination in dismissals on the basis of marital status;
(b) to introduce maternity leave with pay or with comparable
social benefits without loss of former employment, seniority or
social allowances;
(c) to encourage the provision of the necessary supporting social
services to enable parents to combine family obligations with work
responsibilities and participation in public life, in particular through
promoting the establishment and development of a network of child-
care facilities;
(d) to provide special protection to women during pregnancy in
types of work proved to be harmful to them.
3. Protective legislation relating to matters covered in this article
shall be reviewed periodically in the light of scientific and
technological knowledge and shall
be revised repealed or extended as necessary.ǁ (emphasis supplied)
38. These principles which are contained in Article 11, reproduced above,
have to be read into the contract of service between the Municipal Corporation
of Delhi and the women employees (muster roll); and so read these employees
immediately become entitled to all the benefits conceived under the Maternity
Benefit Act, 1961. We conclude our discussion by providing that the direction
issued by the Industrial Tribunal shall be complied with by the Municipal
Corporation of Delhi by approaching the State Government as also the Central
Government for issuing necessary notification under the proviso to sub-section
(1) of Section 2 of the Maternity Benefit Act, 1961, if it has not already been
issued. In the meantime, the benefits under the Act shall be provided to the
women (muster roll) employees of the Corporation who have been working
with them on daily wages.
39. For the reasons stated above, the special leave petition is dismissed.

9. J.H. Jadhav v . Forbes Gokak Ltd (2005) 3 SCC 202

RUMA PAL, J. - 2. The appellant was employed by the respondent. He
claimed promotion as a clerk. When this was not granted, the appellant raised
an industrial dispute. The question whether the appellant was justified in his
prayer for promotion with effect from the date that his juniors were promoted
was referred to the Industrial Tribunal by the State Government. In their
written statement before the Tribunal the respondent denied the appellant‘s
claim for promotion on merits. In addition, it was contended by the respondent
that the individual dispute raised by the appellant was not an industrial dispute
within the meaning of Section 2(k) of the Industrial Disputes Act, 1947, as the

100
workman was neither supported by a substantial number of workmen nor by a
majority union. The appellant claims that his cause was espoused by the
Gokak Mills Staff Union.
3. Before the Tribunal, apart from examining himself, the General
Secretary of the Union was examined as a witness in support of the appellant‘s
claim. The General Secretary affirmed that the appellant was a member of the
Union and that his cause has been espoused by the Union. Documents
including letters written by the Union to the Deputy Labour Commissioner as
well as the objection filed by the Union before the Conciliation Officer were
adduced in evidence. The Tribunal came to the conclusion that in view of the
evidence given by the General Secretary and the documents produced, it was
clear that the appellant‘s cause had been espoused by the Union which was
one of the unions of the respondent employer. On the merits, the Tribunal
accepted the appellant‘s contentions that employees who were junior to him
had been promoted as clerks. It noted that no record had been produced by the
respondent to show that the management had taken into account the
appellant‘s production records, efficiency, attendance or behaviour while
denying him promotion. The Tribunal concluded that the act of the respondent
in denying promotion to the appellant amounted to unfair labour practice. An
award was passed in favour of the appellant and the respondent was directed to
promote the appellant as a clerk from the date his juniors were promoted and
to give him all consequential benefits.
4. The award of the Industrial Tribunal was challenged by the respondent
by way of a writ petition. A Single Judge dismissed the writ petition. The
respondent being aggrieved filed a writ appeal before the appellate court. The
appellate court construed Section 2(k) of the Industrial Disputes Act, 1947 and
came to the conclusion that an individual dispute is not an industrial dispute
unless it directly and substantially affects the interest of other workmen.
Secondly, it was held that an individual dispute should be taken up by a union
which had representative character or by a substantial number of employees,
before it would be converted into an industrial dispute neither of which
according to the appellate court, had happened in the present case. It was held
that there was nothing on record to show that the appellant was a member of
the Union or that the dispute had been espoused by the Union by passing any
resolution in that regard.
5. The definition of ―industrial disputeǁ in Section 2(k) of the Act shows
that 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 or non-employment or the
terms of the employment or with the conditions of labour, of any person. The
definition has been the subject-matter of several decisions of this Court and
the law is well settled. The locus classicus is the decision in Workmen v.
Dharampal Premchand (Saughandhi) [AIR 1966 SC 182] where it was
held that for the purposes of Section 2(k) it must be shown that: (1) The
dispute is connected with the employment or non-employment of a workman.
(2) The dispute between a single workman and his employer was sponsored or
espoused by the union of workmen or by a number of workmen. The phrase
―the unionǁ merely indicates the union to which the employee belongs even

101
though it may be a union of a minority of the workmen. (3) The establishment
had no union of its own and some of the employees had joined the union of
another establishment belonging to the same industry. In such a case it would
be open to that union to take up the cause of the workmen if it is sufficiently
representative of those workmen, despite the fact that such union was not
exclusively of the workmen working in the establishment concerned. An
illustration of what had been anticipated in Dharampal case is to be found in
Workmen v. Indian Express (P) Ltd. [(1969) 1 SCC 228] where an
―outsideǁ union was held to be sufficiently representative to espouse the
cause.
6. In the present case, it was not questioned that the appellant was a
member of the Gokak Mills Staff Union. Nor was any issue raised that the
Union was not of the respondent establishment. The objection as noted in the
issues framed by the Industrial Tribunal was that the Union was not the
majority union. Given the decision in Dharampal case the objection was
rightly rejected by the Tribunal and wrongly accepted by the High Court.
7. As far as espousal is concerned there is no particular form prescribed to
effect such espousal. Doubtless, the union must normally express itself in the
form of a resolution which should be proved if it is in issue. However, proof of
support by the union may also be available aliunde. It would depend upon the
facts of each case. The Tribunal had addressed its mind to the question,
appreciated the evidence both oral and documentary and found that the Union
had espoused the appellant‘s cause.
8. The Division Bench misapplied the principles of judicial review under
Article 226 in interfering with the decision. It was not a question of there
being no evidence of espousal before the Industrial Tribunal. There was
evidence which was considered by the Tribunal in coming to the conclusion
that the appellant‘s cause had been espoused by the Union. The High Court
should not have upset this finding without holding that the conclusion was
irrational or perverse. The conclusion reached by the High Court is therefore
unsustainable.
9. For all these reasons the decision of the High Court cannot stand and must
be set aside.
10. Learned counsel appearing for the respondent then submitted that the
matter may be remanded back to the Division Bench of the High Court as the
Court had not considered the other arguments raised by the respondent while
impugning the award of the Industrial Tribunal. It appears from the impugned
decision that the only other ground raised by the respondent in the writ appeal
was that the grievance of the appellant had been belatedly raised. We have
found from the decision of the Industrial Tribunal that no such contention had
been raised by the respondent before the Tribunal at all. We are not prepared
to allow the respondent to raise the issue before the High Court.

11. The respondent finally submitted that pursuant to disciplinary

proceedings initiated against the appellant in the meanwhile, the appellant had
been dismissed from service and that the order of dismissal was the subject-
matter of a separate industrial dispute. We are not concerned with the
propriety of the order of dismissal except to the extent that the appellant

102
 cannot obviously be granted actual promotion today. Nevertheless, he would
be entitled to the monetary benefits of promotion pursuant to the award of the
Industrial Tribunal which is the subject-matter of these proceedings up to the
date of his dismissal. Any further relief that the appellant may be entitled to
must of necessity abide by the final disposal of the industrial dispute relating
to the order of dismissal which is said to be pending.
12. We therefore allow the appeal and set aside the decision of the High
Court. The award of the Industrial Tribunal is confirmed subject to the
modification that the promotion granted by the award will be given effect to
notionally for the period as indicated by the award up to the date of the
appellant‘s dismissal from service. Reliefs in respect of the period subsequent
to the order of dismissal shall be subject to the outcome of the pending
industrial dispute relating to the termination of the appellant‘s services. If the
termination is ultimately upheld, the appellant will be entitled only to the
reliefs granted by us today. If on the other hand the termination is set aside,
the appellant will be entitled to promotion as granted by the award.

10. Dharangadhara Chemical Works Ltd. v. State of Saurashtra AIR 1957

SC 264 : 1957 SCR 152

N.H. BHAGWATI, J. - This Appeal with a certificate of fitness granted by

the High Court of Saurashtra raises an interesting question whether the agarias
working in the Salt Works at Kuda in the Rann of Cutch are workmen within
the meaning of the term as defined in the Industrial Disputes Act, 1947,
hereinafter referred to as ―the Actǁ.
2. The facts as found by the Industrial Tribunal are not in dispute and are
as follows. The appellants are lessees of the Salt Works from the erstwhile
State of Dharangadhara and also hold a licence for the manufacture of salt on
the land. The appellants require salt for the manufacture of certain chemicals
and part of the salt manufactured at the Salt Works is utilised by the appellants
in the manufacturing process in the Chemical Works at Dharangadhara and
the remaining salt is sold to outsiders. The appellants employ a Salt
Superintendent who is in charge of the Salt Works and generally supervises
the Works and the manufacture of salt carried on there. The appellants
maintain a railway line and sidings and also have arrangements for storage of
drinking water. They also maintain a grocery shop near the Salt Works where
the agarias can purchase their requirements on credit.
3. The salt is manufactured not from sea water but from rain water which
soaking down the surface becomes impregnated with saline matter. The
operations are seasonal in character and commence sometime in October at the
close of the monsoon. Then the entire area is parcelled out into plots called
pattas and they are in four parallel rows intersected by the railway lines. Each
agaria is allotted a patta and in general the same patta is allotted to the same
agaria year after year. If the patta is extensive it is allotted to two agarias who
work the same in partnership. At the time of such allotment, the appellants pay
a sum of Rs 400 for each of the pattas and that is to meet the initial expenses.
Then the agarias commence their work. They level the lands and enclose and
sink wells in them. Then the density of the water in the wells is examined by
the Salt Superintendent of the appellants and then the brine is brought to the

103
surface and collected in the reservoirs called condensers and retained therein
until it acquires by natural process a certain amount of density. Then it is
flowed into the pattas and kept there until it gets transformed into crystals. The
pans have got to be prepared by the agarias according to certain standards and
they are tested by the Salt Superintendent. When salt crystals begin to form in
the pans they are again tested by the Salt Superintendent and only when they
are of a particular quality the work of collecting salt is allowed to be
commenced. After the crystals are collected, they are loaded into the railway
wagons and transported to the depots where salt is stored. The salt is again
tested there and if it is found to be of the right quality, the agarias are paid
therefor at the rate of Rs 0-5-6 per maund. Salt which is rejected belongs to the
appellants and the agarias cannot either remove the salt manufactured by them
or sell it. The account is made up at the end of the season when the advances
which have been paid to them from time to time as also the amounts due from
the agarias to the grocery shop are taken into account. On a final settlement of
the accounts, the amount due by the appellants to the agarias is ascertained and
such balance is paid by the appellants to the agarias. The manufacturing
season comes to an end in June when the monsoon begins and then the agarias
return to their villages and take up agricultural work.
4. The agarias work themselves with their families on the pattas allotted to
them. They are free to engage extra labour but it is they who make the
payments to these labourers and the appellants have nothing to do with the
same. The appellants do not prescribe any hours of work for these agarias. No
muster roll is maintained by them nor do they control how many hours in a
day and for how many days in a month the agarias should work. There are no
rules as regards leave or holidays. They are free to go out of the Works as they
like provided they make satisfactory arrangements for the manufacture of salt.
5. In about 1950, disputes arose between the agarias and the appellants as
to the conditions under which the agarias should be engaged by the appellants
in the manufacture of salt. The Government of Saurashtra, by its letter of
Reference dated November 5, 1951, referred the disputes for adjudication to
the Industrial Tribunal, Saurashtra State, Rajkot. The appellants contested the
proceedings on the ground, inter alia, that the status of the agarias was that of
independent contractors and not of workmen and that the State was not
competent to refer their disputes for adjudication under Section 10 of the Act.
6. This question was tried as a preliminary issue and by its order dated
August 30, 1952, the Tribunal held that the agarias were workmen within the
meaning of the Act and that the reference was intra vires and adjourned the
matter for hearing on the merits. Against this order the appellants preferred an
appeal being Appeal No. 302 of 1952 before the Labour Appellate Tribunal of
India, and having failed to obtain stay of further proceedings before the
Industrial Tribunal pending the appeal, they moved the High Court of
Saurashtra in M.P. No. 70 of 1952 under Articles 226 and 227 of the
Constitution for an appropriate writ to quash the reference dated November 5,
1951 on the ground that it was without jurisdiction. Pending the disposal of
this writ petition, the appellants obtained stay of further proceedings before the
Industrial Tribunal and in view of the same the Labour Appellate Tribunal
passed an order on September 27, 1953 dismissing the appeal leaving the
question raised therein to the decision of the High Court. By their judgment

104
dated January 8, 1954 the learned Judges of the High Court agreed with the
decision of the Industrial Tribunal that the agarias were workmen within
Section 2(s) of the Act and accordingly dismissed the application for writ.
They, however, granted a certificate under Article 133(1)(c) of the
Constitution and that is how the appeal comes before us.
The essential condition of a person being a workman within the terms of
this definition is that he should be employed to do the work in that industry,
that there should be, in other words, an employment of his by the employer
and that there should be the relationship between the employer and him as
between employer and employee or master and servant. Unless a person is
thus employed there can be no question of his being a workman within the
definition of the term as contained in the Act.ǁ
8. The principles according to which the relationship as between employer
and employee or master and servant has got to be determined are well settled.
The test which is uniformly applied in order to determine the relationship is
the existence of a right of control in respect of the manner in which the work
is to be done. A distinction is also drawn between a contract for services and a
contract of service and that distinction is put in this way: ―In the one case the
master can order or require what is to be done while in the other case he can
not only order or require what is to be done but how itself it shall be doneǁ.
[Per Hilbery, J. in Collins v. Hertfordshire County Council (1947) KB
598, 615].
13. The principle which emerges from these authorities is that the prima
facie test for the determination of the relationship between master and servant
is the existence of the right in the master to supervise and control the work
done by the servant not only in the matter of directing what work the servant is
to do but also the manner in which he shall do his work. “The proper test is
whether or not the hirer had authority to control the manner of execution of the
act in questionǁ.
14. The nature or extent of control which is requisite to establish the
relationship of employer and employee must necessarily vary from business to
business and is by its very nature incapable of precise definition. As has been
noted above, recent pronouncements of the Court of Appeal in England have
even expressed the view that it is not necessary for holding that a person is an
employee, that the employer should be proved to have exercised control over
his work, that the test of control was not one of universal application and that
there were many contracts in which the master could not control the manner in
which the work was done (Vide observations of Somervelle, L.J. in Cassidy
v. Ministry of Health [(1951) 2 KB 343, 352-3].
15. The correct method of approach, therefore, would be to consider
whether having regard to the nature of the work there was due control and
supervision by the employer.
16. The Industrial Tribunal on a consideration of the facts in the light of
the principles enunciated above came to the conclusion that though certain
features which are usually to be found in a contract of service were absent, that
was due to the nature of the industry and that on the whole the status of the
agarias was that of workmen and not independent contractors. It was under the
circumstances strenuously urged before us by the learned counsel for the

105
respondents that the question as regards the relationship between the
appellants and the agarias was a pure question of fact, that the Industrial
Tribunal had jurisdiction to decide that question and had come to its own
conclusion in regard thereto, that the High Court, exercising its jurisdiction
under Articles 226 and 227 of the Constitution, was not competent to set aside
the finding of fact recorded by the Industrial Tribunal and that we, here,
entertaining an appeal from the decision of the High Court, should also not
interfere with that finding of fact.
17. Reliance was placed on the observations of Mahajan, J., as he then
was, in Ebrahim Aboobakar v. Custodian General of Evacuee
Property [(1952) SCR 696, 702:]
―It is plain that such a writ cannot be granted to quash the
decision of an inferior court within its jurisdiction on the ground that
the decision is wrong. Indeed, it must be shown before such a writ is
issued that the authority which passed the order acted without
jurisdiction or in excess of it or in violation of the principles of natural
justice.... But once it is held that the court has jurisdiction but while
exercising it, it
made a mistake, the wronged party can only take the course prescribed
by law for setting matters right inasmuch as a court has jurisdiction to
decide rightly as well as wronglyǁ.

18. There is considerable force in this contention of the respondents. The

question whether the relationship between the parties is one as between
employer and employee or between master and servant is a pure question of
fact. Learned counsel for the appellants relied upon a passage from Batt‘s
Law of Master and Servant 4th Edn., at p. 10:
―The line between an independent contractor and a servant is
often a very fine one; it is a mixed question of fact and law, and the
judge has to find and select the facts which govern the true relation
between the parties as to the control of the work, and then he or the
jury has to say whether the person employed is a servant or a
contractor.ǁ
It is equally well settled that the decision of the Tribunal on a question of fact
which it has jurisdiction to determine is not liable to be questioned in
proceedings under Article 226 of the Constitution unless at the least it is
shown to be fully unsupported by evidence.
19. Now the argument of Mr Kolah for the appellants is that even if all the
facts found by the Tribunal are accepted they only lead to the conclusion that
the agarias are independent contractors and that the finding, therefore, that
they are workmen is liable to be set aside on the ground that there is no
evidence to support it. We shall, therefore, proceed to determine the
correctness of this contention.
20. Apart from the facts narrated above in regard to which there is no
dispute, there was the evidence of the Salt Superintendent of the appellants
which was recorded before the Tribunal:
―The Panholders are allotted work on the salt pans by oral
agreement. The Company has no control over the panholders in regard

106
 to the hours of work or days of work. The Company‘s permission is
not sought in matter of sickness or in matter of going out to some
village. The Company has no control over the panholders as to how
many labourers they should engage and what wages they should pay
them. The Company‘s supervision over the work of the panholders is
limited to the proper quality as per requirements of the Company and
as per standard determined by the Government in matter of salt. The
Company‘s supervision is limited to this extent.ǁ
21. The Company acts in accordance with clause 6 of the said agreement
in order to get the proper quality of salt.
22. Panholders are not the workmen of the Company, but are contractors.
The men who are entrusted with pattas, work themselves. They can engage
others to help them and so they do. There is upto this day no instance that any
panholder who is entrusted with a patta, has not turned up to work on it. But
we do not mind whether he himself works or not.
23. If any panholder after registering his name (for a patta) gets work done
by others, we allow it to be done.
24. We own 319 pattas. Some pattas have two partners. In some, one man
does the job. In all the pans, mainly the panholders work with the help of their
(respective) familiesǁ.
25. Clause 6 of the agreement referred to in the course of his evidence by
the Salt Superintendent provided:

“6. We bind ourselves to work as per advice and instructions of

the officers appointed by them in connection with the drawing of brine
or with the process of salt production in the pattas and if there is any
default, negligence or slackness in executing it on our part or if we do
not behave well in any way, the Managing Agent of the said Company
can annul this agreement and can take possession of the patta, brine,
well, etc., and as a result we will not be entitled to claim any sort of
consideration or compensation for any half processed salt lying in our
patta; or in respect of any expense incurred or labour employed in
preparing kiwa patta, well bamboo lining, etc.ǁ
26. There was also the evidence of Shiva Daya, an agaria, who was ex
amined on behalf of the respondents:
―There is work of making enclosures and then of sinking wells.
The company supervises this work. While the wells are being sunk, the
Company measures the density of the brine of wells. In order to bring
the brine of wells to the proper density, it is put in a condenser and
then the Company tests this and then this brine is allowed to flow in
the pattas....
The bottom of a patta is prepared after it is properly crushed under
feet and after the company inspects and okays that it is alright, water is
allowed to flow into it. When salt begins to form at the bottom of a
patta, an officer of the company comes and inspects it. At the end of
2½ months, the water becomes saturated i.e. useless, and so it is
drained away under the supervision of the company. Then fresh brine

107
 is allowed to flow into the patta from the condenser. This instruction is
also given by the company‘s officer.ǁ
27. It was on a consideration of this evidence that the Industrial Tribunal
came to the conclusion that the supervision and control exercised by the
appellants extended to all stages of the manufacture from beginning to end.
We are of opinion that far from there being no evidence to support the
conclusion reached by the Industrial Tribunal there were materials on the
record on the basis of which it could come to the conclusion that the agarias
are not independent contractors but workmen within the meaning of the Act.
28. Learned counsel for the appellants laid particular stress on two features
in this case which, in his submission, were consistent only with the position
that the agarias are independent contractors. One is that they do piece-work
and the other that they employ their own labour and pay for it. In our opinion
neither of these two circumstances is decisive of the question. As regards the
first, the argument of the appellants is that as the agarias are under no
obligation to work for fixed hours or days and are to be paid wages not per day
or hours but for the quantity of salt actually produced and passed, at a certain
rate, the very basis on which the relationship of employer and employees rests
is lacking, and that they can only be regarded as independent contractors.
There is, however, abundant authority in England that a person can be a
workman even though he is paid not per day but by the job.
29. As regards the second feature relied on for the appellants it is
contended that the agarias are entitled to engage other persons to do the work,
that these persons are engaged by the agarias and are paid by them, that the
appellants have no control over them and that these facts can be reconciled
only with the position that the agarias are independent contractors. This
argument, however, proceeds on a misapprehension of the true legal position.
The broad distinction between a workman and an independent contractor lies
in this that while the former agrees himself to work, the latter agrees to get
other persons to work. Now a person who agrees himself to work and does so
work and is therefore a workman does not cease to be such by reason merely
of the fact that he gets other persons to work along with him and that those
persons are controlled and paid by him. What determines whether a person is
a workman or an independent contractor is whether he has agreed to work
personally or not. If he has, then he is a workman and the fact that he takes
assistance from other persons would not affect his status. The position is thus
summarised in Halsbury’s Laws of England , Vol. 14, pp. 651-52:
―The workman must have consented to give his personal services
and not merely to get the work done, but if he is bound under his
contract to work personally, he is not excluded from the definition,
simply because he has assistance from others, who work under himǁ.
30. In the instant case the agarias are professional labourers. They
themselves personally work along with the members of their families in the
production of salt and would, therefore, be workmen. The fact that they are
free to engage others to assist them and pay for them would not, in view of the
above authorities, affect their status as workmen.
31. There are no doubt considerable difficulties that may arise if the
agarias were held to be workmen within the meaning of Section 2(s) of the

108
 Act. Rules regarding hours of work, etc., applicable to other workmen may not
be conveniently applied to them and the nature as well as the manner and
method of their work would be such as cannot be regulated by any directions
given by the Industrial Tribunal. These difficulties, however, are no deterrent
against holding the agarias to be workmen within the meaning of the definition
if they fulfil its requirements. The Industrial Tribunal would have to very well
consider what relief, if any, may possibly be granted to them having regard to
all the circumstances of the case and may not be able to regulate the work to
be done by the agarias and the remuneration to be paid to them by the
employer in the manner it is used to do in the case of other industries where
the conditions of employment and the work to be done by the employees is of
a different character. These considerations would necessarily have to be borne
in mind while the Industrial Tribunal is adjudicating upon the disputes which
have been referred to it for adjudication. They do not, however, militate
against the conclusion which we have come to above that the decision of the
Industrial Tribunal to the effect that the agarias are workmen within the
definition of the term contained in Section 2(s) of the Act was justified on the
materials on the record.
32. We accordingly see no ground for interfering with that decision and
dismiss this appeal with costs.
11. A. Sundarambal v . Government of Goa, Daman & Diu AIR 1988 SC
1700

E.S. VENKATARAMIAH, J. – The short question which arises for

consideration in this case is whether a teacher employed in a school falls
within the definition of the expression ‗workman‘ as defined in S. 2(s) of the
Industrial Disputes Act, 1947 (the Act‘).
2. The appellant, Miss A. Sundarambal, was appointed as a teacher in a
school conducted by the Society of Franciscan Sisters of Mary at Caranzalem,
Goa. Her services were terminated by the Management by a letter dated 25 th

April, 1975. After she failed in her several efforts in getting the order of
termination cancelled, she raised an industrial dispute before the Conciliation
Officer under the Act. The conciliation proceedings failed and the Conciliation
Officer reported accordingly to the Government of Goa, Daman and Diu by
his letter dated 2 May, 1982. On receipt of the report the Government
nd

considered the question whether it could refer the matter for adjudication
under S. 10(1)(c) of the Act but on reaching the conclusion that the appellant
was not a ‗workman‘ as defined in the Act which alone would have converted
a dispute into an industrial dispute as defined in S. 2(k) of the Act, it declined
to make a reference. Thereupon the appellant filed a writ petition before the
High Court of Bombay, Panaji Bench, Goa for issue of a writ in the nature of
mandamus requiring the Government to make a reference under S. 10(1)(c) of
the Act to a Labour Court to determine the validity of the termination of her
services. That petition was opposed by the respondents. After hearing the
parties concerned, the High Court dismissed the writ petition holding that the
appellant was not a workman by its judgment dated 5 September, 1983.
th

Aggrieved by the judgment of the High Court the appellant has filed this
appeal by special leave.
3. Two questions arise for consideration in this case: (1) whether the
school, in which the appellant was working, was an industry, and (2) whether

109
the appellant was a ‗workman‘ employed in that industry. It is, however, not
disputed that if the applicant was not a
‗workman‘ no reference under S. 10(1)(c) of the Act could be sought.
4. The first question need not detain us long. In University of Delhi v.
Ram Nath [AIR 1963 SC 1873] a bench consisting of three learned Judges of
this Court held that the University of Delhi which was an educational
institution and Miranda House, a college affiliated to the said University, also
being an educational institution would not come within the definition of the
expression ‗industry‘ as defined in S. 2(j) of the Act. Section 2(j) of the Act
states that ‗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. Gajendragadkar,
J. (as he then was) who decided the said case, held that the educational
institutions which were predominantly engaged in teaching could not be
considered as industries within the meaning of the said expression in S. 2(j) of
the Act and, therefore, a driver who was employed by the Miranda House
could not be considered as a workman employed in an industry. The above
decision came up for consideration in Bangalore Water Supply &
Sewerage Board v. A. Rajappa [AIR 1978 SC 548] before a larger
bench of this Court. In that case the decision in University of Delhi was
overruled. Krishna Iyer, J. who delivered the majority judgment observed (at
596) thus:
―(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 Delhi 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 Nagpur , will be true test. The whole undertaking will be
‗industry‘ although those who are not ‗workmen‘ by definition may
not benefit by the status.ǁ
5. The learned Judge, however, observed that while an educational
institution was an industry it was possible that some of the employees in that
industry might not be workmen. At page 548 with reference to University
of Delhi the learned Judge observed thus:
―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 Delhi proceeded on that
assumption viz. that teachers are not workmen, which we will adopt to
test the validity of the argument.ǁ
6. Thus it is seen that even though an educational institution has to be
treated as an industry in view of the decision in the Bangalore Water

110
Supply, the question whether teachers in an educational institution can be
considered as workmen still remains to be decided.
8. In order to be a workman, a person should be one who satisfies the
following conditions: (i) he should be a person employed in an industry for
hire or reward; (ii) he should be engaged in skilled or unskilled manual,
supervisory, technical or clerical work; and (iii) he should not be a person
falling under any of the four clauses, i.e. (i) to (iv) mentioned in the definition
of ‗workman‘ in section 2(s) of the Act. The definition also provides that a
workman employed in an industry to do any skilled or unskilled manual,
supervisory, technical or clerical work for hire or reward includes any such
person who has been dismissed, discharged or retrenched in connection with,
or as a consequence of, an industrial dispute, or whose dismissal, discharge or
retrenchment has led to that dispute.
9. We are concerned in this case primarily with the meaning of the words
‗skilled or unskilled manual, supervisory, technical or clerical work.‘ If an
employee in an industry is not a person engaged in doing work falling in any
of these categories, he would not be a workman at all even though he is
employed in an industry. The question for consideration before us is whether a
teacher in a school falls under any of the four categories, namely, a person
doing any skilled or unskilled manual work, supervisory work, technical work
or clerical work. If he does not satisfy any one of the above descriptions he
would not be a workman even though he is an employee of an industry as
settled by this Court in May and Baker (India) Ltd. v. Their Workmen
[AIR 1967 SC 678]. In that case this Court had to consider the question
whether a person employed by a pharmaceutical firm as a representative (for
canvassing orders) whose duties consisted mainly of canvassing orders and
any clerical or manual work that he had to do was only incidental to his main
work of canvassing could be considered as a workman as defined in the Act.
Dealing with the said question, Wanchoo, J. (as he then was) observed thus (at
679-80):
―A ‗workman‘ was then defined as any person employed in any
industry to do any skilled or unskilled manual or clerical work for hire
or reward. Therefore, doing manual or clerical work was necessary
before a person could be called a workman. This definition came for
consideration before industrial tribunals and it was consistently held
that the designation of the employee was not of great moment and what
was of importance was the nature of his duties. If the nature of the
duties is manual or clerical, then the person must be held to be a
workman. On the other hand if manual or clerical work is only a small
part of the duties of the person concerned and incidental to his main
work which is not manual or clerical, then such a person would not be
a workman. It has, therefore, to be seen in each case from the nature of
the duties whether a person employed is a workman or not, under the
definition of that word as it existed before the amendment of 1956. The
nature of the duties of Mukerjee is not in dispute in this case and the
only question therefore is whether looking to the nature of the duties it
can be said that Mukerjee was a workman within the meaning of S.
2(s) as it stood at the relevant time. We find from the nature of the
duties assigned to Mukerjee that his main work was that of canvassing

111
 and any clerical or manual work that he had to do was incidental to his
main work of canvassing and could not take more than a small fraction
of the time for which he had to work. In the circumstances the
tribunal‘s conclusion that Mukerjee was a workman is incorrect. The
tribunal seems to have been led away by the fact that Mukerjee had no
supervisory duties and had to work under the directions of his superior
officers. That, however, would not necessarily mean that Mukerjee‘s
duties were mainly manual or clerical. From what the tribunal itself has
found it clear that Mukerjee‘s duties were mainly neither clerical nor
manual. Therefore, as Mukerjee was not a workman, his case would
not be covered by the Industrial Disputes Act and the tribunal would
have no jurisdiction to order his reinstatement. We, therefore, set aside
the order of the tribunal directing reinstatement of Mukerjee along with
other reliefs.

10. The Court held that the employee Mukerjee involved in that case was
not a workman under section 2(s) of the Act because he was not mainly
employed to do any skilled or unskilled manual or clerical work for hire or
reward, which were the only two classes of employees who qualified for being
treated as ‗workman‘ under the definition of the expression ‗workman‘ in the
Act, as it stood then. As a result of the above decision, in order to give
protection regarding security of employment and other benefits to sales
representatives, Parliament passed a separate law entitled the Sales Promotion
Employees (Conditions of Service) Act, 1976. It is no doubt true that after the
events leading to the above decision took place section 2(s) of the Act was
amended by including persons doing technical work as well as supervisory
work. The question for consideration is whether even after the inclusion of the
above two classes of employees in the definition of the expression
‗workman‘ in the Act a teacher in a school can be called a workman. We are
of the view that the teachers employed by educational institutions whether the
said institutions are imparting primary, secondary, graduate or post-graduate
education cannot be called as ‗workman‘ within the meaning of section 2(s) of
the Act. Imparting of education which is the main function of teachers cannot
be considered as skilled or unskilled manual work or supervisory work or
technical work or clerical work. Imparting of education is in the nature of a
mission or a noble vocation. A teacher educates children, he moulds their
character, builds up their personality and makes them fit to become
responsible citizens. Children grow under the care of teachers. The clerical
work, if any they may do, is only incidental to their principal work of
teaching. We agree with the reasons given by the High Court for taking the
view that teachers cannot be treated as ‗workmen‘ as defined under the Act. It
is not possible to accept the suggestion that having regard to the object of the
Act, all employees in an industry except those falling under the four
exceptions (i) to (iv) in section 2(s) of the Act should be treated as workmen.
The acceptance of this argument will render the words ‗to do any skilled or
unskilled manual, supervisory, technical or clerical work‘ meaningless. A
liberal construction as suggested would have been possible only in the absence
of these words. The decision in May and Baker (India) Ltd. precludes us
from taking such a view. We, therefore, hold that the High Court was right in

112
 holding that the appellant was not a ‗workman‘ though the school was an
industry in view of the definition of ‗workman‘ as it now stands.
11. We may at this stage observe that teachers as a class cannot be denied
the benefits of social justice. We are aware of the several methods adopted by
unscrupulous managements to exploit them by imposing on them unjust
conditions of service. In order to do justice to them it is necessary to provide
appropriate machinery so that teachers may secure what is rightly due to them.
In a number of States in India laws have been passed for enquiring into the
validity of illegal and unjust terminations of services of teachers by providing
for appointment of judicial tribunals to decide such cases. We are told that in
the State of Goa there is no such Act in force. If it is so, it is time that the State
of Goa takes necessary steps to bring into force an appropriate legislation
providing for adjudication of disputes between teachers and the Managements
of the educational institutions. We hope that this lacuna in the legislative area
will be filled up soon.
12. This appeal, however, fails and it is dismissed. Before we conclude we
record the statement made on our suggestion by the learned counsel for the
Management, Shri G.B. Pai that the Management would give a sum of
Rs.40,000/- to the appellant in full and final settlement of all her claims. The
learned counsel for the appellant has agreed to receive Rs. 40,000/-
accordingly. We direct the Management to pay the above sum of Rs.40,000/-
to the appellant in six instalments.

12. H.R. Adyanthaya v . Sandoz (India) Ltd. (1994) 5 SCC 737

P.B. SAWANT, J. – The question that falls for consideration in these

matters is whether the ‗medical representatives‘ as they are commonly
known, are workmen according to the definition of ‗workman‘ under Section
2(s) of the Industrial Disputes Act, 1947 (the ‗ID Act‘). The definition under
this section has undergone changes since its first enactment. It is necessary to
keep in mind the said changes since the decisions of this Court delivered on
the point from time to time are based on the definition, as it stood at the
relevant time. The definition, as it stood originally when the ID Act came into
force w.e.f. 1.4.1947, read as follows:
―(s) ‗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 purposes of any
proceeding 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.ǁ
It was amended by Amending Act 36 of 1956 which came into force from
29.8.1956 to read as follows:
―(s) ‗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
term of employment be expressed in 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

113
 retrenched in connection with, or as a consequence of, that dispute, or
whose dismissal, discharge or retrenchment has led to that dispute, but
does not include any such person
2. The change brought about by this Amendment was that the persons
employed to do
‗supervisory‘ and ‗technical‘ work were also included in the definition for the
first time by this amendment, although those who were employed in a
supervisory capacity were so included in the definition provided their monthly
wage did not exceed Rs. 500. The definition of ‗workman‘ was further
amended by Amendment 46 of 1982 which was brought into force w.e.f.
21.8.1984. It read as –
―(s) ‗workman‘ means any person (including an apprentice)
employed in any industry to do any manual, unskilled, skilled,
technical, operational, clerical or supervisory 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,
but does not include any such person …
3. The first change brought about by this amendment was that whereas
earlier only those who were doing unskilled or skilled manual work were
included in the said definition, now those who did any unskilled or skilled
work, whether manual or not, came to be included in it. The second and the
most important change that was brought about was that those persons who
were employed to do ‗operational‘ work were also brought within the fold of
the said definition.
4. We are not referring to the other changes which the definition of
‗workman‘ underwent, after its enactment in 1947 since they are not relevant
for our purpose.
5. What is further necessary to remember is that the Amending Act 46 of
1982 simultaneously brought about a change in the definition of ‗wages‘
under Section 2(rr) of the
ID Act and for the first time included the following in the said definition:
―(iv) any commission payable on the promotion of sales or business or both.ǁ
6. It is also instructive to point out, in this connection that along with the
change in the definition of ‗wages,‘ the definition of ‗industry‘ under Section
2(j) has also been amended. The relevant part of the amended definition reads
as follows:
7. It will be seen that by the amended definition of ‗industry‘, an activity
relating to the promotion of sales or business or both, carried on by any
establishment is for the first time sought to be brought within the said
definition. However, the amended definition of ‗industry‘ has not till date
come into force.
8. In the light of the amended definitions of ‗workman‘ and ‗wages‘ and
that of ‗industry‘ which has not yet become operative, we may now refer to
the decisions of this Court on the subject.

114
 9. A three-Judge Bench of this court in May & Baker (India) Ltd. v.
Workmen [AIR 1967 SC 678] had to deal directly with the question as to
whether the medical representative of the company, who was discharged from
service, was a workman under the ID Act and the order of reinstatement
passed by the Industrial Tribunal was, therefore, valid. The Court referred to
the undisputed nature of the duties of the employee and found that his main
work was that of canvassing sales. Any clerical or manual work that he had to
do was incidental to the said main work, and could not take more than a small
fraction of the time for which he had to work. In the circumstances, the Court
held that the Tribunal‘s conclusion that the employee was a workman under
the ID Act was incorrect. The Court also observed that the Tribunal in that
case seemed to have been led away by the fact that the employee had no
supervisory duties and had to work under the direction of his superior officers.
The Court held that this would not necessarily mean that the employee‘s duties
were mainly manual or clerical. The Court held that from what the Tribunal
had found, it was clear that the employee‘s duties were mainly neither clerical
nor manual and, therefore, he was not a workman. Hence the Court set aside
the Tribunal‘s direction for reinstating the employee.
10. It is thus obvious from the decision that the contention on behalf of the
workman before the Industrial Tribunal as well as before this Court was that
the employee was doing either manual or clerical work, and that not only he
had no supervisory duties but he was doing his work under the direction of his
superiors and, therefore, he was a workman within the meaning of the
definition of workman as it stood then. The dispute in question had arisen
prior to 6.1.1956. The definition of ‗workman‘ at the relevant time included
only those persons who were employed to do any skilled or unskilled manual
or clerical work. Hence the relevant contention on behalf of the workman was
negatived by this Court. An inference from this decision is also possible, viz.,
that if the employee‘s work was mainly manual or clerical, he would have,
even as the definition stood then, been covered by it.
11. The next decision is also of the same three-judge Bench in Western
India Match Co. Ltd. v. Workmen [AIR 1964 SC 472]. The dispute
there was whether the workmen employed by the sales-office of the company
were entitled to production bonus as were those employed in the factory and
the factory-office. The incidental question which arose in this case was
whether the sales-office was entirely independent of the factory or was a
department of the one and the same unit of production, and whether
inspectors, salesmen, and retail salesmen of the sales-office were workmen
within the meaning of the U.P. Industrial Disputes Act. The
‗workman‘ was defined under that Act to mean ―any person …to do any
manual, supervisory, technical or clerical work for hire or reward…ǁ which
definition was the same as under the
Central Act, viz. the ID Act. This dispute was referred by the State
Government for adjudication to the Industrial Tribunal on 18.8.1961. The
Tribunal had accepted the evidence of the workmen that the writing work of
the inspectors, salesmen and retail salesmen took 75 per cent of the time. This
Court accepted the said finding. On the question whether the sales-office and
the factory and factory-office formed one and the same unit of the industrial
establishment, the Court held that all those growing or making articles as well

115
as those transporting them and also those ultimately completing the process of
bringing them to the ultimate consumer, were engaged in the activity of
producing wealth. It would, therefore, be unreasonable to say that those who
made the matches were ‗producing‘ and those who ‗sold‘ them were not. The
functional integrity, interdependence or community of financial control and
management; community of manpower and of its control, recruitment and
discipline; the manner in which the employer has organised the different
activities; whether he has treated them as independent of one another or as
interconnected and interdependent, are some of the tests to find out whether
the two units are parts of one and the same establishment. The Court further
held that the difference in the rules and practice in connection with their
recruitment, control and discipline, in the standing orders applicable to them,
and in the maintenance of their muster-rolls made no difference to the
situation. So also the fact that the sales-office was paying rent to the factory
for the area occupied by it. It would thus appear that this decision mainly
turned on the nature of the work done by the said salesmen, viz. 75 per cent
clerical work. We have referred to the other aspect, viz., the integrality of the
sales-office and the other parts of the establishment to emphasise that sales is
as much an essential part of an undertaking which is established for the
manufacture and sale of a product. It must be mentioned that there is no
reference in this decision to the earlier decision of the same Bench in May &
Baker case.
12. In Burmah Shell Oil Storage & Distribution Co. of India
Ltd. v. Burmah Shell Management Staff Assn. [AIR 1971 SC 922],
the dispute, among others, was whether the Sales Engineering Representatives
and District Sales Representatives employed in the company were workmen
within the meaning of the ID Act. The dispute had arisen prior to
28.10.1967. The argument on behalf of the workmen was that the definition of the
‗workmen‘
(which at the relevant time also included persons doing supervisory and
technical work) was all comprehensive and contemplated that all persons
employed in an industry must necessarily fall in one or the other of the four
classes mentioned in the main body of the definition, viz., those doing skilled
or unskilled manual work, supervisory work, technical work or clerical work,
and consequently the court should proceed on the assumption that every
person is a workman unless he fell under one of the four exceptions to the
definition. The Court rejected this contention. The Court referred to its earlier
decision in May & Baker case and pointed out that the Court had held that
since duties of the employee there were not mainly manual or clerical the
employee was not a workman. The Court also pointed out that although that
decision was based on the definition as it stood then, when the words
‗supervisory‘ and ‗technical‘ did not occur there, if every employee of an
industry was to be a workman except those mentioned in the four exceptions,
the four classifications, viz., manual, supervisory, technical and clerical need
not have been mentioned in the definition, and the workman could have been
defined so as to include every person employed in an industry except where he
was covered by one of the exceptions. The specification of the four types of
work, according to the Court, was obviously intended to lay down that an
employee was to be a workman only if he was employed to do work of one of

116
those types. There may be employees who do not do any such work and hence
would be out of the scope of the definition. The Court then gave an example
of such workman who would be outside the definition of workman even if he
did not fall in any of the exceptions. Coincidentally, the example given was
that of a person employed in canvassing sales of an industry. According to the
Court, he may not be required to do any paper work nor may he be required to
have any technical knowledge. He may not be supervising the work of any
other employees, nor would he be doing any skilled or unskilled manual work.
Even if he is an employee of the industry, he would not be a workman because
the work for which he is employed is not covered by the four types mentioned
in the definition and not because he could be taken out of the definition being
under one of the exceptions. The Court then referred to a case where
employees are employed to do work of more than one of the types mentioned
in the definition, and pointed out that in such cases the principle was well-
settled that a person must be held to be employed to do that work which is the
main work he is required to do, even though he may be incidentally doing
several types of work. Referring in this connection to the May & Baker
case, the Court pointed out that in that case, it was noticed that the employee‘s
duties were mainly neither clerical nor manual although his duties did involve
some clerical and manual work and hence he was held not to be a workman.
The Court then referred to the nature of the duties of Sales Engineering
Representatives and the District Sales Representatives with whom, among
others, the Court was concerned there. With regard to the Sales Engineering
Representatives, the Court approved of the finding of the Tribunal that he was
not employed on a supervisory work, but found fault with the Tribunal for not
proceeding further to examine whether he was employed on any other work of
such a type that he could be brought within the definition of workman. The
Court then itself examined the said question. Since there was no suggestion at
all that he was employed on clerical or manual work, and all that was
canvassed was that he was doing technical work, the Court found that the
amount of technical work that he did was of ancilliary nature to his chief duty
of promoting sales and giving advice. The mere fact that he was required to
have technical knowledge, for such a purpose, did not make his work
technical. According to the Court the work of advising and removing
complaints so as to promote sales remains outside the scope of technical work.
Consequently, the Tribunal‘s finding that the Sales Engineering
Representative was a workman was set aside. Referring to the District Sales
Representatives, the Court held that they were not doing clerical work, and
that they were principally employed for the purpose of promoting sales of the
company. Their main work was canvassing and obtaining orders. In that
connection, of course, they had to carry on some correspondence, but that
correspondence was incidental to the main work of pushing sales of the
company. In connection with promotion of sales, they had to make
recommendations for selection of agents and dealers; extension or curtailment
of credit facilities to agents, dealers and customers; investments of capital and
revenue in the shape of facilities at agent‘s premises or retail outlets; and
selection of suitable sites for retail outlets to maximise sales and negotiations
for terms of new sites. On these facts, the Court held that the work that they

117
were doing was neither manual nor clerical nor technical nor supervisory, and
further added that the work of canvassing and promoting sales could not be
included in any of the said four classifications and the decision given by the
Tribunal that they were not workmen was valid.
13. In S.K. Verma v. Mahesh Chandra [(1983) 4 SCC 214] the
dispute was whether Development Officers of the Life Insurance Corporation
of India (LIC) were workmen. The dispute arose on account of the dismissal
of the appellant-Development Officer w.e.f. 8.2.1969. The court noticed that
the change in the definition of workman brought about by the Amending Act
36 of 1956 which, as stated above, added to the originally enacted definition,
two more categories of employees, viz., those doing ‗supervisory‘ and
‗technical‘ work. The three-Judge Bench of this Court did not refer to the
earlier decisions in May & Baker , WIMCO and Burmah Shell cases.
The Bench only referred to the decision of this Court in Workmen v. Indian
Standards Institution [(1975) 2 SCC 847] where while considering
whether ISI was an ‗industry‘ or not, it was held that since the ID Act was a
legislation intended to bring about peace and harmony between management
and labour in an
‗industry,‘ the test must be so applied as to give the widest possible
connotation to the term ‗industry‘ and, therefore, a broad and liberal and not a
rigid and doctrinaire approach should be adopted to determine whether a
particular concern was an industry or not. The Court, therefore, held that to
decide the question whether the Development Officers in the LIC were
workmen or not, it should adopt pragmatic and not a pedantic approach and
consider the broad question as to on which side of the line the workman fell,
viz., labour or management, and then to consider whether there were any good
reasons for moving them on from one side to the other. The Court then noticed
that the LIC Staff Regulations classified the staff into four categories, viz., (i)
Officers, (ii) Development Officers, (iii) Supervisors and Clerical Staff, and
(iv) Subordinate Staff. The Court pointed out that Development Officers were
classified separately both from Officers on the one hand and Supervisors and
Clerical Staff on the other and that they as well as Class III and Class IV staff
other than Superintendents were placed on par inasmuch as their appointing
and disciplinary authority was the Divisional Manager whereas that of
Officers was Zonal Manager. The Court also referred to their scales of pay and
pointed out that the appellation '‗Development Officer'‘ was no more than a
glorified designation. The Court then referred to the nature of duties of the
Development Officers and pointed out that a Development Officer was to be a
whole-time employee and that his operations were to be restricted to a defined
area and that he was liable to be transferred. He had no authority whatsoever
to bind the Company in any way. His principal duty appeared to be to organise
and develop the business of the Corporation in the area allotted to him, and for
that purpose, to recruit active and reliable agents, to train them, to canvass new
business and to render post-sale services to policyholders. He was expected to
assist and inspire the agents. Even so, he had not the authority either to appoint
them or to take disciplinary action against them. He did not even supervise the
work of the agents though he was required to train them and assist them. He
was to be a friend, philosopher and guide of the agents working within his
jurisdiction and no more. He was expected to ―stimulate and exciteǁ the

118
agents to work while exercising no administrative control over them. The
agents were not his subordinates. He had no subordinate staff working under
him. The Court, therefore, held that it was clear that the Development Officer
could not by any stretch of imagination be said to be engaged in any
administrative or managerial work and, therefore, he was a workman within
the meaning of the ID Act. Accordingly, the order of the Industrial Tribunal
and the judgment of the High Court holding that he was not a workman were
set aside. As has been pointed out above, this decision did not refer to the
earlier three decisions in May & Baker, WIMCO and Burmah Shell
cases, and obviously proceeded on the basis that if an employee did not come
within the four exceptions to the definition, he should be held to be a
workman. This basis was in terms considered and rejected in Burmah Shell
case by a Coordinate Bench of three Judges. Further no finding is given by the
Court whether the Development Officer was doing clerical or technical work.
He was admittedly not doing manual work. We may have, therefore, to treat
this decision as per incuriam.
14. Ved Prakash Gupta v. Delton Cable India (P) Ltd. [(1984) 2
SCC 569] was decided by the same three-Judge Bench which decided the
S.K. Verma case [(1983) 4 SCC 214]. The question there was whether the
Security Inspector at the gate of the factory was a workman within the
meaning of the ID Act. The dispute had arisen on account of his dismissal
from service on 13.9.1979. The Court referred to the nature of duties
performed by the employee and found that a substantial part of the work of the
employee consisted of looking after the security of the factory and its property
by deputing the watchmen working under him to work at the factory gate or
sending them to the watch-tower or around the factory or to accompany
visitors to the factory and making entries in the visitors register and also
making entries regarding the material entering in and going out of the
premises of the factory. No written list of duties was given to the employee.
The appellant was also doing other items of work such as signing identity
cards of workmen, issuing some small items of stores like torch-cells to his
subordinate watchmen and filling up application forms of other workmen and
counter-signing them or recommending advances and loans or for promotion
of his subordinates. He could not appoint or dismiss any workmen or order
any enquiry against any workmen. He was working under the Security Officer
and various other heads of departments of the management. He was also
performing the duties of chowkidar when one of the chowkidars left the place
temporarily for taking tea etc. He was also accompanying Accounts Branch
people as a guard whenever they carried money. On these facts, the Court held
that the substantial duty of the employee was that of a security inspector at the
gate of the factory and it was neither managerial nor supervisory in nature in
the sense in which those terms were understood in industrial law. The Court,
therefore, held that he was a workman under the ID Act. This decision also did
not refer to the earlier decisions in May & Baker , WIMCO and Burmah
Shell cases and instead followed the ratio of the earlier decision in S.K.
Verma case. What is further, the decision turned on the facts of the case.
15. In Arkal Govind Raj Rao v. Ciba Geigy of India Ltd. [(1995)
3 SCC 371], the employee was first appointed as a Stenographer-cum
Accountant and later as Assistant. His services were terminated on 10.10.1982

119
which formed the subject-matter of an industrial dispute. One of the
preliminary points raised on behalf of the employer before the Labour Court
was whether he was a workman within the meaning of the ID Act. The Court
accepted the finding of the Labour Court that primarily the duties of the
employee were of a clerical nature and held that he was a workman. The Court
also referred to the earlier decision in S.K. Verma and Delton Cable
[(1984) 2 SCC 569] cases.
16. A. Sundarambal v. Government of Goa, Daman & Diu
[(1988) 4 SCC 42] was a case of a teacher in a school conducted by a private
society. Her services were terminated on 25.4.1975 which gave rise to the
industrial dispute. Two questions raised were whether the school was an
industry and whether the teacher was a workman under the ID Act. We are not
concerned with the first question in this case. While answering the second
question, the Court considered the meaning of the words ―skilled or
unskilled, manual, supervisory, technical or clerical workǁ in the definition of
workman under the ID Act and held that if an employee is not a person
engaged in doing work falling in any of the said categories, he would not be a
workman at all even though he is employed in an industry. For this purpose,
the Court relied on May & Baker case, and further held that teachers
employed by educational institutions whether they are imparting primary,
secondary, graduate or postgraduate education, cannot be called workmen.
Imparting of education which is the main function of a teacher cannot be
considered as unskilled or skilled, manual or supervisory or technical or
clerical work. The clerical work a teacher does is only incidental to his
principal work of teaching. The Court did not accept the suggestion that
having regard to the object of the ID Act, all employees in an industry except
those falling under the four exceptions to the definition should be treated as
workmen. The Court held that to accept the said argument would render the
words ―to do any skilled or unskilled manual, supervisory, technical or
clerical workǁ meaningless. The
Court held that a liberal construction as suggested would have been possible
only in the absence of the said words. The Court, therefore, upheld the
decision of the High Court that the appellant was not a workman though the
school was an industry. It is thus obvious from this decision given as late as in
1988 that the Court reiterated the earlier decision in May & Baker case and
instead that before a person could qualify to be a workman within the meaning
of the ID Act, he had to satisfy that he did work of any of the four types
mentioned in the main body of the definition and that it was not enough that
he did not fall within any of the four exceptions in the definition.
17. A still later decision of a two-Judge Bench of this court in T.P.
Srivastava v. National Tobacco Co. of India Ltd. [(1992) 1 SCC 281]
by referring to the decision in Burmah Shell case has also reiterated the law
laid down in May & Baker case. There the employee concerned was a
Section Salesman of the company whose services were terminated w.e.f.
12.7.1973. The Court held that in order to come within the definition of
workman under the ID Act the employee had to be employed to do the work
of one of the types referred to in the main body of the definition. The Court
also referred to the Sales Promotion Employees (Conditions of Service) Act,
1976 and pointed out that the provisions of that Act were not made applicable

120
to the employees of the company. The Court further pointed out that the object
of the said Act would show that persons employed for sales promotion
normally would not come within the definition of workman under the ID Act.
The Court accordingly upheld the decision of the Labour Court that the
employee was not a workman within the meaning of the ID Act.
18. The legal position that arises from the statutory provisions and from
the aforesaid survey of the decisions may now be summarised as follows.
19. Till 29.8.1956 the definition of workman under the ID Act was
confined to skilled and unskilled manual or clerical work and did not include
the categories of persons who were employed to do ‗supervisory‘ and
‗technical‘ work. The said categories came to be included in the definition
w.e.f. 29.8.1956 by virtue of the Amending Act 36 of 1956. It is, further, for
the first time that by virtue of the Amending Act 46 of 1982, the categories of
workmen employed to do ‗operational‘ work came to be included in the
definition. What is more, it is by virtue of this amendment that for the first
time those doing non-manual unskilled and skilled work also came to be
included in the definition with the result that the persons doing skilled and
unskilled work whether manual or otherwise, qualified to become workmen
under the ID Act.
20. The decision in May & Baker case was delivered when the definition
did not include either ‗technical‘ or ‗supervisory‘ or ‗operational‘ categories
of workmen. That is why the contention on behalf of the workmen had to be
based on the manual and clerical nature of the work done by the sales
representatives in that case. The Court had also, therefore, to decide the
category of the sales representatives with reference to whether the work done
by him was of a clerical or manual nature. The Court‘s finding was that the
canvassing for sale was neither clerical nor manual, and the clerical work done
by him formed a small fraction of his work. Hence, the sales representative
was not a workman.
21. In WIMCO case, the dispute had arisen on 18.8.1961 under the U.P.
Industrial Disputes Act and at the relevant time the definition of the workman
in that Act was the same as under the Central Act, i.e. the ID Act which had by
virtue of the Amending Act 36 of 1956 added to the categories of workmen,
those doing supervisory and technical work. However, the argument advanced
before the Court was not on the basis of the supervisory or technical nature of
the work done by the employees concerned, viz., inspectors, salesmen and
retail salesmen. The argument instead, both before the Industrial Tribunal and
this Court was based on the clerical work put in by them, which were found to
be 75 per cent of their work. This Court confirmed the finding of the Tribunal
that the employees concerned were workmen because 75 per cent of their time
was devoted to the writing work. The incidental question was whether the
sales-office and the factory and the factory-office formed part of one and the
same industrial establishment or were independent of each other. The Court
observed that it would be unreasonable to say that those who were producing
matches were workmen and those who sold them were not. In other words, the
Court did not hold that the work of selling matches was as much as operational
part of the industrial establishment as was that of manufacturing.
22. In Burmah Shell case, the workmen involved were Sales
Engineering Representatives and District Sales Representatives. The dispute

121
had arisen on 28.10.1967 when the categories of workmen doing supervisory
and technical work stood included in the definition of workman. The Court
found that the work done by the Sales Engineering Representatives as well as
District Sales Representatives was neither clerical nor supervisory nor
technical. An effort was made on behalf of the workmen to contend that the
work of Sales Engineering Representatives was technical. The Court repelled
that contention by pointing out that the amount of technical work that they did
was ancillary to the chief work of promoting sales and the mere fact that they
possessed technical knowledge for such purpose, did not make their work
technical. The Court also found that advising and removing complaints so as
to promote sales remained outside the scope of the technical work. As regards
the District Sales Representatives, the argument was that their work was
mainly of clerical nature which was negatived by the Court by pointing out
that the clerical work involved was incidental to their main work of promoting
sales. What is necessary further to remember in this case is that the Court
relied upon its earlier decision in May & Baker and pointed out that in order
to qualify to be a workman under the ID Act, a person concerned had to satisfy
that he fell in any of the four categories of manual, clerical, supervisory or
technical workman.
24. We thus have three three-Judge Bench decisions which have taken the
view that a person to be qualified to be a workman must be doing the work
which falls in any of the four categories, viz., manual, clerical, supervisory or
technical and two two-Judge Bench decisions which have by referring to one
or the other of the said three decisions have reiterated the said law. As against
this, we have three three-Judge Bench decisions which have without reference
to the decisions in May & Baker , WIMCO and Burmah Shell cases have
taken the other view which was expressly negatived, viz., if a person does not
fall within the four exceptions to the said definition he is a workman within
the meaning of the ID Act. These decisions are also based on the facts found
in those cases. They have, therefore, to be confined to those facts. Hence the
position in law as it obtains today is that a person to be a workman under the
ID Act must be employed to do the work of any of the categories, viz.,
manual, unskilled, skilled, technical, operational, clerical or supervisory. It is
not enough that he is not covered by either of the four exceptions to the
definition. We reiterate the said interpretation.

25. What is further necessary to remember is that in none of the aforesaid

decisions which we have discussed above, the word ‗operational‘ or the words
‗skilled‘ and ‗unskilled‘ independently of ‗manual‘ fell for consideration as
the amendment under which they were introduced came into operation for the
first time w.e.f. 21.8.1984 and the dispute involved in aforesaid decisions were
of the prior dates.
26. We may now refer to the relevant provisions of the Sales Promotion
Employees (Conditions of Service) Act, 1976 (the ‗SPE Act‘) which came
into force w.e.f. 6.3.1976 and applied forthwith to every establishment
engaged in pharmaceutical industry by virtue of its Section 1(4). The
definition of the Sales Promotion Employee in clause (d) of Section 2 of the
SPE Act as it was originally enacted reads as follows:

122
 ―(d) ‗sales promotion employee‘ means any person by whatever
name called (including an apprentice) employed or engaged in any
establishment for hire or reward to do any work relating to promotion
of sales or business, or both, and –
(i) who draws wages (being wages, not including any commission)
not exceeding seven hundred and fifty rupees per mensem; or
(ii) who had drawn wages (being wages, including commission) or
commission only, in either case, not exceeding nine thousand rupees in
the aggregate in the twelve months immediately preceding the months
in which this Act applies to such establishment and continues to draw
such wages or commission in the aggregate, not exceeding the amount
aforesaid in a year.
but does not include any such person who is employed or engaged
mainly in a management or administrative capacity.ǁ
27. It will be noticed that under the SPE Act, the sales promotion
employee was firstly, one who was engaged to do any work relating to
promotion of sales or business or both, and secondly, only such of them who
drew wages not exceeding Rs. 750 per mensem (excluding commission) or
those who had drawn wages (including commission) or commission not
exceeding Rs. 9000 per annum whether they were doing supervisory work or
not were included in the said definition. The only nature/type of work which
was excluded from the said definition was that which was mainly in
managerial or administrative capacity.
28. The SPE Act was amended by the Amending Act 48 of 1986 which
came into force w.e.f. 6.5.1987. By the said amendment, among others, the
definition of sales promotion employee was expanded so as to include all sales
promotion employees without a ceiling on their wages except those employed
or engaged in a supervisory capacity drawing wages exceeding Rs. 1600 per
mensem and those employed or engaged mainly in managerial or
administrative capacity.
29. Section 6 of that Act made the Workmen Compensation Act, 1923,
Industrial Disputes Act, 1947, (the ID Act), Minimum Wages Act, 1948,
Maternity Benefit Act, 1961, Payment of Bonus Act, 1965 and Payment of
Gratuity Act, 1972 applicable forthwith to the medical representatives. Sub-
section (2) of the said section while making the provisions of the ID Act, as in
force for the time being, applicable to the medical representatives stated as
follows:
―(2) The provisions of the Industrial Disputes Act, 1947 (14 of
1947), as in force for the time being, shall apply to, or in relation to,
sales promotion employees as they apply to, or in relation to, workmen
within the meaning of the Act and for the purposes of any proceeding
under that Act in relation to an industrial dispute, a sales promotion
employee shall be deemed to include a sales promotion employee who
has been dismissed, discharged or retrenched in connection with, or as
a consequence of, that dispute or whose dismissal, discharge or
retrenchment had led to that dispute.ǁ
In other words, on and from 6.3.1976 the provisions of the ID Act became
applicable to the medical representatives depending upon their wages up to

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6.5.1987 and without the limitation on their wages thereafter and upon the
capacity in which they were employed or engaged.

30. It appears that the SPE Act was brought on the statute book, as the
Statement of
Objects and Reasons accompanying the Bill shows, as a result of this Court‘s
judgment in
May & Baker case. The Committee of Petitions (Rajya Sabha) in its 13 th

Report submitted on 14.3.1972 had come to the conclusion that the ends of
social justice would be met only by suitably amending the definition of the
term ‗workman‘ in the ID Act in the manner that the medical representatives
were also covered by the definition of workman under the ID Act. The
Committee also felt that other workers engaged in sales promotion should
similarly be considered as workmen. The legislature, however, considered it
more appropriate to have a separate legislation for governing the conditions of
services of the sale promotion employees instead of amending the ID Act, and
hence the SPE Act.
31. It also appears that Parliament has amended the definition of
‗industry‘ by the
Amending Act 46 of 1982 to include, in the definition of industry in Section
2(j) of the ID Act, among others, any activity relating to the promotion of
sales or business, or both carried on by any establishment. However, that
amendment has not yet come into force. But the amendment made by the very
same Amending Act of 1982 to the definition of ‗workman‘ in Section 2(s) to
include those employed to do ‗operational work,‘ and to the definition of
‗wages‘ in Section 2(rr) to include ―any commission payable on the
promotion of sales or business or bothǁ has come into force w.e.f. 21.8.1984.
33. It was contended by Shri Sharma, appearing for the workmen that the
definition of workmen under the ID Act includes all employees except those
covered by the four exceptions to the said definition. His second contention
was that in any case, the medical representatives perform duties of skilled and
technical nature and, therefore, they are workmen within the meaning of the
said definition. We are afraid that both these contentions are untenable in the
light of the position of law discussed above. The first contention was expressly
negatived by two three-Judge Benches in May & Baker and Burmah Shell
cases as has been pointed out in detail above. As regards the second
contention, it really consists of two sub-contentions, viz., that the medical
representatives are engaged in ‗skilled‘ and ‗technical‘ work. As regards the
word ‗skilled,‘ we are of the view that the connotation of the said word in the
context in which it is used, will not include the work of a sales promotion
employee such as the medical representative in the present case. That word has
to be construed ejusdem generis and thus construed, would mean skilled work
whether manual or non-manual, which is of a genre of the other type of work
mentioned in the definition. The work of promotion of sales of the product or
services of the establishment is distinct from and independent of the types of
work covered by the said definition. Hence the contention that the medical
representatives were employed to do skilled work within the meaning of the
said definition, has to be rejected. As regards the ‗technical‘ nature of their

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work, it has been expressly rejected by this Court in Burmah Shell case.
Hence the contention has also to be rejected.
34. Shri Napathe, the learned counsel appearing for the petitioner in WP
No. 5259 of 1980 contended that inasmuch as the SPE Act, as it was originally
enacted, made a distinction between sales promotion employees drawing
wages not exceeding Rs. 750 per mensem (excluding commission) or Rs. 9000
per annum (including commission) and those drawing wages above the said
amounts, included not only the first category of employees in the said
definition, it was discriminatory as against those who fell in the second
category and was violative of Article 14 of the Constitution. According to him,
the classification made had no rational nexus with the object sought to be
achieved by the enactment. We are afraid that this argument is not tenable.
The service conditions and their protection are not fundamental rights. They
are creatures either of statute or of the contract of employment. What service
conditions would be available to particular employees, whether they are liable
to be varied, and to what extent are matters governed either by the statute or
the terms of the contract. The legislature cannot be mandated to prescribe and
secure particular service conditions to the employees or to a particular set of
employees. The service conditions and the extent of their protection as well as
the set of employees in respect of which they may be prescribed and protected,
are all matters to be left to the legislature. Hence when a legislation extends
protective umbrella to the employees of a particular class, it cannot be faulted
so long as the classification made is intelligible and has a rational nexus with
the object sought to be achieved. In the present case, the classification made
between two categories of the sales promotion employees, viz., those drawing
wages up to a particular limit and those drawing wages above it, is fairly
intelligible. The object of the legislation further appears to be to give
protection of the service conditions to the weaker sections of the employees
belonging to the said category. The legislature at that particular time thought
that it was not either necessary to extend the said protection to all the
employees belonging to the said category irrespective of their income or that
at that stage the circumstances including the conditions and the nature of the
employment and the sales business or operation did not warrant protection to
the economically stronger section of the said employees, and that
economically weaker among them alone needed the protection. Hence it
cannot be said that the classification made of the said employees on the basis
of their income had no rational nexus with the object sought to be achieved,
viz., the protection of the weaker section of the said employees. The extension
of the protective umbrella could not as a matter of right, therefore, be
demanded by those who draw more wages. Even in the definition of the
workman under the ID Act as well as under the very SPE Act, the
classification of those employed to do supervisory work has been made on the
basis of their monthly income although the work done by the two sections of
the workmen is the same, viz., supervisory and those drawing wages above the
particular limit have been excluded from the said definition. According to us,
it is permissible to classify workmen on the basis of their income although the
work that they do is of the same nature. The protective umbrella need not
cover all the workmen doing the particular type of work. It can extend to them
in stages. At what stage which of the said section of the employees should
come under the said umbrella is a matter which should be left to the legislature

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 which is the best judge of the matter. We, therefore, do not see any merit in
the contention.
37. We have already pointed out as to why the word ‗skilled‘ would not
include the kind of work done by the sale promotion employees. For the very
same reason, the word operational‘ would also not include the said work. To
hold that everyone who is connected with any operation of manufacturing or
sales is a workmen would render the categorisation of the different types of
work mentioned in the main part of the definition meaningless and redundant.
The interpretation suggested would in effect mean that all employees of the
establishment other than those expressly excepted in the definition are
workmen within the meaning of the said definition. The interpretation was
specifically rejected by this Court in May & Baker , WIMCO , Burmah
Shell and A. Sundarambal cases. Although such an interpretation was
given in S.K. Verma , Delton Cables and Ciba Geigy cases the
legislature impliedly did not accept the said interpretation as is evident from
the fact that instead of amending the definition of ‗workman‘ on the lines
interpreted in the said latter cases, the legislature added three specific
categories, viz., unskilled, skilled and operational. The ‗unskilled,‘ ‗skilled‘
were divorced from ‗manual‘ and were made independent categories. If the
interpretation suggested was accepted by the legislature, nothing would have
been easier than to amend the definition of ‗workman‘ by stating that any
person employed in connection with any operation of the establishment other
than those specifically expected is a workman. It must further be
recommended that the independent categories of ‗unskilled‘, ‗skilled‘ and
‗operational‘ were added to the main part of the definition after the SPE Act
was placed on the statute book.

13. Management of Chandramalai Estate v. Its Workmen AIR 1960 SC 902

K.C. DAS GUPTA, J. – On August 9, 1955, the Union of the workmen of
the Chandramalai Estate submitted to the Manager of the Estate a
memorandum containing fifteen demands. Though the Management agreed to
fulfil some of the demands the principal demands remained unsatisfied. On
August 29, 1955, the Labour Officer, Trichur, who had in the meantime been
apprised of the position by both the management of the Estate as well as the
Labour Union advised mutual negotiations between the representatives of the
management and workers. Ultimately the matter was recommended by the
Labour Officer to the Conciliation Officer Trichur for conciliation. The
Conciliation Officer‘s efforts proved in vain. The last meeting for Conciliation
appears to have been held on November 30, 1955. On the following day the
Union gave a notice and the workmen went on a strike with effect from
December 9, 1955. The strike ended on January 5, 1956. Prior to this, on
January 5, the Government had referred the dispute as regards five of the
demands for adjudication to the Industrial Tribunal, Trivandrum. Thereafter
by an order dated June 11, 1956, the dispute was withdrawn from the
Trivandrum Tribunal and referred to the Industrial Tribunal, Ernakulam. By its
award dated October 17, 1957, the Tribunal granted the workmen‘s demands
on all these issues. The present appeal has been preferred by the management
of the Chandramalai Estate against the Tribunal‘s award on three of these
issues. These three issues are stated in the reference thus:

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 ―1. Was the price realised by the management for the rice sold to
the workers after decontrol excessive; and if so, are the workers
entitled to get refund of the excessive value so collected?
2. Are the workers entitled to get cumbly allowance with
retrospective effect from the date it was stopped and what should be
the rate of such allowance?
3. Are the workers entitled to get wages for the period of the strike?ǁ
(2) On the first issue the workmen‘s case was that after the control on rice
was lifted by the Travancore-Cochin Government in April 1954, the
management which continued to sell rice to the workmen, charged at the
excessive rate of 12 annas per measure for the rice brought in excess of a
quota for 1-1/2 measure per head. This according to the workmen was
improper and unjustified and they claimed refund of the excess which they
have been made to pay. The management‘s case was that the workmen were
not bound to buy rice from the Estate‘s management and secondly, that only
the actual cost price and not any excess had been charged. The tribunal held on
a consideration of oral and documentary evidence that the management had
charged more than the cost price and held that they were bound to refund the
same.
(3) The second issue was in respect of a claim for cumbly allowance.
Chandramalai Tea Estate is situated at a high altitude. It is not disputed that it
had been customary for the Estates in this region to pay blanket allowance to
workmen to enable them to furnish themselves with blankets to meet the
rigours of the weather and that it had really become a part of the terms and
conditions of service. But in spite of it the management of this Estate stopped
payment of the allowance from 1949 onwards and resumed payment only in
1954. The management‘s defence was that any dispute not having been raised
about this till August 9, 1955, there was no reason for raising it at this late
stage. The Tribunal rejected this contention and awarded cumbly allowance of
Rs. 39 per workman – made up of Rs.7 per year for the year 1949, 1950 and
1951 and Rs. 9 per year for the years 1952 and 1953.
(4) On the third issue while the workmen pleaded that the strike was
justified the management contended that it was illegal and unjustified. The
Tribunal held that both parties were to blame for the strike and ordered the
management to pay workers 50 per cent of their total emoluments for the
strike period.
(5) On the question of excess price of rice having been collected the
appellant‘s contention before us is limited to the question of fact, whether the
Tribunal was right in its conclusion that more than cost price was realised.
The Tribunal has based its conclusion as regards the price realised by the
management on entries made in the management‘s own documents. As
regards what such rice cost the management it held that for the months of
April, July and August and September the price was shown by the
management‘s documents while for May and June these documents did not
disclose the price. For these two months the
Tribunal held the market price of rice as proved by the workers‘ witness No. 6
to have been the price at which the Estate‘s management procured their rice.
We are unable to see anything that would justify us in interfering with these
conclusions of facts. Indeed the documents on which the Tribunal has based

127
its conclusions were not even made part of the Paper-Book so that even if we
had wanted to consider this question ourselves it would be impossible for us to
do so. We are satisfied that the Tribunal was right in its conclusion as regards
the cost price of rice to the management and the price actually realised by the
management from workmen. The management‘s case that the workmen were
charged only the cost price of rice has rightly been rejected by the Tribunal.
The fact that workmen were not compelled to purchase rice from the
management is hardly material; the management had opened the shop to help
the workmen and if it is found that it charged excess rates, in fairness, the
workmen must be reimbursed. The award in so far as it directed refund of the
excess amount collected on the basis of the figures found by the Tribunal
cannot therefore be successfully challenged.

(6) On the question of the cumbly allowance it is important to note that the
only defence raised was that the demand had been made too late. The admitted
fact that it had been regularly paid year after year for many years till it was
stopped in 1949 is sufficient to establish the workmen‘s case that payment of a
proper cumbly allownace had become a part of their conditions of service. We
do not think that the mere fact that the workmen did not raise any dispute on
the management‘s refusal to implement this condition of service till
August 9, 1955 would be a sufficient reason to refuse them such payment. The
management had acted arbitrarily and illegally in stopping payment of these
allowances from 1949 to 1954. They cannot now be heard to say that they
should not be asked to pay it merely because the years have already gone by.
It is reasonable to think that even though the management did not pay the
allowance the workmen had to provide blankets for themselves at their own
expense. The Tribunal has acted justly in directing payment of the allowances
to the workmen for the years 1949 to 1953. The correctness of the rates
awarded by the Tribunal is not challenged before us. The Tribunal‘s award on
this issue also is therefore maintained.
(7) This brings us to the question whether the tribunal was right in
awarding 50 per cent of emoluments to the workmen for the strike period. It is
clear that on November 30, 1955, the Union knew that conciliation attempts
had failed. The next step would be a report by the Conciliation Officer, of such
failure to the Government and it would have been proper and reasonable for
the Union to address the Government at the same time and request that a
reference should be made to the Industrial Tribunal. The Union however did
not choose to wait and after giving notice on December 1, 1955 to the
management that it had decided to strike from December 9, 1955, actually
started the strike from that day. It has been urged on behalf of the appellant
that there was nothing in the nature of the demands to justify such hasty action
and in fairness the Union should have taken the normal and reasonable course
provided by law by asking the Government to make a reference under the
Industrial Disputes Act before it decided to strike. The main demands of the
Union were about the cumbly allowance and the price of rice. As regards the
cumbly allowance they had said nothing since 1949 when it was first stopped
till the Union raised it on August 9, 1955. The grievance for collection of
excess price of rice was more recent but even so it was not of such urgent
nature that the interests of labour would have suffered irreparably if the
procedure prescribed by law for settlement of such disputes through industrial

128
 tribunals was resorted to. After all it is not the employer only who suffers if
production is stopped by strikes. While on the one hand it has to be
remembered that strike is a legitimate and sometimes unavoidable weapon in
the hands of labour it is equally important to remember that indiscriminate and
hasty use of this weapon should not be encouraged. It will not be right for
labour to think that for any kind of demand a strike can be commenced with
impunity without exhausting reasonable avenues for peaceful achievement of
their objects. There may be cases where the demand is of such urgent and
serious nature that it would not be reasonable to expect labour to wait till after
making the Government to make a reference, in such cases, strike even before
such a request has been made may well be justified. The present is not
however one of such cases. In our opinion the workmen might well have
waited for some time after conciliation efforts failed before starting a strike
and in the meantime to have asked the Government to make the reference.
They did not wait at all. The conciliation efforts failed on November 30, 1955,
and on the very next day the Union made its decision on strike and sent the
notice of the intended strike from 9 December, 1955, and on the 9 December,
th th

1955 the workmen actually struck work. The Government appear to have
acted quickly and referred the dispute on January 3, 1956. It was after this that
the strike was called off. We are unable to see how the strike in such
circumstances could be held to be justified.
(8) The Tribunal itself appears to have been in two minds on the question.
Its conclusion appears to be that the strike though not fully justified, was half
justified and half unjustified; we find it difficult to appreciate this curious
concept of half justification. In any case, the circumstances of the present case
do not support the conclusion that the strike was justified at all. We are bound
to hold in view of the circumstances mentioned above that the Tribunal erred
in holding that the strike was at least partially justified. The error is so serious
that we are bound in the interests of justice to set aside the decision. There is,
in our view, no escape from the conclusion that the strike was unjustified and
so the workmen are not entitled to any wages for the strike period. We
therefore allow the appeal in it and set aside the award in so far as it directed
the payment of 50 per cent of the total emoluments for the strike period but
maintain the rest of the award.

14. Syndicate Bank v. K. Umesh Nayak (1994) 5 SCC 572

P.B. SAWANT, J. - These appeals have been referred to the Constitution

Bench in view of the apparent conflict of opinions expressed in three
decisions of this Court - a three-Judge Bench decision in Churakulam Tea
Estate (P) Ltd. v. Workmen [AIR 1969 SC 998] and a two-Judge Bench
decision in Crompton Greaves Ltd. v. Workmen [(1978) 3 SCC 155] on
the one hand, and a two-Judge Bench decision in Bank of India v. T.S.
Kelawala [(1990) 4 SCC 744] on the other. The question is whether
workmen who proceed on strike, whether legal or illegal, are entitled to wages
for the period of strike? In the first two cases, viz., Churakulam Tea Estate
and Crompton Greaves , the view taken is that the strike must be both legal
and justified to entitle the workmen to the wages for the period of strike
whereas the latter decision in T.S. Kelawala has taken the view that whether
the strike is legal or illegal, the employees are not entitled to wages for the

129
period of strike. To keep the record straight, it must be mentioned at the very
outset that in the latter case, viz., T.S. Kelawala the question whether the
strike was justified or not, was not raised and, therefore, the further question
whether the employees were entitled to wages if the strike is justified, was
neither discussed nor answered. Secondly, the first two decisions, viz.,
Churakulam Tea Estate and Crompton Greaves were not cited at the
Bar while deciding the said case and hence there was no occasion to consider
the said decisions there. The decisions were not cited probably because the
question of the justifiability or otherwise of the strike did not fall for
consideration. It is, however, apparent from the earlier two decisions, viz.,
Churakulam Tea Estate and Crompton Greaves that the view taken
there is not that the employees are entitled to wages for the strike period
merely because the strike is legal. The view is that for such entitlement the
strike has both to be legal and justified. In other words, if the strike is illegal
but justified or if the strike is legal but unjustified, the employees would not be
entitled to the wages for the strike period. Since the question whether the
employees are entitled to wages, if the strike is justified, did not fall for
consideration in the latter case, viz., in T.S. Kelawala , there is, as stated in
the beginning, only an apparent conflict in the decisions.
CA No. 2710 of 1991:
3. On 10-4-1989 a memorandum of settlement was signed by the
Indian Banks‘
Association and the All Indian Bank Employees‘ Unions including the
National
Confederation of Bank Employees as the fifth bipartite settlement. The
appellant-Bank and the respondent-State Bank Staff Union through their
respective federations were bound by the said settlement. In terms of clauses
8(d) and 25 of the memorandum of the said settlement, the appellant-Bank and
the respondent-Staff Union had to discuss and settle certain service conditions.
Pursuant to these discussions, three settlements were entered into between the
parties on 9-6-1989. These settlements were under Section 2(p) read with
Section 18(1) of the
Industrial Disputes Act, 1947 (the ‗Act‘). Under these settlements, the
employees of the appellant-Bank were entitled to certain advantages over and
above those provided under the All India Bipartite Settlement of 10-4-1989.
The said benefits were to be given to the employees retrospectively with effect
from 1-11-1989. It appears that the appellant-Bank did not immediately
implement the said settlement. Hence, the employees‘ Federation sent telex
message to the appellant-Bank on 22-6-1989 calling upon it to implement the
same without further loss of time. The message also stated that the employees
would be compelled to launch agitation for implementation of the settlement
as a consequence of which the working of the Bank and the service to the
customers would be affected. In response to this, the Bank in its reply dated
27-6-1989 stated that it was required to obtain the Government‘s approval for
granting the said extra benefits and that it was making efforts to obtain the
Government‘s approval as soon as possible. Hence the employees‘ Federation
should, in the meanwhile, bear it with. On 24-7-1989 the Employees‘
Federation again requested the Bank by telex of even date to implement the
said settlement forthwith, this time, warning the Bank that in case of its failure

130
to do so, the employees would observe a day‘s token strike after 8-8-1989.
The Bank‘s response to this message was the same as on the earlier occasion.
On 18-8-1989, the employees‘ Federation wrote to the Bank that the
settlements signed were without any precondition that they were to be cleared
by the Government and hence the Bank should implement the settlement
without awaiting the Government‘s permission. The Federation also, on the
same day, wrote to the Bank calling its attention to the provisions of Rule 58.4
of the Industrial Disputes (Central) Rules, 1957 (the ‗Rules‘) and requesting it
to forthwith forward copies of the settlements to the functionaries mentioned
in the said rule. By its reply of 23-8-1989 the Bank once again repeated its
earlier stand that the Bank is required to obtain Government‘s approval for
granting the said extra benefits and it was vigorously pursuing the matter with
the Government for the purpose. It also informed the Federation that the
Government was actively considering the proposal and an amicable solution
would soon be reached and made a request to the employees‘ Federation to
exercise restraint and bear with it so that their efforts with the Government
may not be adversely affected. By another letter of the same date, the Bank
informed the Federation that they would forward copies of the agreements in
question to the authorities concerned as soon as the Government‘s approval
regarding implementation of the agreement was received. The Federation by
the letter of 1-9-1989 complained to the Bank that the Bank had been
indifferent in complying with the requirements of the said Rule 58.4 and hence
the Federation itself had sent copies of the settlements to the authorities
concerned, as required by the said rule.
4. On the same day, i.e., 1-9-1989 the Federation issued a notice of strike
demanding immediate implementation of all agreements/ understandings
reached between the parties on 10-4-1989 and 9-6-1989 and the payment of
arrears of pay and allowances pursuant to them. As per the notice, the strike
was proposed to be held on three different days beginning from 18-9-1989. At
this stage, the Deputy Chief Labour Commissioner and Conciliation Officer
(Central), Bombay wrote both to the Bank and the Federation stating that he
had received information that the workmen in the Bank through the
employees‘ Federation had given a strike call for 18-9-1989. No formal strike
notice in terms of Section 22 of the Act had, however, been received by him.
He further informed that he would be holding conciliation proceedings under
Section 12 of the Act in the office of the Regional Labour Commissioner,
Bombay on 14-9-1989 and requested both to make it convenient to attend the
same along with a statement of the case in terms of Rule 41(a) of the Rules.
5. The conciliation proceedings were held on 14-9-1989 and thereafter on
23-9-1989. On the latter date, the employees‘ Federation categorically stated
that no dispute as such existed. The question was only of implementation of
the agreements/understandings reached between the parties on 10-4-1989 and
9-6-1989. However, the Federation agreed to desist from direct action if the
Bank would give in writing that within a fixed time they will implement the
agreements/understandings and pay the arrears of wages etc. under them. The
Bank‘s representatives stated that the Bank had to obtain prior approval of the
Government for implementation of the settlements and as they were the
matters with the Government for obtaining its concurrence, the employees
should not resort to strike in the larger interests of the community. He also
pleaded for some more time to examine the feasibility of resolving the matter

131
satisfactorily. The conciliation proceedings were thereafter adjourned to 26-9-
1989. On this date, the Bank‘s representatives informed that the Government‘s
approval had not till then been obtained, and prayed for time till 15-10-1989.
The next meeting was held on 27-9-1989. The Conciliation Officer found that
there was no meeting ground and no settlement could be arrived at. However,
he kept the conciliation proceedings alive by stating that in order to explore
the possibility of bringing about an understanding in the matter, he would
further hold discussions on 6-10-1989.
6. On 1-10-1989, the Employees‘ Federation gave another notice of strike
stating that the employees would strike work on 16-10-1989 to protest against
the inaction of the Bank in implementing the said agreements/settlements
validly arrived at between the parties. In the meeting held on 6-10-1989, the
Conciliation Officer discussed the notice of strike. It appears that in the
meanwhile on 3-10-1989 the employees‘ Federation had filed Writ Petition
No. 13764 of 1989 in the High Court for a writ of mandamus to the Bank to
implement the three settlements dated 9-6-1989. In that petition, the
Federation had obtained an order of interim injunction on 6-10-1989
restraining the Bank from giving effect to the earlier settlement dated 10-4-
1989 and directing it first to implement the settlements dated 9-6-1989. It
appears further that the employees had in the meanwhile, disrupted normal
work in the Bank and had resorted to gherao. The Bank brought these facts,
viz., filing of the writ petition and the interim order passed therein as well as
the disruption of the normal work and resort to gheraos by the employees, to
the notice of the Conciliation Officer. The meeting before the Conciliation
Officer which was fixed on 13-10-1989 was adjourned to 17-10-1989 on
which date, it was found that there was no progress in the situation. It was on
this date that the employees‘ Federation gave a letter to the Conciliation
Officer requesting him to treat the conciliation proceedings as closed.
However, even thereafter, the Conciliation Officer decided to keep the
conciliation proceedings open to explore the possibility of resolving the matter
amicably.
7. On 12-10-1989 the Bank issued a circular stating therein that if the
employees went ahead with the strike on 16-10-1989, the Management of the
Bank would take necessary steps to safeguard the interests of the Bank and
would deduct the salary for the days the employees would be on strike, on the
principle of ―no work, no payǁ. In spite of the circular, the employees went
on strike on 16-10-1989 and filed a writ petition on 7-11-1989 to quash the
circular of 12-10-1989 and to direct the Bank not to make any deduction of
salary for the day of the strike.
8. The said writ petition was admitted on 8-11-1989 and an interim
injunction was given by the High Court restraining the Bank from deducting
the salary of the employees for 16-10-1989.
9. Before the High Court, it was not disputed that the Bank was a public
utility service and as such Section 22 of the Act applied. It was the contention
of the Bank that since under the provisions of sub-section (1)(d) of the said
Section 22, the employees were prohibited from resorting to strike during the
pendency of the conciliation proceedings and for seven days after the
conclusion of such proceedings, and since admittedly the conciliation
proceedings were pending to resolve an industrial dispute between the parties,

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the strike in question was illegal. The industrial dispute had arisen because
while the Bank was required to take the approval of the Central Government
for the settlements in question, the contention of the employees was that no
such approval was necessary and there was no such condition incorporated in
the settlements. This being an industrial dispute within the meaning of the Act,
the conciliation proceedings were validly pending on the date of the strike. As
against this, the contention on behalf of the employees was that there could be
no valid conciliation proceedings as there was no industrial dispute. The
settlements were already arrived at between the parties solemnly and there
could be no further industrial dispute with regard to their implementation.
Hence, the conciliation proceedings were non est. The provisions of Section
22(1)(d) did not, therefore, come into play.
10. The learned Single Judge upheld the contention of the Bank and held
that the strike was illegal, and relying upon the decision of this Court in T.S.
Kelawala case dismissed the writ petition of the employees upholding the
circular under which the deduction of wages for the day of the strike was
ordered. Against the said decision, the employees‘ Federation preferred Letters
Patent Appeal before the Division Bench of the High Court and the Division
Bench by its impugned judgment reversed the decision of the learned Single
Judge by accepting the contention of the employees and negativing that of the
Bank. The Division Bench, in substance, held that the approval of the Central
Government as a condition precedent to their implementation was not
incorporated in the settlements nor was such approval necessary. Hence, there
was no valid industrial dispute for which the conciliation proceedings could be
held. Since the conciliation proceedings were invalid, the provisions of
Section 22(1)(d) did not apply. The strike was, therefore, not illegal. The
Court also held that the strike was, in the circumstances, justified since it was
the Bank Management‘s unjustified attitude in not implementing the
settlements, which was responsible for the strike. The Bench then relied upon
two decisions of this Court in Churakulam Tea Estate and Crompton
Greaves cases and held that since the strike was legal and justified, no
deduction of wages for the strike day could be made from the salaries of the
employees. The Bench thus allowed the appeal and quashed the circular of the
12-10-1989.
11. Since the matter has been referred to the larger bench on account of the
seeming difference of opinion expressed in T.S. Kelawala and the earlier
decisions in Churakulam Tea Estate and Crompton Greaves , we will
first discuss the facts and the view taken in the earlier two decisions.
12. In Churakulam Tea Estate which is a decision of three learned
Judges, the facts were that the appellant-Tea Estate which was a member of
the Planter‘s Association of Kerala (South India), from time to time since
1946, used to enter into agreements with the representatives of the workmen,
for payment of bonus. In respect of the years 1957, 1958 and 1959, there was
a settlement dated 25-1-1960 between the Managements of the various
plantations and their workers relating to payment of bonus. The agreement
provided that it would not apply to the appellant-Tea Estate since it had not
earned any profit during the said years. On the ground that it was not a party
to the agreement in question, the appellant declined to pay any bonus for the
said three years. The workmen started agitation claiming bonus. The

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conciliation proceedings in that regard failed. All 27 workers in the
appellant‘s factory struck work on the afternoon of 30-11-1961. The
Management declined to pay wages for the day of the strike to the said factory
workers. The Management also laid off without compensation all the workers
of the estate from 1-12-1961 to 8-12-1961. By its order dated 24-5-1962, the
State Government referred to the Industrial Tribunal three questions for
adjudication one of which was whether the factory workmen were entitled to
wages for the day of the strike.
13. The Tribunal took the view that the strike was both legal and justified
and hence directed the appellant to pay wages. This Court noted that at the
relevant time, conciliation proceedings relating to the claim for bonus had
failed and the question of referring the dispute for adjudication to the Tribunal
was under consideration of the Government. The Labour Minister had called
for a conference of the representatives of the Management and workmen and
the conference had been fixed on 23-11-1961. The representatives of the
workmen attended the conference, while the Management boycotted the same.
It was the case of the workmen that it was to protest against the recalcitrant
attitude of the Management in not attending the conference that the workers
had gone on strike from 1 p.m. on the day in question. On behalf of the
Management, the provisions of Section 23(a) of the Act were pressed into
service to contend that the strike resorted to by the factory workers was illegal.
The said provisions read as follows:
23. 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 lockout -
(a) during the pendency of conciliation proceedings before a
Board and seven days after the conclusion of such proceedings;
This Court noted that there were no conciliation proceedings pending on
30-11-1961 when the factory workers resorted to strike and hence the strike
was not hit by the aforesaid provision. The Court further observed that if the
strike was hit by Section 23(a), it would be illegal under Section 24(1)(i) of
the Act. Since, however, it was not so hit, it followed that the strike in this
case could not be considered to be illegal. We may quote the exact
observations of the Court which are as follows:
Admittedly there were no conciliation proceedings pending before
such a Board on 30-11-1961, the day on which the factory workers
went on strike and hence the strike does not come under Section 23(a).
No doubt if the strike, in this case, is hit by Section 23(a), it will be
illegal under Section 24(1)(i) of the Act; but we have already held that
it does not come under Section 23(a) of the Act. It follows that the
strike, in this case, cannot be considered to be illegal. Alternatively, it
was contended on behalf of the Management that in any event, the
strike in question was thoroughly unjustified. It was the Management‘s
case that it had participated in the conciliation proceedings and when
those proceedings failed, the question of referring the dispute was
pending before the Government. The workmen could have made a
request to the Government to refer the dispute for adjudication and,
therefore, the strike could not be justified. Support for this was also
sought by the Management from the observations made by this Court

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 in Chandramalai Estate, Ernakulam v. Workmen [AIR 1960
SC 902]. In that case, this Court had deprecated the conduct of
workmen going on strike without waiting for a reasonable time to
know the result of the report of the Conciliation Officer. This Court
held that the said decision did not support the Management since the
strike was not directly in connection with the demand for bonus but
was as a protest against the unreasonable attitude of the Management
in boycotting the conference held on 23-11-1961 by the Labour
Minister of the State. Hence, this Court held that the strike was not
unjustified. In view of the fact that there was no breach of Section
23(a) and in view also of the fact that in the aforesaid circumstances,
the strike was not unjustified, the Court held that the factory workers
were entitled for wages for that day and the Tribunal‘s award in that
behalf was justified.
14. In Crompton Greaves Ltd. the facts were that on 27-12-1967, the
appellant-Management intimated the workers‘ Union 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 workmen, the
Union sought the intervention of the Minister in charge of Labour and the
Labour Commissioner, in the matter. Thereupon, the Assistant Labour
Commissioner arranged a joint conference of the representatives of the Union
and of the Company in his office, with a view to explore the avenues for an
amicable settlement. Two conferences were accordingly held on 5-1-1968 and
9-1-1968 in which both the parties participated. As a result of these
conferences, the Company agreed to hold talks with the representatives of the
Union at its Calcutta office on the morning of 10-1-1968. The talk did take
place but no agreement could be arrived at. The Assistant Labour
Commissioner continued to use his good offices to bring about an amicable
settlement through another joint conference which was scheduled for 12-1-
1968. On the afternoon of 10-1-1968, the Company without informing the
Labour Commissioner that it was proceeding to implement its proposed
scheme of retrenchment, put up a notice of retrenching 93 of the workmen in
its Calcutta Office. Treating this step as a serious one demanding urgent
attention and immediate action, the workmen resorted to strike w.e.f. 11-1-
1968 after giving notice to the appellant and the Labour Directorate and
continued the same up to 26-6-1968. In the meantime, the industrial dispute in
relation to the retrenchment of the workmen was referred by the State
Government to the Industrial Tribunal on 1-3-1968. By a subsequent order
dated 13-12-1968, the State
Government also referred the issue of the workmen‘s entitlement to wages for
the strike period, for adjudication to the Industrial Tribunal. The Industrial
Tribunal accepted the workmen‘s demand for wages for the period from 11-1-
1968 to the end of February 1968 but rejected their demand for the remaining
period of the strike observing that ―the redress for retrenchment having been
sought by the Union itself through the Tribunal, there remained no
justification for the workmen to continue the strikeǁ.
15. In the appeal filed by the Management against the award of the
Tribunal in this Court, the only question that fell for determination was
whether the award of the Tribunal granting the striking workmen wages for

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the period from 11-1-1968 to 29-2-1968 was valid. In paragraph 4 of the
judgment, this Court observed as follows:
4. 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 provision 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 fact which has to be judged in the light
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.
After observing thus, the Court formulated the following two questions, viz.,
(1) whether the strike in question was illegal or unjustified? and (2) whether
the workmen resorted to force or violence during the said period, that is, 11-1-
1968 to 29-2-1968. While answering the first question, the Court pointed out
that no specific provision of law has been brought to its notice which rendered
the strike illegal during the period under consideration. The strike could also
not be said to be unjustified as before the conclusion of the talks for
conciliation which were going on through the instrumentality of the Assistant
Labour Commissioner, the Company had retrenched as many as 93 of its
workmen without even intimating the Labour Commissioner that it was
carrying out its proposed plan of effecting retrenchment of the workmen.
Hence, the Court answered the first question in the negative. In other words,
the Court held that the strike was neither illegal nor unjustified. On the second
question also, the Court held that there was no cogent and disinterested
evidence to substantiate the charge that the striking workmen had resorted to
force or violence. That was also the finding of the Tribunal and hence the
Court held that the wages for the strike period could not be denied to the
workmen on that ground as well.
16. It will thus be apparent from this decision that on the facts, it was
established that there was neither a violation of a provision of any statute to
render the strike illegal nor in the circumstances it could be held that the strike
was unjustified. On the other hand, it was the Management, by taking a
precipitatory action while the conciliation proceedings were still pending,
which had given a cause to the workmen to go on strike.
18. In Kairbetta Estate, Kotagiri v. Rajamanickam [AIR 1960 SC
893], this Court observed as follows:
Just as a strike is a weapon available to the employees for
enforcing their industrial demands, a lockout is a weapon available to
the employer to persuade by a coercive process the employees to see
his point of view and to accept his demands. In the struggle between
capital and labour, the weapon of strike is available to labour and is
often used by it, so is the weapon of lockout available to the employer
and can be used by him. The use of both the weapons by the respective
parties must, however, be subject to the relevant provisions of the Act.
Chapter V which deals with strikes and lockouts clearly brings out the
antithesis between the two weapons and the limitations subject to
which both of them must be exercised.

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 19. In Chandramalai Estate the facts were that on 9-8-1955, the
workers‘ Union submitted to the Management a charter of fifteen demands.
Though the Management agreed to fulfil some of the demands, the principal
demands remained unsatisfied. On 29-8-1955, the Labour Officer, Trichur,
who had in the meantime been apprised of the situation both by the
Management and the workers‘ Union, advised mutual negotiations between
the representatives of the Management and the workers. Ultimately, the matter
was recommended by the Labour Officer to the Conciliation Officer, Trichur
for conciliation. The Conciliation Officer‘s efforts proved in vain. The last
meeting for conciliation was held on 30-11-1955. On the following day, the
Union gave a strike notice and the workmen went on strike w.e.f. 9-12-1955.
The strike ended on 5-1-1956. Prior to this, on 5-1-1956, the Government had
referred the dispute with regard to five of the demands for adjudication to the
Industrial Tribunal, Trivandrum. Thereafter, by its order dated 11-6-1956, the
dispute was withdrawn from the Trivandrum Tribunal and referred to the
Industrial Tribunal, Ernakulam. By its award dated 19-10-1957, the Tribunal
granted all the demands of the workmen. The appeal before this
Court was filed by the Management on three of the demands. One of the
issues was: ―Are the workers entitled to get wages for the period of the
strike?ǁ. On this issue, before the Tribunal, the workmen had pleaded that the
strike was justified while the Management contended that strike was both
illegal and unjustified. The Tribunal had recorded a finding that both the
parties were to blame for the strike and ordered the Management to pay the
workers 50% of their total emoluments for the strike period.
20. This Court while dealing with the said question held that it was clear
that on 30-11-1955, the Union knew that the conciliation attempts had failed
and the next step would be the report by the Conciliation Officer to the
Government. It would, therefore, have been proper and reasonable for the
workers‘ Union to address the Government and request that a reference be
made to the Industrial Tribunal. The Union did not choose to wait and after
giving notice to the Management on 1-12-1955 that it had decided to strike
work from 9-12-1955, actually started the strike from that date. The Court also
held that there was nothing in the nature of the demands made by the Union to
justify the hasty action. The Court then observed as under:
The main demands of the Union were about the cumbly allowance and
the price of rice. As regards the cumbly allowance they had said
nothing since 1949 when it was first stopped till the Union raised it on
9-8-1955. The grievance for collection of excess price of rice was
more recent but even so it was not of such an urgent nature that the
interests of labour would have suffered irreparably if the procedure
prescribed by law for settlement of such disputes through Industrial
Tribunals was resorted to. After all it is not the employer only who
suffers if production is stopped by strikes. While on the one hand it
has to be remembered that strike is a legitimate and sometimes
unavoidable weapon in the hands of labour it is equally important to
remember that indiscriminate and hasty use of this weapon should not
be encouraged. It will not be right for labour to think that for any kind
of demand a strike can be commenced with impunity without
exhausting reasonable avenues for peaceful achievement of their

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 objects. There may be cases where the demand is of such an urgent
and serious nature that it would not be reasonable to expect labour to
wait till after asking the Government to make a reference. In such
cases, strike even before such a request has been made may well be
justified. The present is not however one of such cases. In our opinion
the workmen might well have waited for some time after conciliation
efforts failed before starting a strike and in the meantime to have asked
the Government to make a reference.
They did not wait at all. The conciliation efforts failed on 30-11-
1955, and on the very next day the Union made its decision on strike
and sent the notice of the intended strike from the 9-12-1955, and on
the 9-12-1955, the workmen actually struck work. The Government
appear to have acted quickly and referred the dispute on 3-1-1956. It
was after this that the strike was called off. We are unable to see how
the strike in such circumstances could be held to be justified.
21. In India General Navigation and Railway Co. Ltd. v.
Workmen [AIR 1960 SC 219], this Court while dealing with the issues raised
there, observed as follows:
In the first place, it is a little difficult to understand how a strike in
respect of a public utility service, which is clearly, illegal, could at the
same time be characterised as ‗perfectly justified‘. These two
conclusions cannot in law coexist. The law has made a distinction
between a strike which is illegal and one which is not, but it has not
made any distinction between an illegal strike which may be said to be
justifiable and one which is not justifiable. This distinction is not
warranted by the Act, and is wholly misconceived, specially in the
case of employees in a public utility service. Every one participating in
an illegal strike, is liable to be dealt with departmentally, of course,
subject to the action of the Department being questioned before an
Industrial Tribunal, but it is not permissible to characterise an illegal
strike as justifiable. 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. Therefore, the tendency
to condone what has been declared to be illegal by statute, must be
deprecated, and 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.
22. We may now refer to the decision of this Court in the T.S. Kelawala
case where allegedly a different view has been taken from the one taken in the
aforesaid earlier decisions and in particular in Churakulam Tea Estate and
Crompton Greaves cases.
23. The facts in the case were that some demands for wage revision made
by the employees of all the banks were pending at the relevant time and in
support of the said demands, the All India Bank Employees Association, gave

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a call for a countrywide strike. The appellant-Bank issued a circular on 23-9-
1977 to all its branch managers and agents to deduct wages of the employees
who participate in the strike for the days they go on strike.
The employees‘ Union gave a call for a four-hour strike on 29-12-1977.
Hence, the Bank on 27-12-1977 issued a circular warning the employees that
they would be committing a breach of their contract of service if they
participated in the strike and that they would not be entitled to draw the salary
for the full day if they do so and consequently they need not report for work
for the rest of the working hours of that day. Notwithstanding it, the
employees went on four-hour strike from the beginning of the working hours
on 29-12-1977. There was no dispute that banking hours for the public
covered the said four hours. The employees, however, resumed work on that
day after the strike hours and the Bank did not prevent them from doing so. On
16-1-1978, the Bank issued a circular directing its managers and agents to
deduct the full day‘s salary of those of the employees who had participated in
the strike. The employees‘ union filed a writ petition in the High Court for
quashing the circular. The petition was allowed. The Bank‘s Letters Patent
Appeal in the High Court also came to be dismissed. The Bank preferred an
appeal against the said decision of the High Court. On these facts, the only
questions relevant for our present purpose which were raised in the case before
the High Court as well as in this Court were whether the Bank was entitled to
deduct wages of workmen for the period of strike and further whether the
Bank was entitled to deduct wages for the whole day or pro rata only for the
hours for which the employees had struck work. The incidental questions were
whether the contract of employment was divisible and whether when the
service rules and the regulations did not provide for deduction of wages, the
Bank could do so by an administrative circular. We are not concerned with the
incidental questions in this case. What is necessary to remember is the
question whether the strike was legal or illegal and whether it was justified or
unjustified was not raised either before the High Court or in this Court. The
only question debated was whether, even assuming that the strike was legal,
the Bank was entitled to deduct wages as it purported to do under the circular
in question. It is while answering this question that this Court held that the
legality or illegality of the strike had nothing to do with the liability for the
deduction of the wages. Even if the strike is legal, it does not save the workers
from losing the salary for the period of the strike. It only saves them from
disciplinary action, since the Act impliedly recognises the right to strike as a
legitimate weapon in the hands of the workmen. However, this weapon is
circumscribed by the provisions of the Act and the striking of work in
contravention of the said provisions makes it illegal. The illegal strike is a
misconduct which invites disciplinary action while the legal strike does not do
so. However, both legal as well as illegal strike invite deduction of wages on
the principle that whoever voluntarily refrains from doing work when it is
offered to him, is not entitled for payment for work he has not done. In other
words, the Court upheld the dictum ―no work no payǁ. Since it was not the
case of the employees that the strike was justified, neither arguments were
advanced on that basis nor were the aforesaid earlier decisions cited before the
Court.
24. There is, therefore, nothing in the decisions of this Court in
Churakulam Tea Estate and Crompton Greaves cases or the other

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earlier decisions cited above which is contrary to the view taken in T.S.
Kelawala . What is held in the said decisions is that to entitle the workmen to
the wages for the strike period, the strike has both to be legal and justified. In
other words, if the strike is only legal but not justified or if the strike is illegal
though justified, the workers are not entitled to the wages for the strike period.
In fact, in India General Navigation case the Court has taken the view
that a strike which is illegal cannot at the same time be justifiable. According
to that view, in all cases of illegal strike, the employer is entitled to deduct
wages for the period of strike and also to take disciplinary action. This is
particularly so in public utility services.
25. We, therefore, hold endorsing the view taken in T.S. Kelawala that
the workers are not entitled to wages for the strike period even if the strike is
legal. To be entitled to the wages for the strike period, the strike has to be both
legal and justified. Whether the strike is legal or justified are questions of fact
to be decided on the evidence on record. Under the Act, the question has to be
decided by the industrial adjudicator, it being an industrial dispute within the
meaning of the Act.
26. In the present case the High Court, relying on Churakulam Tea
Estate and Crompton Greaves cases has held that the strike was both legal
and justified. It was legal according to the High Court because the reference to
the conciliation proceedings was itself illegal and, therefore, in the eye of the
law, no conciliation proceedings were pending when the employees struck
work. The strike was, further justified according to the High Court because the
Bank had taken a recalcitrant attitude and had insisted upon obtaining the
approval of the Central Government for the implementation of the agreements
in question, when no such approval was either stipulated in the agreements or
required by law. We are afraid that the High Court has exceeded its
jurisdiction in recording the said findings. It is the industrial adjudicator who
had the primary jurisdiction to give its findings on both the said issues.
Whether the strike was legal or illegal and justified or unjustified, were issues
which fell for decision within the exclusive domain of the industrial
adjudicator under the Act and it was not primarily for the High Court to give
its findings on the said issues. The said issues had to be decided by taking the
necessary evidence on the subject. We find nothing in the decision of the High
Court to enlighten us as to whether notwithstanding the fact that the
agreements in question had not stipulated that their implementation was
dependent upon the approval of the Central Government; in fact, the Bank was
not duty-bound in law to take such approval. If it was obligatory for the Bank
to do so, then it mattered very little whether the agreements in question
incorporated such a stipulation or not. If the approval was necessary, then
there did exist a valid industrial dispute between the parties and the
conciliation proceedings could not be said to be illegal. It must be noted in this
connection that the said agreements provided for benefits over and above the
benefits which were available to the employees of the other Banks.
Admittedly, the employees struck work when the conciliation proceedings
were still pending. Further, the question whether the implementation of the
said agreements was of such an urgent nature as could not have waited the
outcome of the conciliation proceedings and if necessary, of the adjudication
proceedings under the Act, was also a matter which had to be decided by the

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industrial adjudicator to determine the justifiability or unjustifiability of the
strike.
27. It has to be remembered in this connection that a strike may be illegal
if it contravenes the provisions of Sections 22, 23 or 24 of the Act or of any
other law or of the terms of employment depending upon the facts of each
case. Similarly, a strike may be justified or unjustified depending upon several
factors such as the service conditions of the workmen, the nature of demands
of the workmen, the cause which led to the strike, the urgency of the cause or
the demands of the workmen, the reason for not resorting to the dispute
resolving machinery provided by the Act or the contract of employment or the
service rules and regulations etc. An enquiry into these issues is essentially an
enquiry into the facts which in some cases may require taking of oral and
documentary evidence. Hence such an enquiry has to be conducted by the
machinery which is primarily invested with the jurisdiction and duty to
investigate and resolve the dispute. The machinery has to come to its findings
on the said issue by examining all the pros and cons of the dispute as any
other dispute between the employer and the employee.
28. Shri Garg appearing for the employees did not dispute the proposition
of law that notwithstanding the fact that the strike is legal, unless it is justified,
the employees cannot claim wages for the strike period. However, he
contended that on the facts of the present case, the strike was both legal and
justified. We do not propose to decide the said issues since the proper forum
for the decision on the said issues in the present case is the adjudicator under
the Act.
29. The strike as a weapon was evolved by the workers as a form of direct
action during their long struggle with the employers. It is essentially a weapon
of last resort being an abnormal aspect of the employer-employee relationship
and involves withdrawal of labour disrupting production, services and the
running of the enterprise. It is abuse by the labour of their economic power to
bring the employer to see and meet their viewpoint over the dispute between
them. In addition to the total cessation of work, it takes various forms such as
working to rule, go slow, refusal to work overtime when it is compulsory and
a part of the contract of employment, ―irritation strikeǁ or staying at work but
deliberately doing everything wrong, ―running-sore strikeǁ, i.e., disobeying
the lawful orders, sit-down, stay-in and lie-down strike etc. etc. The cessation
or stoppage of works whether by the employees or by the employer is
detrimental to the production and economy and to the well-being of the society
as a whole. It is for this reason that the industrial legislation while not denying
the right of workmen to strike, has tried to regulate it along with the right of
the employer to lockout and has also provided a machinery for peaceful
investigation, settlement, arbitration and adjudication of the disputes between
them. Where such industrial legislation is not applicable, the contract of
employment and the service rules and regulations many times, provide for a
suitable machinery for resolution of the disputes. When the law or the contract
of employment or the service rules provide for a machinery to resolve the
dispute, resort to strike or lockout as a direct action is prima facie unjustified.
This is, particularly so when the provisions of the law or of the contract or of
the service rules in that behalf are breached. For then, the action is also illegal.

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 30. The question whether a strike or lockout is legal or illegal does not
present much difficulty for resolution since all that is required to be examined
to answer the question is whether there has been a breach of the relevant
provisions. However, whether the action is justified or unjustified has to be
examined by taking into consideration various factors some of which are
indicated earlier. In almost all such cases, the prominent question that arises is
whether the dispute was of such a nature that its solution could not brook
delay and await resolution by the mechanism provided under the law or the
contract or the service rules. The strike or lockout is not to be resorted to
because the party concerned has a superior bargaining power or the requisite
economic muscle to compel the other party to accept its demand. Such
indiscriminate use of power is nothing but assertion of the rule of ―might is
rightǁ. Its consequences are lawlessness, anarchy and chaos in the economic
activities which are most vital and fundamental to the survival of the society.
Such action, when the legal machinery is available to resolve the dispute, may
be hard to justify. This will be particularly so when it is resorted to by the
section of the society which can well await the resolution of the dispute by the
machinery provided for the same. The strike or lockout as a weapon has to be
used sparingly for redressal of urgent and pressing grievances when no means
are available or when available means have failed, to resolve it. It has to be
resorted to, to compel the other party to the dispute to see the justness of the
demand. It is not to be utilised to work hardship to the society at large so as to
strengthen the bargaining power. It is for this reason that industrial legislation
such as the Act places additional restrictions on strikes and lockouts in public
utility services.
31. With the emergence of the organised labour, particularly in public
undertakings and public utility services, the old balance of economic power
between the management and the workmen has undergone a qualitative
change in such undertakings. Today, the organised labour in these institutions
has acquired even the power of holding the society at large to ransom, by
withholding labour and thereby compelling the managements to give in on
their demands whether reasonable or unreasonable. What is forgotten many
times, is that as against the employment and the service conditions available to
the organised labour in these undertakings, there are millions who are either
unemployed, underemployed or employed on less than statutorily minimum
remuneration. The employment that workmen get and the profits that the
employers earn are both generated by the utilisation of the resources of the
society in one form or the other whether it is land, water, electricity or money
which flows either as share capital, loans from financial institutions or
subsidies and exemptions from the Governments. The resources are to be used
for the well-being of all by generating more employment and production and
ensuring equitable distribution. They are not meant to be used for providing
employment, better service conditions and profits only for some. In this task,
both the capital and the labour are to act as the trustees of the said resources on
behalf of the society and use them as such. They are not to be wasted or
frittered away by strikes and lockouts. Every dispute between the employer
and the employee has, therefore, to take into consideration the third
dimension, viz., the interests of the society as a whole, particularly the interest
of those who are deprived of their legitimate basic economic rights and are
more unfortunate than those in employment and management. The justness or

142
 otherwise of the action of the employer or the employee has, therefore, to be
examined also on the anvil of the interests of the society which such action
tends to affect. This is true of the action in both public and private sector. But
more imperatively so in the public sector. The management in the public
sector is not the capitalist and the labour an exploited lot. Both are paid
employees and owe their existence to the direct investment of public funds.
Both are expected to represent public interests directly and have to promote
them.
32. We are, therefore, more than satisfied that the High Court in the
present case had erred in recording its findings on both the counts viz., the
legality and justifiability, by assuming jurisdiction which was properly vested
in the industrial adjudicator. The impugned order of the High Court has,
therefore, to be set aside.

33. Hence we allow the appeal. Since the dispute has been pending since
1989, by exercising our power under Article 142 of the Constitution, we direct
the Central Government to refer the dispute with regard to the deduction of
wages for adjudication to the appropriate authority under the Act within eight
weeks from today. The appeal is allowed accordingly with no order as to
costs.
CA No. 2689 of 1989 and CA Nos. 2690-92 of 1989 :
34. In these two matters, arising out of a common judgment of the High
Court, the question involved was materially different, viz., whether when the
employees struck work only for some hours of the day, their salary for the
whole day could be deducted. As in the case of T.S. Kelawala , in this case
also the question whether the strike was justified or not was not raised. No
argument has also been advanced on behalf of the employees before us on the
said issue. In the circumstances, the law laid down by this Court in T.S.
Kelawala , with which we concur, will be applicable. The wages of the
employees for the whole day in question, i.e., 29-12-1977 are liable to be
deducted. The appeals are, therefore, allowed and the impugned decision of
the High Court is set aside. There will, however, be no order as to costs.

15. Essorpe Mills Ltd. v . Presiding Officer, Labour Court (2008) 7 SCC
594

DR. ARIJIT PASAYAT, J. - Challenge in this appeal is to the order

passed by a Division Bench of the Madras High Court dismissing the writ
appeals filed by the appellant. Background facts as projected by the appellant
are as follows:
Respondents 2 to 23 went on illegal strike from 8-11-1990. Respondent 15
and one S.L. Sundaram who had died in the meantime were the first to strike
work in the blow room resulting in the stoppage of entire operation of the
appellant‘s textile mills. Other workmen followed. All the fifty-five workers
who resorted to strike were suspended. Even after their suspension,
Respondents 2 to 17 remained in the premises causing obstruction. All the
fifty-five workers were charged for misconduct. Out of them thirty-four
apologised and they were taken back into service. But subsequently, three

143
more also apologised and they too were allowed to join duty. Respondents 2 to
23, however, did not relent.
3. On 14-3-1991 the General Secretary of the Tamil Nadu Panchalai
Workers‘ Union served a strike notice on the management purportedly under
Section 22(1) of the Industrial
Disputes Act, 1947 (―the Actǁ) stating that ―strike would commence on or
after 24-3-1991ǁ and on 8th and 24th April and 13-5-1991. Respondents 2 to
23 were dismissed from service after holding a disciplinary enquiry. The
petitions were filed under Section 2-A of the Act for reinstatement with back
wages and continuity of service. The Labour Court by its award dated 24-1-
1994 held that the strike was illegal. However, in purported exercise of powers
under Section 11-A of the Act the Labour Court substituted the punishment of
dismissal by order of discharge and awarded compensation of Rs 50,000 to
each workman.
4. The award was challenged by the appellant as well as the workmen
before the High Court. On 5-8-2000 a learned Single Judge of the High Court
allowed Writ Petition No. 8389 of 1995 filed by Respondents 2 to 23 on the
ground of non-compliance with Section 33(2)(b) of the Act and directed
reinstatement of the workmen with full back wages and continuity of service.
He took the view that a copy of the strike notice dated 14-3-1991 was sent to
the Conciliation Officer and, therefore, conciliation proceedings were pending
on the date of dismissal and since the dismissal was without the approval of
the Conciliation Officer in terms of Section 33 of the Act the same was illegal.
Reliance was placed on a decision of this Court in Jaipur Zila Sahakari
Bhoomi Vikas Bank Ltd. v. Ram Gopal Sharma [(2002) 2 SCC 244].
5. The appellant‘s Writ Petition No. 10239 of 1999 against the alteration
of punishment was dismissed. On 30-12-2003 by the impugned judgment a
Division Bench of the High Court dismissed the writ appeals holding that the
judgment of this Court did not make any distinction between the proceeding
pending before the Conciliation Officer and those pending before an Industrial
Tribunal.
6. On 21-2-2004 the special leave petitions were filed and when the matter
came up for hearing on 20-3-2006 after notice, a Bench of this Court
suggested certain terms for amicable settlement as set out in the order of the
said date. The appellant agreed to the terms proposed, but Respondents 2 to 23
did not agree.

7. The basic stand of the appellant is as follows:

The High Court failed to appreciate that in the absence of a valid notice of
strike in terms of Section 22(1) there can be no commencement of conciliation
proceedings in terms of Section 20(1) of the Act. Section 22(1) prohibits a
strike in a public utility service, in breach of contract, without giving to the
employer advance notice of six weeks. It prohibits strike (a) within the notice
period of six weeks, (b) within fourteen days of giving such notice, (c) before
the expiry of the date of strike specified in such a notice, (d) during the
pendency of any conciliation proceedings before a Conciliation Officer and
seven days after the conclusion of such proceedings. The strike notice issued
on 14-3-1991 stating that the strike will commence on or after 24-3-1991 i.e.
(just ten days‘ notice) does not satisfy the requirement of advance notice

144
stipulated under Section 22(1). Therefore, it is not a valid notice.
Consequently, in the eye of the law there was no commencement of
conciliation proceedings as a result of the said notice.
8. On the dates of dismissal of workmen no conciliation proceeding was
pending in the eye of the law. Unless a conciliation proceeding was pending at
the time of dismissal of workmen, Section 33 will not be attracted and there is
no question of seeking permission of the Conciliation Officer in such a case.
9. The High Court failed to appreciate that in terms of Section 33-A for not
obtaining permission of the Conciliation Officer under Section 33, the only
legal consequence provided is that the Conciliation Officer shall take the
complaint of contravention of the provisions of Section 33 into account in
mediating in and promoting the settlement of such industrial dispute.
Therefore, the order of dismissal in any event was not illegal. There was no
complaint made to the Conciliation Officer in this case.
10. The Conciliation Officer, unlike the Labour Court or an Industrial
Tribunal, has no power of adjudication. Therefore, he cannot set aside the
order of dismissal. The dismissal remains valid.
11. The stand of Respondents 2 to 23 on the other hand is that the appellant
did not raise the plea that there was no conciliation proceeding pending at the
time of dismissal of the workmen. It is stated that there was deemed
conciliation. Before the learned Single Judge the primary issue revolved
around the question as to whether any notice of conciliation had been issued
by the Conciliation Officer and, therefore, there was pendency of conciliation
proceeding. The learned Single Judge held against the appellant relying on a
decision of this Court in Lokmat Newspapers (P) Ltd. v.
Shankarprasad [(1999) 6 SCC 275] holding that once strike notice is issued
under Section 22 of the Act, conciliation proceeding is deemed to have been
commenced and no further notice from the Conciliation Officer is necessary.
12. The stand that the notice of strike does not meet the requirements of
Section 22 of the Act is also not tenable. Section 22(1)(d) of the Act provides
that no person employed in a public utility service shall go on strike in breach
of contract during the pendency of any conciliation proceedings before the
Conciliation Officer and seven days after the conclusion of the proceedings.
The Conciliation Officer shall hold the conciliation proceedings when notice
under Section 22 of the Act has been given.

13. Under Section 12(3) if a settlement is arrived at during conciliation

proceedings, a report is to be sent by the Conciliation Officer to the
Government together with the settlement. If no settlement is arrived at the
Conciliation Officer has to send the failure report under Section 12(4) of the
Act and the Government has to refer the dispute under Section 12(5). Unlike
in the case of non-public utility service, the concept of deemed conciliation
has been statutorily provided in the case of public utility service so that
workmen did not go on strike during pendency of the conciliation proceedings.
When a strike notice under Section 22 of the Act has been given the
Conciliation Officer is mandatorily required to hold the conciliation
proceedings under Section 20(1) of the Act.

145
 14. The purpose of providing for deemed conciliation is to prevent
dislocation of public utility service. The object of enacting clauses (a) and (b)
of Section 22(1) is for the purpose of ensuring that workers do not rush into
strike and give a chance to the Conciliation Officer to resolve the dispute.
15. It is therefore clear that there was a deemed conciliation proceeding
when the notice under Section 22 in Form ‗O‘ of the Tamil Nadu Industrial
Disputes Rules, 1958 (in short ―the Rulesǁ) has been issued. Several
alternatives are provided in Section 22(1) and clauses
(a) to (d) are the alternatives which is clear from the use of the expression
―orǁ. As such the time-limit set out in either one of clause (a) or (b) would
therefore have to be read disjunctively which is clear from clause (c) which
provides that strike shall not be undertaken
―before the expiry of the date of strike specified in any such notice as
aforesaidǁ. It is further submitted that decision in Jaipur Zila case has full
application.
16. A few facts which have relevance need to be noted. The notice was
given about the proposed strike after the strike. Undisputedly, the workers
resorted to strike on 8-11-1990. The notice was given on 14-3-1991. Different
stages enumerated by Section 22(1) are as follows:
(i) advance notice of six weeks;
(ii) fourteen days given to the employer to consider the notice;
(iii) the workmen giving the notice cannot go on strike before the
indicated date of strike;
(iv) pendency of any conciliation proceedings.
17. In this case no conciliation proceedings were pending under sub-
section (4). Sub-section (4) of Section 22 states that the notice of strike
referred to in sub-section (1) has to be given in such manner as may be
prescribed. The Central Rule 71 prescribes the manner in which the notice has
to be given and the notice is in Form ‗L‘. The notice as mandated under
Section 22 has to be given to the employer.
18. Learned counsel for the respondent relied on Section 20 which deals
with commencement and conclusion of proceedings. According to the High
Court the conciliation proceeding is deemed to have been commenced on the
date on which the notice of strike under Section 22 is received by the
Conciliation Officer.
19. The High Court seems to have lost sight of the crucial words ―notice
of strike or lockout under Section 22ǁ. Section 22 presupposes a notice before
the workmen resorted to strike. The notice has to be given to the employer.
Sub-section (6) of Section 22 also has relevance because within a particular
time period after receipt of the notice under sub-section
(1) he shall report to the appropriate Government or to such authority as the
Government may prescribe.
20. The stand of the respondents is that simultaneously notice is required
to be given to the Conciliation Officer in Form ‗L‘ and, therefore, Section 20
has full application. This plea is clearly untenable because Form ‗L‘ refers to
Rule 71 and not Section 22. There is nothing in Section 22 which requires
giving of intimation or copy of the notice under Section 22 to the Conciliation
Officer. At the stage of notice under Section 22 there is no dispute.

146
 21. The date of notice is 14-3-1991 and the proposed strike was on 24-3-
1991. Therefore, on the face of it, it cannot be treated to be a notice as
contemplated under Section 22(1)(a). The notice in question reads as follows:
―By Registered Post
The strike notice issued by the employees under Rule 59(1)
From:
The General Secretary,
Tamil Nadu Panchalal Workers‘ Union,
39, 11th Cross Road,
Tatabath,
Coimbatore 12

To:
The Management,
Essorpe Mills,
Saravanampatti (Post),
Coimbatore 35.
Sir,
We have decided to strike work at Essorpe Mills, Saravanampatti Post,
Coimbatore. Therefore, we are giving advance notice of strike under the
provisions of Section 22(1) of the Industrial Disputes Act, 1947 (Central
Act 14 of 1947). We would inform you as per Section 22(1)(c) that the
strike will commence on or after 24-3-1991.
We have enclosed our demands under Rule 29 of the Chennai
Industrial Disputes Rules, 1958.
Always in service to the nation
sd/-
K.
Palanicha
my
The General
Secretary,
Tamil Nadu Panchalal
Workers‘Union
Copy to:
1. Commissioner of Labour, Chennai
2. Addl. Commissioner of Labour, Coimbatore
3. Deputy Commissioner of Labour, Coimbatore
4. Asstt. Commissioner of Labour (Conciliation-2), Coimbatore
…….
22. In the notice it is stated that the strike will commence on or after
24-3-1991.
Obviously, six weeks‘ time before the date of strike was not given. In this case
the date of notice is 14-3-1991 and the proposed strike was on or after 24-3-
1991. The inevitable conclusion is that the notice cannot be treated to be one
under Section 22. Jaipur Zila case has no application if the notice given is not
in accordance with law. If no notice is given to the employer, the effect of it is
that he is not aware of the proceedings. Obviously, the conciliation

147
proceedings must be one meeting the requirements of law. Here, no notice in
terms of Section 22 of the Act was there.
23. Somewhat unacceptable plea has been taken by Respondents 2 to 23
that in terms of Section 22(1)(b) after fourteen days of giving the notice, the
workmen can go on strike. If this plea is accepted six weeks‘ time stipulated in
Section 22(1)(a) becomes redundant. The expression ―giving such noticeǁ as
appearing in Section 22(1)(b) refers to the notice under Section 22(1)(a).
Obviously, therefore, the workmen cannot go on strike within six weeks‘
notice in terms of Section 22(1)(a) and fourteen days thereafter in terms of
Section 22(1)(b).
24. The expression ―such noticeǁ refers to six weeks‘ advance notice.
Earlier illegal strike is not remedied by a subsequent strike as provided in
Section 22. If such stand is accepted it will go against the requirement of
Section 22 which aims at stalling action for illegal strike.
25. Above being the position, the judgments of the learned Single Judge as
well as that of the Division Bench cannot be sustained and deserve to be set
aside which we direct. Notwithstanding the same the fair approach indicated
by the appellant by accepting the decision of this Court by order dated 20-3-
2006 can be given effect to. It is open to Respondents 2 to 23 or any of them
to comply with the terms indicated.
26. The appeal is allowed to the extent indicated above.

16. Punjab Land Development and Reclamation Corporation Ltd.

v. Presiding Officer, Labour Court (1990) 3 SCC 682

K.N. SAIKIA, J. - 13. Two rival contentions are raised by the parties. The
learned counsel for the employers contend that the word ‗retrenchment‘ as
defined in Section 2(oo) of the Act means termination of service of a
workman only by way of surplus labour for any reason whatsoever. The
learned counsel representing the workmen contend that ‗retrenchment‘ means
termination of the service of a workman for any reason whatsoever, other than
those expressly excluded by the definition in Section 2(oo) of the Act.
14. The precise question to be decided, therefore, is whether on a proper
construction of the definition of ―retrenchmentǁ in Section 2(oo) of the Act, it
means termination by the employer of the service of a workman as surplus
labour for any reason whatsoever, or it means 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, and those expressly
excluded by the definition. In other words, the question to be decided is
whether the word
―retrenchmentǁ in the definition has to be understood in its narrow, natural
and contextual meaning or in its wider literal meaning.
15. Mr. N.B. Shetye, Mr. K.K. Venugopal, and the learned counsel
adopting their arguments refer to the introduction of the provision of
―retrenchmentǁ in the Act.
Retrenchment was not defined either in the repealed Trade Disputes Act,
1929, or in the Industrial Disputes Act, 1947, as originally enacted. Owing to
a crisis in the textile industry in Bombay, apprehending large scale

148
 termination of services of workmen, the Government of India issued an
Ordinance which later became the Industrial Disputes (Amendment) Act,
1953 which was deemed to have come into force on October 24, 1953.
Besides introducing the definitions of ―lay offǁ [clause 2(kkk)] and
―Retrenchmentǁ [clause 2(oo)] this
Amendment Act of 1953 also inserted Chapter V-A in the Act which dealt
with ―lay offǁ and ―Retrenchmentǁ. That chapter contained Sections 25-A to
25-J. Section 25-A provided that Sections 25-C to 25-E inclusive shall not
apply to certain categories of industrial establishments. Section 25-C dealt
with right of workmen laid off for compensation. Section 25-D provided for
maintenance of muster rolls of workmen by employers and Section 25-E
stated the cases in which the workmen were not entitled to lay off
compensation. Section 25-F dealt with conditions precedent to retrenchment of
workmen. Section 25-G dealt with procedure for retrenchment and Section 25-
H dealt with reemployment of retrenched workmen; and Section 25-J dealing
with the effect of laws inconsistent with this chapter said that 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 (20 of 1946); provided
that nothing contained in this Act shall have effect to derogate from any right
which a workman has under any award for the time being in operation or any
contract with the employer.
16. The Statement of Objects and Reasons of the Amendment Act, 1953 was as under:
The Industrial Disputes (Amendment) Bill, 1953 seeks to provide for
payment of compensation to workmen in the event of their lay off or
retrenchment. The provisions included in the Bill are not new and were
discussed at various tripartite meetings. Those relating to lay-off are
based on an agreement entered into between the representatives of
employers and workers who attended the 13 session of the Standing
th

Labour Committee. In regard to retrenchment, the Bill provides that a

workman who has been in continuous employment for not less than
one year under an employer shall not be retrenched until he has been
given one month‘s notice in writing or one month‘s wages in lieu of
such notice and also a gratuity calculated at 15 days‘ average pay for
every completed year of service or any part thereof in excess of six
months. A similar provision has included in the Labour Relations Bill,
1950, which has since lapsed. Though compensation on the lines
provided for in the Bill is given by all progressive employers, it is felt
that a common standard should be set for all employers.
19. In Pipraich Sugar Mills Ltd. v. Pipraich Sugar Mills
Mazdoor Union [AIR 1957 SC 95], the appellant company could not work
its mills to full capacity owing to short supply of sugarcane and got the
permission of the government to sell its machinery but continued crushing
cane under a lease from the purchaser. The workmen‘s union in order to
frustrate the transaction resolved to go on strike and serving a strike notice did
not cooperate with the management with the result that it lost heavily. On the
expiry of the lease and closure of the industry, the services of the workmen
were duly terminated by the company. The workmen claimed the share of
profits on the basis of the offer earlier made by the company and accepted by
the workers. The company having declined to pay and the dispute having been

149
referred, the Industrial Tribunal held that the company was bound to pay and
accordingly awarded a sum of Rs. 45,000 representing their share of the
profits and the award was affirmed by the Labour Appellate Tribunal.
Question before this Court in appeal was whether the termination of the
workmen on the closure of the industry amounted to retrenchment. It was held
that the award was not one for compensation for termination of the services of
workmen on closure of the industry, as such discharge was different from the
discharge on retrenchment, which implied the continuance of the industry and
discharge only of the surplusage, and the workmen were not entitled either
under the Law as it stood on the day of their discharge or even on merits to
any compensation.
20. The contention of the workmen was that even before the enactment of
Industrial Disputes (Amendment) Act, 1953, the tribunal had acted on the
view that the retrenchment included discharge on closure of business and had
awarded compensation on that footing and that the award of the tribunal in
Pipraich case could be supported in that view and should not be disturbed.
This was based on the decision in Employees v. India Reconstruction
Corporation Ltd. [1953 LAC 563] and Bennett Coleman and
Company Ltd. v. Employees [(1954) 1 LLJ 341 (LAT)]. But their
Lordships did not agree. Venkatarama Ayyar, J. speaking for the four-Judge
bench said:
Though there is discharge of workmen both when there is
retrenchment and closure of business, the compensation is to be
awarded under the law, not for discharge as such but for discharge on
retrenchment, and if, as is conceded, retrenchment means in ordinary
parlance, discharge of the surplus, it cannot include discharge on
closure of business.
21. As a result it was held that the award in Pipraich was against the
agreement and could not be supported as one of compensation to the
workmen.
22. Thus this Court in Pipraich was dealing with the question whether the
discharge of the workmen on closure of the undertaking would constitute
retrenchment and whether the workmen were entitled on that account to
retrenchment compensation; and it was observed that retrenchment connoted
in its ordinary acceptation that the business itself was being continued but that
a portion of the staff or the labour force was discharged as surplusage and the
termination of services of all the workmen as a result of the closure of the
business could not, therefore, be properly described as retrenchment, which in
the ordinary parlance meant discharge from the service and did not include
discharge on closure of business.
23. Under an agreement dated August 1, 1895 between the Secretary of
State for India in Council and the Railway Company, the Secretary of State
could purchase and take over the undertaking after giving Railway Company a
notice. On December 19, 1952 a notice was given to the Railway Company for
and on behalf of the President of India that the undertaking of the Railway
Company would be purchased and taken over as from January 1, 1954. On
November 11, 1953, the Railway Company served a notice on its workmen
intimating that as a result of the taking over, the services of all the workmen of
the Railway Company would be terminated with effect from December 31,

150
1953. As a result of the closure, the services of all 450 workmen and 20 clerks
were terminated and the appellant company claimed that the closure was bona
fide being due to heavy losses sustained by the company. The principal
respondent claimed retrenchment compensation for the workmen of the
appellant under clause (b) of Section 25-F of the Act.
25. In both the appeals the question before the Constitution Bench was
whether the claim of the erstwhile workmen both of the Railway Company
and of Sri Dinesh Mills Ltd., to the compensation under clause (b) of Section
25-F of the Act was a valid claim in law.
Observing that the Act had a ‗plexus of amendments‘, and some of the recent
amendments had been quite extensive in nature and that Section 25-F occurred
in Chapter V-A of the Act which dealt with ‗lay off and retrenchment‘ in the
Amending Act, and analyzing Section 25-F as it then stood, S.K. Das, J.
speaking for the Constitution Bench observed that in the first part of the
section both the words ‗retrenched‘ and ‗retrenchment‘ were used and
obviously they had the same meaning except that one was verb and the other
was a noun and that to appreciate the true scope and effect of Section 25-F one
must first understand what was meant by the expression ‗retrenched‘ or
‗retrenchment‘.
26. Analysing the definition of ‗retrenchment‘ in Section 2(oo) the court
found in it the following four essential requirements: (a) termination of the
service of a workman; (b) by the employer; (c) for any reason whatsoever; and
(d) otherwise than as a punishment inflicted by way of disciplinary action. The
court then said:
It must be conceded that the definition is in very wide terms. 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 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 court further said:
There is no doubt that when the Act itself provides a dictionary for the
words used, we must look into that dictionary first for an interpretation
of the words used in the statute. We are not concerned with any
presumed intention of the legislature; our task is to get at the intention
as expressed in the statute. Therefore, we propose first to examine the
language of the definition and see if the ordinary, accepted notion of
retrenchment fits in, squarely and fairly, with the language used.
The court reiterated the following observations in Pipraich : (SCR 886
quoted at SCR 131)
But retrenchment connotes in its ordinary acceptation that the business
itself is being continued but that a portion of the staff of the labour
force is discharged as surplusage and the termination of services of all
the workmen as a result of the closure of the business cannot therefore
be properly described as retrenchment.

151
 This was the ordinary accepted notion of ‗retrenchment‘ in an industry
before addition of Section 2(oo) to the Act, as retrenchment in that case took
place in 1951. Replying to the argument that by excluding the bona fide
closure of business as one of the reasons for termination of the service of
workmen by the employer, one would be cutting down the amplitude of the
expression ‗for any reason whatsoever‘ and reading into the definition the
words which did not occur there, the court agreed that the adoption of the
ordinary meaning would give to the expression ‗for any reason whatsoever‘ a
somewhat narrower scope; one might say that it would get a colour in the
context in which expression occurred; but the court did not agree that it
amounted to importing new words in the definition and said that the legislature
in using that expression said in effect: ―It does not matter why you are
discharging the surplus; if the other requirements of the definition are fulfilled,
then it is retrenchmentǁ. In the absence of any compelling words to indicate
that the intention was to include bona fide closure of the whole business, it
would be divorcing the expression altogether from its context to give it such a
wide meaning as was contended. About the nature of the definition it was said:
It is true that an artificial definition may include a meaning different
from or in excess of the ordinary acceptation of the word which is the
subject of definition; but there must then be compelling words to show
that such a meaning different from or in excess of the ordinary
meaning is intended. Where, within the framework of the ordinary
acceptation of the word, every single requirement of the definition
clause is fulfilled, it would be wrong to take the definition as
destroying the essential meaning of the word defined.
27. The court in Hariprasad dealt with two other contentions; one was
that before the Amending Act of 1953 the retrenchment had acquired a special
meaning which included the payment of compensation on a closure of
business and the legislature gave effect to that meaning in the definition clause
and by inserting Section 25-F. The second was that Section 25-FF inserted in
1956 by Act 41 of 1956 was ‗Parliamentary exposition‘ of the meaning of the
definition clause and of Section 25-F. Rejecting the contentions the court held
that retrenchment meant the discharge of surplus workmen in an existing or
continuing business; it had acquired no special meaning so as to include
discharge of workmen on bona fide closure of business, though a number of
Labour Appellate Tribunals awarded compensation to workmen on closure of
business as an equitable relief for variety of reasons. The court accordingly
held:
(T)hat retrenchment as defined in Section 2(oo) and as used in Section
25 has no wider meaning than the ordinary, accepted connotation of
the word: it means the discharge of surplus labour or staff by the
employer for any reason whatsoever, otherwise than as a punishment
inflicted by way of disciplinary action, and it has no application where
the services of all workmen have been terminated by the employer on
real and bona fide closure of business as in the case of Sri Dinesh
Mills Ltd. Or where the services of all workmen have been terminated
by the employer on the business or undertaking being taken over by
another employer in circumstances like those of the Railway
Company.(emphasis in original)

152
 28. It is interesting to note that the Amending Act 41 of 1956 inserted
original Section 25-FF on September 4, 1956. The Objects and Reasons were
stated thus:
Doubt has been raised whether retrenchment compensation under the
Industrial Disputes Act, 1947 becomes payable by reason merely of
the fact that there has been a change of employers, even if the service
of the workman is continued without interruption and the terms and
conditions of his service remain unaltered. This has created difficulty
in the transfer, reconstitution and amalgamation of companies and it is
proposed to make the intention clearly by amending Section 25-F of
the Act.
Hariprasad case was decided on November 27, 1956. The Industrial
Disputes (Amendment) Ordinance, 1957 (4 of 1957) was promulgated
immediately thereafter with effect from December 1, 1956 and that Ordinance
was replaced by the Industrial Disputes (Amendment) Act, 1957 (18 of 1957).
The following was the Statement of Objects and Reasons:
In a judgment delivered on November 27, 1956, the Supreme
Court held that no retrenchment compensation was payable under
Section 25-F of the Industrial Disputes Act, 1947, to workmen whose
services were terminated by an employer on a real and bona fide
closure of business, or when termination occurred as a result of
transfer of ownership from one employer to another (see AIR 1957 SC
1210). This has led and is likely to lead to a large number of workmen
being rendered unemployed without any compensation. In order to
meet this situation which was causing hardship to workmen, it was
considered necessary to take immediate action and the Industrial
Disputes (Amendment) Ordinance, 1957 (4 of 1957), was promulgated
with retrospective effect from December 1, 1956. This Ordinance was
replaced by an Act of Parliament enacting the provisions contained in
Section 25-FF and 25-FFF. These sections provide that ‗compensation
would be payable to workmen whose services are terminated on
account of the transfer or closure of undertakings‘. In the case of
transfer of undertakings, however, if the workman is re-employed on
terms and conditions which are not less favourable to him, he will not
be entitled to any compensation. This was the position which existed
prior to the decision of the Supreme Court. In the case of closure of
business on account of the circumstances beyond the control of the
employer, the maximum compensation payable to workmen has been
limited to his average pay for three months. If the undertaking is
engaged in any construction work and it is closed down within two
years on account of the completion of its work, no compensation
would be payable to workmen employed therein.
Hariprasad having accepted the ordinary contextual meaning of
retrenchment, namely, termination of surplus labour as the major premise it
was surely open to the Parliament to have amended the definition of
retrenchment in Section 2(oo) of the Act. Instead of doing that the Parliament
added Sections 25-FF and 25-FFF.

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 Thus, by this Amendment Act the Parliament clearly provided that though
such termination may not have been retrenchment technically so-called, as
decided by this Court, nevertheless the employees in question whose services
were terminated by the transfer or closure of the undertaking would be entitled
to compensation, as if the said termination was retrenchment. As it has been
observed, the words ―as ifǁ brought out the legal distinction between
retrenchment defined by Section 2(oo) as it was interpreted by this Court and
termination of services consequent upon transfer of the undertaking. In other
words, the provision was that though termination of services on transfer or
closure of the undertaking may not be retrenchment, the workmen concerned
were entitled to compensation as if the said termination was retrenchment.
29. Thus we find that till then the accepted meaning of retrenchment was
ordinary, contextual and narrower meaning of termination of surplus labour
for any reason whatsoever.
30. In Anakapalle Co-operative Agricultural and Industrial
Society Ltd. v. Workmen [AIR 1963 SC 1489], a company running a
sugar mill was suffering losses every year due to insufficient supply of
sugarcane and wanted to shift the mill. The cane growers formed a co-
operative society and purchased the mill. As agreed between the company and
the society, the company terminated the services of the employees and paid
retrenchment compensation to them under Section 25-FF of the Act. The
society employed some of the old employees and refused to absorb some of
them who raised an industrial dispute. The Industrial Tribunal having directed
the purchaser-society by its award to re-employ them, the society contended
that it was not a successor-in-interest of the company and hence the claim of
re-employment was not sustainable and the services of the employees having
been terminated upon payment of compensation by the company under
Section 25-FF no claim could be made against the transferee society. This
Court held that the society was the successor-in-interest of the company as it
carried on the same or similar business as was carried by the vendor-company
at the same place and without substantial break in continuity. It was further
held that the employees were not entitled to both compensation for termination
of service and immediate re-employment at the hands of the transferee and
Section 25-H was not applicable to the case as the termination of service upon
transfer or closure was not retrenchment properly so called and that
termination of service dealt with in Section 25-FF could not be equated with
retrenchment covered by Section 25-F. It was observed that the words ‗as if‘
in Section 25-FF clearly distinguished retrenchment under Section 2(oo) and
termination under Section 25-FF.
32. In Delhi Cloth and General Mills Ltd. v. Shambhu Nath
Mukherjee [(1977) 4 SCC 415], where the post of motion setter was
abolished and the respondent was given a job of a trainee on probation for the
post of Assistant Line Fixer and the management found him unsuitable for the
job even after extending his probation period up to nine months and offered
him the post of fitter on the same pay and the respondent instead of accepting
the offer wanted to be given another chance to show his efficiency in his job
and the management struck off his name from the rolls without complying
with the provisions of Section 25-F(a) and (b) of the Act and the Labour Court

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having given award in the respondent‘s favour and the appellant‘s writ petition
was rejected by the High Court, Goswami, J. speaking for three
Judges bench said: (SCC p. 420, para 14)
Striking off the name of the workman from the rolls by the
management is termination of his service. Such termination of service
is retrenchment within the meaning of Section 2(oo) of the Act. There
is nothing to show that the provisions of Section 25-F(a) and (b) were
complied with by the management in this case. The provisions of
Section 25-F(a), the proviso apart, and (b) are mandatory and any
order of retrenchment, in violation of these two peremptory conditions
precedent, is invalid.
The appeal was accordingly dismissed. The earlier decisions were not referred
to.
33. Next comes the decision in State Bank of India v. N. Sundara
Money [(1976) 1 SCC 822] (Y.V. Chandrachud, V.R. Krishna Iyer and A.C.
Gupta, JJ.). In an application under Article 226, the respondent on automatic
extinguishment of his service consequent to the pre-emptive provision as to
the temporariness of the period of his employment in his appointment letter
claiming to have been deemed to have had continuous service for one year
within the meaning of Section 25(B)(2) of the Act, the Single Judge of the
High Court having allowed his writ petition and the writ appeal of the
appellant having also failed, this Court in appeal found as fact that the
appointment was purely temporary one for a period of 9 days but might be
terminated earlier, without assigning any reason therefore at the petitioner‘s
discretion; and the employment unless terminated earlier, would automatically
cease at the expiry of the period i.e. November 18, 1972. This 9 days‘
employment added on to what had gone before ripened to a continuous service
for a year ―on the antecedent arithmetic of 240 days of broken bits of serviceǁ
and considering the meaning of ‗retrenchment‘ it was held that the expression
for any reason whatsoever was very wide and almost admitting of no
exception. The contention of the employer was that when the order of
appointment carried an automatic cessation of service, the period of
employment worked itself out by efflux of time, not by act of employer and
such cases were outside the concept of retrenchment. This Court observed that
to retrench is to cut down and one could not 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
denotationǁ.

34. Accepting the literal meaning, Krishna Iyer, J. observed:

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

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 comprehensive definition has been effectuated. Termination embraces
not merely the act of termination by the employer, but the 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 25-F 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 may be, but cessation all the same. That to
write into the order of appointment the date of termination confers no
moksha from Section 25-F(b) is inferable from the proviso to Section
25-F(1) [sic 25-F(a)]. True, the section speaks of retrenchment from
Section 25-F(b) is inferable from the proviso to Section 25-F(1) [sic
25-F(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 25-F and automatic
extinguishment of service by effluxion of time cannot be sufficient.
(emphasis in original)
36. The precedents including Hariprasad do not appear to have been
brought to the notice of their Lordships in this case. It may be noted that since
Delhi Cloth and General Mills a change in interpretation of
retrenchment in Section 2(oo) of the Act is clearly discernible.
37. Mr. Venugopal would submit that the judgment in Sundara Money
case and for that matter the subsequent decisions in the line are per incuriam
for two reasons: (i) that they failed to apply the law laid down by the
Constitution Bench of this Hon‘ble Court in
Hariprasad Shukla case and (ii) for the reason that they have ignored the
impact of two of the provisions introduced by the Amendment Act of 1953
along with the definition of
―retrenchmentǁ in Section 2(oo) and Section 25-F namely, Sections 25-G and
25-H. We agree with the learned counsel that the question of the subsequent
decisions being per incuriam could arise only if the ratio of Sundara Money
case and the subsequent judgments in the line was in conflict with the ratio in
the Hariprasad Shukla case and Anakapalle case. The issue, it is urged,
was, whether it was necessary for the court to interpret Section 2(oo) as being
restricted to termination of services of workmen rendered surplus for arriving
at a decision in the case and if it was unnecessary to so interpret Section 2(oo)
for the purpose of arriving at a decision in that case, the interpretation of
Section 2(oo) would necessarily be rendered obiter. According to counsel, the
long discussion on interpretation of Section 2(oo) could not be brushed aside
as either obiter or mere casual observations of the Constitution Bench.
40. We now deal with the question of per incuriam by reason of allegedly
not following the Constitution Bench decisions. The Latin expression per
incuriam means through inadvertence. A decision can be said generally to be
given per incuriam when this Court has acted in ignorance of a previous
decision of its own or when a High Court has acted in ignorance of a decision
of this Court. It cannot be doubted that Article 141 embodies, as a rule of law,
the doctrine of precedents on which our judicial system is based. In Bengal

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Immunity Company Ltd. v. State of Bihar [AIR 1955 SC 66], it was
held that the words of
Article 141, ―binding on all courts within the territory of Indiaǁ, though wide
enough to include the Supreme Court, do not include the Supreme Court itself,
and it is not bound by its own judgments but is free to reconsider them in
appropriate cases. This is necessary for proper development of law and justice.
43. As regards the judgments of the Supreme Court allegedly rendered in
ignorance of a relevant constitutional provision or other statutory provisions
on the subjects covered by them, it is true that the Supreme Court may not be
said to ―declare the lawǁ on those subjects if the relevant provisions were not
really present to its mind. But in this cases Sections 25-G and 25-H were not
directly attracted and even if they could be said to have been attracted in
laying down the major premise, they were to be interpreted consistently with
the subject or context. The problem of judgment per incuriam when actually
arises, should present no difficulty as this Court can lay down the law afresh,
if two or more of its earlier judgments cannot stand together. The question
however is whether in this case there is in fact a judgment per incuriam. This
raises the question of ratio decidendi in Hariprasad and Anakapalle cases
on the one hand and the subsequent decisions taking the contrary view on the
other.
48. Analysing the complex syllogism of Hariprasad case we find that its
major premise was that retrenchment meant termination of surplus labour of
an existing industry and the minor premise was, that the termination in that
case was of all the workmen on closure of business on change of ownership.
The decision was that there was no retrenchment. In this context it is important
to note that subsequent benches of this Court thought to be the ratio decidendi
of Hariprasad , and that matter of Anakapalle .
49. In Santosh Gupta v. State Bank of Patiala [(1980) 3 SCC
340],O. Chinnappa Reddy, J. sitting with Krishna Iyer, J. deduced the ratio
decidendi of Hariprasad thus:
In Hariprasad Shivshankar Shukla v. A.D. Divikar , 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 or 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.
50. In Hariprasad the learned Judges themselves formulated the question
before them as follows: (SCR p. 130)
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 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

157
 in an industry when the industry itself ceases to exist on a bona fide
closure or discontinuance of his business by the employer?
51. The question was answered by the learned Judges in the following words:
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 it 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.
Rejecting the submission of Dr. Anand Prakash that ―termination of
service for any reason whatsoeverǁ meant no more and no less than discharge
of a labour force which was a surplusage, it was observed in Santosh Gupta
that the misunderstanding of the observations and the resulting confusion stem
from not appreciating the lead question which was posed and answered by the
learned Judges and that the reference to ‗discharge on account of surplusage‘
was illustrative and not exhaustive on account of transfer or closure of
business.
52. Mr. V.A. Bobde submits, and we think rightly, that the sole reason for
the decision in Hariprasad was that the Act postulated the existence and
continuance of an industry and where the industry i.e. the undertaking, itself
was closed down or transferred, the very substratum disappeared and the Act
could not regulate industrial employment in the absence of an industry. The
true position in that case was that Section 2(oo) and Section 25-F could not be
invoked since the undertaking itself ceased to exist. The ratio of Hariprasad ,
according to the learned counsel, is discernible from the discussion at pp. 131-
32 of the report about the ordinary accepted notion of retrenchment ‗in an
industry‘ and Pipraich case was referred to for the proposition that
continuance of the business was essential; the emphasis was not on the
discharge of surplus labour but on the fact that ―retrenchment connotes in its
ordinary acceptation that the business itself is being continued… the
termination of services of all the workmen as a result of the closure of the
business cannot therefore be properly described as retrenchmentǁ. At page 134
in the last four lines also it was said: ―But the fundamental question at issue
is, does the definition clause cover cases of closure of business, when the
closure is real and bona fide?ǁ The reasons for arriving at the conclusion are
given as (SCR p.
134) ―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 existǁ and that the industrial dispute to which the
provisions of the Act applies is only one which arises out of an existing
industry. Thus, the court was neither called upon to decide nor did it decide
whether in a continuing business, retrenchment was confined only to discharge
of surplus staff and reference to discharge of surplusage was for the purpose of
contrasting the situation in that case, i.e. workmen were being retrenched
because of cessation of business and those observations did not constitute

158
reasons for the decision. What was decided was that if there was no continuing
industry the provision could not apply. In fact the question whether
retrenchment did or did not include other terminations was never required to
be decided in Hariprasad and could not, therefore have been, or be taken to
have been decided by this Court.
We agree with Mr. Bobde when he submits that Hariprasad case is not
an authority for the proposition that Section 2(oo) only covers cases of
discharge of surplus labour and staff. The judgments in Sundara Money and
the subsequent decisions in the line could not be held to be per incuriam
inasmuch as in Hindustan Steel and Santosh Gupta cases, the Division
Benches of this Court had referred to Hariprasad case and rightly held that
its ratio did not extend beyond a case of termination on the ground of closure
and as such it would not be correct to say that the subsequent decisions
ignored a binding precedent.
54. In Hindustan Steel Ltd. v. Presiding Officer, Labour Court ,
[(1976) 4 SCC 222], the question was whether termination of service by efflux
of time was termination of service within the definition of retrenchment in
Section 2(oo) of the Act. Both the earlier decisions of the Court in
Hariprasad and Sundara Money were considered and it was held that
there was nothing in Hariprasad which was inconsistent with the decision in
Sundara Money case. It was observed that the decision in Hariprasad was
only that the words ―for any reason whatsoeverǁ used in the definition of
retrenchment would not include a bona fide closure of the whole business
because it would affect the entire scheme of the Act. The decisions in which
contrary view was taken, were over-ruled in Santosh Gupta holding 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 requirement of Section 25-F had
to be complied with. The workman was employed in the State Bank of Patiala
from July 13, 1973 till August 1974 when her services were terminated.
According to the workman she had worked for 240 days in the year preceding
August 21, 1974 and the termination of her services was retrenchment as it did
not fall within any of the three accepted cases. The management‘s contention
was that termination was not due to discharge of surplus labour but due to
failure of the workman to pass the test which could have enabled her to be
confirmed in the service and as such it was not retrenchment. This contention
was repelled.
55. Both Mr. Shetye and Mr. Venugopal submit that judicial discipline
required the smaller benches to follow the decisions in the larger benches.
This reminds us of the words of Lord Hailsham of Marylebone, the Lord
Chancellor, ―in the hierarchical system of courts which exists in this country,
it is necessary for each lower tier… to accept loyally the decisions of the
higher tiersǁ. However, in view of the ratio decidendi of Hariprasad , as we
have seen, there is no room for such a criticism.
56. In Karnataka SRTC v. M. Boraiah [(1984) 1 SCC 244], a
Division Bench of A.N. Sen and Ranganath Misra, JJ. held that in the above
series of cases that have come later, the Constitution Bench decision in
Hariprasad has been examined and the ratio indicated therein has been
confined to its own facts and the view indicated by the court in that case did

159
not meet with the approval of Parliament and, therefore, the law had been
subsequently amended.
57. Speaking for the court, R.N. Misra, J. significantly said:

We are inclined to hold that the stage has come when the view
indicated in Money case has been ‗absorbed into the consensus‘ and
there is no scope for putting the clock back or for an anti-clockwise
operation.
58. More than a month thereafter in Gammon India Ltd. v. Niranjan
Das , a three Judges bench (D.A. Desai, R.B. Misra and Ranganath Misra, JJ.)
construing the one month‘s notice of termination in that case due to reduction
of volume of business of the company said:
On a true construction of the notice, it would appear that the
respondent had become surplus on account of reduction in volume of
work and that constitutes retrenchment even in the traditional sense of
the term as interpreted in Pipraich Sugar Mills Ltd. v. Pipraich
Sugar Mills Mazdoor Union , though that view does not hold the
field in view of the recent decisions of this Court in State Bank of
India v. N. Sundara
Money; Hindustan Steel Ltd. v. Presiding Officer, Labour
Court, Orisss; Santosh Gupta v. State Bank of Patiala;
Delhi Cloth and General Mills Ltd. v. Shambhu Nath
Mukherjee; Mohan Lal v. Bharat Electronics Ltd. and L.
Robert D’Souza v. Executive Engineer, Southern Railway .
The recitals and averments in the notice leave no room for doubt that
the service of the respondent was terminated for the reason that on
account of recession and reduction in the volume of work of the
company, respondent has become surplus. Even apart from this, the
termination of service for the reasons mentioned in the notice is not
covered by any of the clauses (a), (b) and (c) of Section 2(oo) which
defines retrenchment and it is by now well settled that where the
termination of service does not fall within any of the excluded
categories, the termination would be ipso facto retrenchment. It was
not even attempted to be urged that the case of the respondent would
fall in any of the excluded categories. It is therefore indisputably a
case of retrenchment.

59. In a fast developing branch of Industrial and Labour Law it may not
always be of particular importance to rigidly adhere to a precedent, and a
precedent may need be departed from if the basis of legislation changes.
61. When we analyse the mental process in drafting the definition of
―retrenchmentǁ in Section 2(oo) of the Act we find that firstly it is to mean
the termination by the employer of the service of a workman for any reason
whatsoever. Having said so the Parliament proceeded to limit it by excluding
certain types of termination, namely, termination as a punishment inflicted by
way of disciplinary action. The other types of termination excluded were (a)
voluntary retirement; or (b) retrenchment of the workman on reaching the age
of superannuation if the contract of employment between the employer and the
workman concerned contains a stipulation on that behalf; or (c) termination of

160
service of a workman on the ground of continued ill health. Had the
Parliament envisaged only the question of termination of surplus labour alone
in mind, there would arise no question of excluding (a),
(b) and (c) above. The same mental process was evident when Section 2(oo)
was amended inserting another exclusion clause (bb) by the Amending Act of
49 of 1984, with effect from
August 18, 1984, ―termination of the service of workman as a result of the
non-renewal of the contract of employment between the employer and the
workman concerned on its expiry of such contract being terminated under a
stipulation in that behalf contained thereinǁ.
62. This is literal interpretation as distinguished from contextual
interpretation said Tindal, C.J. in Sussex Peerage case:
The only rule of construction of Acts of Parliament is that they should
be construed according to the intent of the Parliament which passed
the Act. If the words of the statute are in themselves precise and
unambiguous, then no more can be necessary than to expound those
words in their natural and ordinary sense. The words themselves alone
do, in such case, best declare the intention of the lawgiver.
68. In the case before us the difficulty was created by defining
‗retrenchment‘ to mean something wider than what it naturally and ordinarily
meant. While naturally and ordinarily it meant discharge of surplus labour, the
defined meaning was termination of service of a workman for any reason
whatsoever except those excluded in the definition itself. Such a definition
creates complexity as the draftsman himself in drafting the other sections
using the defined word may slip into the ordinary meaning instead of the
defined meaning.
71. Analysing the definition of retrenchment in Section 2(oo) we find that
termination by the employer of the service of a workman would not otherwise
have covered the cases excluded in (a) and (b), namely, voluntary retirement
and retirement on reaching the stipulated age of retirement. There would be no
volitional element of the employer. Their express exclusion implies that those
would otherwise have been included. Again if those cases were to be included,
termination on abandonment of service, or on efflux of time, and on failure to
qualify, although only consequential or resultant, would be included as those
have not been excluded. Thus, there appears to be a gap between the first part
and the exclusion part. Mr. Venugopal, on this basis, points out that cases of
voluntary retirement, superannuation and tenure appointment are not cases of
termination ‗by the employer‘ and would, therefore, in any event, be outside
the scope of the main provisions and are not really provisions.
72. The definition has used the word ‗means‘. When a statute says that a
word or phrase shall ―meanǁ – not merely that it shall ―includeǁ – certain
things or acts, ―the definition is a hard-and-fast definition, and no other
meaning can be assigned to the expression than is put down in definitionǁ [per
Esher, M.R., Gough v. Gough ]. A definition is an explicit statement of the
full connotation of a term.
73. Mr. Venugopal submits that the definition clause cannot be interpreted
in isolation and the scope of the exception to the main provision would also

161
have to be looked into and when so interpreted, it is obvious that a restrictive
meaning has to be given to Section 2(oo).
74. It is also pointed out that Section 25-G deals with the principle of ‗last
come, first go‘, a principle which existed prior to the Amendment Act of 1953
only in relation to termination of workmen rendered surplus for any reasons
whatsoever. Besides, it is submitted, by its very nature the wide definition of
retrenchment would be wholly inapplicable to termination simpliciter. The
question of picking out a junior in the same category for being sent out in
place of a person whose services are being terminated simpliciter or otherwise
on the ground that the management does not want to continue his contract of
employment would not arise. Similarly, it is pointed out that starting from
Sundara Money where termination simpliciter of a workman for not having
passed a test, or for not having satisfactorily completed his probation would
not attract Section 25-G, as the very question of picking out a junior in the
same capacity for being sent out instead of the person who failed to pass a test
or failed to satisfactorily complete his probation could never arise. If,
however, Section 25-G were to be followed in such cases, the section would
itself be rendered unconstitutional and violative of fundamental rights of the
workmen under Articles 14, 19(1)(g) and 21 of the Constitution. It would be
no defence to this argument to say that the management could record reasons
as to why it is not sending out the juniormost in such cases since in no single
case of termination simpliciter would Section 25-G be applicable and in every
such case of termination simpliciter, without exception, reasons would have to
be recorded. Similarly, it is submitted, Section 25-H which deals with re-
employment of retrenched workmen, can also have no application whatsoever,
to a case of termination simpliciter because of the fact that the employee
whose services have been terminated, would have been holding a post which
‗eo instanti‘ would become vacant as a result of the termination of his services
and under Section 25-H he would have a right to be reinstated against the very
post from which his services have been terminated, rendering the provision
itself an absurdity. It is urged that Section 25-F is only procedural in character
along with Sections 25-G and 25-H and do not prohibit the substantive right of
termination but on the other hand requires that in effecting termination of
employment, notice would be given and payment of money would be made
and the later procedure under Sections 25-G and 25-H would follow.
75. Mr. Bobde refutes the above argument saying that Sections 25-F, 25-G
and 25-H relate to retrenchment but their contents are different. Whereas
Section 25-F provides for the conditions precedent for effecting a valid
retrenchment, Section 25-G only provides the procedure for doing so. Section
25-H operates after a valid retrenchment and provides for re-employment in
the circumstances stated therein. According to counsel, the argument is
misconceived firstly for the reasons that Section 2 itself says that retrenchment
will be understood as defined in Section 2(oo) unless there is anything
repugnant in the subject or context; secondly Section 25-F clearly applies to
retrenchment as plainly defined by Section 2(oo); thirdly Section 25-G does
not incorporate in absolute terms – the principle of ‗last come, first go‘ and
provides that ordinarily last employee is to be retrenched, and fourthly
Section 25-H upon its true construction should be held to be applicable when
the retrenchment has occurred on the ground of the workman becoming

162
surplus to the establishment and he has been retrenched under Sections 25-F
and 25-G on the principle ‗last come, first go‘.Only then should he be given
an opportunity to offer himself for re-employment. In substance it is submitted
that there is no conflict between the definition of Section 2(oo) and the
provisions of Sections 25F, 25G and 25H. We find that though there are
apparent incongruities in the provisions, there is room for harmonious
construction.
76. For the purpose of harmonious construction, it can be seen that the
definitions contained in Section 2 are subject to there being anything
repugnant in the subject or context. In view of this, it is clear that the extended
meaning given to the term ‗retrenchment‘ under clause (oo) of Section 2 is
also subject to the context and the subject matter. Section 25-F prescribes the
condition precedent to a valid retrenchment of workers as discussed earlier.
Very briefly, the conditions prescribed are that giving of one month‘s notice
indicating the reasons for retrenchment and payment of wages for the period
of the notice. Section 25-FF provides for compensation to workmen in case of
transfer of undertakings. Very briefly, it provides that every workman who has
been in continuous service for not less than one year in an 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 25-F, as if the workman had been retrenched”. Section 25-H
provides for re-employment of retrenched workmen. In brief, it provides that
where any workmen are retrenched, and the employer proposes to take into his
employment any person, he shall give an opportunity to the retrenched
workmen to offer themselves for re-employment as provided in the section
subject to the conditions as set out in the section. In our view, the principle of
harmonious construction implies that in a case where there is a genuine
transfer of an undertaking or genuine closure of an undertaking as
contemplated in the aforesaid sections, it would be inconsistent to read into the
provisions a right given to workman ―deemed to be retrenchedǁ a right to
claim re-employment as provided in Section 25-H. In such cases, as
specifically provided in the relevant sections the workmen concerned would
only be entitled to notice and compensation in accordance with Section 25-F.
It is significant that in a case of transfer of an undertaking or closure of an
undertaking in accordance with the aforesaid provisions, the benefit
specifically given to the workmen is ―as if the workmen had been retrenchedǁ
and this benefit is restricted to notice and compensation in accordance with the
provisions of Section 25-F.
77. The last submission is that if retrenchment is understood in its wider
sense what would happen to the rights of the employer under the Standing
Orders and under the contracts of employment in respect of the workman
whose service has been terminated. There may be two answers to this
question. Firstly, those rights may have been affected by introduction of
Sections 2(oo), 25-F and the other relevant sections. Secondly, it may be said,
the rights as such are not affected or taken away, but only an additional social
obligation has been imposed on the employer so as to give the retrenchment
benefit to the affected workmen, perhaps for immediate tiding over of the
financial difficulty. Looked at from this angle, there is implicit a social policy.

163
As the maxim goes – Stat pro ratione voluntas populi; the will of the people
stands in place of a reason.
80. The definitions in Section 2 of the Act are to be taken ‗unless there is
anything repugnant in the subject or context‘. The contextual interpretation
has not been ruled out. In R.B.I. v. Peerless General Finance and
Investment Co. Ltd :
Interpretation must depend on the text and the context. They are the
bases of interpretation. One may well say if the text is the texture,
context is what gives the colour. Neither can be ignored. Both are
important. That interpretation is best which makes the textual
interpretation match the contextual. A statute is best interpreted when
we know why it was enacted. With this knowledge, the statute must be
read, first as a whole and then section by section, clause by clause,
phrase by phrase and word by word. If a statute is looked at, in the
context of its enactment, with the glasses of the statute-maker,
provided by such context, its scheme, the sections, clauses, phrases
and words may take colour and appear different than when the statute
is looked at without the glasses provided by the context. With these
glasses we must look at the Act as a whole and discover what each
section, each clause, each phrase and each word is meant and designed
to say as to fit into the scheme of the entire Act. No part of a statute
and no word of a statute can be construed in isolation. Statutes have to
be construed so that every word has a place and everything is in its
place. It is by looking at the definition as a whole in the setting of the
entire Act and by reference to what preceded the enactment and the
reasons for it that the court construed the expression ‗Prize Chit‘ in
Srinivasa [Srinivasa Enterprises v. Union of India (1980) 4
SCC 507] and we find no reason to depart from the court‘s
construction.
81. As we have mentioned, industrial and labour legislation involves social
and labour policy. Often they are passed in conformity with the resolutions of
the International Labour Organisation. In Duport Steels v. Sirs [(1980) 1
All ER 529], the House of Lords observed that there was a difference between
applying the law and making it, and that judges ought to avoid becoming
involved in controversial social issues, since this might affect their reputation
in impartiality. Lord Diplock said:
A statute passed to remedy what is perceived by Parliament to be a
defect in the existing law may in actual operation turn out to have
injurious consequences that Parliament did not anticipate at the time
the statute was passed; if it had, it would have made some provision in
the Act in order to prevent them… But if this be the case it is for
Parliament, not for the judiciary, to decide whether any changes
should be made to the law as stated in the Acts…
82. Applying the above reasoning, principles and precedents, to the definition
in Section
2(oo) of the Act, we hold that ―retrenchmentǁ means the termination by the
employer of the service of a workman for any reason whatsoever except those
expressly excluded in the section.

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17. The Workmen v. Firestone Tyre & Rubber Co. (1976) 3 SCC 819

UNTWALIA, J.- 2. 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 the markets throughout the country. The
company has a distribution office at Nicholson Road, Delhi. There was a
strike in the Bombay factory from March 3, 1967 to May 16, 1967 and again
from October 4, 1967. As a result of the strike, there was a short supply of
tyres etc. to the distribution office. In the Delhi office, there were 30
employees at the relevant time. 17 workmen out of 30 were laid off by the
management as per their notice dated February 3, 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 February 5, 1968.
3. The lay-off of the 17 workmen whose names were mentioned in the
notice was recalled by the management on April 22, 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 April 17, 1968
even when 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 February 5, 1968 is illegal and/or unjustified, and if
so, to what relief are these workmen entitled?
4. The Presiding Officer of the Additional Industrial Tribunal, Delhi has
held that the workmen are not entitled to any lay-off compensation. Hence this
is an appeal by their union.
6. 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.
7. The simple dictionary meaning according to the Concise Oxford
Dictionary of the term ‗lay-off is ―period during which a workman is
temporarily dischargedǁ. 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. v. Goya Cotton &
Jute Mills Labour Union [(1952) 2 LLJ 37] 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

165
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.
8. Then, came an amendment in the Industrial Disputes Act, 1947 -
hereinafter referred to as the Act - by Act 43 of 1953. 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 laid-off 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?
10. 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.
11. 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 (oo) 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.
12. 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

166
Employment (Standing Orders) Act, 1946, or under this Act or under any
other law applicable to the industrial establishmentǁ 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. 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 conclusion 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 complete Code as was argued on
behalf of the respondent company in the matter of payment of layoff
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.
13. In Management of Hotel Imperial, New Delhi v. Hotel
Workers’ Union [AIR 1959 SC 1342] 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.
14. 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.
15. In Veiyra ( M. A. ) v. Fernanda [AIR 1957 Bom. 100], a Bench of
the Bombay High Court opined that under the general law the employer was

167
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 nut be questioned as being ultra vires.
We do not think that the view expressed by the Bombay High Court is correct.
16. There is an important decision of this Court in Workmen of Dewan
Tea Estate v. Management [AIR 1964 SC 1458] 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,
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, 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 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).
17. Mr Andley placed strong reliance upon the decision of this Court in
Sanghi Jeevaraj
Ghewar Chand v. Secretary, Madras Chillies,Grains Kirana
Merchants Workers’ Union
[(1969) 1 SCC 366]. 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:

168
 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 raised 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:
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 establishmentǁ to which the provisions
of Chapter VA do not apply, and it will be so as per the terms of the
employment.
19. 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 lay-off.
As we have said above, this will not cover the case of those workmen who
have settled or compromised their disputes with the management.

18. U.P.State Brassware Corpn. Ltd. v. Uday Narain Pandey (2006) 1 SCC
479

S.B. SINHA, J. - Whether direction to pay back wages consequent upon a

declaration that a workman has been retrenched in violation of the provisions
of Section 6-N of the U.P. Industrial Disputes Act, 1947 (equivalent to Section
25F of the Industrial Disputes Act, 1947) as a rule is in question in this appeal
which arises out of a judgment and order dated 6.2.2004 passed by a Division

169
Bench of the High Court of Judicature at Allahabad in Civil Misc. Writ
Petition No. 23890 of 1992 dismissing the appeal preferred by the Appellant
herein arising out of a judgment and order dated 8th July, 1992.
The Appellant is an undertaking of the State of Uttar Pradesh. The
Respondent herein was appointed on 23rd July, 1984 in a project known as
Project Peetal Basti by the Appellant for looking after the construction of
building, cement loading and unloading. He worked in the said project from
23.7.1984 till 8.1.1987. He was thereafter appointed in Non-Ferrous Rolling
Mill. By an order dated 12/13.2.1987, the competent authority of the Non-
Ferrous Mill of the Appellant passed the following order:
"Following two persons are hereby accorded approval for appointment
in Non-Ferrous Rolling Mill on minimum daily wages for the period w.e.f.
date indicated against their name till 31-3-1987.
Sl No. Name Date
1. Sh. Hori Lal 7-1-1987
8-1-
2. Sh. Uday Narain Pandey 1987"
The services of the Respondent were terminated on the expiry of his
tenure. An industrial dispute having been raised, the appropriate government
by an order dated 14.9.1998 referred the following dispute for adjudication by
the Presiding Officer, Labour Court, Uttar Pradesh:
Whether the employer's decision to terminate the Workman Sh.
Uday Narain son of Pateshwari Pandey w.e.f. 1-4-87 was illegal and
improper? If yes whether the concerned workman is entitled to the
benefit of retrenchment and other benefit?
The Project Officer of the Appellant-Corporation appears to have
granted a certificate showing the number of days on which the Respondent
performed his duties.
The Labour Court in its award dated 31.10.1991 came to the finding
that the
Respondent worked for more than 240 days in each year of 1985-1986.It was
directed:
Therefore, I reached to the decision that the employer should
reinstate the concerned workman Uday Narain Pandey son of Sh.
Pateshwari Pandey w.e.f. the date of retrenchment i.e. 1-4-87 and he
should be paid entire backwage with any other allowances w.e.f. same
date within 30 days from the date of this order together with Rs. 50/-
towards cost of litigation to Sh. Uday Narain Pandey. I decide
accordingly in this Industrial Dispute. The Appellant herein filed a
writ petition before the Allahabad High Court in May, 1992 which was
marked as Civil Misc. Writ Petition No. 23890 of 1992 inter alia
contending that as the Respondent had not rendered service
continuously for a period of 240 days during the period of 12 calendar
months immediately before his retrenchment uninterruptedly, he was
not a workman within the meaning of Section 2(z) of the U.P.
Industrial Disputes Act. It was further contended that the appointment
of the Respondent was on contractual basis for a fixed tenure which

170
 came to an end automatically as stipulated in the aforementioned order
dated 12/13.2.1987.
An application was filed by the Respondent herein under the Payment of
Wages Act wherein an award was passed. The said order was also questioned
by the Appellant by filing a writ application before the High Court and by an
order dated 12.8.1993, the High Court directed it to pay a sum of rupees ten
thousand to the Respondent. Pursuant to or in furtherance of the said order, the
Respondent is said to have been paid wages upto February, 1996. By reason of
the impugned order dated 6.2.2004, the writ petition was dismissed holding:
Having heard the learned counsel for the Petitioners and having
perused the record, I am of the opinion that the aforesaid findings
recorded by the Labour Court cannot be said to be perverse. The
learned senior counsel then contended that the Petitioner No. 1 i.e.
U.P. State Brassware Corporation Ltd. has been closed down. Be that
as it may, the position of the Respondent workman would be the same
as that all the similar employees and this cannot be a ground to set
aside the award of the Labour Court.
Ms. Rachana Srivastava, learned counsel appearing on behalf of the
Appellant would bring to our notice that the Appellant's industries have been
lying closed since 26.3.1993 and in that view of the matter, the Labour Court
as also the High Court committed a serious error in passing the impugned
judgment. The appointment of the Respondent, the learned counsel would
contend, being a contractual one for a fixed period, Section 6-N of the U.P.
Industrial Disputes Act would have no application.
Relying on or on the basis of the principle of 'no work no pay', it was
urged that for the period the Respondent did not work, he was not entitled to
any wages and as such the grant of back wages by the Labour Court as also by
the High Court is wholly illegal, particularly, in view of the fact that no
statement was made in his written statement filed before the Labour Court that
he was not employed with any other concern. In any event, the Respondent
was also not interested in a job. In support of the aforementioned contention,
reliance has been placed on Kendriya Vidyalaya Sangathan v. S.C.
Sharma [(2005) 2 SCC 363] and Allahabad Jal Sansthan v. Daya
Shankar Rai [(2005) 5 SCC 124].
Mr. Bharat Sangal, learned counsel appearing on behalf of the
Respondent, on the other hand, would submit that Section 2 (oo)(bb) of the
Industrial Disputes Act, 1947 applies to the workmen working in the State of
Uttar Pradesh as there does not exist any such provision in the U.P. Industrial
Disputes Act. It was conceded that in view of the fact that establishment of the
Appellant was sold out on 26.3.1993, the Respondent may not be entitled to
an order of reinstatement with full back wages but having regard to the fact
that his services were wrongly terminated with effect from 1.4.1987, he would
be entitled to back wages for the entire period from 1.4.1987 till 26.3.1993
besides the amount of compensation as envisaged under the U.P. Industrial
Disputes Act.
Payment of back wages, Mr. Sangal would urge, is automatic consequent
upon a declaration that the order of termination is unsustainable for any reason

171
whatsoever and in particular when it is found to be in violation of the
provisions of Section 6-N of the U.P. Industrial Disputes Act.
It is not in dispute that the Respondent was appointed on daily wages. He
on his own showing was appointed in a project work to look after the
construction of building.
The construction of the building, the learned Labour Court noticed, came
to an end in the year 1988. The reference by the appropriate government
pursuant to an industrial dispute raised by the Respondent was made in the
year 1990.
A decision had been taken to close down the establishment of the
Appellant as far back on 17.11.1990 wherefor a Government Order, GO No.
395/18 Niryat-3151/90 dated 17.11.1990 was issued. In its rejoinder affidavit
filed before the High Court, it was contended that the said GO was
implemented substantially and all the employees including the regular
employees save and except some skeleton staff for winding up were
retrenched. The Non Ferrous Mill of the Appellant was sold on 26.3.1993.
The Labour Court in its impugned award has not arrived at any finding
that the order of appointment dated 8.1.1987 whereby the Respondent was
appointed afresh in the Non Ferrous Rolling Mill was by way of unfair labour
practice. It is, however, true that the Appellant relying on or on the basis of
the aforementioned order dated 12/13.2.1987 in terms whereof the
Respondent's services were approved for appointment in the said mill on
minimum daily wages for the period 8.1.1987 till 31.3.1987 terminated his
services without giving any notice or paying salary of one month in lieu
thereof. No compensation in terms of Section 6-N of the U.P. Industrial
Disputes Act was also paid.
Before adverting to the decisions relied upon by the learned counsel for the
parties, we may observe that although direction to pay full back wages on a
declaration that the order of termination was invalid used to be the usual result
but now, with the passage of time, a pragmatic view of the matter is being
taken by the court realizing that an industry may not be compelled to pay to
the workman for the period during which he apparently contributed little or
nothing at all to it and/ or for a period that was spent unproductively as a result
whereof the employer would be compelled to go back to a situation which
prevailed many years ago, namely, when the workman was retrenched.
It is not disputed that the Respondent did not plead that he after his
purported retrenchment was wholly unemployed.
Section 6-N of the U.P. Industrial Disputes Act provides for service of one
month notice as also payment of compensation to be computed in the manner
laid down therein. Proviso to clause (a) of the said provision, however,
excludes the requirement of giving such notice in the event the appointment
was for a fixed tenure.

Section 25B(2)(a) of the Industrial Disputes Act raises a legal fiction that
if a workman has actually worked under the employer continuously for a
period of more than 240 days during a period of twelve calendar months
preceding the date with reference to which calculation is to be made, although

172
he is not in continuous service, he shall be deemed to be in continuous service
under an employer for a period of one year.
The Labour Court although passed its award relying on or on the basis of
the certificate issued by the Appellant, it did not hold that during the
preceding 12 months, namely, for the period 1st April, 1986 to 31st March,
1987 the workman had completed 240 days of service. Unfortunately, neither
the Labour Court nor the High Court considered this aspect of the matter in
right perspective.
No precise formula can be laid down as to under what circumstances
payment of entire back wages should be allowed. Indisputably, it depends
upon the facts and circumstances of each case. It would, however, not be
correct to contend that it is automatic. It should not be granted mechanically
only because on technical grounds or otherwise an order of termination is
found to be in contravention of the provisions of Section 6-N of the U.P.
Industrial Disputes Act.
Section 2(oo)(bb) of the Central Act as inserted by Industrial Disputes
Amendment Act, 1984 is as under:
"2. Definitions - In this Act, unless there is anything repugnant
in the subject or context,
(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
(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 in that behalf contained therein;"
However, a similar provision has not been enacted in the U.P. Industrial
Disputes Act.
The contention of the Appellant, as noticed hereinbefore, was that the
Respondent having been appointed for a fixed period was not entitled to any
compensation under the provisions of Section 6-N of the U.P. Industrial
Disputes Act. But, in this connection our attention has been drawn to a 2-
Judge Bench decision of this Court in Uttar Pradesh State Sugar
Corporation Ltd. v. Om Prakash Upadhyay [2002 (1) LLJ 241: (2002)
10 SCC 89] wherein it was held that in view of Section 31(1) of Industrial
Disputes (Amendment and Miscellaneous Provisions) Act, 1956, the
provisions of Section 2(oo)(bb) of the Central Industrial Disputes Act would
not be applicable. In that view of the matter, although no notice was required
to be service in view of the proviso to Clause (a) of Section 6-N of the U.P.
Industrial Disputes Act, compensation therefor as provided for in Clause (b)
was payable. But, it is not necessary for us to go into the correctness or
otherwise of the said decision as it is not disputed that before the provisions of
Section 6-N of the U.P. Industrial Disputes Act can be invoked, the concerned
workman must work at least for 240 days during a period of twelve calendar
months preceding the date with reference to which calculation is to be made.

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 However, as the question as regard termination of service of the
Respondent by the Appellant is not in issue, we would proceed on the basis
that the services of the Respondent were terminated in violation of Section 6-
N of the U.P. Industrial Disputes Act. The primary question, as noticed by us
herein before, is as to whether even in such a situation the Respondent would
be entitled to the entire back wages.
Before adverting to the said question in a bit more detail, let us consider
the decisions relied upon by Mr. Sangal.
In Hindustan Tin Works Pvt. Ltd. v. Employees of Hindustan
Tin Works Pvt. Ltd. [(1979) 1 SCR 563], this court merely held that the
relief of reinstatement with continuity of service can be granted where
termination of service is found to be invalid. It, therefore, does not lay down a
law in absolute terms to the effect that right to claim back wages must
necessarily follow an order declaring that the termination of service is invalid
in law.
In Hindustan Tin Works notice for retrenchment was issued inter alia
for non-availability of raw material to utilize the full installed capacity, power
shedding limiting the working of the unit to 5 days a week and the mounting
loss which were found to be factually incorrect. The real reason for issuing
such a notice was held to be "the annoyance felt by the management
consequent upon the refusal of the workmen to agree to the terms of
settlement contained in the draft dated 5th April, 1974".
Laws proverbial delay, it was urged therein, is a matter which should be
kept in view having regard to the fact situation obtaining in each case and the
conduct of the parties. Such a contention was raised on the ground that the
company was suffering losses. The court analysed factual matrix obtaining
therein to the effect that a sum of Rs. 2,80,000/- was required to be paid by
way of back wages and an offer was made by way of settlement to pay 50% of
the back wages observing:
"Now, undoubtedly the appellant appears to have turned the
corner. The industrial unit is looking up. It has started making profits.
The workmen have already been reinstated and, therefore, they have
started earning their wages. It may, however, be recalled that the
appellant has still not cleared its accumulated loss. Keeping in view all
the facts and circumstances of this case it would be appropriate to
award 75% of the back wages to the workmen to be paid in two equal
instalments."
It will, therefore, be seen that this Court itself, having regard to the factual
matrix obtaining in the said case, directed payment of 75% of the back wages
and that too in two equal instalments.
In Management of Panitole Tea Estate v. The Workmen [(1971)
3 SCR 774], a two-judge bench of this Court while considering the question as
regard grant of relief or reinstatement, observed:
The general rule of reinstatement in the absence of special
circumstances was also recognised in the case of Workmen of
Assam Match Co. Ltd. v. Presiding Officer, Labour Court,
Assam and has again been affirmed recently in Tulsidas Paul v.
Second Labour Court, W.B . In Tulsidas Paul it has been

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 emphasised that no hard and fast rule as to which circumstances would
establish an exception to the general rule could be laid down and the
Tribunal must in each case decide the question in a spirit of fairness
and justice in keeping with the objectives of industrial adjudication.
In Surendra Kumar Verma v. Central Government Industrial
Tribunal-cum-Labour Court, New Delhi [(1981) 1 SCR 789], this
Court refused to go into the question as to whether termination of services of a
workman in violation of the provisions of Section 25F is void ab initio or
merely invalid or inoperative on the premise that semantic luxuries are
misplaced in the interpretation of 'bread and butter' statutes. In that context,
Chinnappa Reddy, J. observed:
Plain common sense dictates that the removal of an order
terminating the services of workmen must ordinarily lead to the
reinstatement of the services of the workmen. It is as if the order has
never been, and so it must ordinarily lead to back wages too. But there
may be exceptional circumstances which make it impossible or wholly
inequitable vis-`-vis the employer and workmen to direct reinstatement
with full back wages. For instance, the industry might have closed
down or might be in severe financial doldrums; the workmen
concerned might have secured better or other employment elsewhere
and so on. In such situations, there is a vestige of discretion left in the
court to make appropriate consequential orders. The court may deny
the relief of reinstatement where reinstatement is impossible because
the industry has closed down. The court may deny the relief of award
of full back wages where that would place an impossible burden on the
employer. In such and other exceptional cases the court may mould the
relief, but, ordinarily the relief to be awarded must be reinstatement
with full back wages. That relief must be awarded where no special
impediment in the way of awarding the relief is clearly shown. True,
occasional hardship may be caused to an employer but we must
remember that, more often than not, comparatively far greater hardship
is certain to be caused to the workmen if the relief is denied than to the
employer if the relief is granted.
Yet again, no law in absolute terms had been laid down therein. The court
proceeded on the basis that there may be situations where grant of full back
wages would be inequitable. In the fact situation obtaining therein, the court,
however was of the opinion that there was no impediment in the way of
awarding the relief. It is interesting to note that Pathak, J., as His Lordship
then was, however was of the view:
"Ordinarily, a workman who has been retrenched in contravention
of the law is entitled to reinstatement with full back wages and that
principle yields only where the justice of the case in the light of the
particular facts indicates the desirability of a different relief."
The expression 'ordinarily' must be understood given its due meaning. A
useful reference in this behalf may be made to a 4-Judge Bench decision of
this Court in Jasbhai Motibhai Desai v. Roshan Kumar, Haji Bashir
Ahmed [(1976) 1 SCC 671] wherein it has been held:

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 35. The expression ―ordinarilyǁ indicates that this is not a cast-
iron rule. It is flexible enough to take in those cases where the
applicant has been prejudicially affected by an act or omission of an
authority, even though he has no proprietary or even a fiduciary
interest in the subject-matter. That apart, in exceptional cases even a
stranger or a person who was not a party to the proceedings before the
authority, but has a substantial and genuine interest in the subject-
matter of the proceedings will be covered by this rule. The principles
enunciated in the English cases noticed above, are not inconsistent
with it.
In J.N. Srivastava v. Union of India [(1998) 9 SCC 559] again no
law has been laid down in the fact situation obtaining therein. The court held
that the workmen had all along been ready and willing to work, the plea of 'no
work no pay' as prayed for should not be applied.
We may notice that in M.D., U.P. Warehousing Corpn. v. Vijay
Narayan Vajpayee [(1980) 3 SCC 459] and Jitendra Singh Rathor v. Shri
Baidyanath Ayurved Bhawan Ltd. although an observation had been made to
the effect that in a case where a breach of the provisions of Section 25-F has
taken place, the workmen cannot be denied back wages to any extent, no law,
which may be considered to be binding precedent has been laid down therein.
In P.G.I. of Medical Education & Research, Chandigarh v. Raj
Kumar [(2001) 2 SCC 54], Banerjee, J., on the other hand, was of the
opinion:
The learned counsel appearing for the respondents, however,
placed strong reliance on a later decision of this Court in PGI of
M.E. & Research Chandigarh v. Vinod Krishan Sharma
wherein this Court directed payment of balance of 60% of the back
wages to the respondent within a specified period of time. It may well
be noted that the decision in Soma case has been noticed by this Court
in Vinod Sharma case wherein this Court apropos the decision in
Soma case observed: "A mere look at the said judgment shows that it
was rendered in the peculiar facts and circumstances of the case. It is,
therefore, obvious that the said decision which centred round its own
facts cannot be a precedent in the present case which is based on its
own facts." We also record our concurrence with the observations
made therein. Payment of back wages having a discretionary element
involved in it has to be dealt with, in the facts and circumstances of
each case and no straight-jacket formula can be evolved, though,
however, there is statutory sanction to direct payment of back wages in
its entirety. As regards the decision of this Court in Hindustan Tin
Works (P) Ltd. be it noted that though broad guidelines, as regards
payment of back wages, have been laid down by this Court but having
regard to the peculiar facts of the matter, this Court directed payment
of 75% back wages only.
The decisions of this Court strongly relied upon by Mr. Sangal, therefore,
do not speak in one voice that the industrial court or for that matter the High
Court or this Court would not have any discretionary role to play in the matter
of moulding the relief. If a judgment is rendered merely having regard to the
fact situation obtaining therein, the same, in our opinion, could not be a

176
declaration of law within the meaning of Article 141 of the Constitution of
India.
It is one thing to say that the court interprets a provision of a statute and
lays down a law, but it is another thing to say that the courts although exercise
plenary jurisdiction will have no discretionary power at all in the matter of
moulding the relief or otherwise give any such reliefs, as the parties may be
found to be entitled to in equity and justice. If that be so, the court's function
as court of justice would be totally impaired. Discretionary jurisdiction in a
court need not be conferred always by a statute.
Order VII, Rule 7 of the Code of Civil Procedure confers power upon the
court to mould relief in a given situation. The provisions of the Code of Civil
Procedure are applicable to the proceedings under the Industrial Disputes Act.
Section 11-A of the Industrial Disputes Act empowers the Labour Court,
Tribunal and National Tribunal to give appropriate relief in case of discharge
or dismissal of workmen.
The meaning of the word 'discharge' is somewhat vague. In this case, we
have noticed that one of the contentions of the Appellant was that the services
of the Respondent had been terminated in terms of its order dated
12/13.2.1987 whereby and whereunder the services of the Respondent herein
was approved till 31.3.1987.
The Industrial Disputes Act was principally established for the purpose of
pre-empting industrial tensions, providing the mechanics of dispute-
resolutions and setting up the necessary infrastructure 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. [See LIC v.
D.J. Bahadur (1981) 1 SCC 315]
Industrial Courts while adjudicating on disputes between the management
and the workmen, therefore, must take such decisions which would be in
consonance with the purpose the law seeks to achieve. When justice is the
buzzword in the matter of adjudication under the Industrial Disputes Act, it
would be wholly improper on the part of the superior courts to make them
apply the cold letter of the statutes to act mechanically. Rendition of justice
would bring within its purview giving a person what is due to him and not
what can be given to him in law.
A person is not entitled to get something only because it would be lawful
to do so. If that principle is applied, the functions of an industrial court shall
lose much of its significance.
The changes brought about by the subsequent decisions of this Court
probably having regard to the changes in the policy decisions of the
government in the wake of prevailing market economy, globalization,
privatization and outsourcing is evident.
In Hindustan Motors Ltd. v. Tapan Kumar Bhattacharya [(2002)
6 SCC 41], this Court noticed Raj Kumar and Hindustan Tin Works but
held:
As already noted, there was no application of mind to the question
of back wages by the Labour Court. There was no pleading or
evidence whatsoever on the aspect whether the respondent was
employed elsewhere during this long interregnum. Instead of remitting

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 the matter to the Labour Court or the High Court for fresh
consideration at this distance of time, we feel that the issue relating to
payment of back wages should be settled finally. On consideration of
the entire matter in the light of the observations referred to supra in the
matter of awarding back wages, we are of the view that in the context
of the facts of this particular case including the vicissitudes of long-
drawn litigation, it will serve the ends of justice if the respondent is
paid 50% of the back wages till the date of reinstatement...
The Court, therefore, emphasized that while granting relief application of
mind on the part of the industrial court is imperative. Payment of full back
wages, therefore, cannot be the natural consequence.
The said decisions were, however, distinguished in Mohan Lal v.
Management of M/s.
Bharat Electronics Ltd. [(1981) 3 SCC 225]. Desai, J. was of the opinion:
17. But there is a catena of decisions which rule that where the
termination is illegal especially where there is an ineffective order of
retrenchment, there is neither termination nor cessation of service and
a declaration follows that the workman concerned continues to be in
service with all consequential benefits. No case is made out for
departure from this normally accepted approach of the courts in the
field of social justice and we do not propose to depart in this case.
In Allahabad Jal Sansthan v. Daya Shankar Rai [(2005) 5 SCC
124], in which one of us was a party, this Court had taken into consideration
most of the decisions relied upon by Mr. Sangal and observed:
A law in absolute terms cannot be laid down as to in which cases,
and under what circumstances, full back wages can be granted or
denied. The Labour Court and/or Industrial Tribunal before which
industrial dispute has been raised, would be entitled to grant the relief
having regard to the facts and circumstances of each case. For the said
purpose, several factors are required to be taken into consideration. It
is not in dispute that Respondent 1 herein was appointed on an ad hoc
basis; his services were terminated on the ground of a policy decision,
as far back as on 24-1-1987. Respondent 1 had filed a written
statement wherein he had not raised any plea that he had been sitting
idle or had not obtained any other employment in the interregnum. The
learned counsel for the appellant, in our opinion, is correct in
submitting that a pleading to that effect in the written statement by the
workman was necessary. Not only no such pleading was raised, even
in his evidence, the workman did not say that he continued to remain
unemployed. In the instant case, the respondent herein had been
reinstated from 27-2-2001.
It was further stated:
16. We have referred to certain decisions of this Court to highlight
that earlier in the event of an order of dismissal being set aside,
reinstatement with full back wages was the usual result. But now with
the passage of time, it has come to be realised that industry is being
compelled to pay the workman for a period during which he
apparently contributed little or nothing at all, for a period that was

178
 spent unproductively, while the workman is being compelled to go
back to a situation which prevailed many years ago when he was
dismissed. It is necessary for us to develop a pragmatic approach to
problems dogging industrial relations. However, no just solution can
be offered but the golden mean may be arrived at.

Yet again in General Manager, Haryana Roadways v. Rudhan Singh

[JT 2005 (6) SC 137 : (2005) 5 SCC 591], a 3-Judge Bench of this Court in a
case where the workman had worked for a short period which was less than a
year and having regard to his educational qualification, etc. denied back wages
although the termination of service was held to have been made in violation of
Section 25F of the Industrial Disputes Act, 1947 stating:
A host of factors like the manner and method of selection and
appointment i.e. whether after proper advertisement of the vacancy or
inviting applications from the employment exchange, nature of
appointment, namely, whether ad hoc, short term, daily wage,
temporary or permanent in character, any special qualification required
for the job and the like should be weighed and balanced in taking a
decision regarding award of back wages. One of the important factors,
which has to be taken into consideration, is the length of service, which
the workman had rendered with the employer. If the workman has
rendered a considerable period of service and his services are
wrongfully terminated, he may be awarded full or partial back wages
keeping in view the fact that at his age and the qualification possessed
by him he may not be in a position to get another employment.
However, where the total length of service rendered by a workman is
very small, the award of back wages for the complete period i.e. from
the date of termination till the date of the award, which our experience
shows is often quite large, would be wholly inappropriate. Another
important factor, which requires to be taken into consideration is the
nature of employment. A regular service of permanent character cannot
be compared to short or intermittent daily-wage employment though it
may be for 240 days in a calendar year.

The only question is whether the Respondent would be entitled to back

wages from the date of his termination of service till the aforementioned date.
The decision to close down the establishment by the State of Uttar Pradesh
like other public sector organizations had been taken as far back on
17.11.1990 where for a GO had been issued. It had further been averred,
which has been noticed hereinbefore, that the said GO has substantially been
implemented. In this view of the matter, we are of the opinion that interest of
justice would be subserved if the back wages payable to the Respondent for
the period 1.4.1987 to 26.3.1993 is confined to 25% of the total back wages
payable during the said period.
The judgments and orders of the Labour Court and the High Court are set
aside and it is directed that the Respondent herein shall be entitled to 25%
back wages of the total back wages payable during the aforesaid period and
compensation payable in terms of Section 6-N of the U.P. Industrial Disputes

179
 Act. If, however, any sum has been paid by the Appellant herein, the same
shall be adjusted from the amount payable in terms of this judgment.
For the reasons aforementioned, the appeal is allowed in part and to the
extent mentioned hereinbefore. However, there shall be no order as to costs.

19. Management Shahdara (Delhi) Saharanpur Light Railway Co. Ltd. vs.
S.S. Railway Workers' Union (18.09.1968 - SC)

J.M. Shelat, J.:This appeal, by special leave, is by the employer and

raises the question as to the scope of Section 10(2) of the Industrial
Employment (Standing Orders) Act, 20 of 1946, as amend ed by Act 36 of
1956 (referred to hereinafter as the Act).

2. The Standing Orders of the Appellant-company were certified on

August 7, 1962 by the Regional Labour Commissioner, Central, under
Section 4 of the Act. Both the company and the workmen filed appeals
against the said order which were disposed of by the Appellate authority
under Section 6. Sometime thereafter the respondent-union applied for
certain modifications, some of which were certified by the Regional
Labour Commissioner by his order dated December 28, 1963. The
Appellant-company filed an appeal against the said order which was
disposed of by the Chief Labour Commissioner in April 19641 On April
25, 1965 the respondent-union made a further application for
modifications. The Regional Labour Commissioner by his order dated
September 2, 1965 allowed certain modifications but rejected the rest. The
union thereupon appealed against the said order. After hearing the parties
the Chief Labour Commissioner passed his impugned order dated October
27, 1967 ordering certification of certain modifications. Though the
Appellant-company objected at first to all the modifications, counsel
pressed the appeal in respect of four modifications only. The first
modification challenged is in Standing Order 9, Clause (a) which, as
unamended, read as follows :

"The railway under the terms of employment has the right to terminate the
services of a permanent workman on giving him one month's notice in
writing or one month's pay may be paid in lieu of notice."
The union claimed that the management should give reasons even when,
they terminated, the services of an employee by a discharge simpliciter.
The modification allowed directed reasons to be recorded in writing and
communicated to the workman if he so desires at the time of discharge but
not if the management considers it inadvisable. The second modification is
in Standing Order 12, Clause (A), which, in its unamended form, read as
follows:

"When any of the penalties specified in Order 9 is imposed upon a

workman an appeal shall lie to the authority next above that imposing the
penalty. An appeal shall lie to the Managing Agents only on original
orders passed by the General Manager ....."
The union's plea was that some time limit was necessary for the disposal
of the appeals as the managing agents who are the appellate authority
against the orders of the General Manager took months to dispose of such

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appeals thereby delaying the workman from raising an industrial dispute in
time and seek timely relief. The modification allowed was that every such
appeal shall be disposed of by the appellate authority within 60 days from
the date of its receipt. The third modification is in Standing Order 11 (vii)
which read as follows :

"Removal from service: A workman shall be liable to be removed from

service in the following circumstances :

(a) Inefficiency.
....."

The modification allowed was as follows ;

"In case of inefficiency due to physical unfitness the workman whom the
management considers suitable for some alternative employment shall be
offered the same on reasonable emoluments having regard to his former
emoluments."
The modification contains, it will be noticed, four limitations : (1) it
applies only to cases of removal on the ground of physical unfitness, (2)
the consideration of suitability for an alternate employment is left to the
management, (3) the existence of alternative post, and (4) the question as
to what reasonable emoluments should be is left to the management. The
fourth modification is in Standing Order 11(vii)(c) which, in its
unamended form, was as follows :

"Every person against whom departmental enquiry is being made shall be

supplied with a copy of the findings in connection with his dismissal and
removal from service. The workman shall also be supplied with a copy of
the proceedings of the enquiry committee as soon as possible after the
conclusion of the enquiry proceedings in his case and be allowed to defend
his case through union's representative."
The modification allowed was as follows :

"In case the management propose to remove the workman from service
they shall serve on the workmen separate show cause notice to that effect."
3. Counsel for the company challenged the impugned order in its two
facets: the scope of the power of modification under Section 10(2), and on
merits on the ground that the modifications did not stand the test of
reasonableness, and fairness. On the first question his contention was that
the jurisdiction and powers of the authorities under the Act to certify
modifications of the existing standing orders are limited to cases where a
change of circumstances is established. In the course of his argument,
counsel, however, qualified the contention by conceding that if at the time
of the last certification certain circumstances were, for one reason or me
other, omitted from consideration they would constitute a valid reason for
modification and the modification would be granted even though in such a
case a change of circumstances has not occurred. He next contended that
in any case though Section 11 of the Code of Civil Procedure did not
apply, principles analogous to res judicata would apply to an application
for modification unless such application is occasioned by new

181
circumstances having arisen or is based on new facts. Briefly, the
argument was that the object of the Act is to have conditions of service of
workmen in an establishment defined with precision, and therefore, to
have standing orders dealing with such conditions certified. For industrial
harmony and peace it is necessary that those conditions are stable and do
not remain undefined or fluctuating. In pursuance of this object the Act
confers finality to such certified standing orders or modifications thereof
under Section 6. The contention was that if modifications were allowed
without any restraint, there would be multiple applications specially as
individual workman have been given the right to apply for modifications.
Therefore, the word 'final' in Section 6, it was argued, must be so read as
to mean that an application for modification under Section 10(2) can only
be maintainable if it is justified on the ground of a change of
circumstances having occurred after the last certification, which of course,
according to the concession made by counsel also would include cases
where certain circumstances were not taken into account at the time of the
last certification.

4. The relevant provisions of the Act requiring consideration in this appeal

are Sections 4, 6, 10, 11 and 12. Section 4 provides that standing orders
shall be certified under the Act if (a) a provision is made therein for every
matter set out in the Schedule, and (b) they are otherwise in conformity
with the provisions of the Act. The section further provides that it shall be
the function of the certifying officer or the appellate authority to
adjudicate upon the fairness or reasonableness of the provisions of the
standing orders. Section 6 provides that any person aggrieved by the order
of the certifying officer passed under Section 5(2) may appeal to the
appellate authority and the appellate authority, "whose decision shall be
final", shall by an order confirm the standing orders in the form certified
under Section 5(2) or amend or add thereto to render them certifiable
under the Act. Section 10, whose interpretation is in question, provides by
Sub-section 1 as follows :

"Standing orders finally certified under this Act shall not, except on
agreement between the employer and the workmen, be liable to
modification until the expiry of 6 months from the date on which the
standing orders or the last modifications thereof came into operation."
5. Sub-s. 2 runs as follows :

"Subject to the provisions of Sub-section (1), an employer or workman

may apply to the certifying officer to have the standing orders modified . .
... .
6. Sub-s. 3 provides that the foregoing provisions of the Act shall apply in
respect of an application for modification as they apply to the certification
of the first standing orders. Section 11 empowers the certifying officer and
the appellate authority to correct clerical or arithmetical mistakes in an
order passed by them or errors arising from any accidental slip or
omission. Lastly, Section 12 provides that no oral evidence having the
effect of adding to or otherwise varying or contradicting standing orders as
finally certified under the Act shall be admitted in any court.

182
7. Counsel conceded, and did so rightly, that there is no express provision
in any one of these sections restricting the right to apply for modification
or the power of the authorities to allow modification only on proof of a
change of circumstances. The only limitations to the power are the
reasonableness or fairness which of course must be established and the
expiry of six months after the date of the standing orders or their last
modifications coming into operation. In the absence of any such express
restriction we should then ask ourselves whether there is in any of these
sections anything which would indicate such a restriction by necessary
implication. In that connection the only word which can point to such a
restriction, according to counsel, is the word 'final' in Section 6, so that the
contention reduces itself to this that by making the order of the appellate
authority final under Section 6, Parliament intended by necessary
implication that the bar of finality can only be removed if new
circumstances arise which necessitate or justify modification.

8. But the intention of the legislature, as observed by Lord Watson in

Salomon v. A. Salomon & Co. Ltd., [1897] A.C. 22 Supp. "is a common
but very slippery phrase, which popularly understood, may signify
anything from intention embodied in positive enactment to speculative
opinion as to what the legislature probably would have meant, although
there has been an omission to enact". It is well settled that the meaning
which words ought to be understood to bear is not to be ascertained by any
process akin to speculation and the primary duty of a court is to find the
natural meaning of the words used in the context in which they occur, that
context including any other phrase in the Act which may throw light on
the sense in which the makers of the Act used the words in dispute. In R.
v. Wimbledon Justices, [1953] 1 Q.B. 380. Lord Goddard said : "Although
in construing an Act of Parliament the court must always try to give effect
to the intention of the Act and must look not only at the remedy provided
but also at the mischief aimed at, it cannot add words to a statute or read
words into it which are not there . . . ." Similarly, in R. v. Mansel Jones,
[1889] 23 Q.B.D. 29 Lord Coleridge said that it was the business of the
courts to see what Parliament had said, instead of reading into an Act what
ought to have been said. So too, in Latham v. Lafone,[1867] L.R. 2 Ex.
115 Martin B. said: "I think the proper rule for construing this statute is to
adhere to its words strictly; and it is my strong belief that, by reasoning on
long-drawn inferences and remote consequences, the courts have
pronounced many judgments affecting debts and actions in a manner that
the persons who originated and prepared the Act never dreamed of." In the
light of these principles we ought, therefore, to give a literal meaning to
the language used by Parliament unless the language is ambiguous or its
literal sense gives rise to an anomaly or results in something which would
defeat the purpose of the Act.

9. The Act was passed because the legislature thought that in many
industrial establishments the conditions of service were not uniform and
sometimes were not even reduced to writing. This led to conflicts resulting
in unnecessary industrial disputes. The object of passing the Act was thus
to require employers to define with certainty the conditions of service in
their establishments and to require them to reduce them to writing and to

183
get them compulsorily certified. The matters in. respect of which the
conditions of employment had to be certified were specified in the
schedule to the Act. As the Act stood prior to its amendment in 1956,
Section 3 required the employer to submit to the certifying officer draft
standing orders proposed by him for adoption in his establishment. Section
4 provided that standing orders shall be certifiable if (a) provision is made
therein for every matter set out in the Schedule, and (b) that they were
otherwise in conformity with the provisions of the Act. The section,
however, expressly provided that it shall not be the function of the
certifying officer or the appellate authority to adjudicate upon the fairness
or reasonableness of the standing orders. Under Section 5, the certifying
officer was required to send a copy of the draft standing orders to the
union, if any, or in its absence to the workmen in the manner prescribed
together with a notice calling for objections by them, if any, and to give
opportunity to the employer and the workmen of being heard and then to
decide whether or not any modification of or addition to the draft standing
orders was necessary to render them certifiable under the Act. Section 6
provided for an appeal by any person aggrieved by the order passed under
Section 5. The appellate authority, whose decision was made final, had the
power to confirm or amend or add to the standing orders passed by the
certifying officer to render them certifiable under the Act. Though the
order passed by the appellate authority was made final under Section 6,
Section 10 provided for modification. Sub-section 1 of Section 10
provided that standing orders finally certified under this Act shall not,
except on agreement between the employer and the workmen, be liable to
modification until expiry of six months from the date on which they or the
last modification thereof came into operation. Sub-section 2 read as
follows :

"An employer desiring to modify his standing orders shall apply to the
Certifying Officer in that behalf Sub-section 3 provided that the foregoing
provisions of the Act shall apply in respect of an application under Sub-
section 2 as they apply to the certification of the first standing orders.
10. As the Act stood prior to 1956, there was thus a prohibition against the
certifying officer going into the question of reasonableness or fairness of
the draft standing orders submitted to him by the employer. His only
function was to see that the draft made provisions for all matters contained
in the Schedule and that it was otherwise certifiable under the Act.
Therefore, though the workmen through the union or otherwise were
served with the copy of the draft and had the right to raise objections, the
objections could be of a limited character, namely, that the draft did not
provide for all matters in the Schedule or that it was not otherwise
certifiable under the Act. Even in an appeal under Section 6, the only
objections they could raise were limited to the two aforesaid questions.
The workmen thus could not object that the draft standing orders were not
reasonable or fair. Under Section 10, the right to apply for modification
was conferred on the employer alone and in view of Sub-section 3 the only
consideration which the certifying authority could apply to such
modification was the one which he could apply under Sections 4 and 6.
Therefore, no question whether the modification was fair or reasonable
could be raised. It is thus clear that the workman had very little say in the

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matter even if he felt that the standing orders or their modifications were
either not reasonable or fair. They could, of course, raise an industrial
dispute. But that remedy was hardly satisfactory. Such a dispute had to be
first sponsored by a union or at least a substantial number of workmen; it
had next to go through the process of conciliation and lastly the
appropriate Government may or may not be prepared to refer such a
dispute to industrial adjudication. Even if it did, the entire process was a
protracted one.

11. In 1956, Parliament effected radical changes in the Act widening its
scope and altering its very complexion. Section 4, as amended by Act 36
of 1956, entrusted the authorities under the Act with the duty to adjudicate
upon fairness and reasonableness of the standing orders. The enquiry when
such standing orders are submitted for certification is now two-fold; (1)
whether the standing orders are in consonance with the model standing
orders, and (2) whether they are fair and reasonable. The workmen,
therefore, can raise an objection as to the reasonableness or fairness of the
draft standing orders submitted for certification. By amending Section
10(2) both the workmen and the employer are given the right to apply for
modification and by reason of the change made in Section 4 a
modification has also now to be tested by the yardstick of fairness and
reasonableness. The Act provides a speedy and cheap remedy available to
the individual workman to have his conditions of service determined and
also for their modifications. By amending Sections 4 and 10, Parliament
not only broadened the scope of the Act but also gave a clear expression to
the change in its legislative policy. Parliament knew that the workmen,
even as the unamended Act stood, had the right to raise an industrial
dispute, yet, not satisfied with such a remedy, it conferred by amending
Sections 4 and 10 the right to individual workmen to contest the draft
standing orders submitted by the employer for certification on the ground
that they are either not fair or reasonable, and more important still, the
right to apply for their modification despite the finality of the order of the
appellate authority under Section 6. Parliament thus deliberately gave a
dual remedy to the workmen both under this Act and under the Industrial
Disputes Act. This fact has in recent decisions been recognised by this
Court, (cf. Bangalore Woollen, Cotton & Silk Co. Ltd. v. Their Workmen,
MANU/SC/0220/1967 : (1968)ILLJ555SC ., Buckingham & Cernatic Co.
Ltd. v. Workmen, C.A. No. 674 of 1968 decided on 25th July, 1968 and
Hindustan Brown Boveri Ltd. v. The Workmen, C.A. No. 1631 of 1966
decided on 31st July, 1967.

12. It will be pertinent, while examining the question whether there is a

restriction, as suggested by counsel, to the right to apply for modifications,
to bear in mind the change in the legislative policy reflected in the
amendments of Sections 4 and 10. It will be noticed that Section 10 does
not state that once a standing order is modified and the modification is
certified, no further modification is permissible except upon proof that
new circumstances have arisen since the last modification. As a matter of
fact the legislature has not incorporated any words in the sub-section
restricting the right to apply for modification except of course the time
limit of six months in Sub-section 1. Section 6 no doubt lays down that the

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order of the appellate authority in an appeal against the order of the
certifying officer under Section 5 is final but that finality is itself subject to
the right to apply for modification under Section 10(2). Even so, it was
urged that the finality of the order under Section 6 was indicative of a
condition precedent to the jurisdiction under sec. 10(2) to entertain an
application for modification on a new set of circumstances having arisen
in the meantime, The question is whether such is the position.

13. The finality to the order passed under Section 6 really means that there
is no further appeal or revision against that order and no more. This view
finds support from Section 12 which lays down that once the standing
orders are finally certified, no oral evidence can be led in any court which
has the effect of adding to or otherwise varying or contradicting such
standing orders. Section 6, when read with Section 12, indicates that the
finality given to the certification by the appellate authority is against a
challenge thereof in a civil court. But the finality given to the appellate
authority's order is subject to the modification of those very standing
orders certified by him. As already stated, Section 10 itself does not lay
down any restriction to the right to apply for modification. Apart from the
right to apply for modification under the Act, the workmen can raise an
industrial dispute with regard to the standing orders. There is nothing in
the Industrial Disputes Act restricting the right to raise such a dispute only
when a new set of circumstances has arisen. If that right is unrestricted,
can it be possible that the very legislature which passed both the Acts
could have, while conferring the right on the workmen individually,
restricted that right as suggested by counsel ? To illustrate, a new
industrial establishment is set up and workmen are engaged therein. Either
there is no union or if there is one it is not yet properly organised. The
standing orders of the establishment are certified under the Act. At the
time of certification, the union or the workmen's representatives had raised
either no objections or only certain objections. If subsequently the
workmen feel that further objections could have been raised and if so
raised the authority under the Act would have taken them into
consideration, does it mean that because new circumstances have since
then not arisen, the workmen would be barred from applying for
modification ? Let us take another illustration. Where, after the standing
orders or their modifications are certified, it strikes a workman after they
have been in operation for some time that a further improvement in his
conditions of service is desirable, would he be debarred from, applying for
a further modification on the ground that no change of circumstances in
the meantime has taken place? Where the standing orders provide 10
festival holidays if counsel were right, the workmen can never apply for an
addition in their number as they would be faced with the contention that
the festivals existed at the time of the last certification and there was
therefore no change of circumstances.

14. The Act is a beneficent piece of legislation and therefore unless

compelled by any words in it we would not be justified in importing in
Section 10 through inference only a restriction to the right conferred by it
on account of a supposed danger of multiplicity of applications. The
policy of Section 10 is clear that a modification should not be allowed

186
within six months from the date when the standing orders or the last
modifications thereof came into operation. The object of providing the
time limit was that the standing orders or their modifications should be
allowed to work for sufficiently lone time to see whether they work
properly or not. Even that time limit is not rigid because a modification
even before six months is permissible if there is an agreement between the
parties.

15. The ground for urging that a restriction should be read in Section 10
was the apprehension that since workmen individually have the right to
apply for modifications there would be multiple applications which an
employer would have to face. Secondly, that an application without a
change of circumstances would be tantamount to a review by the same
authority of his previous order of certificating. It was said that if no
restriction is read in Section 10 it would mean that the same authority,
who on satisfaction of the fairness and reasonableness of a standing order
or its last modification had certified it would be called upon to review his
previous decision on reasonableness and fairness. Such a review, it was
argued, is permissible only on well-recognised grounds, namely, discovery
of new and important matter or evidence, a mistake or an error apparent on
the face of the record or any other sufficient reason.

16. An application for modification would ordinarily be made where (1) a

change of circumstances has occurred, or (2) where experience of the
working of the standing orders last certified results in inconvenience,
hardship, anomaly etc. or (3) where some fact was lost sight of at the time
of certification, or (4) where the applicant feels that a modification will be
more beneficial. In category (1) there would be no difficulty as a change of
circumstances has taken place. But in cases falling under the rest of the
categories there will be no change of circumstances. Does it mean that
though the implementation of the standing orders has resulted in hardship,
inconvenience or anomaly, no modification can be asked for because there
is no change of circumstances ? As to multiplicity of applications we think
that there is no justification for any such apprehension, for unless there is a
justification for modification the authorities under the Act would reject
them on the ground that they are frivolous and therefore neither fair nor
reasonable. Lastly, as to such an application being a review of the last
certifying order an application under Section 10 is not a review. An
application for review would be made in the proceedings in which the
judgment or order sought to be reviewed is passed. That would not be so
in the case of an application under Section 10(2). Such an application is
independent of the proceedings in which the last certifying order was
passed and is made in the exercise of an independent right conferred upon
the applicant by Section 10(2). In an application for modification, the issue
before the authority would be not as to the reasonableness or fairness of
the standing orders or their last modification, but whether the modification
now applied for is fair and reasonable. Therefore, the contention that a
change of circumstances is a condition precedent to the maintainability of
an application under Section 10(2) or that an application for modification
without proof of such a change amounts to review by the same authority of
its previous order is not correct.

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17. It was then argued that assuming that a modification without a change
of circumstances is permissible though Section 11 of the Code of Civil
Procedure does not apply to industrial matters, sound policy dictates that
principles analogous to res judicata must be applied and it must be held
that unless circumstances have changed an application for modification
would be barred. For this, counsel relied on Burn & Co. v. Their
Employees, MANU/SC/0062/1956 : (1957)ILLJ226SC . There the
demand was for wage scales fixed in an award by the Mercantile Tribunal
instead of the scales in accordance with the scheme of the Bengal
Chamber of Commerce. In a dispute previously raised by labour an award
was made in 1950 which accepted the wage scales according to the
scheme of the Bengal Chamber of Commerce and rejected the demand for
the scales according to those awarded by the Mercantile Tribunal which
were more favourable. It was in these circumstances that this Court
expressed the view that an award fixing wage scales should have fairly
long range operation and should not be unsettled unless a change of
circumstances has occurred justifying fresh adjudication. But with the
constant spiralling of prices the principle would appear to have lost much
of its efficacy. The trend in recent decisions is that application of technical
rules such as res judicata, acquiescence, estoppel etc. are not appropriate to
industrial adjudication. In Guest, Keen, Williams Private Ltd. v. P. J.
Sterling, MANU/SC/0144/1959 : (1959)IILLJ405SC a modification of a
standing order relating to the age of superannuation was sought by raising
an industrial dispute. It was contended that the reference of that dispute
was barred by acquiescence and laches. That contention was rejected, the
Court observing that industrial tribunals should be slow and circumspect
in applying technical principles such as acquiescence and estoppel. In
Workmen of Balmer Lawrie & Co. v. Balmer Lawrie & Co.,
MANU/SC/0167/1963 : (1964)ILLJ380SC also it was observed that the
question as to revision of wage scales must be examined on the merits of
each individual case and technical considerations of res judicata should
not be allowed to hamper the discretion of industrial adjudication. It is
therefore, doubtful whether principles analogous to res judicata can
properly be applied to industrial adjudication.

18. On merits, Mr. Gokhale argued that the four modifications to which he
objected were neither fair nor reasonable and that therefore we should set
them aside. The question is, whether in an appeal under Article 136 we
would be justified in interfering with conclusions as to reasonableness and
fairness by authorities empowered by the Act to arrive at such
conclusions. In Rohtak Hissar District Electricity Supply Co. Ltd. v. State
of Uttar Pradesh and Ors., MANU/SC/0253/1965 : (1966)IILLJ330SC this
Court prevented counsel for the employer from canvassing such a question
on the ground that the matter of fairness and reasonableness was left by
the legislature to the authorities constituted under the Act. In Hindustan
Antibiotics Ltd. v. The Workmen and Ors., MANU/SC/0187/1966 :
(1967)ILLJ114SC . this Court repeated what it had earlier stated in Bengal
Chemical & Pharmaceutical Workers v. Their Workmen,
MANU/SC/0118/1959 : (1959)ILLJ413SC . that though Article 136 is
couched in widest terms, it is necessary to exercise discretionary

188
jurisdiction of this Court only in cases where awards are made in violation
of the principles of natural justice or are made in a manner causing grave
injustice to parties or raise an important principle of industrial law
requiring elucidation by this Court or disclose exceptional or special
circumstances which merit consideration by this Court.

19. As aforesaid, the modifications objected by the appellant-company are:

(1) giving reasons and communicating them to the workman concerned
even in cases of discharge simpliciter, (2) insertion of time limit of 60
days in the disposal of appeals, (3) insertion in standing order 11 of a
clause that where a workman is removed on the ground of inefficiency due
to physical unfitness, the management should offer to such a workman
alternative employment on reasonable emoluments and (4) insertion of the
clause requiring a second show cause notice at the stage when the decision
of suitable punishment is to be made. So far as modifications (2) and (3)
are concerned, clearly no principle is involved and there would be no
justification for us to interfere with the conclusion of the appellate
authority on the question of their being fair and reasonable. As regards the
first modification, the contention was that an employer has under the law
of master and servant the right to terminate the services of his employee
by a discharge simpliciter after giving a month's notice or a month's wages
in lieu thereof, and is not required to give reasons for such an order. The
Industrial Disputes Act also does not lay down any fetter to that right by
requiring him to give reasons to the employee concerned and industrial
adjudication has so far recognized such a right. To impose such a fetter by
a change in the standing orders is therefore not warranted by any statute,
and, therefore, cannot be said to be either fair or reasonable. It must.
however, be borne in mind that the right to contract in industrial matters is
no longer an absolute right and statutes dealing with industrial matters
abound with restrictions on the absolute right to contract. The doctrine of
hire and fire, for instance, is now completely abrogated both by statutes
and by industrial adjudication, and even where the services of an
employee are terminated by an order of discharge simpliciter the legality
and propriety of such an order can be challenged in industrial tribunals.
These restrictions on the absolute right to contract are imposed evidently
because security of employment is more and more regarded as one of the
necessities for industrial peace and harmony and the contentment it brings
about a prerequisite of social justice. During the last decade or so statutes
have been passed such as the Bihar Shops and Establishments Act, 1953
which require a reasonable cause for dispensing with the services of an
employee by an order of discharge simpliciter. If reasons for discharging
an employee are furnished to the employee concerned, he not only has the
satisfaction of knowing why his services are dispensed with but it becomes
easy for him in appropriate cases to challenge the order on the ground that
it is either not legal or proper which in the absence of knowledge of those
reasons it may be difficult, if not impossible for him to do. In these
circumstances, if the authorities under the Act have come to the
conclusion that such a modification is fair and reasonable we would hardly
be justified in interfering with such a decision.

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20. As regards the modification requiring a second show cause notice,
neither the ordinary law of the land nor the industrial law requires an
employer to give such a notice. In none of the decisions given by courts or
the tribunals such a second show cause notice in case of removal has ever
been demanded or considered necessary. The only class of cases where
such a notice has been held to be necessary are those arising under Article
311. Even that has now been removed by the recent amendment of that
Article. To import such a requirement from Article 311 in industrial
matters does not appear to be either necessary or proper and would be
equating industrial employees with civil servants. In our view, there is no
justification on any principle for such equation. Besides, such a
requirement would unnecessarily prolong disciplinary enquiries which in
the interest of industrial peace should be disposed of in as short a time as
possible. In our view it is not possible to consider this modification as
justifiable either on the ground of reasonableness or fairness and should
therefore be set aside.

21. The appeal, therefore, is partly allowed to the extent aforesaid and the
impugned order to that extent is set aside. There will be no order as to
costs.

22. Bhargava, J. The management of the Shahdara (Delhi) Saharanpur

Light Railway Co., Ltd. (hereinafter referred to as "the Company") has
filed this appeal, by special leave, against an order passed by the Chief
Labour Commissioner (Central) under Section 6 of the Industrial
Employment (Standing Orders) Act, 1946 (hereinafter referred to as "the
Act") as an appellate authority, granting partially an application made
under Section 10 of the Act presented on behalf of the respondent,
Shahdara-Saharanpur Railway Workers' Union, The first draft Standing
Orders submitted by the Company to the Certifying Officer under Section
4 of the Act were certified by him on 7/8-8-1962, after deciding objections
that had been filed, on behalf of the workmen. In appeal, the Chief Labour
Commissioner (Central), New Delhi, modified those Standing Orders to
some extent by his order dated 12th February, 1963. Subsequently, these
certified Standing Orders were modified by the order dated 28th
December, 1963 passed by the Certifying Officer, and the appeal against
his orders of modification was dismissed on the 23rd April, 1964. Then,
on 25th April, 1965, an application was presented under Section 10(2) of
the Act on behalf of the respondent seeking modifications in a number of
Standing Orders as they stood after original certification and first
modification. The Certifying Officer passed his orders on this application
and, against those orders, the respondent filed an appeal before the Chief
Labour Commissioner (Central), New Delhi. The Chief Labour
Commissioner, by his order dated 27th October, 1967, allowed
modifications in a number of Standing Orders. The present appeal is
directed against this order and' challenges the modifications granted in
Standing Orders Nos. 9(a), 12(A), 11(ix), 11(vii) and 13. The main ground
urged by the Company before this Court in support of this appeal was that
the Chief Labour Commissioner was not justified in directing
modifications in the Standing Orders, already certified, in the absence of
fresh material or fresh facts on the basis of which alone he was entitled to

190
grant modifications under Section 10 of the Act. Learned counsel
appearing on behalf of the Company in the alternative, also put forward
the plea that on principles analogous to the rule of res judicata it should be
held that the Chief Labour Commissioner had no jurisdiction to grant these
modifications under Section 10 in view of the previous decisions given
when the Standing Orders were originally certified and modified for the
first time.

23. So far as the argument of learned counsel based on the applicability of

principles analogous to the rule of res judicata is concerned, learned
counsel conceded that there is no direct ruling of any Court laying down
that such principles are applicable when a Certifying Office is dealing with
an application for modification of Standing Orders under Section 10 of the
Act, or when an appeal against such an order is being heard by the
Appellate Authority under Section 6 of the Act. Reliance was, however,
placed on the decision of this Court in Burn & Co., Calcutta v. Their
Employees, MANU/SC/0062/1956 : (1957)ILLJ226SC where this Court
was dealing with the applicability of the principle analogous to the rule of
res judicata to proceedings before an Industrial Tribunal dealing with a
reference under the Industrial Disputes Act. In that case, an earlier award
had been given in an industrial dispute and the question arose whether, in
the subsequent dispute for adjudication, the decisions given in the earlier
award should be held as binding, unless it was shown that there had been a
change of circumstances. In the appeal before this Court, it was urged that
the Appellate Tribunal was in error in brushing aside the earlier award and
in deciding the matter afresh as if it arose for the first time for
determination; and it was argued that, when once a dispute is referred to a
Tribunal and that results in an adjudication, that must be taken as binding
on the parties thereto, unless there was a change of circumstances, and, as
none such had been alleged or proved, the earlier award should have been
accepted, as indeed it was accepted by the Adjudicator. This Court held :

"In the instant case, the Labour Appellate Tribunal dismissed this
argument with the observation that that was 'a rule of prudence and not of
law'. If the Tribunal meant by this observation that the statute does not
enact that an award should not be re-opened except on the ground of
change of circumstances, that would be quite correct. But that is not
decisive of the question, because there is no provision in the statute
prescribing when and under what circumstances an award could be re-
opened. Section 19(4) authorises the Government to move the Tribunal for
shortening the period during which the award would operate, if 'there has
been a material change in the circumstances on which it was based'. But
this has reference to the period of one year fixed under Section 19(3) and
if that indicates anything, it is that that would be the proper ground on
which the award could be re-opened under Section 19(6), and that is what
the learned Attorney-General contends. But we propose to consider the
question on the footing that there is nothing in the statute to indicate the
grounds on which an award could be reopened. What then is the position ?
Are we to hold that an award given on a matter in controversy between the
parties after full hearing ceases to have any force if either of them
repudiates it under Section 19(6), and that the Tribunal has no option,

191
when the matter is again referred to it for adjudication, but to proceed to
try it de novo, traverse the entire ground once again, arid come to a fresh
decision. That would be contrary to the well-recognised principle that a
decision once rendered by a competent authority on a matter in issue
between the parties after a full enquiry should not be permitted to be re-
agitated. It is on this principle that the rule of res judicata enacted in
Section 11 of the Civil Procedure Code is based. That section is, no doubt,
in terms inapplicable to the present matter, but the principle underlying it,
expressed in the maxim 'interest rei publicae ut sit finis litium', is founded
on sound public policy and is of universal application. 'The rule of res
judicata is dictated', observed Sir Lawrence Jenkins, C.J., in Sheoparsan
Singh v. Ramnandan Prasad Singh, The Army & Navy Stores Ltd., [1916]
L.R. 43 I.A. 'by a wisdom which is for all time.' And there are good
reasons why this principle should be applicable to decisions of Industrial
Tribunals also. Legislation regulating the relation between Capital and
Labour has two objects in view. It seeks to ensure to the workmen, who
have not the capacity to treat with capital on equal terms, fair returns for
their labour. It also seeks to prevent disputes between employer and
employees, so that production might not be adversely affected and the
larger interests of the society might not suffer. Now, if we are to hold that
an adjudication loses its force when it is repudiated under Section 19(6)
and that the whole controversy is at large, then the result would be that far
from reconciling themselves to the award and settling down to work it,
either party will treat it as a mere stage in the prosecution of a prolonged
struggle, and far from bringing industrial peace, the awards would turn out
to be but truces giving the parties breathing time before resuming hostile
action with renewed vigour. On the other hand, if we are to regard them as
intended to have long term operation and at the same time hold that they
are liable to be modified by change in the circumstances on which they
were based, both the purposes of the legislature would be served. That is
the view taken by the Tribunals themselves in The Army & Navy Stores
Ltd., Bombay v. Their Workmen, [1951] 2 L.L.J, 31 and Ford Motor Co.
of India Ltd. v. Their Workmen, [1951] 2 L.L.J. 231. and we are of
opinion that they lay down the correct principle, and that there were no
grounds for the Appellate Tribunal for not following them."
24. As against this view expressed by this Court, learned counsel for the
respondent relied on the remarks made by this Court in a subsequent case,
Workmen of Balmer Lawrie and Co. v. Balmer Lawrie and Co.,
MANU/SC/0167/1963 : (1964)ILLJ380SC . In that case, the Court was
dealing with the question of alteration in wage structure and had to
consider the effect of am earlier award. The Court held :

"When a wage structure is framed, all relevant factors are taken into
account and normally it should remain in operation for a fairly long
period; but it would be unreasonable to introduce considerations of res
judicata as such, because for various reasons which constitute the special
characteristics of industrial adjudication, the said technical considerations
would be inadmissible. As the Labour Appellate Tribunal itself has
observed, the principle of gradual advance towards the living wage which
industrial adjudication can never ignore, itself constitutes such a special
feature of industrial adjudication that it renders the application of the

192
technical rule of res judicata singularly inappropriate. If the paying
capacity of the employer increases or the cost of living shows an upward
trend, or there are other anomalies, mistakes or errors in the award fixing
wage structure, or there has been a rise in the wage structure in
comparable industries in the region, industrial employees would be
justified in making a claim for the re-examination of the wage structure
and if such a claim is referred for industrial adjudication, the Adjudicator
would not normally be justified in rejecting it solely on the ground that
enough time has not passed after the making of the award, or that material
change in relevant circumstances had not been proved. It is, of course, not
possible to lay down any hard and fast rule in the matter. The question as
to revision must be examined on the merits in each individual case that is
brought before an adjudicator for his adjudication."
25. Further support was sought by learned counsel from the remarks made
by this Court in Associated Cement Staff Union and Anr. v. Associated
Cement Company and Ors., MANU/SC/0282/1963 : (1964)ILLJ12SC The
judgment in this case was given only about a month after the judgment in
the case of Workmen of Balmer Lawrie & Co. by the same Bench of this
Court which held :

"It is true that too frequent alterations of conditions of service by industrial

adjudication have been gene rally deprecated by this Court for the reason
that it is likely to disturb industrial peace and equilibrium. At the same
time, the Court has more than once pointed out the importance of
remembering the dynamic nature of industrial relations. That is why the
Court has, specially in the more recent decisions, refused to apply to
industrial adjudications principles of res judicata that are meant and suited
for ordinary civil litigations. Even where conditions of service have been
changed only a few years before, industrial adjudication has allowed fresh
changes if convinced of the necessity and justification of these by the
existing conditions and circumstances. Where, as in the present case; in a
previous reference the tribunal has refused the demand for change, there is
even less reason for saying that that refusal should have any such binding
effect. It is important to remember in this connection that working hours
remained unchanged for many years in this concern and during these
years, considerable changes have taken place in the country's economic
position and expectations. With the growing realization of need for better
distribution of national wealth has also come an understanding of the need
for increase in production as an essential prerequisite of which greater
efforts on the part of the labour force are necessary. That itself is sufficient
reason against accepting the argument against any change in working
hours if found justified on relevant considerations that have been indicated
above."
26. These three decisions, which have been brought to our notice, prima
facie indicate that the Court has expressed conflicting views on the
question of applying the principle underlying the rule of res judicata to
proceedings for adjudication of industrial disputes by an Industrial
Tribunal under the Industrial Disputes Act. In the circumstances, I have
felt some hesitation in applying this principle in the present case as urged
on behalf of the Company. I consider that, in the present case, it would be
much more appropriate to examine the scheme of the Act itself to find out

193
the intention of the legislature and to arrive at a decision on that basis on
the question whether a modification on an application under Section 10 of
the Act should only be allowed on the basis of facts or circumstances
appearing subsequent to the previous certification of the Standing Orders,
or whether, in dealing with the application for modification, the Certifying
Officer and the Appellate Authority can re-examine the entire position
even as it existed at the time of the previous orders and arrive at a different
decision.

27. The scheme of the Act was examined by this Court in Rohtak Hissar
District Electricity Supply Co. Ltd. v. State of Uttar Pradesh and Ors.,
MANU/SC/0253/1965 : (1966)IILLJ330SC where this Court held :

"The Act was passed on the 23rd April, 1946, and the Standing Orders
framed by the U.P. Government under Section 15 of the Act were
published on the 14th May, 1947. The Central Act (the Industrial Disputes
Act No. 14 of 1947) came into force on the 1st April, 1947, whereas the
U.P. Act (U.P. Industrial Disputes Act No. 28 of 1947) came into force on
the 1st February, 1948. It will thus be seen that the Act came into force
before either the Central Act or the U.P. Act was passed. The scheme of
the Act originally was 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 the workmen employed by
them. The Legislature thought that, in many industrial establishments, the
conditions of employment were not always uniform, and sometimes, were
not even reduced to writing, and that led to considerable confusion which
ultimately resulted in industrial disputes. That is why the Legislature
passed the Act making it compulsory for the establishments, to which the
Act applied, to reduce to writing conditions of employment and get them
certified as provided by the Act. The matters in respect of which
conditions of employment had to be certified were specified in the
schedule appended to the Act. This Schedule contains 11 matters in
respect of which Standing Orders had to be made. In fact, the words
"Standing Orders" are defined by Section 2(g) as meaning rules relating to
matters set out in the Schedule. The "Certifying Officer" appointed under
the Act is defined by Section 2(c), whereas "Appellate Authority" is
defined by Section 2(a).

Originally, the jurisdiction of the Certifying Officer and the Appellate

Authority was very limited; they were called upon to consider whether the
Standing Orders submitted for certification conformed to the Model
Standing Orders or not. Section 3(2) provides that these Standing Orders,
shall be, as far as practicable, in conformity with such Model Standing
Orders. Section 15, which deals with the powers of the appropriate
Government to make rules, authorises, by Clause (2)(b), the appropriate
Government to set out Model Standing Orders for the purposes of this Act.
That is how the original jurisdiction of the certifying authorities was
limited to examine the draft Standing Orders submitted for certification
and compare them with the Model Standing Orders.

194
In 1956, however, a radical change was made in the provisions of the Act.
Section 4, as amended by Act 36 of 1956, has imposed upon the Certifying
Officer or the Appellate Authority the duty to adjudicate upon the fairness
or the reasonableness of the provisions of any Standing Orders. In other
words, after the amendment was made in 1956, the jurisdiction of the
certifying authorities has become very much wider and the scope of the
enquiry also has become correspondingly wider. When draft Standing
Orders are submitted for certification, the enquiry now has to be two-fold;
are the said Standing Orders in conformity with Model Standing Orders;
and are they reasonable or fair? In dealing with this latter question, the
Certifying Officer and the Appellate Authority have been given powers of
a Civil Court by Section 11(1). The decision of the Certifying Officer is
made appealable to the Appellate Authority under Section 6 at the instance
of either party. Similarly, by an amendment made in 1956 in Section
10(2), both the employer and the workmen are permitted to apply for the
modification of the said Standing Orders after the expiration of 6 months
from the date of their coming into operation. It will thus be seen that when
certification proceedings are held before the certifying authorities, the
reasonableness or the fairness of the provisions contained in the draft
Standing Orders falls to be examined."

It is in the light of this scheme of the Act explained by this Court that the
decision has to he arrived at as to how, in what manner and under what
circumstances the Certifying Officer or the Appellate Authority should
grant modifications when an application under Section 10(2) of the Act is
validly made after the expiry of the period of six months laid down in
Section 10(1) of the Act.

28. The purpose of the Act, as it was originally passed in 1946, was
merely 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 the workmen employed by them. To give
effect to this purpose, Section 3 of the Act gave the power exclusively to
the employers to submit draft Standing Orders for certification. The
Certifying Officer had to certify the Standing Orders, if provision was
made in them for every matter set out in the Schedule and the Standing
Orders were otherwise in conformity with the provisions of the Act. In
addition, Sub-section (2) of Section 3 also laid down that the provision to
be made was to be, as far as practicable, in conformity with Model
Standing Orders prescribed by the appropriate State Government. Thus,
the Act, in its original form, was designed only for the purpose of ensuring
that conditions of service, which the employer laid down, became known
to the workmen and the liberty of the employer in prescribing the
conditions of service was only limited to the extent that the Standing
Orders had to be in conformity with the provisions of the Act and, as far as
practicable, in conformity with Model Standing Orders. The Certifying
Officer or the Appellate Authority were debarred from adjudicating upon
the fairness or the reasonableness of the provisions of the Standing Orders.
There, as noticed in the case of Rohtak Hissar District Electricity Supply
Co. Ltd., MANU/SC/0253/1965 : (1966)IILLJ330SC the Legislature made
a drastic change in the policy of the Act by amending Section 4 and laying

195
upon the Certifying Officer the duty of deciding whether the Standing
Orders proposed by the employer were reasonable and fair, and also by
amending Section 10(2) so as to permit even a workman to apply for
modification of the certified Standing Orders, while, in the original Act,
the employer alone had the right to make such an application. It is,
however, to be noticed that the preamble of the Act was not altered, so that
the purpose of the Act remained as before. While the Act was in its
unamended form, if the workmen had a grievance, they could not apply
for modification of certified Standing Orders and, even at the time of
initial certification, they could only object to a Standing Order on the
ground that it was not in conformity with the provisions of the Act or
Model Standing Orders. After amendment, the workmen were given the
right to object to the draft Standing Orders at the time of first certification
on the ground that the Standing Orders were not fair and reasonable and,
even subsequently, to apply for modification of the certified Standing
Orders after expiry of the period of six months prescribed under Section
10(1) of the Act. These rights granted to the workmen and the powers
conferred on the Certifying Officer and the Appellate Authority, however,
still had to be exercised for the purpose of giving effect to the object of the
Act as it continued to remain in the preamble, which was not altered.
Before the amendment of the Act if the workmen had any grievance on the
ground of unfairness or unreasonableness of the Standing Orders proposed
by the employer, their only remedy lay under the Industrial Disputes Act.
By amendment in 1956, a limited remedy was provided for them in the
Act itself by conferring on the Certifying Officer the function of judging
the reasonableness and fairness of the proposed Standing Orders. These
amendments cannot, however, affect the alternative remedy which the
workmen had of seeking redress under the Industrial Disputes Act if they
had grievance against any of the Standing Orders certified by the
Certifying Officer [See Bangalore Woollen, Cotton and Silk Mills
Company Ltd. v. Their Workmen and Anr., MANU/SC/0220/1967 :
(1968)ILLJ555SC and the Buckingham and Carnatic Co. Ltd. v. Their
Workmen, Civil Appeal No. 674 of 1968 decided on 25-7-1968. It is,
therefore, clear that, after the amendment in 1956, the workmen have now
two alternative remedies for seeking alterations in the Standing Orders
proposed or already certified. They can object to the proposed Standing
Orders at the time of first certification, or can ask for modification of the
certified Standing Orders under Section 10(2) on the limited ground of
fairness or reasonableness. But, for the same purpose, they also have the
alternative remedy of seeking redress under the Industrial Disputes Act, in
which case the scope of their demand would be much wider. If the
proceedings go for adjudication under the Industrial Disputes Act, the
workmen can claim alterations of the Standing Orders not merely on the
ground of fairness or reasonableness, but even on other grounds, such as
further liberalisation of the terms and conditions of service, even though
the certified Standing Orders may be otherwise fair and reasonable. The
remedy provided by the Act has, therefore, a limited scope only.

29. In this background, the effect of Section 6, which lays down that when
the Appellate Authority gives its decision confirming the Standing Orders
either in the form certified by the Certifying Officer or after amending the

196
Standing Orders by making modifications, thereof or additions thereto, his
decision shall be final, has further to be considered. On the face of it, this
provision means that, if the Appellate Authority confirms the Standing
Orders at the time of first certification, that order is not to be subsequently
questioned before any authority. There is, of course, the provision in
Section 10(2) permitting either an employer or a workman to apply for
modification of the Standing Orders after the expiry of six months from
the date of certification. It appears to me that, on the language of Section
6, it must be held that this request for modification under Section 10(2)
can only be made on the basis of fresh facts or fresh circumstances arising
subsequent to the passing of the order by the Appellate Authority under
Section 6 confirming the Standing Orders for the first time. If, on
receiving an application for modification under Section 10(2) the
Certifying Officer is held to be authorised to reconsider the reasonableness
or fairness of a Standing Order already certified and confirmed under
Section 6 the finality envisaged under that section in respect of the
decision of the Appellate Authority will be nullified. Cases may arise
where, on first application for certification of the Standing Orders, an
objection may be raised by the workmen and a modification sought on the
ground that the proposed Standing Order is not fair or reasonable. Such an
objection may be dismissed both by the Certifying Officer and the
Appellate Authority. Six months after the certification, a workman may
apply for the same modification of the same Standing Order without any
fresh facts or circumstances. If it be held that the power of the Certifying
Officer on an application for modification is not limited at all and can be
exercised even on the material which was originally before the Certifying
Officer and the Appellate Authority, the Certifying Officer may, on the
same material, come to a conclusion different from the conclusion arrived
at by the Appellate Authority at the first stage under Section 6 of the Act.
In that case, the Certifying Officer may allow the modification which was
previously rejected by the Appellate Authority. The wide interpretation,
urged by learned counsel for the workmen in this appeal that the power of
a Certifying Officer on an application for modification is not limited at all,
can thus result in orders being made which completely negative the
finality of the decision given by an Appellate Authority under Section 6 at
an earlier stage. In fact, if this interpretation is accepted and it is held that
an order of modification can be made on the identical material which was
available to the Appellate Authority at the time of its earlier order, it
would mean that merely because a period of six months has elapsed, a
Certifying Officer would be competent to re-appraise the same facts and
circumstances, take a different view and set aside the order passed by his
superior authority and, thus, in effect, sit in judgment over an order made
by a superior authority. Of course, a Certifying Officer, being junior to the
Appellate Authority, may hesitate to do so; but a successor Appellate
Authority may very well hold views different from his predecessor and
may come to a decision on identical material that a Standing Order held to
be fair and reasonable by his predecessor at the stage of appeal under
Section 6 was not fair and reasonable; and that a modification should be
allowed on the ground of being fair and reasonable, even though that
modification was disallowed by his predecessor. It is also to be noted that
the right to apply for modification is not confined to workmen alone, but

197
that right is granted to the employers also. There can, therefore, be reverse
cases where the draft Standing Order submitted by an employer may be
modified by the Appellate Authority under Section 6 and, six months later,
the employer may again apply for modification so as to result in
restoration of his original draft in the hope that the successor Appellate
Authority would hold the opinion that the original draft Standing Order
proposed by the employer was fair and reasonable and that the
modification made by his predecessor under Section 6 was not justified.
Considering these circumstances. I am of the view that, when an
application under Section 10(2) of the Act is made, the Certifying Officer
can modify Standing Order already certified, only if the request is not
made on the basis of the same material which existed at the earlier stage
when the Standing Orders were certified. I am unable to accept an
interpretation which will completely do away with the finality of orders
made under Section 6 of the Act by an Appellate Authority.

30. This interpretation, of course, does not affect the right of the workmen
to seek an amendment of the Standing Orders, even if certified as
reasonable and fair by the Appellate Authority under Section 6 by
appropriate proceedings under the Industrial Disputes Act. In fact, it
appears to me that the power of a Tribunal dealing with an industrial
dispute under that Act relating to a Standing Order will, of course, be wide
enough to permit the Tribunal to direct alteration of a Standing Order held
to be reasonable and fair by the Appellate Authority under Section 6 of the
Act, in case a dispute about it is referred to the Tribunal; and that is the
only remedy available if either the workman or the employer desires to
have modification without any fresh grounds, material or circumstances.
The validity of the order of the Appellate Authority in the present appeal
has to be judged on this basis.

31. I have already mentioned earlier the various Standing Orders in respect
of which modifications allowed by the Appellate Authority were sought to
be challenged in this appeal. The objections in respect of some of these
modifications, which were originally challenged, were not pressed by
counsel during the hearing of the appeal and, consequently, those
modifications need not be interfered with. At the stage of final hearing,
learned counsel only pressed for setting aside four modifications
mentioned by the Chief Labour Commissioner in his appellate order as
items Nos. 1, 3, 5 and 6 relating to modifications of Standing Orders 9(a),
12(A) and 11(vii). It may be mentioned that items 5 and 6 are both
modifications in Standing Order 11(vii). In each of these cases, the order
passed by the Chief Labour Commissioner now impugned shows that he
did not rely on any fresh facts, material or circumstances which were not
available at the earlier stage when the Standing Orders were first certified
or first modified. In effect, therefore, the present order amounts to passing
orders, different from earlier orders passed by the Appellate Authority, on
a re-consideration of the same material which was available to both the
Authorities. In fact, the modification at item No. 1 in Standing Order 9(a)
had been specifically disallowed in appeal by the Chief Labour
Commissioner in his order dated 12th February, 1963, when he first heard
the appeal under Section 6 and confirmed the certification of the original

198
Standing Orders. Thus, in respect of item No. 1, what the present Chief
Labour Commissioner has done is to permit the modification because he
considered it reasonable and fair, even though, on the same material, his
predecessor had disallowed this very modification on the basis that, in his
opinion, the original draft Standing Order was fair and reasonable. On the
principle enunciated above, it is clear that the order of the Chief Labour
Commissioner, allowing all these four modifications, which is not based
on any fresh facts, material or circumstances, is liable to be set aside.

32. As a result, I would partly allow the appeal and set aside the order of
the Chief Labour Commissioner (Central), permitting modifications
mentioned by him in his Order at item Nos. 1, 3, 5 and 6 relating to
Standing Orders 9(a), 12(A) and 11(vii). In the circumstances of this case,
I would direct parties to bear their own costs of this appeal.

20. Agra Electric Supply Co. Ltd. vs. Alladdin and Ors. (12.08.1969 -
SC)

J.M. Shelat, J: In this appeal, by special leave, two questions arise : (1)
whether standing orders govern the employees appointed before they are
certified under the Industrial Employment (Standing Orders) Act, 20 of
1946, and (2) whether the appellant-company was entitled to terminate the
service of a workman appointed as a probationer before the expiry of the
period of probation except on the ground of misconduct.

2. The first question relates to 3 workmen, Alladin, Ram Prasad and

Noorul Zaman, who were employed in 1929, 1935 and 1937 respectively,
long before the company's standing orders were certified and brought into
force in 1951 and who were superannuated under standing order 32 of the
said standing orders. Prior to 1951 there were no rules or conditions of
service prescribing the age of superannuation. Standing order 32 for the
first time laid down 55 years as the age of superannuation. Relying on
standing order 32 the company served on the three workmen notices dated
December 19, 1964, November 20, 1963 and January 27, 1964, who had
by then attained the age of 58, 64 and 59 years, by which the company
retired them with effect from January 1, 1965, December 29, 1963 and
March 1, 1964 respectively. The Labour Court, to which the dispute
arising from the compulsory retirement was referred, held that the
company's standing orders having been certified long after these workmen
were employed and the conditions of their employment not having
provided any age of retirement, the company could not apply standing
order 32 to them, and therefore, the orders of superannuation were bad,
and directed their reinstatement and payment to them of their wages from
the date of retirement till the date when they would be reinstated.

3. Thus, the question involved in this appeal is whether the company could
retire by applying standing order 32 these three workmen, who admittedly
had long passed the age of superannuation provided thereunder. Counsel
for the company argued that once the standing orders are certified and
come into operation, they would, subject to their modification as provided

199
under the Act, bind all workmen, irrespective of whether they were
employed before or after they came into force, and that therefore, the
Labour Court was in error in holding to the contrary and ordering their
reinstatement. Mr. Kumaramangalam, on the other hand, argued (1) that
the company's action amounted to applying standing order 32
retrospectively, that that was not warranted, for, if the standing orders were
intended to be so applied, they would have so expressly provided, and (2)
that in a previous reference, being Ref. 91 of 1964, between the appellant-
company and its workmen, this very Labour Court had decided that these
standing orders did not apply to workmen previously employed, that an
appeal was sought to be filed in this Court against that order but no special
leave was granted, and therefore, that order became final. Consequently,
the company was not entitled to reagitate the same question, as it was
precluded from doing so by principles analogous to the principle of res
judicata.

4. The question as to whether standing orders were retrospective in their

application can obviously arise only if they do not in law bind workmen
previously employed. Such a question can hardly arise if the provisions of
the Act show, as contended by counsel for the company, that once they are
certified and come into force, they bind both the employer and all the
workmen presently employed.

5. As observed in Shahdara (Delhi)-Saharanpur Light Railway Company

Ltd. v. Shahdara-Saharanpur Railway Workers' Union [1969] 1 L.L.J. 734
the Act is a beneficent piece of legislation, its object being to require, as its
preamble and its long title lay down, employers in industrial
establishments to define with sufficient precision the conditions of
employment of workmen employed under them and to make them known
to such workmen. Before the passing of the Act, there was nothing in law
to prevent an employer having different contracts of employment with
workmen employed by him with different and varying conditions of
service. Such a state of affairs led to confusion and made possible
discriminatory treatment between employees and employees though all of
them were appointed in the same premises and for the same or similar
work. Such a position is clearly incompatible with the principles of
collective bargaining and renders their effectiveness difficult, if not
impossible. To do away with such diversity and bargaining with each
individual workman, the legislature provided by Section 3 of the Act that
every employer of an industrial establishment must, within 6 months from
the date of the Act becoming applicable to his industrial establishment,
submit to the certifying authority under the Act draft standing orders
prepared by him for adoption, in his industrial establishment providing
therein for all matters set out in the Schedule to the Act, and where model
standing orders are prescribed to have such draft standing orders in
conformity with them. The draft standing orders are to be accompanied by
particulars of workmen employed in the establishment as also the name of
the union, if any, to which they belong. This requirement clearly means
particulars of the workmen in employment at the date of the submission of
the draft standing orders for certification and not those only who would be
employed in future after certification. Under Section 4, such draft orders
200
are certifiable if they provide for all matters set out in the Schedule, are
otherwise in conformity with the Act and are adjudicated as fair and
reasonable by the certifying officer or the appellate authority. Section 5
requires the certifying officer to forward a copy of the draft standing
orders to the union or in its absence to workmen in the prescribed manner
with a notice requiring objection, if any, from the workmen. After giving
the employer and the union or the workmen's representatives an
opportunity of being heard, the certifying officer has to decide whether or
not any modification or addition to the draft submitted by the employer is
necessary and then certify the draft standing orders and send copies thereof
and of his order in that behalf to the employer, the union or the
representatives of the workmen. Section 6 confers the right of appeal to
any person aggrieved by such order to the appellate authority, who, by his
order, can either confirm or amend the standing orders. Under Section 7,
such standing orders are to come into operation on the expiry of 30 days
from the date on which their authenticated copies are sent by the certifying
officer to the parties where no appeal against these orders is filed or where
such appeal is filed on expiry of 7 days from the date on which copies of
the appellate authority's order are sent as required by Section 6(2). Section
9 requires the employer to post the standing orders as finally certified on
boards maintained for that purpose at or near the entrance through which
the majority of workmen enter the industrial establishment and in all
departments thereof. Section 10 confers the right to an employer or any of
the workmen to apply for modification after expiry of 6 months from the
date on which they or the last modification thereof came into operation.
The Schedule to the Act sets out matters which the standing orders must
provide for. These matters are classification of workmen, shift working,
periods and hours of work, holidays, pay days, wage rates, conditions and
procedure for applying for grant of leave, closing and reopening of
sections of the industrial establishment, temporary stoppage of work,
liabilities and rights of the employer and the workmen arising therefrom,
termination of employment, disciplinary action, penalties etc.

6. The obligation imposed on the employer to have standing orders

certified, the duty of the certifying authority to adjudicate upon their
fairness and reasonableness, the notice to be given to the union and in its
absence to the representatives of the workmen, the right conferred on them
to raise objections, the opportunity given to them of being heard before
they are certified, the right of appeal and the right to apply for
modifications given to workmen individually, the obligation on the
employer to have them published in such a manner that they become easily
known to the workmen, all these provisions abundantly show that once the
standing orders are certified and come into operation, they become binding
on the employer and all the workmen presently employed as also those
employed thereafter in the establishment conducted by that employer. It
cannot possibly be that such standing orders would bind Only those who
are employed after they come into force and not those who were employed
previously but are still in employment when they come into force. The
right of being heard given to the union or, where there is no union, to the
representatives of the workmen, the right of appeal and the right to apply
for modification given to workmen individually clearly indicate that they
201
were provided for because the standing orders, as they emerge after
certification, are intended to be binding on all workmen in the employment
of the establishment at the date when they come into force and those
employed thereafter. Surely, the union or, in its absence, the
representatives of workmen, who are given the right to raise objections
either to the draft standing orders proposed by the employer or to the
fairness and reasonableness of their provisions, could not have been
intended to speak for workmen to be employed thereafter and not those
whom they presently represent. Besides, if the standing orders were to
bind only those who are subsequently employed, the result would be that
there would be different conditions of employment for different classes of
workmen, one set of conditions for those who are previously employed
and another for those employed subsequently, and where they are
modified, even several sets of conditions of service depending upon
whether a workman was employed before the standing orders are certified
or after, whether he was employed before or after a modification is made
to any one of them and would bind only a few who are recruited after and
not the bulk of them, who though in employment were recruited
previously. Such a result could never have been intended by the
legislature, for, that would render the conditions of service of workmen as
indefinite and diversified, as before the enactment of the Act. Why does
Section 3(3) of the Act require the employer to give particulars of the
workmen employed by him at the date of his submission of the draft
standing orders unless the object of making him furnish the particulars was
to have uniformity of conditions of service and to make the standing orders
binding on all those presently employed. That is why the Act also insists
among other things that after they are certified they must be made known
to all workmen by posting them at or near the entrance through which they
pass and in the language known to the majority of them.

7. In Guest, Keen, Williams Pvt. Ltd. v. P.J. Sterling

MANU/SC/0144/1959 : (1959)IILLJ405SC a view apparently contrary to
the one above stated was said to have been taken since it was held there
that it was unfair in that particular case to fix the age of superannuation of
previous employees by a subsequent standing order, which should apply in
that matter to future entrants. In that view the Court fixed 60 years as the
age of retirement for such previous employees although the standing order
had provided 55 years as the age of superannuation. In Salem Erode
Electricity Distribution Company Ltd. v. Salem Erode Electricity
Distribution Company Ltd. Employees Union MANU/SC/0248/1965 :
(1966)ILLJ443SC this Court, however, took the same view which we have
stated above and held that the provisions of the Act clearly indicated that
matters specified in the Schedule to the Act should be covered by uniform
standing orders applicable to all workmen employed in an industrial
establishment and not merely to entrants employed after their certification.
The question arose out of an application made by the employer for
modification of the existing standing orders by providing different rules
relating to holidays and leave for employees appointed before a certain
date and those appointed after that date. Negativing such a modification,
the Court, after examining the relevant provisions of the Act, stated at
pages 504 and 505 as follows :
202
One has merely to examine these clauses one by one to be satisfied that
there is no scope for having two separate Standing Orders in respect to any
one of them. Take the case of classification of workmen. It is
inconceivable that there can be two separate Standing Orders in respect of
this matter. What we have said about classification is equally true about
each one of the other said clauses; and so, the conclusion appears to be
irresistible that the object of the Act is to certify Standing Orders in respect
of the matters covered by the Schedule; and having regard to these matters,
Standing Orders so certified would be uniform and would apply to all
workmen alike who are employed in any industrial establishment.

...

On principle, it seems expedient and desirable that matters specified in the

Schedule to the Act should be covered by uniform Standing Orders
applicable to all workmen employed in an industrial establishment. It is
not difficult to imagine how the application of two sets of Standing Orders
in respect of the said matters is bound to lead to confusion in the working
of the establishment and cause dissatisfaction amongst the employees. If
Mr. Setalvad is right in contending that the Standing Orders in relation to
these matters can be changed from time to time, it may lead to the
anomalous result that in course of 10 or 15 years there may come into
existence 3 or 4 different sets of Standing Orders applicable to the
employees in the same industrial establishment, the application of the
Standing Orders depending upon the date of employment of the respective
employees. That, we think, is not intended by the provisions of the Act.

At page 509 to 510 the Court referred to the case of Guest, Keen, Williams
Private Ltd. MANU/SC/0144/1959 : (1959)IILLJ405SC :
(1959)IILLJ405SC relied on by the employers' counsel, and explained why
the Court had fixed 60 years as the age of superannuation for the
employees appointed before the standing orders were certified although the
standing orders had fixed 55 years as the age of superannuation stating that
:

that course was adopted under the special and unusual circumstances
expressly stated in the course of the judgment.
This decision thus confirms the view taken by us that the object of the Act
is to have uniform standing orders providing for the matters enumerated in
the Schedule to the Act, that it was not intended that there should be
different conditions of service for those who are employed before and
those employed after the standing orders come into force, and finally, that
once the standing orders come into force, they bind all those presently in
the employment of the concerned establishment as well those who are
appointed thereafter.

8. Counsel for the workmen, however, drew our attention to the award in
Ref. 91 of 1964 under Section 4(k) of the U.P. Industrial Disputes Act,
1947. That reference, no doubt, was between the appellant-company and
its workmen and the question decided there was whether the company was
203
right in compulsorily retiring the six workmen there concerned under these
very standing orders although they were employed before they were
certified and came into force. The Labour Court, relying on Workmen of
Kettlewell Bullen and Company Ltd. v. Kettlewell Bullen and Company
Ltd. [1964] 2 L.L.J.146 which in turn had relied on Guest, Keen, Williams'
case MANU/SC/0144/1959 : (1959)IILLJ405SC : (1959)IILLJ405SC ,
held that Standing Order 32 of these Standing Orders could not be applied
to those previously appointed and that, therefore, the company's action in
retiring those workmen was not justified.

9. We may mention that the case of Kettlewell Bullen & Company [1964]
2 L.L.J. 146 was not one concerned with Standing Orders but with rules
made by the company and this Court, relying on the decision in Guest,
Keen, Williams Private Ltd. MANU/SC/0144/1959 : (1959)IILLJ405SC :
(1959)IILLJ405SC held that where the rules of retirement are framed by
the company they would have no application to its prior employees unless
such employees have accepted the new rules. It is clear that neither the
case of Kettlewell Bullen & Co. [1964] 2 L.L.J. 146 nor the case of Guest,
Keen, Williams Private Ltd. MANU/SC/0144/1959 : (1959)IILLJ405SC :
(1959)IILLJ405SC in the light of the explanation given in the case of
Salem Erode Electricity Distribution Co. Ltd. [1966] 2 S.C.R.98 was
applicable and the Labour Court was, therefore, clearly in error in basing
its award on the decision in the case of Kettlewell Bullen & Co. [1964] 2
L.L.J.146

10. The argument, however, was that even if that award was erroneous, the
company did not appeal against it, consequently it became final and the
issue there decided being the same and between the same parties,
principles analogous to the principle of res judicata would apply and
therefore no relief should be granted in the present case to the company. It
is true, as stated in The Newspapers Ltd. v. The State Industrial Tribunal,
U.P. MANU/SC/0078/1957 : (1957)IILLJ1SC that an award binds not
only the individuals present or represented but all workmen employed in
the establishment and even future entrants. But that principle is founded on
the essential condition for the raising of an industrial dispute itself. If an
industrial dispute can be raised only by a group of workmen acting on their
own or through their union, the conclusion must be that all those who
sponsored the dispute are concerned in it and therefore bound by the
decision on such dispute. (see New India Motors (P) Ltd. v. K.T. Morris)
MANU/SC/0232/1960 : (1960)ILLJ551SC Such a consideration, however,
is not the same as the principle of res judicata or principles analogous to
res judicata. In Workmen v. Balmer Lawrie and Company
MANU/SC/0167/1963 : (1964)ILLJ380SC no doubt, a case of revision of
wage scales, this Court cautioned against applying technical considerations
of res judicata thereby hampering the discretion of industrial adjudication.
(see also Shahdara (Delhi)-Saharanpur Light Railway Company Ltd. v.
Shahdara-Saharanpur Railway Workers' Union [1969] 1 L.L.J. 734 How
inexpedient it is to apply such a principle is evident from the fact that the
award in Ref. 91 of 1964 was based on the decision in Kettlewell Bullen &
Co. Ltd. [1964] 2 L.L.J.146 which in turn had followed the case of Guest,
Keen, Williams Private Ltd. MANU/SC/0144/1959 : (1959)IILLJ405SC :
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(1959)IILLJ405SC on the supposition (which, as aforesaid, was not
correct) that standing orders are not binding on those who are employed
prior to their certification and their coming into force. The company,
presumably, did not challenge the correctness of that award because it was
perhaps than thought that that was the law laid down in Guest, Keen,
Williams Private Ltd. MANU/SC/0144/1959 : (1959)IILLJ405SC :
(1959)IILLJ405SC . The consequence of holding that the company is
barred by principles analogous to res judicata would be that there would be
two sets of conditions of service; one for those previously employed and
the other for those employed after the standing orders were certified, a
consequence wholly incompatible with the object and policy of the Act.
The very basis of the award in Ref. 91 of 1964, namely, the wrong
understanding of the decision in Guest, Keen, Williams Private Ltd.
MANU/SC/0144/1959 : (1959)IILLJ405SC : (1959)IILLJ405SC , having
gone, it becomes all the more difficult arid undesirable to perpetuate the
distinction made therein between those who were previously appointed
and those appointed subsequently and to refuse on such an untenable
distinction relief to the company. The award in Ref. 91 of 1964 was made
on May 24, 1965 when it was believed that the decision in Guest, Keen,
Williams Co. Ltd. MANU/SC/0144/1959 : (1959)IILLJ405SC :
(1959)IILLJ405SC laid down the principle that standing orders would not
bind workmen previously employed. That that was not so was clarified in
the case of Salem Erode Electricity Distribution Co. Ltd.
MANU/SC/0248/1965 : (1966)ILLJ443SC : (1966)ILLJ443SC , the
decision in which was pronounced on November 3, 1965 removing
thereby any possible misapprehension. The present reference was made on
June 23, 1966, long after the decision in Salem Erode Electricity
Distribution Co. Ltd. MANU/SC/0248/1965 : (1966)ILLJ443SC :
(1966)ILLJ443SC and the Labour Court gave the award impugned in this
appeal on July 24, 1968. Thus, both the Reference and the award were
made in circumstances different from those which prevailed when Ref. 91
of 1964 was made and disposed of, a factor making it doubtful the
application of a principle such as res judicata.

11. The second question relates to the workman, Shameem Khan. The
company appointed him under a letter of appointment dated December 2,
1965 to the post of a cleaner as a probationer for 6 months with discretion
to the resident engineer to extend that period. The letter also stated that
during his probationary period his service would be liable to termination
without any notice and without assigning any reason therefore and that he
would not be deemed to have been confirmed automatically in the post on
the expiry of the probation period unless so advised in writing. The
workman worked as such probationer till February 28, 1966 when he was
served with a memorandum that his service was terminated as from the
close of that day.

12. The workman's case was that the company had no right to terminate his
service before the expiry of the 6 months period of probation which is the
period prescribed by standing order 2(c), that the stipulation in the letter of
appointment that his service was liable to termination during the probation
period was contrary to that standing order, and that therefore, that
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stipulation was not valid, and lastly, that the said order, though apparently
one of termination simpliciter, was not a bona fide order, was in truth
punitive in nature, and therefore, could not be passed without an
opportunity of being heard having been given to him in a properly held
enquiry. The fact is that no such enquiry was held and no opportunity was
given to the workman to explain any misconduct for which he could be
removed or dismissed.

13. The evidence before the Labour Court was that the concerned
workman had unauthorisedly used the motor-cycle belonging to one
Sidhana, a shift engineer in the company and that that motorcycle met with
an accident while the workman was using it causing damage to it. Three
days after that accident a report alleging that his work as a probationer was
unsatisfactory was made by his superior officer. On this evidence the
Tribunal came to the conclusion that the impugned order was not an order
of termination simpliciter, that though couched in that language it was
passed as a punishment or the workman having used that vehicle without
the consent of its owner and was, therefore, an order of dismissal. The
Tribunal was also of the opinion that the said report alleging unsatisfactory
work by the workman was colourable and made at the instance of the shift
engineer or at any rate was inspired by the said incident. In this view the
Labour Court held that the exercise of power to terminate the service of the
workman was not bona fide and consequently it set aside that order and
directed his reinstatement.

14. Now, it is a well settled principle of industrial adjudication that even if

an impugned order is worded in the language of a simple termination of
service, industrial tribunals can look into the facts and circumstances of the
case to ascertain if it was passed in colourable exercise of the power of the
management to terminate the service of an employee and find out whether
it was in fact passed with a view to punish him. The letter of appointment
clearly states that the workman, Shameem Khan, was appointed as a
probationer for a period of 6 months with power to the resident engineer to
extend the period of probation. Ordinarily, that would mean that at the end
of the probation period the company would have to decide whether to
confirm him to a permanent post or, if that is not possible, to terminate his
service. Standing order 2(c) provides that a probationer is an employee
who is provisionally employed to fill a permanent vacancy in a post and
who has not completed the period of probation thereunder. It also lays
down that the normal period of probation shall be 6 months but the
resident engineer has the discretion to extend that period, the maximum
period of probation being 12 months in all. Ordinarily, this would mean
that a probationer's service cannot be terminated except for some
misconduct until the expiry of the probation period. The letter of
appointment, no doubt, contained a provision that the service of the
workman was liable to termination even during the probationary period.
That provision, however, must be read to mean that the appointment was
subject to the management's power of termination as provided in the
standing orders. Standing order 14 provides for such a power and lays
down that the service of "any employee" (which expression includes a
probationer as is clear from the classification of employees in standing
206
 order 2) can be terminated on grounds (a) to (f) therein set out. It is quite
clear that the termination of service of the concerned workman cannot be
attributed to any one of these grounds. Therefore, that order cannot be save
to have been passed in conformity with the power to terminate his service
under the standing orders.

15. But apart from this consideration, the Labour Court came to a finding
on the evidence before it that the real reason for passing the impugned
order was not the alleged unsatisfactory work on the part of the workman
but his having unauthorisedly used the motorcycle and causing damage to
it, that the order was punitive and not a simple termination of service and
was therefore in colourable exercise of the power of termination. This
finding is clearly one of fact and meant that the Labour Court rejected the
evidence led by the management that the work of the concerned workman
was found unsatisfactory. It is impossible to say from the evidence before
the Labour Court that that finding was perverse or such as could not be
reasonably arrived at. In that view, it is impossible to interfere with the
order of the Labour Court relating to workman, Shameem Khan.

16. In the result, the appeal is partly allowed. The order of the Labour
Court in connection with the 3 workmen whom the company retired, is set
aside but its order relating to workman, Shameem Khan, is confirmed. In
accordance with the order, passed by this Court on January 24, 1969, while
granting stay to the appellant-company, the company will pay to the
workman, Shameem Khan, interest at 6% per annum on the amount of the
arrears of wages still due to him under the order of the Labour Court. As
the appeal is partly allowed and partly dismissed, there will be no order as
to costs.

21. The Associated Cement Company Ltd vs Shri P. D. Vyas And

Others on 11 February, 1960

GAJENDRAGADKAR J.--The Associated Cement Companies Ltd., Dwarka Cement

Works, Dwarka and the Associated Cement Companies Ltd., Sevalia Cement Works,
Sevalia (hereinafter called the appellants) own and manage several cement works
throughout India including inter alia cement manufacturing factories at Dwarka and
Sevalia called the Dwarka Cement Works and the Sevalia Cement Works
respectively. In 1946 the appellants submitted to respondent 2, the Commissioner of
Labour, Bombay, in his capacity as certifying officer, draft standing orders for
certification under s. 3(1) of the Industrial Employment (Standing Orders) Act, 1946
(20 of 1946) (hereinafter called the Act). Respondent 2 made several alterations in the
draft submitted by the appellants. The two important alterations which are the subject-
matter of the present appeal were in respect of items Nos. 8 and 16. Under item No. 8
the draft standing orders had required that notice of fourteen days shall be given in the
event of discontinuance of a shift. Respondent 2 has modified it by increasing the
period of notice from fourteen days to one month. This modification has been made in
accordance with the model standing order on this subject. Similarly, item No. 16(2) in
the draft standing orders provided that striking work either singly or with other
workers without giving fourteen days' previous notice would be treated as

207
misconduct; whereas item No'. 16(3) provided that inciting while on the premises any
worker to strike work shall be treated as misconduct. These two provisions in the draft
have been modified by respondent's and the order thus modified provides that striking
work illegally either singly or with other workers or abetting, inciting, instigating or
acting in furtherance of an illegal strike would be treated as misconduct. This
modification also is consistent with the relevant provision in the model standing
order.

2. Feeling aggrieved by the modifications made by respondent 2 in the draft

submitted by them the appellants preferred an appeal to the Industrial court
(hereinafter called respondent 1). Respondent I was not impressed by the contentions
raised by the appellants with the result that the modifications made by respondent 2
were confirmed and the appeal was dismissed.

3. Thereupon the appellants filed a writ petition, being Miscellaneous

Application No. 267 of 1954, in the Bombay High Court challenging the validity of
the action of respondents 2 and 1. Mr Justice Coyajee who heard the said application,
upheld the contention raised by the appellants and came to the conclusion that in
making the impugned modifications respondent 2 and respondent I had acted beyond
their jurisdiction. The learned judge, therefore, set aside the modifications made and
allowed the appellants' petition. Against this order respondent 2 preferred an appeal,
being Appeal No. 122 of 1954, before the Court of Appeal in the Bombay High
Court. The appellate court reversed the decision of Coyajee J. and held that the action
of respondents 2 and I in making the modifications in question was justified by the
provisions of the Act. In the result the petition filed by the appellants was dismissed.
It is against this decision that the present appeal has been preferred by the appellants;
and the short question which it raises for our decision is: whether, under the
provisions of the Act, it was competent to respondents 2 and 1 to make the impugned
modifications in the draft standing orders submitted by the appellants for certification
under the Act ?
4. The Act has been passed because it was thought" 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." Standing Orders are defined by s. 2(g) of the Act to
mean rules relating to matters set out in the Schedule. The Schedule sets out 11
matters in respect of which standing orders are required to be made by the employers.
Mr. Kolah, for the appellants, contends that the main object of the Act is to require the
employers to provide for conditions of service in respect of all the matters covered by
the Schedule, and, according to him, the jurisdiction of respondent 2 under the Act as
it then stood is confined only to see that standing orders are made in respect of all the
items specified in the Schedule. In this connection Mr. Kolah has strongly relied on
the provision of s. 4 which then laid down inter alia that "it shall not be the function
of the certifying officer or the appellate authority to adjudicate upon the fairness or
reasonableness of the provisions of any standing order". The argument is that the Act
expressly prohibits respondent 2 or respondent I from enquiring whether any of the
provisions made in the draft standing orders are fair or reasonable, and it is urged that,
in making the modifications in question, in substance respondent 2 has embarked
upon an enquiry about the reasonableness or fairness of the relevant conditions

208
included in the draft. Thus presented the argument is no doubt attractive ; but there
are some other provisions in the Act which show that the argument based on the said
provision of s. 4 cannot succeed. It is, therefore, necessary to consider the other
provisions which are material. Before we do so, we would like to add that by a
subsequent amendment made in 1956 s. 4 now provides that it shall be the function of
the certifying officer or the appellate authority to adjudicate upon the fairness or
reasonableness of the provisions of any standing orders.In other words, what was
expressly excluded from the jurisdiction of the authorities under the Act has now been
clear made their duty, and so the argument based upon the provision as it stood in
1946 is, after the amendment of 1956, purely academic.
5. Section 3 of the Act requires the employer to submit draft standing
orders. Section 3(2) provides that in the draft thus submitted provision shall be made
for every matter set out in the Schedule which may be applicable to the industrial
establishment, and where model standing orders have been prescribed, shall be, so far
as is practicable, in conformity with such model. It is common ground that model
standing orders have been proscribed in the present case, and so it follows that
under s. 3, sub s. (2) the draft submitted by the appellants had to be in conformity
with the model sanding orders so far as was practicable. In other words, the effect
of s. 3 sub-s. (2) is 'that, unless it is shown that it is impracticable to do so, the
appellants' draft had to conform to the model. This position cannot be disputed. Then,
the -next relevant provision of the Act is contained in s. 4 which provides that
standing orders shall be certifiable under this Act if (a) provision is made therein for
every matter set out in the Schedule which is applicable to the industrial
establishment, and (b) the standing orders are otherwise in conformity with the
provisions of this Act. The rest of the provision of s. 4 has already been cited and
considered by us. Having thus provided for the tests which have to be satisfied before
a draft submitted by the employer can be treated as certifiable, s. 5 provides for the
procedure of the proceedings which are taken before the certifying officer. Section
5 (2) lays down that after notice is given to the parties concerned the certifying officer
shall decide whether or not any modification of, or addition to, the draft submitted by
the employer is necessary to render the draft standing orders certifiable under the Act,
and shall make an order in writing accordingly. Sub-section (3) of s. 5 then provides
for certifying the draft after making modifications, if any, under sub-s. (2). There is
one more section to which reference may be made. Section 15(2)(b) provides that the
rules which the appropriate government may make under the Act may set out model
standing orders for the purposes of this Act. The cumulative effect of these provisions
is that the certifying officer has to be satisfied that the draft standing orders deal with
every matter set out in the Schedule and are otherwise in conformity with the
provisions of the Act. This latter requirement necessarily imports the consideration in
specified in s. 3, sub-s. (2), that is to may, the draft standing order must be in
conformity with the model standing order which is provided under s. 15(2)(b) for the
purposes of the Act, and, as we have already seen, unless it is shown that it would be
impracticable to do so, the draft standing order must be in conformity with the model
standing order. It is quite true that this requirement does not mean that the draft
standing order must be in identical words but it does mean that in substance it must
conform to the model prescribed by the appropriate government.
6. The question which then arises is: was it or was it not open to respondent 2 to
consider whether the draft submitted by the appellants should not conform to the
model standing order in respect of the topics with which we are concerned in the
present appeal? The answer to this question must obviously be in the affirmative. It

209
was not only open to respondent 2 to enquire into the matter but it was clearly his
duty to do so before holding that the draft orders were certifiable under s. 4. Now
such an enquiry necessarily involves the consideration of the question as to whether it
would be practicable to insist upon conformity with the model standing order in
regard to the matters in dispute. If respondent 2 was satisfied that it would be
practicable to insist upon such conformity it would be within his competence to make
the suitable modifications in the draft. If, on the other hand, he took the view that it
would not be practicable to insist upon such conformity he would, despite the
disparity between the model and the draft, treat the draft as certifiable. In the present
case respondent 2 as well as respondent I have held that it was practicable to insist
upon conformity with the model standing order regard to the matters in dispute; and
so they have made suitable modifications. Having regard to the relevant provisions
which we have just considered, it seems difficult to accept the plea that in making the
modifications in question respondent 2 and respondent 1 have exceeded their
jurisdiction. It is important to make a distinction between considerations of fairness or
reasonableness which are excluded from the purview of the enquiry before respondent
2 and respondent I from considerations of practicability which are necessarily
imported in such an enquiry. The line separating the one from the other may be thin
but nevertheless it is a firm and existing line which is statutorily recognised in the
respective provisions o the Act. Respondent 2 may not modify the draft on the ground
that its provisions are unfair or unreasonable but he can and must modify the draft in
matters covered by the model standing order if he is satisfied that conformity with
such model standing order is practicable in the circumstances of the case. In our
opinion, therefore, the High Court was right in holding that the authorities under the
Act had acted within their jurisdiction in making the impugned modifications. We
may mow refer to the decisions to which our attention was invited by Mr. Kolah. In
Guest, Keen Williams (Private) Ltd v. Sterling (P. J.) & Ors. (1) this Court had
occasion to consider the effect of a part of the provision contained in S. 4 of the Act
as it stood before its amendment in 1956. It is, however clear that in that case the
point raised for our decision now did not fall to be considered. In Electric Workers'
Union v. The U.P. Electric Supply Co. (2), Mr. Justice Wanchoo, who was acting as
the appellate authority under the Act, appears to have held that the provision
contained in S. 3(2) had nothing to do with the power of the certifying officer to
substitute the model for the draft. Acoording to the learned judge the said provision
was intended merely to help and guide the employers as to how they should frame
their draft standing orders. This decision apparently supports (1) (1960) 1 S.C.R. 348
(2) A.I.R. 1949 All. 504.
7. The argument that the certifying officer cannot make any changes in the
provisions of the draft where those provisions are clear on the ground that they are not
reasonable and fair and that other provisions which may have been provided in the
model standing orders should be substituted for them. If, in making these
observations, it was intended to decide that, before certifying the draft standing orders
submitted by the employer, the certifying officer cannot enquire and decide whether it
would be practicable or not to make the provisions in the draft conform to the model
standing orders, with respect, we would hold that the said decision is inconsistent with
the true effect of the relevant provisions of the Act. We may incidentally add that the
observations made by Wanchoo J. in that case have not been approved by the
Allababad High Court in Jiwan Mal & Co. v. Secretary, Kanpur Loha Mills
Karamchari Union & Ors. (1). In Mysore Kirloskar Employees Association v.
Industrial Tribunal, Bangalore & Anr. (2), the Mysore High Court has considered this

210
question and it appears to have concurred more with the view expressed by the
Bombay High Court which is the subject-matter of the present appeal than with the
observations of Wanchoo J. There is one more point to which reference must be
made. Mr. Kolah attempted to argue before us that, even if the authorities under the
Act had jurisdiction to deal with the matter and examine whether or not it was
practicable to insist upon conformity with the model standing orders, the
modifications made by them on the merits are impracticable. We have not allowed
Mr. Kolah to urge this contention before us because such a plea was not raised by the
appellants in their petition for a writ before the Bombay High Court, and it would not
be open to them to raise it for the first time before us. Besides, in a petition for a writ
of certiorari it would normally not be open to the appellants to challenge the merits of
the findings made by the authorities under the Act. The result is the appeal fails and is
dismissed with costs.

22. Guest, Keen, Williams Private Ltd vs P. J. Sterling And Others

on 15 May, 1959

GAJENDRAGADAR J.-This appeal by special leave arises from an industrial dispute

between Guest, Keen, Williams Private Ltd., (hereafter called the appellant) and its
workmen represented by Guest, Keen, Williams Staff Association (hereafter called
the respondent) which was referred for adjudication to the Fifth Industrial Tribunal,
West Bengal, Calcutta, by the Government of West Bengal on December 29, 1954.
Three questions were the subject-matter of the reference : " (1) If the system of forced
retirement of workmen at the age of 55 as introduced by the management in May
1954 is justified ? (2) To What relief the workmen are entitled on retirement ? and (3)
If the forced retirement of the workmen named in the attached list is justified ?-To
what relief including reinstatement and/or compensation are they entitled ?" These
three questions were answered substantially in favour of the appellant by the tribunal ;
but on appeal by the respondent, the Labour Appellate Tribunal has reversed the
findings of the tribunal and has substantially answered the questions in favour of the
respondent. The correctness of this decision is challenged by the appellant by its
present appeal.

2. The appellant is a company incorporated with limited liability under the Indian
Companies Act. It carries on business at 41, Chowringhee Road, Calcutta. Its business
is engineering and manufacturing of engineering products. It has a factory at Howrah
where about 5000 workmen are employed.

3. After the Industrial Employment (Standing Orders) Act, 1946 (Act 20 of 1946)
(hereafter called the Act) came into force on April 23, 1946, the appellant submitted
its draft standing orders for certification to the certifying officer. On December 19,
1953, the certifying officer duly certified the said orders after giving the trade unions
of the appellant's workmen an opportunity to be heard and after considering their
objections. Against the said orders no appeal was preferred by the respondent, and so
they became final and operative as conditions of service between the parties.

4. The standing order in regard to retirement of the appellant's employees provides

that " workmen shall retire from the service of the company on reaching the age of 55

211
years but the company may at its sole discretion offer an extension of service beyond
this age to anybody." In pursuance of this standing order the appellant examined the
cases of 56 of its employees who according to their service records appeared to have
attained the age of superannuation. The objection, raised by two workmen about the
correctness of the age shown in their service records was examined and ultimately
upheld; their records were accordingly corrected on the strength of the certificates
granted to them by the Civil Surgeon, Howrah. Seven were allowed extention of
service up to March 31, 1955, while the remaining 47 who were over the age of 55
were retired with effect from May 31, 1954, after giving each one of them a notice in
that behalf on May 11, 1954. These 47 workmen are shown in the list attached to the
reference and it is in respect of them that question No. 3 has been referred to the
tribunal, The said 47 workmen were paid all the emoluments due to them in respect of
Provident Fund contributions made by the appellant in respect of them and by
themselves; they were also paid gratuities at the rate of 15 days' pay for each year of
their service prior to their becoming the members of the Provident Fund. Besides they
were given valuable presents by the appellant in appreciation of their services; and in
a large number of cases the appellant offered employment to the sons or other
relatives of the said work- men.

5. Even so the respondent raised a dispute about the compulsory retirement of the said
workmen and in fact challenged the validity of the relevant standing order itself. It is
after this dispute was referred to the tribunal for adjudication that the present
proceedings commenced.

6. The tribunal held that the system of forced retirement introduced by the appellant
under its relevant standing order was perfectly justified. It observed that the
respondent had given no convincing reason why the age limit of retirement should by
fixed not at 55 but at 60 years as alleged by it; and it referred to the fact that in the
case of a dispute between 'the appellant and its head-office staff the retirement age
had been fixed at 55 years by consent in proceedings before the Second Industrial
Tribunal on September 24, 1953. Reference was also made to the award in the
Calcutta Exchange Gazette and Daily Advertiser And One of their employees (1)
where the age of superannuation had been similarly fixed at 55. Incidentally the
tribunal was impressed by the appellant's argument that the respondent had not
preferred an appeal against the relevant standing order though an appeal was
competent under the Act. Having held that the compulsory retirement at the age of 55
fixed by the standing order was justified the tribunal proceeded to consider the two
other questions and issued some directions as to the compensation to be given to the
47 workmen. With these directions we are not concerned in this appeal. It is,
however, necessary to (1) The Calcutta Gazette, Pt. 1. dt. 16-9-1954, P. 3111.

refer to the fact that in dealing with issue No. 3 the tribunal examined the argument of
the respondent that the age of superannuation fixed by the standing order should be
made applicable to new entrants and not to the old; but it held that there was no
substance in the said contention. " Unemployment among youths ", observed the
tribunal, " is certainly more reprehensible and unfortunate than unemployment among
old men "; and it thought that to accept the respondent's contention would mean the
impairment of the efficiency of the industry to which, as a tribunal, it can never be a
party. According to it, there was no question of any breach of faith or understanding
qua the 47 workmen who had been compulsorily retired. It appears from the judgment

212
of the tribunal that these contentions which it has rejected in dealing with issue No. 3
were in fact more relevant to issue No. 1 which is a general issue.

The Labour Appellate Tribunal has taken a contrary view on the main question of
principle covered by issue No. 1., According to the appellate tribunal the fact that the
system of forced retirement was based on the relevant standing order does not ipso
facto bar adjudication on the question of justness and propriety of the system itself. It
held that the appellant had admitted that there was no fixed age of retirement
obtaining in its concern before the standing orders were certified, and that in fact in
some cases the appellant had employed persons who had passed the age of
superannuation. That is why the appellate tribunal came to the conclusion that it
would not be unreasonable to assume that all workmen who joined the appellant's
service prior to the framing of the standing orders had naturally and legitimately
expected that they would be allowed to continue in service as long as they remain
physically fit; and so it held that the new scheme cannot be justly enforced against the
workmen who had been recruited by the appellant before the introduction of the said
orders. In the result the appellate tribunal answered the first issue by holding that the
age of compulsory retirement should be 55 in regard to persons employed by
the appellant subsequent to the certification of the standing orders; but that there
should be no age of retirement in regard to the prior employees of the appellant
Consistently with this finding the appellate tribunal has directed that the 47 workmen
who had been compulsorily retired by the appellant should be reinstated on condition
that they refund whatever money they might have received from the appellant in the
shape of gratuity or Provident Fund dues. It is this decision which has given rise to the
present appeal. The first point which has been urged before us by the learned
Attorney-General on behalf of the appellant is that the appeal preferred by the
respondent before the Labour Appellate Tribunal was incompetent and should not
have been entertained by it. Under s. 7(1)(a) of the Industrial Disputes (Appellate
Tribunal) Act, 1950 (48 of 1950), an appeal lies to the appellate tribunal from any
award or decision of an industrial tribunal inter alia if the appeal involves any
substantial question of law. The argument is that the respondent's appeal did not
satisfy this requirement, and so the appellate tribunal has exceeded its jurisdiction in
entertaining it. We are not impressed by this argument. It is clear that issue No. 1
which was referred to the tribunal is a general issue affecting more than 5,000
employees of the appellant; and it is an issue the decision of which would necessarily
raise questions of industrial policy and principle; whether or not the appellant was
entitled to introduce an age of superannuation, and if it was entitled so to do, would
the introduction of the system affect the rights of persons who had joined the
appellant's service in the legitimate expectation that they would not be subject to any
such rule? What would be the proper age of superannuation in a concern like the
appellant's? In our opinion, questions like these which necessarily arose in deciding
issue No. 1 are questions of law and since they affect a large number of the appellant's
employees it cannot be said that the respondent's appeal before the Labour Appellate
Tribunal did not involve a substantial question of law. The challenge to the validity of
the decision ofthe Labour Appellate Tribunal on this preliminary ground must,
therefore, fail.

It is then urged that the present reference itself is bad; and this contention is based on
the provisions ofs. 7 of the Act which makes the standing orders binding between the
employer and his employees. There is no doubt that under s. 7 standing orders would

213
bind all the employees of the employer without any distinction. As soon as the
standing orders become operative they bind both the employer and all the employees
then in his service. The learned Attorney- General contends that the 47 employees
who have been retired on the ground that they had exceeded the age of
superannuation were bound by the relevant standing order which fixed the age of
superannuation at the age of 55; and until the said standing order is modified
according to law it would not be open to them to question the validity of their
compulsory retirement. In support of this argument he has relied on the decision of
the Madras High Court in Mettur Industries Ltd. v. Varma & Ors. (')In that case Bala-
krishna Aiyer, J., has held that " where an industrial dispute relates to a particular
individual and the question is whether he has been improperly dealt with, then that
question must be determined within the framework of the existing agreement and the
existing rules. Employees can raise a dispute and ask that the standing orders be
amended but till the standing orders are amended they hold the field and any dispute
that may arise in an undecided case must be disposed of in accordance with the
standing orders as they happen to be at the relevant time " A similar view has been
expressed by Bishan Narain, J., of the Punjab High Court in Bharat Starch and
Chemicals Ltd., And The Industrial Tribunal, Punjab (2).

This argument assumes that the present reference has been made primarily if not
solely by reference to the cases of the 47 workmen who have been compulsorily
retired by the appellant. In our opinion such an assumption is clearly not wellfounded.
The reference shows that the main question which the industrial (1) ~(1958) II
L.L.J.326.

(2) (1958) II L.L.J. 24-3.

tribunal has been called upon to decide is the general question affecting the large
number of the appellant's employees who had accepted its service before the relevant
standing orders were framed. In terms it covers all the employees of the appellant and
for deciding it the tribunal would have to examine the matter on the merits and
consider whether the relevant standing order as it stands is valid or whether it needs
any modification. The second question also has reference to workmen other than
those who have been compulsorily retired; and the answer to this question would
naturally depend upon the conclusion which the tribunal may reach on the merits of
the first issue. It is only the third question which has reference to the 47 workmen
who have been compulsorily retired; and this question is framed on the hypothesis
that the forced retirement of the appellant's employees under the system introduced by
the relevant standing order is upheld by the tribunal. On that hypothesis the third
question requires the tribunal to decide whether the 47 workmen are entitled to any
compensation and/or reinstatment. It is thus clear that the reference is primarily
concerned with the main industrial dispute raised by the respondent about the
propriety and the validity of the system of forced retirement introduced by the
appellant and this question had to be decided by the tribunal on the merits. Indeed, as
the judgment of Balakrishna lyer,points out in the case of Mettur Industries Ltd.it is
open to the employees to raise a disputeand ask that the standing orders be amended.
Thatis precisely what the respondent seeks to do by raising the present dispute as
disclosed in issue No. 1. We must therefore, hold that the argument about the
invalidity of the reference is unsound.

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It is relevant at this stage to consider the scheme and effect of the relevant provisions
of the Act. The Act came into force on April 23, 1946, and it was intended to require
employers in industrial establishments to define with sufficient precision the
conditions of employment under them and to make the said (1)(1958) II L.L.J. 326.

conditions known to the workmen employed by them. The matters which had to be
provided in standing orders are enumerated under I 1 items in the Schedule to the Act.
The expression " Standing Orders " as used in the Act means rules relating to matters
set out in the Schedule. When the draft standing orders are submitted to the certifying
officer, the said officer has to satisfy himself that they make provision for every
matter set out in the schedule and that they are otherwise in conformity with the
provisions of the Act. It is significant that originally under s. 4 it was not competent to
the certifying officer to adjudicate upon the fairness or reasonableness of the
provisions of any standing orders. The same disability was imposed I on the appellate
authority. This section has, however, been subsequently amended by Act 36 of 1956,
and the effect of the amendment is that it has now been made the function of the
certifying officer or the appellate authority to adjudicate upon the fairness or the
reasonableness of the provisions of the standing orders. Prior to this amendment,
however, all that the certifying officer had to do before certifying the said standing
orders was to see that all the matters in the schedule are covered and that they are not
otherwise inconsistent with the provisions of the Act. Under s. 7 standing orders when
certified come into operation subject to its other provisions. S. 10 lays down that
standing orders finally certified shall not, except on agreement between the employer
and the workmen, be liable to modification until the expiry of six months from the
date on which the standing orders or the last modifications thereof came into
operation. Sub-s. (2) of s. 10 prior to its amendment in 1956 authorised only the
employer to apply for the modification of the standing orders. Subsequent to the said
amendment workmen also have been given the rights to apply for such modification.
It is thus clear that the scope for the enquire before the certifying officer and the
appellate authority under the original Act was extremely limited, and the right to
claim a modification of the standing orders was not given to the employees prior to
the amendment of s. 10(2). Nevertheless the standing orders when they were certified
became operative and bound the employer and all his employees.

There can be no doubt that before the amendment of 1956 if the employees wanted to
challenge the reasonableness or fairness of any of the standing orders the only course
open to them was to raise an industrial dispute in that matter. This position has been
substantially altered by the two amendments to which we have just referred; but we
are concerned in the present appeal with the state of the law as it prevailed prior to the
said amendments, and so it cannot be denied that the employees had a right to claim a
modification of the standing orders on the ground that they were unreasonable or
unfair by raising an industrial dispute in that behalf. Subsequent to the amendment of
the Act the employees can raise the same dispute before the certifying officer or
before the appellate tribunal and may in a proper case apply for its modification
under s. 10(2) of the Act. The position then is that though the relevant standing order
about the age of superannuation came into operation under s. 7 and was binding
thereafter upon the employer and all his employees the right of the respondent to
challenge the validity or propriety 'of the standing order and to claim a suitable
modification in it cannot be disputed. The standing orders certified under the Act no
doubt become part of the terms of employment by operation of s. 7 ; but if an

215
industrial dispute arises in respect of such orders and it is referred to the tribunal by
the appropriate government, the tribunal has jurisdiction to deal with it on the merits.
This position is not, and cannot be, disputed. It is, however, contended that the delay
made by the respondent in raising the present dispute shows that the respondent had
acquiesced in the relevant standing orders and that in substance is pleaded as a bar to
the validity of the present reference. We do not think that this contention can be
upheld. In dealing with industrial disputes the application of technical legal principles
should as far as is reasonably possible be avoided. Take the present argument of
acquiescence which in ordinary civil litigation may justify a plea of estoppel. An
industrial dispute has to be raised by the union before it can be referred; and it is not
unlikely that the union may not be presuaded to raise a dispute though the grievance
of a particular workman or a number of workmen may otherwise be wellfounded;
then again, even if the union takes up a dispute the State Government may or may not
refer it to the industrial tribunal. The discretion of the State Government under s.
10 of the Industrial Disputes Act is very wide. Thus, workmen affected by standing
orders may not always and in every case succeed in obtaining a reference to the
industrial tribunal on the relevant points. That is why the tribunals should be slow and
circumspect in applying the technical principles of acquiescences and estoppel in the
adjudication of industrial disputes. If a dispute is raised after a considerable delay
which is not reasonably explained the tribunal would undoubtedly take that fact into
account in dealing with the merits of the dispute. But unless the relevant facts clearly
justify such a course it would be inexpedient to throw out the reference on
preliminary technical objections of the kind raised by the appellant under the present
contention. In the present case the relevant rule was certified in December 1953, and
came into operation in January 1954. The present dispute was raised by the
respondent as soon as the appellant sought to enforce it in May 1954. That is why it is
difficult to accept the argument that the respondent has been guilty of latches or
acquiescence. We would, therefore, hold that the respondent was entitled to raise the
present industrial dispute and that the present reference does not suffer from any
infirmity.

The learned Attorney-General has then argued that the Labour Appellate Tribunal has
completely misunderstood the scope of the enquiry contemplated by issue No. 1. His
case is that under issue No.No. 1 all that the tribunal was called upon to decide in the
abstract was the propriety of the standing order fixing the age of superannuation at 55.
The tribunal was not required and was not expected to consider the impact of this rule
on the workmen employed by the appellant, Should any age of superannuation be
fixed, and if yes, what should be the limit in that behalf ? These are the only questions
which called for the decision of the tribunal on issue No.

1. In fact the learned Attorney-General suggested that in deciding issue No.No. 1 the
tribunal has merely to say yes or no. That is the substance of his contention. We are
satisfied that this contention is misconceived. There is no doubt that in dealing with
issue No. 1 the tribunal had to consider not only the propriety, reasonableness and
fairness of the rule, but it had also to deal with the question as to whether the said rule
could and should be made applicable to employees who had already been employed
by the appellant in service without any limitation as to the age of retirement. In fixing
the age of superannuation industrial tribunals have often enough considered this dual
aspect of the question and it is the sam dual aspect that was intended to be examined
when issue No. 1 was framed. Indeed both the industrial, and the appellate, tribunals

216
have considered this twofold aspect of the matter, though it may be conceded that the
discussion in both the judgments is somewhat confused and mixed up. There. is,
however, no doubt that the respondent's grievance about the application of the rule to
the previous employees of the appellant was specifically urged before the tribunals.

That takes us to the merits of the dispute. It is not denied by the appellant that before
the present standing orders were certified the appellant had not introduced any age of
superannuation while employing its workmen. In its statement before the tribunal the
respondent had specifically averred that there was no fixed age or period of service
for retirement and that the implied condition of service was that the workman would
continue in service so long as he lived, if not invalidated earlier for reasons of health;
and it was also alleged by it that for the first time in its history the appellant suddenly
thought of giving effect to the relevant standing orders by compulsorily retiring the 47
workmen in question. It may, however, be added that amongst remedies suggested by
the respondent in its written statement it had expressly stated that 60 should be fixed
as the age of retirement for persons already in the employment of the appellant with
option to further continue subject to physical fitness. In support of this plea the
respondent had relied upon the statement filed by the appellant giving details of the
47 retired workmen; this statement showed that some workmen had been employed
for the first time even after they had passed the age of 55 and that a large majority of
them had passed the age of 55 much before their actual retirement. It is significant
that though the respondent had made these specific allegations the appellant did not
suggest that there was any age of retirement in force before the framing of the
standing orders. It is true that the appellant put in a general denial of all the
allegations made by the respondent in its statement but such a general denial cannot
have much value. In paragraph 5 of its statement the appellant has referred to the fact
that it is the usual practice to fix the age of retirement at 55 in the public and private
sectors of industry and that it is in line with the provisions of the
Employees' Provident Fund Act. It is obvious that, though the appellant referred to the
usual practice of fixing the age of superannuation in the private and public sectors, it
made no such averment in regard to any such practice prevailing in the case of its own
employees. Even in the statement of its case before this court the appellant has said
that there was no fixed age of retirement before the standing orders were introduced
but it sought to add that ordinarily workmen were made to retire at the age of 55. This
latter statement is an allegation of fact made for the first time before this Court. There
is nothing on the record which would justify or substantiate it. Thus the Labour
Appellate Tribunal was perfectly right in dealing with the merits of the dispute on the
basis that the large number of employees who had been engaged by the appellant
prior to the making of the standing orders were not subject to any rule of
superannuation.

It is, however, contended on behalf of the appellant that both the tribunals have
agreed that 'it isreasonable to fix the age of superannuation at 55; and in a sense the
appellant is justified in raising this contention. The Labour Appellate Tribunal,
however has held that this age cannot be applied retrospectively so as to affect the
prior employees of the appellant and it is only this aspect of the matter which calls for
a decision from us. The respondent does not deny that the relevant standing order
fixing the age of superannuation at 55 will and should bind the future entrants into the
service of the appellant. The learned Solicitor-General, however, contends that it
would be unreasonable and unfair to apply this rule to the workmen who were already

217
in the employment of the appellant. In regard to the workmen already in the
employment of the appellant it has been brought to our notice by the appellant that the
workmen themselves wanted that the age of superannuation should be fixed; and it is
also urged that fixing the age of superannuation at 60 as suggested by the respondent
would be inconsistent with paragraph 69 of the Employees' Provident Fund Scheme,
1952, notified under s. 5 of the Employees' Provident Fund Act, 1952 (Act 19 of
1952). The argument that the workmen themselves wanted the age of superannuation
to be fixed ignores the fact that this demand was coupled with the claim that the age
should be fixed at 60 and option should be given to the employees to continue
thereafter. Therefore the alleged admission of the workmen cannot be pressed into
service by the appellant in support of the fixation of -the age of retirement at 55. The
argument based on paragraph 69 is, in our opinion, wholly invalid because the said
paragraph does not make it obligatory on the employer to fix the age of retirement of
the employees at 55. Explanation 11 to the said paragraph provides that a member
shall be deemed to have attained the age of superannuation on completing the age of
55 years; but this deeming clause does not mean that in every case the employee must
retire at the age of 55. Paragraph 69 (1) specifically authorises the member to
withdraw the full amount standing to his credit in the fund on retirement from service
in the industry at any time after the attainment of the age of superannuation. In other
words, two conditions have to be satisfied before the member can withdraw the fund;
he must have attained the age of superannuation and he must have actually retired
from service. This position was fairly conceded by the learned Attorney-General
during the course of his argument.

On the other hand the learned Solicitor-General contends that making the rule of
superannuation applicable to the prior employees would be obviously unfair and
unreasonable. He no doubt sought to invoke the assistance of s. 2 (oo) of
the Industrial Disputes Act which defines retrenchment. His argument was that the
wrongful retirement of the prior employees on the ground that they had attained the
age of 55 would amount to retrenchment within the meaning of the said provision,
and that would entitle them to make a claim for retrenchment benefit under s. 25(F) of
the said Act. This, according to him, would constitute prejudice to the prior
employees. However, he fairly conceded that this argument of prejudice would not be
valid in view of the decision of this Court in Hariprasad Shivshankar Shukla v. A.D.
Divikar(1). That is why we do not propose to deal with this argument.

That takes us to the question as to whether the fixing of the age of superannuation at
55 in regard to the prior employees can be said to be reasonable and fair having
regard to the fact that when they entered service there was no such limitation. The
Labour Appellate Tribunal has held that it would both be unreasonable and unfair to
introduce this condition in respect of these workmen. This view is supported by the
decision 'of the Labour Appellate Tribunal in Jamadoba Colliery of Messrs. Tata Iron
and Steel Co., Ltd. v. Shri Nasiban (2). In that case the respondent. Nasiban had
joined the services of the colliery before the rules of superannuation were introduced;
and when she was sought to be retired on the strength of the said rules the action of
the employer was challenged before the industrial tribunal. The tribunal and the
Labour Appellate Tribunal both held that the respondent having entered the service of
the colliery before the new rules came into force could not be prejudicially affected
by the conditions made thereunder when she did not exercise her option to be
governed by the said rules. In other words, the view taken by the tribunals was that in

218
the case of prior employees an option should be given to them to be governed by the
new orders or rules; and it is only if they exercise the said option that the new orders
or rules should be made applicable to them.

In this connection the learned Attorney-General has referred us to some other awards
where the age of superannuation has been fixed generally by reference to all the
employees. The first award on which he has relied was passed in the dispute between
the present appellant and its employees at the head- office at Calcutta('). This award is
of no assistance to the appellant because it is clear that the age of superannuation was
fixed by the award solely on the basis of the agreement between the parties. If the
employees agree that a particular age of superannuation should be fixed inregard to all
of them there can be no difficulty in upholding the validity of the agreement. An
award by agreement cannot therefore assist the appellant in its present contention. The
other award to which our attention has been drawn was in respect of an industrial
dispute between the Bengal Chamber of commerce And Its Employees (2). This
award did fix the age of retirement at 55; but it is not clear from the award that this
age came to be fixed for the first time. The question as to whether the rule as to the
age of superannuation can be fixed for the first time in regard to both the past and
future employees of the concern has not been considered in this award. The third
award which was cited before ,us was passed in an industrial dispute between M/s.
Calcutta Exchange Gazette & Daily Advertiser and Shri Uma Prasanna Bhattacharjee
(3). The dispute in (1) The Calcutta Gazette, Pt. 1, dt. 24-9-53 P.3261. (2) Govt. of
West Bengal, Labour Deptt., "Awards made by the Tribunals " for quarter ending
March 1949, P. 116 at P.131.

(3) The Calcutta Gazette, Pt. 1, dt. 16-9-1954, P. 3111.

that case was in regard to the termination of Shri Uma Prasanna Bhattacharjee and
this dispute was settled in favour of the employee. It appears that in making the award
the tribunal has referred to the Omnibus Press Tribunal Award in which the age of
superannuation has been fixed at

55. This latter award has not been produced before us. It is clear that in none of the
awards on which the appellant has relied has the question of principle been considered
whether the age of superannuation can be fixed for the first time so as to affect the
legitimate expectations of the persons in previous employment who were not
subjected to any such rule. As we have alaeady pointed out this question has been
considered by the Labour Appellate Tribunal in the case of the Jamadoba Colliery (1)
and the view expressed therein has been followed by the present Labour Appellate
Tribunal. We do not think that on the record as it stands, and in the circumstances of
this case, we would be justified in reversing the decision of the Labour Appellate
Tribunal. That, however, leaves one more point to be considered. If the view taken by
the Labour Appellate Tribunaj that it would be unfair and unreasonable to impose the
rule of 55 against,, the previous employees is accepted, does it follow that there
should be no rule of superannuation in regard to them ? Unfortunately, this aspect of
the matter has not been considered by the Labour Appellate Tribunal at all. Its
omission to consider' this point is all the more to be regretted because in the statement
of the respondent it had been expressly suggested that the age of 60 years would be
reasonable in regard to the previous employees though of course the statement had
claimed an option for the said employees to continue in service after crossing. the age

219
bar of 60 subject to physical fitness. The learned Solicitor- General has expressly
stated before us that having regard to the stand taken by the respondent in the present
proceedings it would be open to us to consider whether the age of 60 should not be
prescribed as the retirement age for the employees who were in the service of the
appellant before the certification of (1)1955 L.A.C. 582.

the present standing orders. He did not dispute the fact that the tribunals could have
made an appropriate order in that behalf and he fairly conceded that we could
ourselves give an appropriate direction if we thought it reasonable to do so. In our
opinion it is necessary to fix the age of superannuation even with regard to the prior
employees, and we feel no difficulty in holding that it would not be unfair or
unreasonable to direct that these employees should retire on attaining the age of 60.
An option to continue in service even thereafter which the respondent claimed is
wholly unreasonable and is entirely inconsistent with the notion of fixing the age of
superannuation itself. Once the age of superannuation is fixed it may be open to the
employer for special reasons to continue in its employment a workman who has
passed that age; but it is inconceivable that when the age, of superannuation is fixed it
should be in the option of the employee to continue in service thereafter. We would
accordingly hold that in the circumstances of this case the rule of retirement for the
previous employees in the concern should be 60 instead of 55 and that the rule of 55
should apply to all employees who enter the service of the appellant after the relevant
standing orders came into force. In fixing the age of superannuation of I the prior
employees at 60 years we are in substance giving effect to the plea made by the
respondent before us.

We would, however, like to add that this conclusion should not be taken as a decision
on the general question of fixing the age of superannuation in the case of industrial
employees. In fixing the age of superannuation industrial tribunals have to take into
account several relevant factors.. What is the nature of the work assigned to the
employees in the course of their employment? What, is the nature of the wage
structure paid to them? What are the retirement benefits and other amenities available
to them? What is the character of the climate where the employees work and what is
the age of superannuation fixed in comparable industries in the same region? What is
generally the practice prevailing in the industry in the past in the matter of retiring its
employees ? These and other relevant facts have to be weighed by the tribunal in
every case when it is called upon to fix an age of superannuation in an industrial
dispute. In the present case, as we have already observed, the age of 55 has been fixed
by both the tribunals for future entrants; and this- is substantially based on the
standing order which we have already considered. In regard to the prior employees it
is not seriously disputed that the retirement age can and may be fixed at 60. It is under
these circumstances that we have come to the conclusion that the age of
superannuation for prior employees should be fixed at 60.

In regard to the 47 workmen shown in the list attached to the reference it appears that
all of them have already passed the age of superannuation. Annexure B giving the
details about these workmen which has been filed by the appellant shows the year of
birth of each one of them and the entries in the relevant column indicate that none of
them would be entitled to claim reinstatement now as a. result of this judgment. But
quite apart from this consideration as we have already pointed out they have accepted
the order of retirement without protest and have voluntarily and willingly received

220
their provident fund gratuity as well as presents given to them by the appellant. the
appellant has also appointed the relatives of many of these retired men. We would
therefore, direct that none of them is entitled to reinstatement.

With these modifications the decision of the Labour Appellate Tribunal is confirmed.
Since both the parties have partly succeeded and failed before us we direct that each
party should bear its own costs. Appeal allowed in part.

23. TK Rangarajan v Govt of Tamil Nadu AIR 2003 SC 3032

M.B.Shah:
Unprecedented action of the Tamil Nadu Government terminating the services of all
employees who have resorted to strike for their demands was challenged before the
High Court of Madras by filing writ petitions under Articles 226/227 of the
Constitution. Learned Single Judge by interim order inter alia directed the State
Government that suspension and dismissal of employees without conducting any
enquiry be kept in abeyance until further orders and such employees be directed to
resume duty. That interim order was challenged by the State Government by filing
writ appeals. On behalf of Government employees, writ petitions were filed
challenging the validity of the Tamil Nadu Essential Services Maintenance Act, 2002
and also the Tamil Nadu Ordinance No.3 of 2003. The Division Bench of the High
Court set aside the interim order and arrived at the conclusion that without exhausting
the alternative remedy of approaching the Administrative Tribunal, writ petitions
were not maintainable. It was pointed out to the Court that the total detentions were
2211, out of which 74 were ladies and only 165 male and 7 female personnel have so
far been enlarged on bail, which reveals pathetic condition of the arrestees. The
arrestees were mainly clerks and subordinate staff. The Court, therefore, directed that
those who were arrested and lodged in jails be released on bail. That order is
challenged by filing these appeals. For the same reliefs, writ petitions under Article
32 are also filed. At the outset, it is to be reiterated that under Article 226 of the
Constitution, the High Court is empowered to exercise its extra- ordinary jurisdiction
to meet unprecedented extra-ordinary situation having no parallel. It is equally true
that extra-ordinary powers are required to be sparingly used. The facts of the present
case reveal that this was most extra-ordinary case, which called for interference by the
High Court, as the State Government had dismissed about two lacs employees for
going on strike.

It is true that in L. Chandra Kumar v. Union of India and others [(1997) 3 SCC 261],
this Court has held that it will not be open to the employees to directly approach the
High Court even where the question of vires of the statutory legislation is challenged.
However, this ratio is required to be appreciated in context of the question which was
decided by this Court wherein it was sought to be contended that once the Tribunals
are established under Article 323-A or Article 323B, jurisdiction of the High Court
would be excluded. Negativing the said contention, this Court made it clear that
jurisdiction conferred upon the High Court under Article 226 of the Constitution is a
part of inviolable basic structure of the Constitution and it cannot be said that such
Tribunals are effective substitute of the High Courts in discharging powers of judicial
review. It is also established principle that where there is an alternative, effective,

221
efficacious remedy available under the law, the High Court would not exercise its
extra- ordinary jurisdiction under Article 226 and that has been reiterated by holding
that the litigants must first approach the Tribunals which act like courts of first
instance in respect of the areas of law for which they have been constituted and
therefore, it will not be open to the litigants to directly approach the High Court even
where the question of vires of the statutory legislation is challenged. In L. Chandra
Kumar's case, the Court inter alia referred to and relied upon the case in Bidi Supply
Co. v. Union of India [1956 SCR 267], wherein Bose, J. made the following
observations:— "The heart and core of a democracy lies in the judicial process, and
that means independent and fearless Judges free from executive control brought up in
judicial traditions and trained to judicial ways of working and thinking. The main
bulwarks of liberty and freedom lie there and it is clear to me that uncontrolled
powers of discrimination in matters that seriously affect the lives and properties of
people cannot be left to executive or quasi-executive bodies even if they exercise
quasi- judicial functions because they are then invested with an authority that even
Parliament does not possess. Under the Constitution, Acts of Parliament are subject to
judicial review particularly when they are said to infringe fundamental rights,
therefore, if under the Constitution Parliament itself has not uncontrolled freedom of
action, it is evident that it cannot invest lesser authorities with that power."

The Court further referred to the following observations from the decision
in Kesavananda Bharati v. State of Kerala [(1973) 4 SCC 225] as under:— "77. From
their conclusions, many of which have been extracted by us in toto, it appears that this
Court has always considered the power of judicial review vested in the High Courts
and in this Court under Articles 226 and 32 respectively, enabling legislative action to
be subjected to the scrutiny of superior courts, to be integral to our constitutional
scheme."

The Court further held:

"78. …… We, therefore, hold that the power of judicial review over legislative action
vested in the High Courts under Article 226 and in this Court under Article 32 of the
Constitution is an integral and essential feature of the Constitution, constituting part
of its basic structure. Ordinarily, therefore, the power of High Courts and the Supreme
Court to test the constitutional validity of legislations can never be ousted or
excluded.

81. If the power under Article 32 of the Constitution, which has been described as the
"heart" and "soul" of the Constitution, can be additionally conferred upon "any other
court", there is no reason why the same situation cannot subsist in respect of the
jurisdiction conferred upon the High Courts under Article 226 of the Constitution. So
long as the jurisdiction of the High Courts under Articles 226/227 and that of this
Court under Article 32 is retained, there is no reason why the power to test the
validity of legislations against the provisions of the Constitution cannot be conferred
upon Administrative Tribunals created under the Act or upon Tribunals created
under Article 323-B of the Constitution..."

Thereafter, the Court to emphasise that Administrative Tribunals are not functioning
properly, quoted the observations with regard to the functioning of the Administrative
Tribunals from the Malimath Committee's Report (1989-90), which are reproduced

222
hereunder:— "Functioning of Tribunals 8.63 Several tribunals are functioning in the
country. Not all of them, however, have inspired confidence in the public mind. The
reasons are not far to seek. The foremost is the lack of competence, objectivity and
judicial approach. The next is their constitution, the power and method of
appointment of personnel thereto, the inferior status and the casual method of
working. The last is their actual composition; men of calibre are not willing to be
appointed as presiding officers in view of the uncertainty of tenure, unsatisfactory
conditions of service, executive subordination in matters of administration and
political interference in judicial functioning. For these and other reasons, the quality
of justice is stated to have suffered and the cause of expedition is not found to have
been served by the establishment of such tribunals.

8.64 Even the experiment of setting up of the Administrative Tribunals under

the Administrative Tribunals Act, 1985, has not been widely welcomed. Its members
have been selected from all kinds of services including the Indian Police Service. The
decision of the State Administrative Tribunals are not appealable except under Article
136 of the Constitution. On account of the heavy cost and remoteness of the forum,
there is virtual negation of the right of appeal. This has led to denial of justice in
many cases and consequential dissatisfaction. There appears to be a move in some of
the States where they have been established for their abolition." [It is to be stated that
in Tamil Nadu, at present, the Administrative Tribunal is manned by only one man.]
Finally the Court held thus:— "99. In view of the reasoning adopted by us, we hold
that clause 2(d) of Article 323-A and clause 3(d) of Article 323-B, to the extent they
exclude the jurisdiction of the High Courts and the Supreme court under Articles
226/227 and 32 of the Constitution, are unconstitutional. Section 28 of the Act and the
"exclusion of jurisdiction" clauses in all other legislations enacted under the aegis of
Articles 323-A and 323-B would, to the same extent, be unconstitutional. The
jurisdiction conferred upon the High Courts under Articles 226/227 and upon the
Supreme Court under Article 32 of the Constitution is a part of the inviolable basic
structure of our Constitution. While this jurisdiction cannot be ousted, other courts
and Tribunals may perform a supplemental role in discharging the powers conferred
by Articles 226/227 and 32 of the Constitution. The Tribunals created under Article
323-A and Article 323-B of the Constitution are possessed of the competence to test
the constitutional validity of statutory provisions and rules. All decisions of these
Tribunals will, however, be subject to scrutiny before a Division Bench of the High
Court within whose jurisdiction the Tribunal concerned falls. The Tribunals will,
nevertheless, continue to act like courts of first instance in respect of the areas of law
for which they have been constituted. It will not, therefore, be open for litigants to
directly approach the High Courts even in cases where they question the vires of
statutory legislations (except where the legislation which creates the particular
Tribunal is challenged) by overlooking the jurisdiction of the Tribunal
concerned.Section 5(6) of the Act is valid and constitutional and is to be interpreted in
the manner we have indicated."

There cannot be any doubt that the aforesaid judgment of larger Bench is binding on
this Court and we respectfully agree with the same. However, in a case like this, if
thousands of employees are directed to approach the Administrative Tribunal, the
Tribunal would not be in a position to render justice to the cause. Hence, as stated
earlier because of very very exceptional circumstance that arose in the present case,

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there was no justifiable reason for the High Court not to entertain the petitions on the
ground of alternative remedy provided under the statute.

Now coming to the question of right to strike — whether Fundamental, Statutory or

Equitable/Moral Right — in our view, no such right exists with the government
employees. (A) There is no fundamental right to go on strike:-- Law on this subject is
well settled and it has been repeatedly held by this Court that the employees have no
fundamental right to resort to strike. In Kameshwar Prasad and others v. State of
Bihar and another [(1962) Suppl. 3 SCR 369] this Court (C.B.) held that the rule in so
far as it prohibited strikes was valid since there is no fundamental right to resort to
strike.

In Radhey Shyam Sharma v. The Post Master General Central Circle, Nagpur [(1964)
7 SCR 403], the employees of Post and Telegraph Department of the Government
went on strike from the midnight of July 11, 1960 throughout India and petitioner was
on duty on that day. As he went on strike, in the departmental enquiry, penalty was
imposed upon him. That was challenged before this Court. In that context, it was
contended that Sections 3, 4 and 5 of the Essential Services Maintenance Ordinance
No.1 of 1960 were violative of fundamental rights guaranteed by clauses (a) and (b)
of Article 19(1) of the Constitution. The Court (C.B.) considered the Ordinance and
held that Sections 3, 4 and 5 of the said Ordinance did not violate the fundamental
rights enshrined in Article 19(1)(a) and

(b) of the Constitution. The Court further held that a perusal of Article 19(1)(a) shows
that there is no fundamental right to strike and all that the Ordinance provided was
with respect to any illegal strike. For this purpose, the Court relied upon the earlier
decision in All India Bank Employees' Association v. National Industrial Tribunal &
others [(1962) 3 SCR 269] wherein the Court (C.B.) specifically held that even very
liberal interpretation of sub-clause (C) of clause (1) of Article 19 cannot lead to the
conclusion that trade unions have a guaranteed right to an effective collective
bargaining or to strike, either as part of collective bargaining or otherwise. In Ex-
Capt. Harish Uppal v. Union of India and Another [(2003) 2 SCC 45], the Court
(C.B.) held that lawyers have no right to go on strike or give a call for boycott and
even they cannot go on a token strike. The Court has specifically observed that for
just or unjust cause, strike cannot be justified in the present-day situation. Take strike
in any field, it can be easily realised that the weapon does more harm than any justice.
Sufferer is the society — public at large. In Communist Party of India (M) v. Bharat
Kumar and others [(1998) 1 SCC 201], a three-Judge Bench of this Court approved
the Full Bench decision of the Kerala High Court by holding thus:— "….There
cannot be any doubt that the fundamental rights of the people as a whole cannot be
subservient to the claim of fundamental right of an individual or only a section of the
people. It is on the basis of this distinction that the High Court has rightly concluded
that there cannot be any right to call or enforce a "Bandh" which interferes with the
exercise of the fundamental freedoms of other citizens, in addition to causing national
loss in many ways. We may also add that the reasoning given by the High Court
particularly those in paragraphs 12, 13 and 17 for the ultimate conclusion and
directions in paragraph 18 is correct with which we are in agreement."

The relevant paragraph 17 of Kerala High Court judgment reads as under:— "17. No
political party or organisation can claim that it is entitled to paralyse the industry and

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commerce in the entire State or nation and is entitled to prevent the citizens not in
sympathy with its viewpoints, from exercising their fundamental rights or from
performing their duties for their own benefit or for the benefit of the State or the
nation. Such a claim would be unreasonable and could not be accepted as a legitimate
exercise of a fundamental right by a political party or those comprising it."

(B) There is no legal / statutory right to go on strike. There is no statutory provision

empowering the employees to go on strike.

Further, there is prohibition to go on strike under the Tamil Nadu Government

Servants Conduct Rules, 1973 (hereinafter referred to as "the Conduct Rules"). Rule
22 provides that "no Government servant shall engage himself in strike or in
incitements thereto or in similar activities." Explanation to the said provision explains
the term 'similar activities'. It states that "for the purpose of this rule the expression
'similar activities' shall be deemed to include the absence from work or neglect of
duties without permission and with the object of compelling something to be done by
his superior officers or the Government or any demonstrative fast usually called
"hunger strike" for similar purposes. Rule 22-A provides that "no Government servant
shall conduct any procession or hold or address any meeting in any part of any open
ground adjoining any Government Office or inside any Office premises — (a) during
office hours on any working day; and (b) outside office hours or on holidays, save
with the prior permission of the head of the Department or head of office, as the case
may be.

(C) There is no moral or equitable justification to go on strike. Apart from statutory

rights, Government employees cannot claim that they can take the society at ransom
by going on strike. Even if there is injustice to some extent, as presumed by such
employees, in a democratic welfare State, they have to resort to the machinery
provided under different statutory provisions for redressal of their grievances. Strike
as a weapon is mostly misused which results in chaos and total maladministration.
Strike affects the society as a whole and particularly when two lakh employees go on
strike enmasse, the entire administration comes to a grinding halt. In the case of strike
by a teacher, entire educational system suffers; many students are prevented from
appearing in their exams which ultimately affect their whole career. In case of strike
by Doctors, innocent patients suffer; in case of strike by employees of transport
services, entire movement of the society comes to a stand still; business is adversely
affected and number of persons find it difficult to attend to their work, to move from
one place to another or one city to another. On occasions, public properties are
destroyed or damaged and finally this creates bitterness among public against those
who are on strike. Further, Mr. K.K. Venugopal, learned senior counsel appearing for
the State of Tamil Nadu also submitted that there are about 12 lacs Government
employees in the State. Out of the total income from direct tax, approximately 90% of
the amount is spent on the salary of the employees. Therefore, he rightly submits that
in a Society where there is a large scale unemployment and number of qualified
persons are eagerly waiting for employment in Government Departments or in public
sector undertakings, strikes cannot be justified on any equitable ground.

We agree with the said submission. In the prevailing situation, apart from being
conscious of rights, we have to be fully aware of our duties, responsibilities and
effective methods for discharging the same. For redressing their grievances, instead of

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going on strike, if employees do some more work honestly, diligently and efficiently,
such gesture would not only be appreciated by the authority but also by people at
large. The reason being, in a democracy even though they are Government
employees, they are part and parcel of governing body and owe duty to the Society.

We also agree that misconduct by the government employees is required to be dealt

with in accordance with law. However, considering the gravity of the situation and the
fact that on occasion, even if the employees are not prepared to agree with what is
contended by some leaders who encourage the strikes, they are forced to go on strikes
for reasons beyond their control. Therefore, even though the provisions of the Act and
the Rules are to be enforced, they are to be enforced after taking into consideration
the situation and the capacity of the employees to resist. On occasion, there is
tendency or compulsion to blindly follow the others. In this view of the matter, we
had suggested to the learned senior counsel Mr. Venugopal that employees who went
on strike may be reinstated in service and that suggestion was accepted by Mr.
Venugopal after obtaining instructions from the State Government. Hence, on
24.7.2003, we had passed the following order:— "Heard the learned counsel for the
parties.

Mr. K.K. Venugopal, the learned senior counsel appearing for the State of Tamil
Nadu after obtaining necessary instructions states that:

1. The State Government will re-instate all the government employees who are
dismissed because they had gone on strike, except (i) 2,200 employees who had been
arrested and (ii) employees against whom FIR had been lodged.

2. This reinstatement in service would be subject to unconditional apology as well as

undertaking to the effect that employees would abide by Rule 22 of the Tamil Nadu
Government Servants Conduct Rules 1973 which provides as under: -

"22. Strikes: No Government servant shall engage himself in strike or in incitements

thereto or in similar activities."

Explanation — For the purpose of this rule the expression 'similar activities' shall be
deemed to include the absence from work or neglect of duties without permission and
with the object of compelling something to be done by his superior officers or the
Government or any demonstrative fast usually called "hunger strike" for similar
purposes."

It is also stated that Government will proceed under the Disciplinary Rules only
against those employees who had indulged in violence and who had incited the other
employees to go on strike.

From 25th July such employees would be reinstated in service subject to their giving
unconditional apology for resorting to strike and also an undertaking to the effect that
in future he would abide by Rule 22. He also states that for the employees who would
be reinstated in service with regard to the period for which they remained absent,
appropriate order would be passed by the State Government for regularizing their
absent. However, this would not be treated as a break in service.

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Ordered accordingly.

For further orders and directions list the matter on 31.7.2003."

On 31st, number of affidavits were filed contending that large number of employees
are not reinstated in service despite the assurance given by the State Government.
Matter was adjourned at the request of learned counsel for the respondent for
verification of the said contention. After verification, additional affidavit has been
filed by Secretary to Government, Personnel and Administrative Reforms
Department, Secretariat, Chennai, revealing the exact figures with regard to dismissed
and reinstated employees. In paragraph 6, it has been stated as under:— "6. The
following details are submitted for reference of this Hon'ble Court:—

1. Total number of Government servants 1,70,241 dismissed as per Section 7 of

TESMA and teachers of Aided Colleges suspended.

2. Total number reinstated so far, as per the 1,56,106 statement made before this
Hon'ble Court.

3. Number of employees and teachers not 14,135 reinstated.

CATEGORIES OF EMPLOYEES AND GOVERNMENT TEACHERS WHO

CANNOT CLAIM A RIGHT TO BE REINSTATED.

(a) Government servants arrested. 2,211

(b) Secretariat staff for the reasons mentioned 2,215

earlier.

(c) Officers holding higher position. 534

(d) Government servants (other than the 1,112

Secretariat staff) involved in offences

Under Section 5 or Section 5 read with

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Section 4 of TESMA.

Total number of persons who cannot 6,072

Claim a right to be reinstated.

REMAINING NUMBER OF EMPLOYEES 8,063

WHOM THE STATE GOVERNMENT IS

WILLING TO REINSTATE."

For the categories (b) and (c) i.e. Secretarial staff of 2215 and 534 officers holding
higher positions, it is agreed and made clear that they would be treated as suspended
instead of dismissed. Remaining 8063 employees, as stated above, will be reinstated
in service (w.e.f. 25th July, 2003) on their tendering unconditional apology for
resorting to strike and also an undertaking to abide by Rule 22 of Conduct Rules in
future. He further makes a statement that with regard to the representations which are
made or are to be made by the employees who are in category (a), (b), (c) and (d), the
same would be considered by three retired High Court Judges to be named by the
Chief Justice of the High Court of Madras. Each Judge would decide approximately
representations of 2000 employees within a period of one month or thereabout from
the date of allocation of representations. For this purpose, a convenient place for their
office work and the secretarial staff would be made available to all the three Judges
by the State Government within a period of seven days from today without fail. The
concerned Judges would decide the representation of the employees without taking
into consideration Section 7 of the Ordinance and as far as possible in accordance
with the Conduct Rules and equity. Retired Judges to be paid honorarium at the rate
of Rs.50000/- per month. All the three Judges are requested to evolve a common
procedure for disposing of the representations. The decision of the Judge on the
representation would be binding to the State Government and the State Government
would act in accordance with the same. However, if any of the employees is
aggrieved, it would be open to such employee to challenge the same before an
appropriate forum.

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Finally, it is made clear that employees who are re-instated in service would take care
in future in maintaining discipline as there is no question of having any fundamental,
legal or equitable right to go on strike. The employees have to adopt other alternative
methods for redressal of their grievances. For those employees who are not re-
instated in service on the ground that FIRs are lodged against them or after holding
any departmental enquiry penalty is imposed, it would be open to them to challenge
the same before the Administrative Tribunal and the Tribunal would pass appropriate
order including interim order within a period of two weeks from the date of filing of
such application before it. It is unfortunate that the concerned authorities are not
making the Administrative Tribunals under the Administrative Tribunal Act, 1985,
functional and effective by appointing men of caliber. It is for the High Court to see
that if the Administrative Tribunals are not functioning, justice should not be denied
to the affected persons. In case, if the Administrative Tribunal is not functioning, it
would be open to the employees to approach the High Court.

Lastly, we make it clear that we have not at all dealt with and considered the
constitutional validity of Tamil Nadu Essential Services Maintenance Act, 2002 and
the Tamil Nadu Ordinance No.3 of 2003 or interpretation of any of the provisions
thereof, as the State Government has gracefully agreed to re-instate most of the
employees who had gone on strike. For this, we appreciate the efforts made and the
reasonable stand taken by the learned Counsel for the parties. Further, we have not
dealt with the grievances of the employees against various orders issued by the State
Government affecting their service benefits. We hope that Government would try to
consider the same appropriately.

The Appeals and Writ Petitions are disposed of accordingly. There shall be no order
as to costs.

24. Vidyasagar Institute of Mental Health v Hospital Employees Union

(2006) ILLJ 781 (Del)

1. This judgment will dispose of plaintiff suit for declaration that the strike threatened
by Dr. Vidyasagar Hospital Employees' Union is illegal and seeking a restraint
against them and their members from holding any demonstration, Page 1248 dharans,
slogan shouting and in any way blocking the ingress and egress of the plaintiff, its
office bearer, patients, visitors and other persons visiting the hospital up to a distance
of 500 meters from the radius of the hospital known as VIMHANS, 1, Institutional
Area, Nehru Nagar, New Delhi.

2. The suit was filed by Mr. M.M. Bargotra, Administrative Officer of the Hospital
contending that he is authorized by a letter of the Chairman to file the suit. It was
stated that plaintiff has its principal place of providing medical health care services at
1, Institutional Area, Nehru Nagar, New Delhi and plaintiff also has a medical center
at Saket. Plaintiff has 246 employees on its roll. Plaintiff has also engaged the
services of contractors for providing services under the contract assigned to them and
the payments are made to the contractors as per terms agreed.

3. Plaintiff's plea is that he is following all rules, procedures, bye laws as

contemplated under the labor laws and despite that he was shocked and surprised

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when a demand letter dated 18th February, 2002 was received raising arbitrary
demands by the employees union. These demands were raised by a newly formed
union and its leaders whose main objective was to harass the management and to
frustrate the peaceful working in the hospital and to achieve their illegal
designs/motives.

4. The plaintiff contended that after issuing the demand letter dated 18th February,
2002, the defendant union also filed a claim before the Conciliation Officer, Pushp
Vihar, New Delhi and the plaintiff's management tried to resolve the disputes, if any
amicably so that the working in the hospital is not disrupted and a congenial and
healthy atmosphere is maintained. Though the workmen were not entitled to any of
the demands but with a larger perspective in view, the plaintiff agreed to consider
some of the demands to some extent.

5. Despite the effort of the plaintiff to resolve the matter, the defendant sent a notice
of strike dated 29th April, 2002. The strike notice was replied in detail by the plaintiff
by letter dated 14th May, 2002 where it was also advised that the defendant should
desist from militant and disruptive activities. All the efforts of the management to
settle the disputes amicably and reconcile the matters seem to have failed when the
defendant vide their letter dated 14th June, 2002 refused to amicably settle the
disputes and threatened the Plaintiff to settle their demands before 23rd July, 2002
failing which defendant and its members threatened to resort to coercive methods of
raising slogans, shouting, blockage of passage and disruption of medical facilities in
the hospital and to go on strike with effect from 24th June, 2002 necessitating plaintiff
to file the present suit for declaration and permanent injunction.

6. By an interim order dated 21st June, 2002, the defendant was restrained from
holding demonstration in a manner which may in any way obstruct the ingress and
egress of any member of plaintiff management or any employee of the plaintiff and/or
any patient or any visitor to the hospital and that they will hold the demonstration
peacefully at least at a distance of 50 meters from the entrance of the premises of the
plaintiff. Though after the interim order was passed against the defendant, an
appearance was put through a Page 1249 counsel on 20th August, 2002 by the
defendant, however, on subsequent dates, no one appeared nor written statement was
filed entailing ex parte proceedings against the defendant. The plaintiff thereafter filed
its evidence on affidavit and proved the documents.

7. The plaintiff has filed the evidence on affidavit of Shri R.A. Aggarwal, Personnel
and Welfare Officer, who deposed that he is working in the plaintiff hospital and is
conversant with the facts and circumstances. He categorically deposed that the plaint
was signed and verified by Shri M.M. Bargotra who was earlier working as a Senior
Administrative Officer and who has left the services of the hospital. He deposed that
he is conversant with the signatures of earlier Sr. Administrative officer and has seen
him signing and writing. The witness of the plaintiff also proved the authorization
letter given by Shri J.N. Chaudhary, Chairman of the plaintiff concern, which was
proved as Ex.PW1/1.

8. On behalf of the plaintiff, it was stated and proved that plaintiff is following all
rules and procedure, bye-laws as provided under labor law and the demand letter
dated 18th February, 2002 issued by defendant Union was illegal and arbitrary and

230
without any just cause. Copy of the demand letter dated 18th February, 2002 was
proved as Ex.PW1/2. The statement of claim by the defendant union filed before the
Conciliation Officer and the reply filed by the plaintiff's management were also
proved and exhibited as Ex.PW1/3 and PW1/4.

9. The plaintiff's witness deposed that despite the various meetings between the
management and the defendant union in order to resolve the disputes and demands in
a congenial and healthy atmosphere, the defendants vide their letter dated 29th April,
2002 called for a strike on wrong premises and assumptions. The letter giving threat
of strike was proved by the witness as PW1/5 and the reply sent by plaintiff was
proved and marked as Ex.PW1/6.

10. The witness categorically deposed that despite all efforts being made by the
plaintiff's management to resolve the disputes, if any, amicably and even consider the
demands which were not reasonable, the defendant refused to amicably settle the
disputes and threatened to go on strike and disrupt the working of the hospital, if all
their demands were not met before 23rd June, 2002.

11. The plaintiff contention is that despite the reference having been sent by the labor
authorities for adjudication, the defendant has threatened to take law in his own hands
and resort to slogans shouting, blockage of passage and disruption of medical
facilities to patients and other visitors.

12. I have perused the pleas of the plaintiff in the plaint and the deposition of the
witness of the plaintiff which have remained un-rebutted. As the pleas of the plaintiff
have not been refuted, inevitable inference is that suit was signed and verified and
instituted by a duly authorized person and the plaintiff has been complying with all
rules, procedure, bye-laws as provided under the labor laws and the defendant does
not have any right to take law in his own hands. The plea of the plaintiff that the
demands of the defendant are illegal and arbitrary had not been disputed and rebutted.
In any case, the plaintiff Page 1250 has a right to continue its activities without any
disruption from the defendant and its members. The defendant may have a right to
event heir grievance, however, they cannot disrupt the functioning and cause any
inconvenience to the patients, visitors and the members of the staff of the plaintiff.

13. Law on the right to hold demonstrations by the unions/employees for pressing
their demands stands crystallized by various judgments of the apex Court and by High
Courts, some of which are as under:-

i. S.D. Sharma v. Trade Fair Authority of India, New Delhi, 1985 Labour I.C (NOC)
42 (Delhi) ii. Jay Engineering Works Ltd and Ors. v. State of West Bengal and Ors., .

iii. All India Bank Employees Association v. The National Industrial Tribunal (Bank
Disputes), Bombay and Ors., .

iv. The Association of State Road Transport undertakings v. The Association of State
Road Transport undertaking employees Union (Registered) and Ors., 1986
Lab.I.C.1543 Delhi.

v. A.E.P.C v. A.E.P.C Employees Union (Registered), 1989(1) LLJ page 117 Delhi.

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vi. Indian Hotel Company Ltd v. Taj Mahal Karamchari Union and Ors., 1992 Labour
Law Reporter pg.561 Delhi.

vii. Mahanagar Telephone Nigam Ltd v. Bhartiya Mahanagar Telephone Nigam

Karamchari Sangh and Ors., 1991 LLR pg.792 Delhi.

viii. The East India Hotel Ltd v. Oberoi Intercontinental Hotel Employees Union
(Regd) and Ors., 1994 LLR Vol.25, page 929 Delhi.

ix. Delhi Public School and another v. The Delhi State School Karamchari Union
(Regd) and Ors., .

14. From these following principles can be culled out:-

1.Civil Court has the jurisdiction to entertain suit of this nature

2.Immunity given to the Unions under Section 18 of the Trade Unions Act, 1926,
does not extend to conduct those acts which may amount to offence.

3.Peaceful demonstration is a fundamental right of the Unions/employees.

4.It is the legitimate right of the workers to make legitimate demands and when not
met, even go on peaceful but legal strike, a right so recognized under labor laws.
Trade union has a right to pursue its trade union activities by peaceful methods.
However, in exercise of such a right unions/employees cannot disrupt the functioning
of the employer or obstruct willing workers from performing their duties. Further they
cannot indulge in the acts of violence, physical assault, intimidation, threats etc.

5.There is no right of the unions/employees to hold demonstrations at the residence of

the employer. This is specifically prohibited by the provisions Page 1251 of
the Industrial Disputes Act and amounts to unfair labor practice on the part of the
unions (See Schedule V Entry 6). Thus holding of any kind of demonstration even
physical demonstration is per se prohibited at the residence of the employer.

6.Thus while it may be the right of the union to hold peaceful demonstration, such
demonstrations cannot be allowed to become violent or intimidating in nature. The
safety of those visitors who are visiting the employers premises as well, as those
willing workers, including their smooth ingress and egress is also to be ensured. This
balance is to strike between the two competing and conflicting interests. The Courts
have devised the methods to ensure it by fixing the distance from the employers
premises within which such demonstration etc would not be permissible meaning
thereby Unions can resort to these demonstrations only beyond a particular distance.
In this way they are able to hold peaceful demonstration and at the same time it is
ensured that such peaceful demonstration does not relegate the aforesaid rights of the
employer. This is a message which runs through all the aforesaid judgments

15.The defendants or their employers have no business or cause to cause

inconvenience, harassment or to extend threats to plaintiff his employees and cause
obstruction to these or others who may visit the plaintiff. Such conduct on the part of
the employees of the defendants for the redressal of their grievance to put pressure

232
indirectly and disrupt the functioning of the plaintiff is not permissible nor can be
permitted in the present facts and circumstances.

16. Considering the facts, the defendants cannot be allowed to disrupt the activities,
functioning, ingress and egress of visitors and the patients and create nuisance by
raising slogans near the hospital where patients need peace and solitude. The right of
the defendants to have a peaceful demonstration can be vouched safely, if they are
allowed to hold peaceful demonstration without making such nuisance which will
disrupt the solitude and peace of the patients and the willing workers, if they are
allowed to do it at a distance of 200 meters from the boundary of the premises of the
plaintiff.

17. In totality of circumstances, I, therefore, hold that the threat of strike given by the
defendant is illegal and I restrain the defendant and its members from holding
demonstration, dharnas, slogan shouting and in any way blocking the ingress and
egress of the plaintiff, its office bearers, patients, visitors and other persons visiting
the hospital in any manner, however, they may be entitled to stage peaceful
demonstration and dharnas at a distance of 200 meters from the outer radius of the
hospital known as VIMHANS, 1, Institutional Area, Nehru Nagar, New Delhi. Cost
of the suit is also awarded to the plaintiff and against the defendants.

18. Suit is decreed in terms hereof and decree sheet be drawn accordingly.

25. Gujarat Steel Tubes v Mazdoor Sabha AIR 1980 SC 1896

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 growing workers, punctuated by smouldering demand, 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.

The Judge Perspective 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

233
on this road 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 clan 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 reported, 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 h 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 honorable, 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 strike 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 should willingly regard workers as
the real owners of the concerns which they fancy they have created.

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. De hors these man-

dates, 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 entrepreneureal
excellence and employs over 800 workmen knit together into the respondent Union

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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 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 round a harrowing hundred rupees or more in this thriving Ahmedabad
industry.

The course of this precarious co-existence 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,
alter 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 workman and recruited
some fresher 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 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.

Sri Ashok Sen, for the appellant-Management, and Sri Tarkunde for the respondent-
Sabha, have extensively presented their rival versions with forceful erudition. Sri 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 Sri Bhandare has pressed the lachrymose case of the several hundreds of
'interregnal' employees whose removal from service, on reinstatement 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 Ashok 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.

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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 use 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 libitem 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.

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 scaled
to Rs. 680 lakhs the next year, to Rs. 1136 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 star ted on a
magnificent sum per mensem of Rs. 100/- in toto even as late as 1970, although some
workmen, with more service, were paid some what 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 Union, 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:

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"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 workman."

The engineering industry, where India is forging ahead, was apparently exploitative
towards labour, and to make amends for this un-

healthy 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 broad 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 mini-increases 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 lockout 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 Ashok 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 Unions 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.

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,

237
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 glamour. 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 workmen, 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
January 25, 1973 with breach of clause 6 of the Agreement of August 4, 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
underSection 10A of the I.D. Act, 1947. Neither party shall take any direct action
including go-slow, 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 money-loaded item was the grievance about the Wage Board recommendations.
The temper, by now, was tense.

The Management, on the same day, (January 25, 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 January 20, 1973 the Company had expressed its willingness to
implement the Wage Board recommendations according to its interpretation on and
with effect from January 1, 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

238
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 January 1, 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 the strike was illegal and in breach of the settlement
of August 4, 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 August 4, 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 January 1, 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 an 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 January 1,
1969 as already cautioned in the notice dated January 27, 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 August 4, 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 the gesture
and persisting on the war path. The stern economic sanction was brought home in a
critical paragraph:

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"By this final notice the workmen are informed that they should withdraw the strike
and resume work before Thursday, February 15, 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 January 1, 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 August 4, 1972 and all other labour problems. In spite of this, if the
workmen do not resume duty before Thursday, February 15, 1973. then the Company
will terminate the services of all workmen who are on strike and thereafter it will run
thefactory by employing new workmen. All workmen may take note of this fact."

The count-down thus began. February 15, 1973 arrived, and the Management struck
the fatal blow of discharging the strikers-all the labour force, 853 strong-and
recruiting fresh hands and thus work was resumed by February 19, 1973.

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 February 15,1973,
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, February 19, 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 pre-condition 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 February 21, 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 ill 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 February 20, 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

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action. Was it a harm less 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 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.
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
April 28, 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 July 31,
1973 a substantial number of 419 returned to the factory.

The crack of workman's morale was accelerated by escalating reemployment 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 bond fides. Meanwhile,

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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 imbroglio and brought no bread. The worker
wanted bread, job, and no phyrric victory.

A crescent of hope appeared on the industrial sky. The Management but out a 'final
offer' on May 31, 1973, calling on all workmen to rejoin last 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."

The Sabha was willing and wrote back on June 8, 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 upto 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, l 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 II the vanquished the Sabha
and the re-employment offered 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

242
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 fake 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 at 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 Sec. 10A
of the Act, confining the dispute to reinstatement of 400 workmen discharged on
February 21 1973. A reference under Sec. 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 counter-productive 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 know-how and, by its sheer slow motion
and high price, defects 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.

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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 all 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 Art. 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 :

"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

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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 (see [1976] 2 S.C.C. at p. 343).

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 Ashok 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 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 or 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 15). 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 itemizes 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 amounts to
misconduct. Standing order 25 provides for penalty impossible on a workman guilty
of misconduct. Accordingly amongst other punishments, a workman could be visited
with the penalty of discharge under order 23 of dismissal without notice for a
misconduct [see sub- clauses (f) and (g) of clause ( 1 ) j. 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 workman
concerned in respect of the alleged misconduct in the manner set forth in clause (4).

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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 dyed 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 coexist, an inference of punishment is
reasonable though not inevitable. What arc 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 311and 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 case (1958 SCR

828) have been at times obscure. if cited de hors the full facts. In Samsher Singh's
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:

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'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 from (the apparent, or officially revealed object) in the
present con text has lead 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.' 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 judgement, 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 Art
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 scrutinized, 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 G 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 stigmatizing epithets. If the basis is not misconduct,
the order is saved. In Murugan Mills, this Court observed:

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"The right of the employer to terminate the services of his workman under a standing
order, like cl. 17(a) in the present case, which accounts 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. v. Workers of the Company. The matter then came up before this
before this Court also in Chartered Bank v. Chartered Bank Employees Union(3) and
the Management of U.B. Dutt & Co. v. Workmen of U. B. Dutt & Co.(4) Wherein the
view taken by Labour Appellate Tribunal was approved and it was held that even in a
case like the present the requirements of bona fides was essential and if the
termination of service was a colourable exercise of the power or as a result of
victimization 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."

Again, in Chartered Bank v. Employees Union his 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's 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 311. 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 he 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 naivete 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, no misconduct. They have just been told off. But the Management admits

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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 Ashok 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 world, 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, Any 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 other which we must consider before holding either guilty.
Sri Tarkunde told us the tale of woe of the workmen. In 3 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 tantalizing 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 inIndia, 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 painly dismissals for a series of alleged misconducts

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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
normal 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 case to Shamsher
Singh's 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
paralyzed. The strikers allegedly indulge ill objectionable. activities. The exasperated
Management hits back by ordering 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 explicity 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

250
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 ,4. 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. Prove and penetrate so as to reveal the reality, but this controversy has
been set at rest by the decision in Western India Automobile Association v. Industrial
Tribunal Bombay. 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 ensure 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 an(l
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
Co. v. Its Workmen]. In the matter of an order of discharge of an employee as
understood within the meaning of the Industrial Disputes Act the iron 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 amount; to victimisation or unfair

251
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. v.
Workmen]. 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 respondents 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 cl. 17(a) of the
Standing orders permitting discharge simpliciter in such circumstances was clearly a
colorable exercise of power to terminate services of a workman under the provision 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. v. Industrial
Tribunal, Madras & Anr. This view was affirmed in Tata Engineering & Locomotive
Co. Ltd. v. S. C. Prasad & Anr.(4). After approving the ratio in Murugan Mills case,
this Court in L. Michael & Anr. v. M/s. Johnson Pumps India Ltd observed that the
manner of dressing up an order did not matter. The slightly different observation in
Workmen of Sudder office, Cinnamare v. Management was explained by the Court
and it was further affirmed that since the decision of this Court in the Chartered Bank
v. The Chartered Bank Employee's Union 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 victimization 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 v. P. S.
Malvenkar & ors. The employee in that 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 discharged. The
Corporation contended that wider 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 either should be construed so as to emasculate the other
cr 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 cf 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

252
case make the order or termination punitive in character so as 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 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 n 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. How ever, 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 u.s 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 native hue about Article 226, without being
anglophile 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

253
here in appeal over the High Court s Judgement. 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.

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 faction 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 '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
built. 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 1 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. 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 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

254
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 11 A 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 hide-bound 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-a-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 s. 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. & Anr. v.
Rohtas Industries State Union ors. (1) This Court observed that as the Arbitrator
under s. 10Ahas the power to bind even those who are not parties to the reference or
agreement and the whole exercise under s. 10A as well as the source of the force of
the Award on publication derived from the statute, it is legitimate to regard such an
arbitrator now as part of the infrastructure of the sovereigns 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 v. Hind Cycle Ltd., 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 he no ground
for interference. The power of judicial supervision of the High Court under Article
227 of the Constitution (as it then stood) is not greater than those under Article
226 and it must be limited to seeing that a tribunal functions within the limits of its

255
authority [see Nagendra Nath Bora & Anr. v. The Commissioner of Hills Division &
Appeals, Assam & ors.(a) ]. This led to a proposition that in exercising jurisdiction
under Article 226 the High Court is not constituted 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 Art 226 to review the evidence and to arrive at an independent finding on the
evidence. [See State of Andhra Pradesh v. S. Shree Rama Rao ] A constitution Bench
of this Court in P. H. Kalyani v. M/s-. Air France, Calcutta ) 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 in the
finding of fact is made by the impugned order and it is shown that it success 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's case was affirmed. Following the
aforementioned decision, the Gujarat High Court in Navinchandra Shakerchand Shah
v. Manager, Ahmedabad Coop. Department Stores Ltd. 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 19 G.L.R. p. 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 over-rule the objection of invalidity of the High Courts 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 ease the arbitrator expressed himself as concurring with the
punishment. But if he had disagreed, as the High Court, in his place, did, could he
have interfered? Armed with the language of Sec. 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 could 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,
Sec. 11A did clothe the arbitrator with similar power as tribunals, despite the doubt
created by the abstruse absence A of specific mention of 'arbitrator' in Sec. 11A. This
position needs closer examination and turns on interpretational limitations. At this
stage, to facilitate the discussion, we may read the provision:

"11A. Where an industrial dispute relating to the discharge or dismissal of a workmen

has been referred to a 1 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, 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:

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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".

Sec. 11A was introduced in purported implementation cf 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
being to the same brood. The entire scheme, from its I.L.O. genesis, through the
objects and Reasons, fits 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 Sec. 11A
powers applies a fortiori to arbitrators. Then why omit ? Could it be a synopic
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 these 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. May be, 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,

257
wider sense and quoted Fry, L.J. in Dawkins v. Rokeby [L.R. 8 Q.B. 255, affirmed,
L.R. 7 H.L. 744]:

"I accept that, with this qualification that I do not like the word 'tribunal'. The word is,
ambiguous, because it has not like 'court' any ascertainable meaning in English law"
(Royal Acsuarium v. Parkinson. [1892] Q.B. 431, cited COURT) .

There is a reference to the bishop's commission of enquiry as judicial tribunal and,

significantly, specific mention has been made in these terms.

"Disputes between employers and employees are A 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
this 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 laws in the draftsman, once the object and effect are plain. Judges may not be too
'anglo-phonic' 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
Commissioner v. Ayrshire Employers Mutual Insurance Association, 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."(a). 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."(3) ' 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." 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

258
to these general principles of interpretation: "The laws should be liberally interpreted,
in order that their intent be preserved".

"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."(3) 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.

"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"(5) Prof. Bodehheimer states that the American trend is
towards a purpose-oriented rather than a plain-meaning rule in its rigid orthodoxy. In
United States v. American Trucking Association. 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, how ever, clear the words
may be on "superficial examination." B 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 Sec. 11A includes 'arbitrators'. This, in
turn, flows from our interference 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 socio- legal 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:

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" 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.. Judges 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.

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 for the legislature. But it could not greatly alter the shape of the tree."

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 law-makers
although this view prevented "technical minded Judges (from pressing) precedents to
their logical conclusions". 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 libitem and it is wholesome to be cautious as Lord Reid
inShaw v. D.P.P. 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. rt 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 decides it.
The judges do every day make law, though it is almost heresy to say so. If the truth is
recognized 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 case referred with approval-and so do

we-to the observations of Justice Holmes.

"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 A 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, .. ".

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 s. 11Awas argued at length, as to whether an omission of
any reference to Arbitrator appointed under s. 10Ain s. 11A would suggest that the

260
Arbitrator under s. 10A, notwithstanding the terms of reference, would not enjoy the
power conferred on all conceivable industrial adjudicators under s. 11A. It was said,
after referring to the objects and reasons in respect of the bill which was moved to
enact s. 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 s. 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 Sasus omissions. Reliance was placed on Gladstone v. Bower
where the question arose whether a reference to a tenancy from year to year in s. 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 S. 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 buts the Court's ability to do so is limited by the recognised
canons of interpretation. The Court may, for example, prefer an alternative construc-

tion 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 not alternative
construction; it is simply a case of something being overlooked. The Court cannot
legislate for a casus omissions. To do so would be to usurp the function of the
legislature [see Magor & St. Mellons Rural District Council v. Newport Corporation.
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 v. G. Panneerselvam.]
Undoubtedly, the Court cannot put into the Act words which 'are not expressed, and
which cannot reasonably he 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 v. Secretary of State(3).] 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, I.. J. in Seaford Court Estates Ltd. v. Asher
wherein he observed as under:

"When a defect appears a Judge cannot simply fold his hands and blame the draftman.
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

261
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 & Anr. v. Dr. Asis Kumar Mukherjee & ors. where in he
observed as under:

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 fulfills 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 par-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 objects 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 tn examine or prescribe the correct punishment belongs to
tribunal/arbitrator even under Sec. 11 in 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 fresh. In such a virgin situation both culpability and
quantification of punishment arc 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 re-gurgitate all that has been said
by this Court upto 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, the entire subject is at large and both guilt and punishment,
in equal measure, may be determined, without inhibition of jurisdiction, by the
tribunal.

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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 S. 11A is not applicable, an Arbitrator under s.
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 s. 10A will have to decide
keeping in view the spirit of S. 11A [See Union of India v. Bungo Steel Furniture Pvt.
Ltd. (1967)] 1 S.C.R. 324]. The Jurisdictional hurdles being thus cleared, we may
handle the basic facts and the divergences 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. Sec. 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 the 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
workmen, a wholesale survey of A 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, D. that the Company seems to be a well managed one.) The
cardinal distinction in our punitive jurisprudence between a commission of enquiry

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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 6. a disciplinary
proceeding viz. what is the specific misconduct against the particular workmen 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 factions 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 ? Lifeand 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 ?

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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 concretize this generalised criticism of the otherwise well-covered

award. The crowd of documents and camping 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 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 tn 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 cause 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
agreement in respect of 64 discharged or dismissed workmen and the other workmen

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and 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 r) 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-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

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January 27, 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 not 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 Company 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

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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 got 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 Art. 19, sows the seeds of this burgeoning
jurisprudence. The Gandhian quote at the beginning of this judgement 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 v.
Barnard, so as to remove the effects of decisions of conspiracy and intimidation. He
goes on to state that Allen v. Flood and Quinn v. Leathem taking the conspiratorial
view must never be permitted to be quoted in courts. In contrast, reference was made
to Willis on Constitutional Law, pp. 878-879, 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 Art. 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 Railway Co. Ltd. v. Their Workmen,
(supra) 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. More illegality of the strike does not per se spell unjustifiability. For,
in Crompton Greaves Ltd. v. Workmen (supra) this Court held that even if a strike be
illegal, it cannot be castigated as unjustified, unless the reasons for it are entirely

268
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 Railway Co. Ltd. (supra)
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 are 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 chargesheet 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 M/s. Burn & Co. Ltd. v. Their Workmen & Ors.(1) 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

269
although they had participated in the strike. After referring to the ratio in M/s. Burn &
Co. Ltd. case, this Court in Bata Shoe Co. (P) Ltd. v. D. N. Ganguly & Ors.(2)
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.'s case this Court distinguished
the decision in India General Navigation & Railway Co. Ltd.'s and observed that the
decision in that case was on the facts placed before the Court. In fact, Bata Shoe Co.'s
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. v. Its Workmen(1), the Management after holding
that the strike was illegal, terminated the services of 230 workmen without framing
any chargesheet 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 v. Additional Industrial Tribunal Delhi & Ors.,(2) this Court
was called upon to examine the ratio in Model Mills(3) case and India General
Navigation & Railway Co. Ltd. case and this Court in terms affirmed the ratio in India
General Navigation & Railway Co. Ltd. case 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. & Anr. v. Their Workmen(4), 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 s. 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. v. Motipur Sugar Factory(1),
and Provincial Transport Service v. State Industrial Court) (2). 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

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the labour court to decide for itself whether the charge of misconduct was proved and
what punishment should be awarded (see Imperial Tabacco Company of India Ltd. v.
Its Workmen) (3).

As against the above propositions, Sri Sen relied upon the observations of this Court
in Oriental Textile Finishing Mills, Amritsar v. Labour Court, Jullundur & Ors.(4).
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 workmen on the ground of
misconduct, viz., participation in the illegal strike. After so saying, the Court agreed
with the view of the Court in Indian General Navigation & Railway Co. Ltd. case 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 or 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

271
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 v. Its Employees (1) sets out the rule on
reinstatement and back wages when the order of this Court, et al, deal with this
subject :

"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 workmen 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 workmen'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 Art. 43A cannot be missed, as explained in Hindustan
Tin Works, Labour is no more a mere factor in production but a partner in Industry,

272
conceptually speaking, and less than full back wages is a sacrifice by those who can
best 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 Art. 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
(Supra). 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 reinvestigate 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 chargesheets, 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 sec. 11A does take in an arbitrator too,
and, in this case, the arbitral reference, apart from sec. 11A, is plenary in scope.

In the second chapter of our sum-up, the first thing we decide is that Art. 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 Art. 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,

273
suggestive of the dubiety of the inflated accusations and awareness of the minor role
of the mass of workmen in the Engineers 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.
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. 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 of 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 Navi-

gation, Punjab National Bank and Swadeshi Industries, 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 of the strike
and join work. Those efforts were made at three different stages, namely, (1)
immediately after the workers went on the lightening strike and before chargesheets

274
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 joint duty before the charge-sheet
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
straightaway 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 joint 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 showcause why their names should not be struck off. Besides,
those notices were given after charges formally served upon each workmen 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. [see Lad's case(1) and Panitole Tea Estate's case(2)]. 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 dependent on a complex of circumstances. [See for e.g. 1967
(15) F.L.R. 395 paras 3 and 4].

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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 v. The presiding
Officer, Madhya Pradesh Industrial Court, Indore & Ors.(1) 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.

Kalyani(2) 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 Kalyani
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 shall of the Management's order,
predating of the nativity does not arise. The reference to Sasa Musa in Kalyani
enlightens this position. The latter case of D. C. Roy v. The Presiding Officer,
Madhya Pradesh Industrial Court, Indore & Ors. (supra) specifically refers to
Kalyani's case and Sasa Musa's case and holds that where the Management discharges
a workmen 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. Roy (supra) 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 s. 2(00) which, in this case, is in violation of s.
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. 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 ! are 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 August 3, 1979 and on the eve of the closure of counsel's submissions certain
inconclusive settlement proposals were discussed. We, therefore, consider August 3,
1979 as a pivotal point in the calender with reference to which the final relief may be
moulded. We direct that the 100 workmen for whom reinstatement is being refused

276
will be treated as in service until August 3, 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 s. 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
nationally 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 1000/- 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
reabsorption 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. Divas 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

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December 31, 1979 and the rest on or before March 31, 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 workmen 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 herein-before mentioned would be set aside and they are deemed to be
in service till August 3, 1979, when they will be retrenched and they will be paid
retrenchment compensation as provided ins. 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 December 31, 1979, and the rest on or before March
31, 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 August 9, 1979, when the
hearing in this case concluded. 50 per cent of the amount that becomes payable to
each workmen under the directions herein above given will be paid on or before
March 31, 1980, and the balance on or before September 30, 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

278
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 March 31, 1980,
and the High Court's direction for back wages in their respect in 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 post-
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 truma 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.
Lawrence 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.

KOSHAL, J.-I have had the advantage of going through the judgment of my learned
brother Iyer, J., but after giving the same my most serious consideration I regret that I
find myself unable to endorse it as I hold a different opinion in relation to three
important findings arrived at by him, namely,

(a) that the discharge of workmen amounted really to their dismissal because the
motivation for it was their alleged misconduct.

(b) that an arbitrator would fall within the ambit of the term "Tribunal" as used in sub-
section (2) of section 11A of the Industrial Disputes Act (hereinafter called the 1947
Act), and

279
(c) that the High Court acted within the four corners or its jurisdiction under article
227 of the Constitution of India while interfering with the finding of the arbitrator that
the workmen were correctly punished with dismissal if the orders of discharge could
be construed as such.

I am therefore appending this note which may be read in continuation of that

judgment.

2. The parties are admittedly governed by the Industrial Employment (Standing

Orders Act, 1946 (hereafter referred to as the "S.O. Act" section 15(2) of which
empowers the appropriate Government to make rules, inter alia setting out model
standing orders for the purposes of that Act. The expression 'standing orders' is
defined in section 2(g) of the S.O. Act to mean rules relating to the matters set out in
the schedule thereto, items 8 and 9 of which run thus :

"8. Termination of employment, and the notice therefor to be given by the employer
and workmen.
"9. Suspension or dismissal for misconduct and acts or omissions which constitute
misconduct."

The appropriate Government (in this case the Government of Gujarat) has prescribed
Model Standing Orders (M.S.Os. for short) under section 15(2) of the S.O. Act. The
relevant part of M.S.O. 23 is extracted below :

"23. (1) Subject to the provisions of the Industrial disputes Act, 1947, the employment
of a permanent workman employed on rates other than the monthly rates of wages
may be terminated by giving him fourteen days' notice or by payment of thirteen days'
wages (including all admissible allowances) in lieu of notice.
"(2)................................ "(3)................................ "(4) The employment of a permanent
workman employed on the monthly rates of wages may be terminated by giving him
one month's notice or on payment of one month's wages (including all admissible
allowances) in lieu of notice.
"(4-A) The reasons for the termination of service of a permanent workman shall be
recorded in writing and communicated to him, if he so desires, at the time of
discharge, unless such communication, in the opinion of the Manager, is likely
directly or indirectly to lay any person open to civil or criminal proceedings at the
instance of the workman.
"(5).................................... "(6).................................... "(7) All classes of workmen
other than those appointed on a permanent basis may leave their service or their
service may be terminated without or pay in lieu of notice : Provided that services of a
temporary workman shall not be terminated as a punishment unless he has been given
an opportunity of explaining the charges of misconduct alleged against him in the
manner prescribed in Standing Order 25.
"(8)..................................... "(9)...................................."

M.S.O. 24 enumerates 25 kinds of acts or omissions on the part of a workman which

amount to misconduct. Clauses

(a) and (b) of the M.S.O. describe two of such acts thus :

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"(a) willful insubordination or disobedience, whether or not in combination with
another, of any lawful and reasonable order of a superior;
(b) going on illegal strike or abetting, inciting, instigating or acting in furtherance
thereof;"

M.S.O. 25 lays down the manner in which a workman guilty of misconduct may be
dealt with. It states :

"25. (1) A workman guilty of misconduct may be -

(a)............................................
(b)............................................
(c)............................................
(d)............................................
(e).............................................
(f) discharged under Order 23;
(g) dismissed without notice.

"(2)............................................ "(3) No order of dismissal under sub-clause (g) of

clause (1) shall be made except after holding an inquiry against the workman
concerned in respect of the alleged misconduct in the manner set forth in clause (4).

"(4) A workman against whom an inquiry has been held shall be given a charge-sheet
clearly setting forth the circumstances appearing against him and requiring
explanation. He shall be given an opportunity to answer the charge and permitted to
be defended by a workman working in the same department as himself. Except for
reasons to be recorded in writing by the officer holding the inquiry, the workman shall
be permitted to produce witnesses, in his defence and cross-examine any witnesses on
whose evidence the charge rests. A concise summary of the evidence led on either
side and the workman's plea shall be recorded. "(5) .............................................. ."
Clauses (3) and (4) of M.S.O. 25 speak of an inquiry only in the case of an order
falling under sub-clause (g) of clause (1) of that M.S. It is thus quite clear (and this is
not disputed) that the only sub-clause of clause (1) of M.S.O. 25 to which the
provisions of clauses (3) and (4) of that M.S.O. would be attracted is sub-clause (g)
and that if an order of discharge falls under M.S.O. 23 an inquiry under clauses (3)
and (4) of M.S.O. 25 would not be a prerequisite thereto even though such an order is
mentioned in subclause (f) of clause (1) of that M.S.O. And that is why it has been
vehemently urged on behalf of the workmen who were discharged en masse and who
were not taken back by the Management that the orders of discharge made in relation
to them amount really to orders of dismissal and are bad in law by reason of the fact
that no inquiry of the type above mentioned was held before they were passed.

3. Under M.S.Os. 23 and 25 the Management has the power to effect termination of
the services of an employee by having recourse to either of them. In action taken
under M.S.O. 23 no element of punishment is involved and the discharge is a
discharge simpliciter; and that is why no opportunity to the concerned employee to
show cause against the termination is provided for. Dismissal, however, which an
employer may order, is, in its very nature, a punishment, the infiction of which
therefore has been made subject to the result of an inquiry (having the semblance of a
trial in a criminal proceeding). Exercise of each of the two powers has the effect of
the termination of the services of the concerned employee but must be regarded,

281
because of the manner in which each has been dealt with by the M.S.Os., as separate
and distinct from the other.

4. It was vehemently argued on behalf of the workmen that once it was proved that
the order of discharge of a workman was passed by reason of a misconduct attributed
to him by the management, the order cannot but amount to an order of dismissal. But
this argument, to my mind, is wholly without substance, and that for two reasons. For
one thing, clause (1) of M.S.O. 25 specifically states in sub-clause

(f) that a workman guilty of misconduct may be discharged under M.S.O. 23. This
clearly means that when the employer is satisfied that a workman has been guilty of
misconduct, he may (apart from visiting the workman with any of the punishments
specified in sub-clauses (a), (b), (c), (d) and

(e) of clause (1) of M.S.O. 25) either pass against him an order of discharge for which
no inquiry precedent as provided for in clauses (3) and (4) of M.S.O. 25 would be
necessary, or, may dismiss him after holding such an inquiry. Which of the two kinds
of order the employer shall pass is left entirely to his own discretion.

It is true that the employer cannot pass a real order of dismissal in the garb of one of
discharge. But that only means that if the order of termination of services of an
employee is in reality intended to punish an employee and not merely to get rid of
him because he is considered useless, inconvenient or troublesome, the order, even
though specified to be an order of discharge, would be deemed to be an order of
dismissal covered by sub-clause (g) of clause (1) of M.S.O. 25. On the other hand if
no such intention is made out, the order would remain one of discharge simpliciter
even though it has been passed for the sole reason that a misconduct is imputed to the
employee. That is how, in my opinion, M.S.Os. 23 and 25 have to be interpreted. The
argument that once an alleged misconduct is shown to have been the motive for the
passage of an order of discharge, the same would immediately and without more,
amount to an order of dismissal, is not warranted by the language used in M.S.O. 25
which specifically gives to the employer the power to get rid of "a workman guilty of
misconduct" by passing an order of his discharge under M.S.O. 23.

5. Secondly, the reasons for the termination of service of a permanent workman under
M.S.O. 23 have to be recorded in writing and communicated to him, if he so desires,
under clause 4-A) thereof. Such reasons must obviously consist of an opinion
derogatory to the workman in relation to the performance of his duties; and whether
such reasons consist of negligence, work-shirking or of serious overt acts like theft or
embezzlement, they would in any case amount to misconduct for which he may be
punished under M.S.O. 25. It is difficult to conceive of a case in which such reasons
would not amount to misconduct. The result is that M.S.O. 23 would be rendered
otiose if termination of service thereunder for misconduct could be regarded as a
dismissal and such a result strikes at the very root of accepted canons of
interpretation. If it was open to the Court to "lift the veil" and to hold an order of
discharge to amount to a dismissal merely because the motive behind it was a
misconduct attributed to the employee, the services of no employee could be
terminated without holding against him an inquiry such as is contemplated by clauses
(3) and (4) of M.S.O. 25.

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6. The interpretation placed by me on M.S.Os. 23 and 25 finds ample support in
Bombay Corporation v. Malvankar(1) of which the facts are on all fours with those in
the present case. Miss P. S. Malvankar, respondent No. 1 in that case, was a clerk in
the employment or the Bombay Electric Supply and Transport Undertaking which
was being run by the Bombay Corporation. Her services were terminated on the
ground that her record of service was unsatisfactory. It was however stated in the
order of termination of her services that she would be paid one month's wages in lieu
of notice and would also be eligible for all the benefits as might be admissible under
the Standing Orders and Service Regulations of the Undertaking. Those Standing
Orders correspond to the standing orders with which we are here concerned.
Thereunder, two powers were conferred on the employer, one being a power to
impose punishment for misconduct following a disciplinary inquiry under clause (2)
of Standing Order 21 read with Standing Order 23 and the other one to terminate the
service of the employee by one calendar month's written notice or pay in lieu thereof
under Standing Order 26. The question arose as to which power had been exercised
by the employer in the case of Miss Malvankar and Jaswant Singh, J., delivering the
judgment of the Court on behalf of himself and Bhagwati, J., was answering that
question when he made the observations reproduced from his decision by my learned
brother Iyer, J. This Court was then clearly of the opinion that-

(a) the power to terminate the services by an order of discharge simpliciter is distinct
from and independent of the power to punish for misconduct and the Standing Orders
cannot be construed so as to render either of these powers ineffective; and
(b) reasons for termination have to be communicated to the employee and those
reasons cannot be arbitrary, capricious or irrelevant but that would not mean that the
order of termination becomes punitive in character just because good reasons are its
basis.

The Court further remarked that if the misconduct of the employee constituted the
foundation for terminating his service then it might be liable to be regarded as
punitive but this proposition was doubted inasmuch as "even in such case it may be
argued that the management has not punished the employee but has merely terminated
his service under Standing Order 26".

7. So all that remains to be determined in this connection is as to when would

misconduct be the `foundation' of an order of dis-

charge. Merely because it is the reason which weighed with the employer in effecting
the termination of services would not make the order of such termination as one
founded on misconduct, for, such a proposition would run counter to the plain
meaning of clause (1) of M.S.O. 25. For an order to be `founded' on misconduct, it
must, in my opinion, be intended to have been passed by way of punishment, that is, it
must be intended to chastise or cause pain in body or mind or harm or loss in
reputation or money to the concerned worker. If such an intention cannot be spelled
out of the prevailing circumstances, the order of discharge or the reasons for which it
was ostensibly passed, it cannot be regarded as an order of dismissal. Such would be
the case when the employer orders discharge in the interests of the factory or of the
general body of workers themselves. That this is what was really meant by the judicial
precedents which use the word `foundation' in connection with the present
controversy finds support from a number of decisions of this Court. In The Chartered

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Bank, Bombay v. The Chartered Bank, Employees' Union(1) this Court held that if
the termination of service is a colourable exercise of the power vested in the
management or is a result of victimization or unfair labour practice, the Industrial
Tribunal will have jurisdiction to intervene and set aside such termination. Applying
this principle to the facts of the case before it, this Court ruled :

"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"
(emphasis supplied).

This case was followed in The Tata Oil Mills Co., Ltd., v. Workmen(2) where
Gajendragadkar, C.J., who delivered the judgment of the Court, stated the law thus :

"The true legal position about the Industrial Courts' jurisdiction and authority in
dealing with cases of this kind is no longer in doubt. It is true that in several cases,
contract of employment or provisions in Standing Orders authorise an industrial
employer to terminate the service of his employees after giving notice for one month
on paying salary for one month in lieu of notice, and normally, an employer may, in a
proper case, be entitled to exercise the said power. But where an order of discharge
passed by an employer gives rise to an industrial dispute, the form of the order by
which the employees' services are terminated, would not be decisive; industrial
adjudication would be entitled to examine the substance of the matter and decide
whether the termination is in fact discharge simpliciter or it amounts to dismissal
which has put on the cloak of a discharge simpliciter. If the Industrial Court is
satisfied that the order of discharge is punitive, that it is mala fide, or that it amounts
to victimization or unfair labour practice, it is competent to the Industrial Court to set
aside the order and in a proper case, direct the reinstatement of the employee. In some
cases, the termination of the employee's services may appear to the Industrial Court to
be capricious or so unreasonably severe that an inference may legitimately and
reasonably be drawn that in terminating the services, the employer was not acting
bona fide. The test always has to be whether the act of the employer is bonafide or
not. If the act is mala fide, or appears to be a colourable exercise of the powers
conferred on the employer either by the terms of the contract or by the standing
orders, then notwithstanding the form of the order, industrial adjudication would
examine the substance and would direct reinstatement in a fit case..".

The same test was laid down for determining whether an order of discharge could be
construed as one ordering dismissal in The Tata Engineering and Locomotive Co.,
Ltd., v. S. C. Prasad(1) by Shelat and Bhargava, JJ. :

"No doubt, the fact that the order was couched in the language of discharge
simpliciter is not conclusive. Where such an order gives rise to an industrial dispute
its form is not decisive and the tribunal which adjudicates that dispute can, of course,
examine the substance of the matter and decide whether the termination is in fact
discharge simpliciter or dismissal though the language of the order is one of simple
termination of service. If it is satisfied that the order is punitive or mala fide or is
made to victimise the workmen or amounts to unfair labour practice, it is competent
to set it aside. The test is whether the act of the employer is bona fide. If it is not, and
is a colourable exercise of the power under the contract of service or standing orders,
the Tribunal can discard it and in a proper case direct reinstatement."

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The Chartered Bank, Bombay v. The Chartered Bank Employees' Union (supra) was
followed by this Court in Workmen of Sudder Office, Cinnamore v. Management(1)
and therein stress was laid on the employer's right to terminate the services of a
workman by an order of discharge simpliciter under the terms of the contract where
there was no lack of bona fides, unfair labour practice or victimization.

So the real criterion which formed the touchstone of a test to determine whether an
order of termination of services is an order of discharge simpliciter or amounts to
dismissal is the real nature of the order, that is, the intention with which it was passed.
If the intention was to punish, that is, to chastise, the order may be regarded as an
order of dismissal; and for judging the intention, the question of mala fides (which is
the same thing as a colourable exercise of power) becomes all-important. If no mala
fides can be attributed to the management, the order of discharge must be regarded as
one having been caused under M.S.O. 23 even though the reason for its passage is
serious misconduct.

8. It is in light of the conclusion just above arrived at that the discharge of the
workmen in the instant case has to be judged. The question of intention or mala fides
is really one of fact (of which the arbitrator was, in my opinion, the sole judge, unless
his finding on the point was vitiated by perversity in which case alone it was liable to
be reviewed by the High Court). The discussion of the evidence by the arbitrator in
his award is not only full and logical but, in my opinion, also eminently just. At all
material times the Management was out to placate the Sabha (and therefore, the
workmen) and gave to it a long rope throughout. The attitude of the Sabha on the
other hand was one of intransigence and obduracy. According to the settlement of the
4th of August, 1972, it was not open to the workmen to resort to a strike till the expiry
of a period of five years; nor could the Management declare a lock out till then. Any
disputes arising between the parties, according to the terms arrived at, were to be
sorted out through negotiations or, failing that, by recourse to arbitration. A dispute
was raised by the Sabha soon thereafter over the implementation of the
recommendations of the Central Engineering Wage Board (hereinafter called the
Board), the payment of bonus for the year 1971 and wages for an earlier lock out. In
paragraph 7.47 of its award the Board had made the following recommendations :

"7.47. After considering the problem in its entirety, we agreed to divide the industry
into five regions or areas as under and in doing so, we have also considered the
prevailing wage levels at different places and the cost of living at important centres in
these places.
"1. Bombay City and Greater Bombay including Thana Ambarnath & Kalyan
Industrial Areas.
"2. Calcutta, Greater Calcutta, Howrah Industrial area, Jamshedpur Industrial area,
Durgapur, Asansol and Ranchi industrial areas.
"3. Madras industrial area, Bangalore industrial area, Hyderabad industrial area,
Poona-Chinchwad industrial area, Delhi industrial area and Ahmedabad.
"4. Coimbatore, Nagpur, Bhopal, Kanpur, Baroda and Faridabad industrial areas.
"5. The rest of the country."

This classification was made for the purpose of granting `area allowance' which
varied with the category in which the area of the situation of a factory fell. No
allowance was to be paid to the factories falling in category 5 and on the basis of the

285
phraseology used by the Board the Management contended that Ahmedabad industrial
area (in which its factory was situated) fell within that category. This interpretation of
the categorisation made by the Board was not acceptable to the Sabha who claimed
that the factory was covered by category 3; and this was an issue on which the Sabha
was not prepared to climb down. Similarly, the Sabha was adamant on the question of
bonus for the year 1971 which it claimed at 16 per cent over and above 8.33 per cent
allowed by statute with the plea that bonus at that rate had been paid in the earlier
year. This being the position and negotiations between the parties held at two
meetings convened on 14-12-1972 and 20-1-1973 having ended in a fiasco, the
Management offered to have the disputes resolved by arbitration but that again was a
course not acceptable to the Sabha which, however, accused the Management of
flouting the settlement dated the 4th of August , 1972, by not coming to the
negotiating table. The attitude adopted by the Sabha was, to say the least, most
unreason able. It could not have its own way in taking certain matters as final and
non-negotiable. Nor can it be said that stand taken by the management was
unreasonable. Paragraph 7.47 of the award of the Board categorized various factories
with reference to the areas which were either described by the names of the cities in
which they were situated or by the names of certain industrial areas. Ahmedabad was
mentioned as such and so was Calcutta while the other areas were mentioned as such
and such industrial areas. It was thus a very reasonable plea put forward on behalf of
the Management that only Ahmedabad city and not Ahmedabad industrial area was
included in category 3 and that that industrial area fell within category 5. On the other
hand, the Sabha interpreted the word `Ahmedabad' occurring in category 3 to include
Ahmedabad industrial area (in which lay the factory in question) and demanded area
allowance for its workers on that score. The reasonableness of the plea of the
Management is obvious and it was the attitude of the Sabha which lacked reason in
that on the failure of the negotiations they spurned the offer of the Management for
arbitration on the question of interpretation of the categorisation. It can also not be
said that the objection regarding payment of bonus raised by the Management was not
a reasonable one. The argument that the stand of the Management that the
negotiations between them and the Sabha on the questions of interpretation of the
Board's award and bonus having failed as there was no meeting ground on either of
them, they could be referred to arbitration, lacked reason, is wholly unacceptable. The
attitude of the Sabha in insisting on negotiations being held only on the basis of
certain propositions formulated by it amounted really to a refusal to negotiate the
points in dispute and the Management was therefore not left with any alternative
except to suggest an arbitration as envisaged in the settlement dated the 4th of August,
1972.

9. Later developments reveal a similar state of affairs in so far as the attitude of the
Sabha is concerned. Over and over again it was asked not to precipitate a strike and to
act within the terms of the settlement but the advice fell on deaf ears. Even after the
strike which, it is admitted on all hands, was illegal and certainly not envisaged by the
settlement of the 4th of August, 1972, the Management continued to make requests to
the Sabha to send back the workers, but again no heed was paid to those requests. On
the other hand, the Sabha began making suggestions to the Government to take over
the factory. Ultimately, when the Management was faced, to adopt means to
rehabilitate the factory by reports to fresh recruitment, they had no option except to
terminate the services of its workmen. Each one of the orders of termination of
services which were actually passed, was on the face of it wholly innocuous inasmuch

286
as it did not stigmatise in any manner whatsoever the concerned workman. The
Management had however to record reasons for the discharge in pursuance of the
provisions of clause (4A) of M.S.O. 25 and those reasons did charge each worker with
misconduct inasmuch as he had taken part in the illegal strike and had refused to
resume duty inspite of repeated demands made by the Management in that behalf. All
the same, the Management made it clear that inspite of such misconduct it had no
intention of punishing the workers who were given not only the benefit of an order of
discharge simpliciter but also the option to come back to work within a specified
period in which case they would be reinstated with full benefits. An intention not to
punish could not be expressed in clearer terms and is further made out from the fact
that more than 400 workers who resumed duty were reinstated without break in
service. In passing the orders of discharge, therefore, the Management did nothing
more than act under M.S.O. 23 and its action cannot be regarded as amounting to
dismissal in the case of any of the workers. They had the right to choose between a
discharge simpliciter and a dismissal and, in the interests of the factory and the
members of the Sabha and perhaps on compassionate grounds also, they chose the
former in unequivocal terms. The intention to punish being absent, the finding of the
High Court that the order of discharge amounted to one of dismissal cannot be
sustained.

10. I now turn to the interpretation of sub-section (2) of section 11A of the 1947 Act.
It is a well settled canon of interpretation of statutes that the language used by the
legislature must be regarded as the only source of its intention unless such language is
ambiguous, in which situation the preamble to the Act the Statement of Objects of and
Reasons for bringing it on the Statute book and the purpose underlying the legislation
may be taken into consideration for ascertaining such intention. That the purpose of
the legislation is to fulfil a socio-economic need, or the express object underlying it,
does not come into the picture till an ambiguity is detected in the language and the
court must steer clear of the temptation to mould the written word according to its
own concept of what should have been enacted. That is how I propose to approach the
exercise in hand.

11. For the sake of convenience of reference I may set out the provisions of clauses
(aa) and (r) of section 2, of sub-sections (1) and (2) and the opening clause of sub-
section (3) of section 11, and of the whole of section 11A of the 1947 Act:

"2. (aa) `arbitrator' includes an umpire;" "2. (r) `Tribunal' means an Industrial
Tribunal constituted under section 7A and includes an Industrial Tribunal constituted
before the 10th of March, 1957, under this Act;"
"11. (1) Subject to any rules that may be made in this behalf, an arbitrator, a Board,
Court, Labour Court, Tribunal or National Tribunal shall follow such procedure as the
arbitrator or other authority concerned may think fit.
"(2) A conciliation officer or a member of a Board, or Court or the presiding officer
of a Labour Court, Tribunal or National Tribunal may for the purpose of inquiry into
any existing or apprehended industrial dispute, after giving reasonable notice, enter
the premises occupied by any establishment to which the dispute relates.
"(3) Every Board, Court, Labour Court, Tribunal and National Tribunal shall have the
same powers as are vested in a Civil Court under the Code of Civil Procedure, 1908.
when trying a suit, in respect of the following matters, namely:- .........."

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"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 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 only on the materials on record and
shall not take any fresh evidence in relation to the matter."

Section 2 of the Act specifically lays down that unless there is anything repugnant in
the subject or context, the expressions defined therein would have the meanings
attributed to them. Throughout the Act therefore, while 'arbitrator' would include an
umpire, a 'Tribunal' would not include an arbitrator but would mean only an Industrial
Tribunal constituted under the Act, unless the context makes it necessary to give the
word a different connotation. In sub- section (1) of section 11, it is conceded, the
word 'Tribunal' has been used in accordance with the definition appearing in clause (r)
of section 2because an arbitrator is separately mentioned in that sub-section. In sub-
sections (2) and (3) of that section a Board, a Labour Court, a Tribunal and a National
Tribunal have been invested with certain powers. Would a Tribunal as contemplated
by sub- sections (2) and (3) then include an arbitrator ? My reply to the question is all
emphatic 'no'. It is well settled that if a term or expression is used in a particular piece
of legislation in one sense at one place, the same sense will pervade the entire
legislation wherever the term is used unless an intention to the contrary is expressed.
Here the word 'Tribunal' has been used in three sub-sections of the same section and
no reason at all is fathomable for the proposition that it means one thing in sub-
section (1) and something different in sub-sections (2) and (3). It may also be
mentioned here that in all the three sub-sections the word 'Tribunal' has a capital 'T'
which is also part of the expression 'Tribunal' as occurring in clause (r) of section
2 and thus connotes a proper noun rather than the generic word 'tribunal' as embracing
all institutions adjudicating upon rights of contending parties. A third and perhaps a
clinching reason for this interpretation is available in the use of the expression
"National Tribunal" along with the word "Tribunal" in all the three sub-sections
which militates against the argument that the word "Tribunal" as used in sub-sections
(2) and (3) means an institution of that type. If the word "Tribunal" as used in sub-
sections (2) and (3) means such an institution, then the use of the expression
"National Tribunal" would be redundant and redundancy is not one of the qualities
easily attributable to a legislative product. In that case, in fact, other words used in the
two sub-sections last mentioned, namely, 'Court' and 'Labour Court' would also
become redundant. In this view of the matter, the word "Tribunal" as used in all the
first three sub-sections of section 11 must be held to have been used in the sense of
the definition occurring in clause (r) of section 2.

12. Section 11A is just the next succeeding section and therein a part of the
arrangement adopted is the same as in sub-sections (2) and (3) of section 11 so that
powers are conferred by it on a "Labour 16-868SCI/79 Court, Tribunal or National
Tribunal" which arrangement is repeated in the section thrice over. That the word

288
"Tribunal" as used in section 11A has the same meaning as it carries in the three sub-
sections of section 11 is obvious and I need not repeat the reasons in that behalf; for,
they are practically the same as have been set out by me in relation to section 11.

13. In my opinion the language employed in section 11A sufferers from no ambiguity
whatever and is capable only of one meaning, i.e., that the word 'Tribunal' occurring
therein is used in the sense of the definition given in clause (r) of section 2. It is thus
not permissible for this Court to take the Statement of Objects and Reasons or the
purpose underlying the enactment into consideration while interpreting section 11A.

I may mention here however that a perusal of the Statement of Objects and Reasons
forming the background to the enactment of section 11A leads me to the same
conclusion. In that Statement a reference was specifically made to tribunals as well as
arbitrators in, terms of the recommendations of the International Labour Organization.
But inspite of that the word 'arbitrator' is conspicuous by its absence from the section.
What is the reason for the omission ? Was it consciously and deliberately made or
was it due to carelessness on the part of the draftsmen and a consequent failure on the
part of the legislature ? In my opinion the Court would step beyond the field of
interpretation and enter upon the area of legislation if it resorts to guess work
(however intelligently the same may be carried out) and attributes the omission to the
latter cause in a situation like this which postulates that the pointed attention of the
legislature was drawn to the desirability of clothing an arbitrator with the same
powers as were sought to be conferred on certain courts and tribunals by section
11A and it did not accept the recommendation. I would hold, in the circumstances,
that the omission was deliberately made.

It follows that the powers given to a Tribunal under section 11A are not exercisable
by an arbitrator who, therefore, cannot interfere with the punishment (awarded by the
employer) in case he finds misconduct proved.

14. The last point on which I differ with the finding of my learned brother relates to
the exercise by the High Court of its powers under article 227 of the Constitution of
India. As pointed out by him the High Court, while discharging its functions as
envisaged by that article, does not sit as a court of appeal over the award of the
arbitrator but exercises limited jurisdiction which extends only to seeing that the
arbitrator has functioned within the scope of his legal authority. This proposition finds
full support from Nagendra Nath Bora and Another v. The Commissioner of Hills
Division and Appeals, Assam and Others(1), P. H. Kalyani v. M/s. Air France,
Calcutta(2), state of Andhra Pradesh v. S. Sree Rama Rao(3) and Navinchandra
Shakerchand Shah v. Manager, Ahmedabad Cooperative Department Stores Ltd.(4),
all of which have ben discussed at length by him and require no further consideration
at my hands. In this view of the matter it was not open to the High Court to revise the
punishment (if the discharge is regarded as such) meted out by the Management to the
delinquent workmen and left in tact by the arbitrator whose authority in doing so has
not been shown to have been exercised beyond the limits of his jurisdiction.

15. I need not go into the other aspects of the case. In view of my findings-

289
(a) that the orders of discharge of the workmen could not be regarded as orders of
their dismissal and were, on the other hand, orders of discharge simpliciter properly
passed under M.S.O. 23;

(b) that the arbitrator could not exercise the powers conferred on a Tribunal
under section 11A of the 1947 Act and could not therefore interfere with the
punishment awarded by the Management to the workmen (even if the discharge could
be regarded a punishment), and

(c) that in any case the High Court exceeded the limits of its jurisdiction in interfering
with the said punishment purporting to act in the exercise of its powers under article
227 of the Constitution of India, the judgment of the High Court must be reversed and
the order of the arbitrator restored. The three appeals are decided accordingly, the
parties being left to bear their own costs throughout.

O R D E R The appeals are dismissed substantially with such modifications as are

indicated in the decretal part of the judgment of the majority.

26. Rohtas Industries v Union (1976) 2 SCC 82

KRISHNA IYER, J.-We permit ourselves a few preliminary observations disturbingly

induced 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 challenges of industrial
life, both in the substantive norms or regulations binding the three parties- the States,
Management and Labour-and in the processual system which has baulked, by
dawdling dysfunction, early finality and prompt remedy in a sensitive area where
quick solution is of 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 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 strikes and settlements, the last of which led to an arbitration award in 1959
which, in turn, prompted two writ petitions before the High Court. After a spell of a
few years they ripened into a judgment. 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

290
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 area 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 judgment 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 dismissal. On this score we are disposed to make
short shrift of the appeals with stating but the necessary facts and focusing on the
larger legal facets. Nevertheless, the significance and plurality of the points pressed
have defeated condensation. D The facts 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 zigzag 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 Sangh (for short, the Mazdoor Sangh) was the
representative union during the relevant period while the other, the Rohtas Industries
Seva Sangh (for brevity, the Seva Sangh) is 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 purposes this expression embraces both the
appellants) which came to an end by virtue of a memorandum of agreement dated
October 2, 1957, to which not merely the management but also the two registered
unions aforementioned and the two unregistered 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 claim for compensation for losses due to strike shall be submitted for
arbitration of Sri J. N. Majumdar and Sri R. C. Mitter, ex-High Court Judges 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 during 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
s.

10A 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 the management for
compensation for its 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:-

291
(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 eighth 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 relation to 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 s. 10A of the Act savours
of a private arbitration and is not amenable to correction under Art. 226 of the
Constitution. (b) Even if there be jurisdiction, a discretionary desistance 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 recognised ground for the High Court's interference. (3)
The view of law taken by the High Court on (1) the supposed flaw in the award based
on 'mixed motives' for the offending strike; (ii) the exclusion of remedies other than
under s. 26 of the Act; and (iii) the implied immunity from all legal proceedings
against strikers allegedly arising from s. 18 of the Trade Unions Act, 1926 is wrong.
A few other incidental arguments have cropped up but the core contentions are what
we have itemised above. (1)-(a) & (b) The expansive and extraordinary power of the
High Courts under Art. 226 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. f The amendment to Art.
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
extra-ordinary 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

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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 Art. 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 s. 10Aof the Act is insulated from interference under Art. 226 but we
respectfully agree with the observations of Gajendragadkar J., (as he then was)
in Engineering Mazdoor Sabha v. Hind Cycles Ltd(1) which nail the argument against
the existence of jurisdiction. The learned Judge clarified at p. 640:

"Article 226 under which a writ of certiorari can be issued in an appropriate case, is,
in a sense, wider than Art. 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 Tribunals. Under Art. 226(1), an
appropriate writ can (1) [1963] Supp. I S.C.R. 625.
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 Art. 136 in a proper cases, a writ may lie
against his award under Art. 226". (p. 640) We agree that the position of an arbitrator
under s.

10A of the Act (as it then stood) vis a vis Art. 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 s. 10A as well as the source of
the force of the award on publication derive from the statute. 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 tribunals amenable to judicial
review. i This observation made en passant by us is induced by the discussion at the
bar and turns on the amendments to s. 10A and cognate provisions like s. 23, by Act
XXXVI of 1964.

Should the Court invoke this high prerogative under Art. 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 s. 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 s. 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.

(2) Thus, we arrive at a consideration of the appellants 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

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during the strike period by the assurance that his clients were inclined to abandon
realisation of the entire compensation, even if this Court up held 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
be cause 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 do s 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(1) and to the unreported decision
Babu Ram(2). 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(1) stated 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."
(p. 640-641) In Bharat Barrel & Drum Manufacturing Co. (8) 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. (4) 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

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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 the award . . . some legal (1) [1967] 1 S.C.R.633. (2) C.A.107 of 1966
decided on 5-12-68.
(3) A.I.R 1967 S.C. 361. (4) 50 I.A. 324.
proposition which is the basis of the award and which you can, then say is erroneous."

Williams J., in the case of Hodkinson v. Verne(1) 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 flawsome finding explicit or visibly
implicit? Then the Court can correct.

Tucker J., in James Clark (2) 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 changing 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 (2), 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 'F its resolution ex facie of
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 r t 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 aside, express hopefully the view that a minimal
judicialisation by statement, laconic or lengthy, of the essential law that guides the

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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 (1) [1857]
3 C.B. (N.S.) 189, (2) [1944]1 K.B.

566. 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 s. 24 of the Act and therefore
illegal. This illegal strike animated by inter-union 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 2chain 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 pre sent 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
water-tight 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 J 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 t on facts and on law. They have referred to the strike being
illegal with specific reference to the provisions of the Act, but faulted them selves 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 this rule of common law? Counsel for the appellants inevitably relied on the
tort of 'conspiracy' and referred us to Moghul Steamship Co.(1); Allen v. Floor(2);

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Quinn v. Leathem(3) and Sorrel v. Smith (4). These decisions of the English Courts
are a 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 torts was shaped to sene 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 circumstances.
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 anglo-phonic 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 Torts 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 (See Salmond-Law of Torts-p. 505,
15 s Ed.). It is interesting that in Edition of Salmond, Mogul 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 wilfully 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 a 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 1, (1) [1892] A.C. 25. (2) [1898] A.C. 1.

(3) [1901] A.C. 495. (4) [1925] A.C. 700.

of the Trade Disputes Act, 1906, largely unnecessary, for there will now be few
conspiracies arising out of trade disputes which are not protected at common law."
(pp. 508-509, 15th Edn., Sweet & Maxwell) (emphasis, ours) 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."

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(p.513, 15th Edn., Sweet & Maxwell) (emphasis, ours) Even when 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 conceivably 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 wilfully 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 v. Smith (supra) 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 a 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 Sumner
pointed out in Sorrel (Supra): ` "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 3-L390SCI/76 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 submission, 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 proposition 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 F 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 1 the law of conspiracy. J.T. Cameron has argued (in 1965 Vol. 28
Modern Law Review p. 448) that:

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"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 the
proper answer is to remove the tort of conspiracy from the law altogether, and with it
the Rookes v. Barnard version of intimidation, and to put in its place a different basis
of liability.

(CONSPIRACY AND INTIMIDATION: An Anti-Meta-physical Approach) The

author complains that the fundamental basis is unsatisfactory and uncertain and
demands that a complete re- writing 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 J 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 re-statement of the law were
under taken 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 ten ability 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 crystalized by the earlier settlement (d/2-10-
1957). There thus arose an industrial dispute within s. 2(k) of the Act. Since
conciliation proceedings were pending the strike was ipso jure illegal (ss. 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 damage 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 s. 2(k), of the
Act. Section 23, read with s. 24, it is agreed by both sides, make 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 fall- out has to be sought within the statute and not
de hors it. If this stand of the workers is right, the remedy indicated in s. 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 Automobiles Case(1) settles the legal issue involved in the above
argument. The industrial Disputes Act is a comprehensive and self-contained Code so
far as it speaks and the enforcement of rights created thereby can only be through the

299
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, n Premier
Automobiles (Supra) observed:

"The object of the Act, as its preamble indicates, is to make provision for the
investigation and settlement of industrial disputes, which means adjudication of such
disputes 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."
* * * * * "In Deo v. Bridges (1831 1B and Ad, 847 (2)- (1898)) A.C. 387 at p. 859 are
the famous and of 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."
(1) [1976] 1 S.C.R. 427.

Barraclough v. Brown & Ors(1), decided by the House of Lords is 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. (Supra):

"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 an 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 s. 24 of the Act) has to be sought exclusively in s. 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 s. 10 A. While we
are not called upon to pronounce conclusively on the contention, since we have ex
pressed 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
jurisdictional essence of proceedings under the Act is the presence of an 'industrial
dispute'. Strikes and lock-outs stem from such disputes. l he machinery for settlement

300
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 proscriptions 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 s 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 s.
10 A 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 10 A. No industrial dispute, no valid
arbitral (1) [1897] A.C. 615.

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 s. 10 A 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 s.2 (k) .
Undoubtedly this expression must receive a wide coll- notation, 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(1). 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 s. 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 ground 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 s. 18 of
the Trade Unions Act, 1926 to rebuff the claim for compensation. We have listened to

301
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.

27. Anand Bihari and others v RSRTC and another 1991 Lab IC 494

1. The expression "ill-health" used in sub-clause (c) of Section 2(00) of the

Industrial Disputes Act, 1947 has to be construed relatively and in its context.
It must have a bearing on the normal discharge of duties. It is not any illness
but that which interferes with the usual orderly functioning of the duties of the
post which would be at- tracted by the sub-clause. Conversly, even if the
illness does not affect general health or general capacity and is restricted only
to a particular limb or organ but affects the efficient working of the work
entrusted it will be covered by the phrase. For it is not the capacity in general
but that which is necessary to perform the duty for which the workman is
engaged which is relevant and material and should be considered for the
purpose. Therefore, any disor- der in health which incapacitates an individual
from dis- charging the duties entrusted to him or affects his work adversely or
comes in the way of his normal and effective functioning can be covered by
the said phrase. The phrase has also to be construed from the point of view of
the consumers of the concerned products and services. If on account of a
workman's disease or incapacity or debility in functioning, the resultant
product or the service is likely to be affected in any way or to become a risk to
the health, life or property of the consumer, the disease or incapacity has to be
categorised as all-health for the purpose of the sub-clause, otherwise, the
purpose of production for which the services of the workman are engaged will
be frustrated and worse still in cases such as the present one they will
endanger the lives and the property of the consumers, Hence the Court should
place a realistic and not a technical or pedantic meaning on the said phrase.
Therefore, the said phrase would include cases of drivers such as the present
ones who have developed a defective or sub-normal vision or eye-sight which
is bound to interfere with their normal working as drivers. Accordingly the
termination of the services of the drivers in the present case being covered by
sub-clause (c) of Section 2(00) would not amount to re- trenchment within the
meaning of Section 2(00) of the Act. Hence the termination per se is not
illegal because the provisions of Section 25-F have not been followed while
effecting it. [63 ID-H, 632A-D] Workmen of the Bangalore Woolien, Cotton
and Silk Mills Ltd. v. Its Management, [1962] 1 L.L.J. 213, referred to. New
Coilings Concise English Dictionary; Webster's Comprehensive Dictionary
(International Edition),' Concise Oxford Dictionary (3rd Edition); and Shorter
Oxford English Dictionary, referred to.
2. It is also clear from the provisions of the Employees State Insurance
Act that the cases of sub-normal eye-sight or loss of the required vision to
work as a driver would not be covered by the provisions of that Act as an

302
employment injury or as an occupational disease, for no provision is made
there for compensation for a disability to carry on a particular job. The present
workmen cannot be said to have suffered either a permanent, total or partial
disablement to carry on any job or to have developed cataract due to infra-red
radiations. The workmen are and will be able to do any work other than that of
a driver with the eye-sight they possess.
3. There is no dispute that the drivers developed a weak or subnormal eye-
sight or lost their required vision on account of their occupation as drivers in
the Corporation. They have to drive the heavy motor vehicles in sun-rain, dust
and dark hours of night. In the process they are ex- posed' to the glaring and
blazing sun light and beaming and blinding lights of the vehicles coming from
the opposite direction. They are required to strain their eye-sight every
moment of the driving, keeping a watchful eye on the road for the bumps,
bends and slopes, and to avoid all kinds of obstacles on the way. It is this
constant training of eyes on the road which takes its inevitable toil of the
vision. The very fact that in a short period, the Corporation had to terminate
the services of no less than 30 drivers shows the extent of the occupational
hazard to which the drivers of the Corporation are exposed during their
service. It also shows that weakening of the eye-sight is not an isolated
phenomenon but a wide-spread risk to which those who take the employment
of a driver expose themselves. Yet the Corporation treats their cases in the
same manner and fashion as it treats the cases of other workmen who on
account of reasons not connected with the employment suffer from ill- health
or continued ill-health. That by itself is discriminatory against the drivers. The
discrimination against the employees such as the drivers in the present case,
also ensues from the fact that whereas they have to face pre- mature
termination of service on account of disabilities contracted from their jobs, the
other employees continue to serve till the date of their superannuation. There
is no justification in treating the cases of workmen like drivers who are
exposed to occupational diseases and disabilities on par with the other
employees. The injustice, inequity and discrimination is writ large in such
cases and is indefensible.
4. The workmen are not denizens of an Animal Farm to be eliminated
ruthlessly the moment they become useless to the establishment. They have
not only to live for the rest of their life but also to maintain the members of
their family and other dependants, and to educate and bring up their children.
Their liability in this respect at the advanced age at which they are thus retired
stands multi- plied, They may no longer be of use to the Corporation for the
job for which they were employed, but the need of their patronage to others
intensifies with the growth in their family responsibilities.
5. No special provision is made and no compensatory relief is provided in the
service condition for the drivers for pre-mature incapacitation. The service
conditions of the workmen such as the drivers in the present case, therefore,
must provide for adequate safeguards to remedy the situation by compensating
them is some form for the all-round loss they suffer for no fault of theirs. 5.1.
In view of the fact that the Corporation took an unhelpful stand in the matter
of formulating a scheme of relief which is the legitimate due of the workmen
and not a scheme on compassionate or charitable basis, the Supreme Court
itself evolved a scheme for giving relief to the workmen-drivers keeping in
view the points (i) that the workmen concerned are incapacitated to work only

303
 as drivers and are not rendered incapable of taking any other job either in the
Corporation or outside; (ii) that the workmen are at an advanced age of their
life and it would be difficult for them to get a suitable alternative employment
outside; (iii) and that the relief made available under the scheme should not be
such as would induce the workmen to feign disability which, in the case of
disability such as the present one, viz., the development of a defective eye-
sight, it may be easy to do, Accordingly, the Supreme Court directed that the
Corporation shall in addition to giving each of the retired workmen his
retirement benefits, offer him any other alternative job which may be available
and which he is eligible to perform and in case no such alternative job is
available each of the workman shall be paid along with his retirement benefits
an additional compensatory amount proportionate to the length of service
rendered by the employees and the balance of their service.
6. The termination of services of helper (in C.A.No. 1862) was unjustified and
also illegal being in contraven- tion of the provisions of Section 25-F of the
Act. The High Court erred in treating his case on par with cases of other
drivers. The appellant-workman will, therefore, be entitled to his retirement
benefits as a driver from the date of his employment as a helper. He would
further be entitled to be reinstated in service as a helper with all arrears of
back wages as a helper. In case he opts for receiving the compensatory amount
under the scheme framed by this Court, he may do so for the period beginning
from the date from which his services as a helper were terminated.
7. The decision of the High Court impugned in C.A. No. 1863 is set aside and
the respondent-Corporation is directed to give the concerned workman the
benefit of the scheme propounded.

28. Uptron v Shammi Bhan (1998) 6 SCC 538

SAGHIR AHMAD, J: Respondent 1 was appointed as an operator (Trainee) on

13.6.1980 in the petitioner's establishment. On completion of training, she was
absorbed on that post with effect from 13.7.1981 and was confirmed on 13.7.1982.
She thus acquired the status of a permanent employee.

2. With effect from 7th of November, 1984, respondent 1 proceeded, and remained till
29th January, 1985, on maternity leave. Thereafter, she allegedly remained absent
with effect from 30.1.1985 to 12.4.1985 without any application for leave and
consequently, by order dated 12th April, 1985, the petitioner informed respondent 1
that her services stood automatically terminated in terms of Clause 17 (g) of the
Certified standing Orders. Respondent 1 raised an Industrial Dispute and made prayer
to the State Government in 1985 that her case may be referred to the Industrial
Tribunal for adjudication. Her application, filed before the Deputy Labour
Commissioner, Lucknow, was registered as C.B. Case No. 310-1985. The State
Government, by its order dated 18.7.1990, referred the following question for
adjudication to the Industrial Tribunal, Lucknow:

"Whether the termination of the services of female Smt. Shammi Bhan, operator,
daughter of C.N. Kaul, by the management by its letter dated 12.4.1985 is proper and

304
legal. If not, the relief which the employee will be entitled to?" (Translated from
Hindi)

3. The Tribunal, by its Award dated 21st July, 1992, held that the termination of
services of respondent 1 amounted to "Retrenchment" within the meaning of Section
2(00) of the Industrial Disputed Act and since all other legal requirements had not
been followed, the termination was bad and consequently she was entitled to
reinstatement as also fifty per cent of back wages from the date of termination till
reinstatement.

4. This Award was challenged by the petitioner through a Writ Petition in the
Allahabad High Court (Lucknow Bench) and the High Court, by the impugned
judgment dated 28.10.1997, dismissed the writ petition upholding the findings of the
Tribunal that termination of respondent's services was "retrenchment". The High
Court further held that while invoking the provisions of Clause 17(g) of the Certified
Standing Orders, the petitioner ought to have been given an opportunity of hearing to
respondent.

5. Mr. Manoj Swarup, learned counsel appearing for the petitioner in this Special
Leave Petition, has contented that since there was a specific provision contained in
Para 17(g) of the Certified Standing Orders that if the employee overstays the leave
without permission for more than seven days his services would be liable to automatic
termination, the Industrial Tribunal as also the High Court were wrong in holding that
the termination of her services was bad. He has also contented that the termination of
respondent's services on account of her continued absence would not amount to
"retrenchment" as defined in Section 2(00) of the Industrial Disputes Act (for short,
`the Act 6') and, therefore, there was no occasion for the High Court or the Industrial
Tribunal to grant reinstatement or direct payment of back wages.

6. The Tribunal as also the High Court have recorded a categorical finding of fact that
the respondent was a permanent employee in the petitioner's establishment.

7. We have to see whether the services of the respondent, who had acquired the status
of a permanent employee, could be terminated in the mode and manner adopted by
the petitioner, who maintains that it was done in accordance with Clause 17 (g) of the
Certified Standing Orders and no grievance can, therefore, be raised by the
respondent on that account.

8. Before examining Clause 17(g) of the Certified Standing Orders, we may point out
that the concept of employment under industrial law involves, like any other
employment, three ingredients:

(i) management/industry/factory/ employer, who employs or, to put it differently,

engages the services of the workman;
(ii) employee/workman, that is to say, a person who works for the employer for wages
or monetary compensation; and
(iii) contract of employment or the agreement between the employer and the
employee whereunder the employee/workman agrees to render services to the
employer, in consideration of wages, subject to the supervision and control of the
employer.

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9. The general principles of the Contract Act applicable to an agreement between two
persons having capacity to contract, are also applicable to a contract of industrial
employment, but the relationship so created is partly contractual, in the sense that the
agreement of service may give rise to mutual obligations, for example, the obligation
of the employer to pay wages and the corresponding obligation of the workman to
render services, and partly non-contractual, as the States have already, by legislation,
prescribed positive obligations for the employer towards his workmen, as, for
example, terms, conditions and obligations prescribed by the Payment of Wages Act,
1936; Industrial Employment (Standing Orders) Act, 1946; Minimum Wages Act,
1948; Payment of Bonus Act, 1965; Payment of Gratuity Act, 1972 etc.

10. Prior to the enactment of these laws, the situation, as it prevailed in many
industrial establishments, was that even terms and conditions of service were often
not reduced into writing nor were they uniform in nature, though applicable to a set of
similar employees. This position was wholly incompatible to the notions of social
justice, inasmuch as there being no statutory protection available to the workmen, the
contract of service was often so unilateral in character that it could be described as
mere manifestation of subdued wish of the workmen to sustain their living at any cost.
An agreement of this nature was an agreement between two unequals, namely those
who invested their labour and toil, flesh and blood, as against those who brought in
Capital. The necessary corollary of such an agreement was the generation of conflicts
at various levels disturbing industrial peace and resulting necessarily in loss of
production and sometimes even closure or lock out of the industrial establishment. In
order to overcome this difficulty and achieve industrial harmony and peace,
theIndustrial Employment (Standing Orders) Act, 1946 was enacted requiring the
management to define, with sufficient precision and clarity, the conditions of
employment under which the workmen were working in their establishments. The
underlying object of the Act was to introduce uniformity in conditions of employment
of workmen discharging similar functions in the same industrial establishment under
the same management and to make those terms and conditions widely known to all
the workmen they could be asked to express their willingness to accept the
employment.

11. The Act also aimed at achieving a transition from mere contact between unequals
to the conferment of "Status" on workmen through conditions statutorily imposed
upon the employers by requiring every industrial establishment to frame "Standing
Orders" in respect of matter enumerated in the Schedule appended to the Act. The
standing Orders so made are to be submitted to the certifying officer who is required
to make an enquiry whether they have been framed in accordance with the Act and on
being satisfied that they are in consonance with provisions of the Act, to certify them.
Once the standing orders are so certified, they become binding upon both the parties,
namely, the employer and the employees. The certified Standing Orders are also
required to be published in the manner indicated by the Act which also sets out the
Model Standing Orders. Originally, the jurisdiction of the Certifying Officer was
limited to examine the draft Standing Orders and compare them with the model
Standing Orders. But in 1956, the Act was radically amended and Section 4 gave
jurisdiction to the Certifying Officer, as also the Appellate Authority, to adjudicate
and decide the questions, if raised, relating to the fairness or reasonableness of any
provision of the Standing Orders.

306
12. In pursuance of the above powers, the petitioner framed its own Standing Orders
which have been duly certified. Clause 17(g) of the Certified Standing Orders, which
constitutes the bone of contention between the parties, is quoted below:

"The services of a workman are liable to automatic termination if he overstays on

leave without permission for more than seven days. In case of sickness, the medical
certificate must be submitted within a week."

13. It was in pursuance of the above provision that the services of the respondent were
terminated by the petitioner by observing in its letter dated 12th April, 1985, as under:

"The services of Mrs. Shammi Bhan, Token No. 158, Operator ceased automatically
from Uptron Capacitors Ltd., Lucknow with immediate effect, in accordance with the
clause 17(g) of the Certified Standing orders of Uptron Capacitors Limited."

14. Respondent No.1, admittedly, was a permanent employee.

15. Conferment of `permanent' status on an employee guarantees security of tenure. It

is now well settled that the services of a permanent employee, whether employed by
the Government, or Govt. company or Govt. instrumentality or Statutory Corporations
or any other "Authority" within the meaning of Article 12, cannot be terminated
abruptly and arbitrarily, either by giving him a month's or three months' notice or pay
in lieu thereof or even without notice, notwithstanding that there may be a stipulation
to that effect either in the contract of service or in the Certified Standing Orders.

16. This Court in West Bengal State Electricity Board & Ors. vs. Desh Bandhu Ghosh
& Ors. (1985) 3 SCC 116. held that any provision in the Regulation enabling the
management to terminate the services of a permanent employee by giving three
months' notice or pay in lieu thereof, would be bad as violative of Article 14 of the
Constitution. Such a Regulation was held to be capable of vicious discrimination and
was also held to be naked `hire and fire' rule. This view was reiterated in Central
Inland Water Transport Corporation Limited & Anr. vs. Brojo Nath Ganguly & Anr.
(1986) 3 SCC 156.

17. Again in O.P. Bhandari vs. Indian Tourism Development Corporation Ltd. & Ors.
(1986) 4 SCC 337, this Court held that Rule 31 (v) of the Indian Tourism
Development Corporation (Conduct. Discipline & Appeal) Rules, 1978, which
provided that the services of a permanent employee could be terminated by giving
him 90 days' notice or pay in lieu thereof, would be violative of Articles 14 and 16 of
the Constitution.

18. The whole case law was reviewed by the Constitution Bench in Delhi Transport
Corporation vs. D.T.C. Mazdoor Congress & Ors. 1991 Supp (1) SCC 600, and
except the than Chief Justice Sabyasachi Mukharji, who dissented, the other 4 judges
reiterated the earlier view that the services of a confirmed employee could not be
legally terminated by a simple notice.

19. This being the legal position, the action taken against the respondent, who, as
pointed out earlier, was a permanent employee, was wholly illegal.

307
20. There is another angle of looking at the problem. Clause 17(g), which has been
extracted above, significantly does not say that the services of a workman who
overstays the leave for more than seven days shall stand automatically terminated.
What it says is that "the services are liable to automatic termination." This provision,
therefore, confers a discretion upon the management to terminate or not to terminate
the services of an employee who overstays the leave. It is obvious that this discretion
cannot be exercised, or permitted to be exercised, capriciously. The discretion has to
be based on an objective consideration of all the circumstances and material which
may be available on record. What are the circumstances which compelled the
employee to proceed on leave; why he overstayed the leave; was there any just and
reasonable cause for overstaying the leave; whether he gave any further application
for extension of leave; whether any medical certificate was sent if he had, in the
meantime, fallen ill? These are questions which would naturally arise while deciding
to terminate the services of the employee for overstaying the leave. Who would
answer these questions and who would furnish the material to enable the management
to decide whether to terminate or not to terminate the services are again questions
which have an answer inherent in the provision itself, namely, that the employee
against whom action on the basis of this provision is proposed to be taken must be
given an opportunity of hearing. The principles of natural justice, which have to be
read into the offending clause, must be complied with and the employee must be
informed of the grounds for which action was proposed to be taken against him for
overstaying the leave.

21. This Court in D.K. Yadav vs. J.M.A Industries Ltd. (1993) 3 SCC 259 has laid
down that where the Rule provided that the services of an employee who overstays
the leave would be treated to have been automatically terminated, would be bad as
violative of Articles 14, 16 and 21 of the Constitution. It was further held that if any
action was taken on the basic of such a rule without giving any opportunity of hearing
to the employees, it would be wholly unjust, arbitrary and unfair. The Court reiterated
and emphasised in no uncertain terms that principles of natural justice would have to
be read into the provision relating to automatic termination of services.

22. Learned counsel for the petitioner has placed strong reliance upon a decision of
this Court in Civil Appeal No. 3486 of 1992, Scooters India & Ors. vs. Vijay E.V.
Eldred, decided on 10.301996, in support of his contention that any stipulation for
automatic termination of services made in the Standing Orders could not have been
declared to be invalid. We have been referred to a stray sentence in that judgment,
which is to the following effect:

"It is also extraordinary for the High Court to have held clause 9.3.12 of the standing
orders as invalid."

This sentence in the judgment cannot be read in isolation and we must refer to the
subsequent sentences which run as under:

"Learned counsel for the respondent rightly made no attempt to support this part of
the High Court's order. In view of the fact that we are setting aside the High Court's
judgment, we need not deal with this aspect in detail."

308
23. In view of this observation, the question whether the stipulation for automatic
termination of services for overstaying the leave would be legally bad or not, was not
decided by this Court in the judgment relied upon by Mr. Manoj Swarup. In that
judgment the grounds on which the interference was made were different. The
judgment of the High Court was set aside on the ground that it could not decide the
disputed question of fact in a writ petition and the matter should have been better left
to be decided by the Industrial Tribunal. Further, the High Court was approached after
more than six years of the date on which the cause of action had arisen without there
being any cogent explanation for the delay. Mr. Manoj Swarup contended that it was
conceded by the counsel appearing on behalf of the employee that the provision in the
Standing Orders regarding automatic termination of services is not bad. This was
endorsed by this Court by observing that "Learned counsel for the respondent rightly
made no attempt to support this part of the High Court's order." This again cannot be
treated to be a finding that provision for automatic termination of services can be
validly made in the Certified Standing Orders. Even otherwise, a wrong concession
on a question of law, made by a counsel, is not binding on his client. Such concession
cannot constitute a just ground for a binding precedent. The reliance placed by Mr.
Manoj on this judgment, therefore, is wholly out of place.

24. It will also be significant to note that in the instant case the High Court did not
hold that Clause 17(g) was ultra vires but it is did hold that the action taken against
the respondent to whom an opportunity of hearing was not given was bad.

25. In view of the above, we are of the positive opinion that any clause in the
Certified Standing Orders providing for automatic termination of service of a
permanent employee, not directly related to "production" in a Factory or Industrial
Establishment, would be bad if it does not purport to provide an opportunity of
hearing to the employee whose services are treated to have come to an end
automatically.

26. We may now consider the question of "Retrenchment" which is defined in Section
2(00) as under:-

"2(00) `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 (bb) termination of the service of a 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 in that
behalf contained therein; or
(c) termination of the service of a workman on the ground of continued ill-health."

27. The definition of "Retrenchment" was introduced in the Act by Act 43 of 1953
with effect from 24th of October, 1953, Clause (bb) was inserted in the definition by
Act 49 of 1984 with effect from 18.8.1984.

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28. The definition is conclusive in the sense that "retrenchment" has been defined to
mean the termination of the service of a workman by the employer for any reason
whatsoever. If the termination was by way of punishment as a consequence of
disciplinary action, it would not amount to "Retrenchment". Originally, there were
two other exceptions, namely,

(i) voluntary retirement of the workman and

(ii) retirement of the workman on reaching the age of superannuation if the contract of
employment contained a stipulation to the effect.

29. By the Amending Act 49 of 1984, two further exceptions were introduced in the
definition by inserting (bb) with effect from 18.8.84; one was the termination of
service on the ground of continued ill-health of the workman and the other was
termination of service on account of non-renewal of the contract of employment on
the expiry of the term of that contract. If such contract of employment contained a
stipulation for termination of service and the services of the workman are terminated
in accordance with that stipulation, such termination, according to Clause (bb), would
also not amount to "Retrenchment".

30. What was contended before the Tribunal as also before the High Court was that
the termination of the services of respondent was covered by Clause (bb) of Section
2(00) and, therefore, it could not be treated as "Retrenchment" with the result that
other statutory provisions, specially those contained inSection 25F of the Act were not
required to be complied with. This argument which was not accepted by the Tribunal
and the High Court has been stressed us also and here also it must meet the same fate
as it is without any substance or merit.

31. From the facts set out above, it would be seen that the respondent was a
permanent employee of the petitioner. There was no fixed-term contract of service
between them. There was, therefore, no question of services being terminated on the
expiry of that contract. In the absence of a fixed-term contract between the parties, the
question relating to the second contingency, namely, that the termination was in
pursuance of a stipulation to that effect in the contract of employment, does not arise.

32. The contract of employment referred to in the earlier part of Clause (bb) has to be
the same as is referred to in the latter part. This is clear by the use of words "such
contract" in the earlier part of this Clause. What the clause, therefore, means is that
there should have been a contract of employment for a fixed-term between the
employer and the workman containing a stipulation that the services could be
terminated even before the expiry of the period of contract. If such contract, on the
expiry of its original period, is not renewed and the services are terminated as a
consequence of that period, it would not amount to "Retrenchment". Similarly, if the
services are terminated even before the expiry of the period of contract but in
pursuance of a stipulation contained in that contract that the services could be so
terminated, then in that case also, the termination would not amount to
"retrenchment". This view finds support from a decision of this Court in Escorts Ltd.
vs. Presiding Officer, (1997) 11 scc 521.

310
33. This case does not fall in either of the two situations contemplated by Clause (bb).
The `Rule of exception', therefore, is not applicable in the instant case and
consequently the finding recorded by the Tribunal on "retrenchment" cannot be
disturbed.

34. For the reasons stated above, we find no merit in this petition which is dismissed
at the SLP stage.

29. Kairbetta Estate v Rajamanickam AIR 1960 SC 893

GAJENDRAGADKAR, J.-This appeal by special leave is directed against the order

passed by the Labour Court at Coimbatore directing the appellant, the Management of
the Kairbetta Estate, Kotagiri, to pay lay-off compensation to its workmen, the
respondents, for the period between July 28, 1957, to September 2, 1957. This order
was passed on a complaint filed by the respondents before the Labour Court under s.
33C(2) of the Industrial Disputes Act, XIV of 1947 (hereinafter called the Act).

The material facts leading to the respondents' complaint must be set out briefly at the
outset. On July 26, 1957, Mr. Ramakrishna Iyer, the appellant's Manager, was
assaulted by some of the workmen of the appellant. He suffered six fractures and had
to be in hospital in Coonoor and Madras for over a month. The appellant's staff
working in the division known as Kelso Division was also threatened by the
workmen., As a result of these threats three members of the staff wrote to the
appellant on July 27, 1957, that they were afraid to go down to the lower division and
it was impossible for them to work there because their lives were in danger. They
added that the workers in the lower division were threatening them that they would
murder them if they worked in the lower division. On receiving this communication
from its staff the appellant notified on the same day that the Kelso Division would be
closed from that day onwards until further notice. This notice referred to the brutal
assault on the Manager and to the threat held out against the field staff who were
reluctant to face the risk of working in the lower division. It appears that the Kelso
Division continued to be closed until September 2, 1957, on which date it was
opened, as a result of conciliation before the labour officer, when the respondents
gave an assurance that there would not be any further trouble. The claim for layoff is
made for the said period during which the division remained closed between July 28
to September 2, 1957. Soon after the division was closed the respondents made a
complaint to the Labour Court (No. 43 of 1957) under s. 33A of the Act in which they
alleged that they had been stopped from doing their work without notice or enquiry
and claimed an order of reinstatement with back wages and continuity of service. At
the hearing of the said complaint the appellant raised a preliminary objection that the
closure in question was a lock-out and that it did not amount either to an alteration of
conditions of service to the prejudice of the workmen nor did it constitute discharge
or punishment by dismissal or otherwise under cls. A and B of s. 33 respectively, and
so the petition was incompetent. This preliminary objection was upheld by the Labour
Court and the complaint was accordingly dismissed on November 30, 1957.
Thereafter the present complaint was filed by the respondents on January 31, 1958,
under s. 33C of the Act. In this complaint it was stated that the respondents were
refused work from July 28 to September 2, 1957, " by declaring a lock-out of a
division of the estate " and the claim made was that, as the management for their own

311
reasons did not choose to run the division during the said days and laid-off the
respondents, the respondents were entitled to claim lay-off compensation under s.
25C of the Act. Against this complaint the appellant raised several contentions It was
urged on its behalf that the complaint was in- competent under s. 33C and that the
Labour Court had no jurisdiction to deal with it. It was also contended that the closure
of the division amounted to a look-out which under the circumstances. was perfectly
justified and as such the respondents were not entitled to claim any lay-off
compensation. The Labour Court rejected the preliminary objection as to want of
jurisdiction and held that the complaint was competent under s. 33C. On the merits it
found in favour of the respondents and so it directed the appellant to pay to the
respondents the lay-off compensation for the period in question. It is this order which
is challenged before us in the present appeal; and the same two questions are raised
before us.

For the purpose of deciding this appeal we will assume that the complaint filed by the
respondents under s. 33C was competent and that the Labour Court could have
entertained a claim for lay-off compensation if the respondents were otherwise
entitled to it. On that assumption the question which we propose to decide is whether
the closure of the appellant's division during the relevant period which amounts to a
lock-out can be said to fall within the definition of lay-off. We have already pointed
out that in the earlier complaint by the respondents under s. 33A it has been held by
the Labour Court that the closures question was a lock-out and as such the appellant
had not contravened the provisions of s. 33 of the Act. Even in the present application
the respondents have admitted that the said closure is a lock-out but they have added
that a lock-out falls within the definition of lay-off and that is the basis for their claim
for layoff compensation. The question which thus arises for our decision is: Does a
lock-out fall under s. 2(kkk) which defines a lay-off ?

Section 2(kkk) defines a lay-off as meaning 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. There is an explanation to the definition which it is
unnecessary to set out. It is clear that tile lay-off takes place for one or more of the
reasons specified in the definition. Lay-off may be due to shortage of coal or shortage
of power or shortage of raw materials or accumulation of stocks or breakdown of
machinery or any other reason. " Any other reason " to which the definition refers
must, we think, be a reason which is allied or analogous to reasons already specified.
It has been urged before us on behalf of the respondents that " any other reason "
mentioned in the definition need not be similar to the preceding reasons but should
include any other reason of whatsoever character for which lay-off may have taken
place; and in support of this argument reliance is placed on s. 25E(iii). Section
25E deals with three categories of cases where compensation is not liable to be paid to
a workman even though he may have been laid-off. One of these is prescribed by s.
25E(iii); if the laying-off is due to a strike or slowing down of production on the part
of workmen in another part of the establishment no compensation has to be paid. The
argument is that laying-off which is specified in this clause has been excepted
because, but for the exception, it would have attracted the definition of s. 2(kkk) and
would have imposed an obligation on the employer to pay lay-off compensation. That
no doubt is true; but we do- not see how the case specified in this clause is

312
inconsistent with the view that " any other reason " must be similar to the preceding
reasons specified in the definition. If there is a strike or slowing down of production
in one part ,of the establishment, and if lay-off is the consequence, the reason for
which lay-off has taken place would undoubtedly be similar to the reasons specified
in the definition. We are, therefore, satisfied' that the expression " any other reason "
should be construed to mean reason similar or analogous to the preceding reasons
specified in the definition. That is the view taken by the Allahabad High Court in J. K.
Hosiery Factory v. Labour Appellate Tribunal of India & Anr.(1).

(1) A.I.R. 1956 All. 498.

Let us now consider what a lock-out means under the Act. Section 2(1) defines a
lock-out as meaning the closing of a place of employment, or the suspension of work,
or the refusal by an employer to continue to employ any number of persons employed
by him. It may be relevant to point out that the definition of lock-out contained in s.
2(e) of the Trade Disputes Act, 1929 (VII of 1929), had, in addition to the present
definition under s. 2(1), included an additional clause describing a lock-out which
provided that "such closing, suspension or refusal occurs in consequence of a dispute
and is intended for the purpose of compelling those persons or of aiding another
employer in compelling persons employed by him to accept terms or conditions of or
affecting employment ". This clause has now been deleted. Even so, the essential
character of a lock-out continues to be substantially the same. Lock-out can be
described as the antithesis of a strike. Just as a strike is a weapon available to the
employees for enforcing their industrial demands, a lock-out is a weapon available to
the employer to persuade by a coercive process the employees to see his point of view
and to accept his demands. In the struggle between capital and labour the weapon of
strike is available to labour and is often used by it, so is the weapon of lock- out
available to the employer and can be used by him. The use of both the weapons by the
respective parties must, however, be subject to the relevant provisions of the Act.
Chapter V which deals with strikes and lock-outs clearly brings out the antithesis
between the two weapons and the limitations subject to which both of them must be
exercised. Thus the concept of lockout is essentially different from the concept of lay-
off, and so where the closure of business amounts to a lock-out under s. 2(1) it would
be impossible to bring it within the scope of lay-off unders. 2(kkk). As observed by
the Labour Appellate Tribunal in M/S. Presi- dency Jute Mills Co. Ltd. v. Presidency
Jute Mills Co. Employees' Union (2), in considering the essential character of a lock-
out its dictionary meaning may be borne in mind. According to the dictionary
meaning (2) [1952].L.A.C. 62.

lock-out means " a refusal by the employer to furnish work to the operatives except
on conditions to be accepted by the latter collectively ".

Stated broadly lay-off generally occurs in a continuing business, whereas a lock-out is

the closure of the business. In the case of a lay-off, owing to the reasons specified in
s. 2(kkk) the employer is unable to give employment to one or more workmen. In the
case of a lock-out the employer closes the business and locks out the whole body of
workmen for reasons which have no relevance to causes specified in s. 2(kkk). Thus
the nature of the two concepts is entirely different and so are their consequences. In
the case of a lay-off the employer may be liable to pay compensation as provided bys.
25(C), (D) and (E) of the Act; but this liability can-not be invoked in the case of a

313
lock-out. The liability of the employer in cases of lock-out would depend upon
whether the lock-out was justified and legal or not; but whatever the liability, the
provisions applicable to the payment of lay-off compensation cannot be applied to the
cases of lockout. Therefore, we hold that the lock-out in the present case was not a
lay-off, and as such the respondents are not entitled to claim any lay-off compensation
from the appellant. Incidentally we would like to add that the circumstances of this
case clearly show that the lock-out was fully justified. The appellant's Manager had
been violently attacked and the other members of the staff working in the lower
division were threatened by the respondents. In such a case if the appellant locked out
his workmen no grievance can be made against its conduct by the respondents.

In the result the appeal is allowed, the order passed by the Labour Court is set aside
and the complaint filed by the respondents under s. 33C is dismissed. There would be
no order as to costs.

Appeal allowed.

30.Associated Cement Companies v Their Workmen AIR 1960 SC 56

S. K. DAS J.-This appeal by special leave from an award dated October 10, 1956,
made by the Industrial Tribunal, Bihar, raises an important question of interpretation
in the matter of a disqualification for lay-off compensation under s. 25E read with s.
25C of the Industrial Disputes Act, 1947 (hereinafter called the Act), and so far as we
know, this is the first case of its kind in which the expression " in another part of the
establishment " occurring in cl. (iii) of s. 25E has come up for an authoritative
interpretation. The facts are simple and are shortly set out below. The Associated
Cement Companies Ltd., hereinafter called the Company, have a number of cement
factories in different States of the Indian Union as also in Pakistan. There are two
such factories in the State of -Bihar, one at Khelari and the other at a place called
Jhinkpani in the district of Chaibasa in Bihar. The latter factory is commonly known
as the Chaibasa Cement Works. There is a limestone quarry owned by the same
Company situate about a mile and a half from-the Chaibasa Cement Works, the
quarry being known as the Rajanka limestone quarry. Limestone is the principal raw
material for the manufacture of cement and the Chaibasa Cement Works, depended
exclusively for the supply of limestone on the said quarry. At the time relevant to this
appeal there were two classes of labourers at the quarry, those employed by the
Company through the management of the Chaibasa Cement Works and others who
were engaged by a contractor. There was one union known as the Chaibasa Cement
Workers' Union, hereinafter called the Union, of which the Company's labourers both
at the Cement Works and the quarry were members. There was another union
consisting of the contractor's labourers which was known as the A. C. C. Limestone
Contractor's Mazdoor Union. On January 3, 1955, the Union made certain demands
on the management on behalf of the labourers in the limestone quarry, but these were
rejected by the management. Then, by a subsequent letter dated February 18, 1955,
the General Secretary of the Union gave a notice to the Manager of the Chaibasa
Cement Works to the effect that the Union proposed to organise a general stay-in-
strike in the limestone quarry from March 1, 1955, if certain demands, details whereof
are unnecessary for our purpose, were not granted on or before February 28,1955. A
similar notice was also given on behalf of the A.C.C. Limestone Contractor's

314
Mazdoor Union. These notices led to certain efforts at conciliation which however,
failed. On February 24, 1955, the management gave a notice to all employees of the
Chaibasa Cement Works, in which it was stated that in the event of the strike
materialising in the limestone quarry, it would be necessary for the management to
close down certain sections of the factory at Jhinkpani on account of the non-supply
of limestone; the notice further stated that in the event of such closure, it would be
necessary to lay off the workers not required during the period of closure for the
sections concerned. The strike commenced on March 1, 1955, and lasted till July 4,
1955. On March 25, 1955, the management wrote to the General Secretary of the
Union intimating to him that the workers in certain departments referred to in an
earlier letter dated March 19, 1955, would be laid-off with effect from April 1, 1955.
On March 28, 1955, the management gave the lists of employees who were to be laid-
off with effect from April 1, 1955, and they were, actually laid-off from that date.
During the period of the strike fresh efforts at conciliation were made and ultimately
the strike came to an end on July 5, 1955, when the Central Government referred the
dispute between the management and the workers of the limestone quarry to the
Central Industrial Tribunal at Dhanbad. This reference was, however, withdrawn by
mutual consent in terms of a settlement arrived at on December 7, 1955. The details
of this settlement are not relevant to this appeal. Thereafter, a demand was made by
the Union for payment of lay-off compensation to those workers of Chaibasa Cement
Works who had been laid-off for the period April 1, 1955, to July 4, 1955. This
demand was refused by the management. This gave rise to an industrial dispute which
was referred by the Government of Bihar under s. 10 of the Act to the Industrial
Tribunal, Bihar. The terms of reference set out the dispute in the following words:-

" Whether the workmen of the Chaibasa Cement Works are entitled to compensation
for lay-off for the period from April 1, 1955, to July 4, 1955."

The parties filed written statements before the Industrial Tribunal and the only
witness examined in the case was Mr. Dongray, Manager of the Chaibasa Cement
Works, Jhinkpani. At this point it is necessary to read the two sections of the Act
which relate to the right of workmen to lay-off compensation and the circumstances in
which they are disqualified for the same. The right is given by s. 25C and the
disqualification is stated in three clauses of s. 25E, of which the third clause only is
important for our purpose. We now proceed to read ss. 25C and 25E so far as they are
material for our purpose.

" S. 25C. (1) 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, 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."

" S. 25E. No compensation shall be paid to a workman who has been laid-off-

(i) ........................

(ii)........................

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(iii) if such laying-off is due to a strike or slowing- down of production on the part of
workmen in another part of the establishment."

Now, the central point round which the controversy between the parties has raged is
this. Was the lay-off of the workers in certain sections of the Chaibasa Cement Works
due to a strike on the part of workmen in another part of the establishment within the
meaning of cl. (iii) of s. 25E ? In other words, was the limestone quarry at Rajanka
part of the establishment known as the Chaibasa Cement Works? The contention of
the management was and is that the Cement Works and the limestone quarry form one
establishment within the meaning of cl. (iii) aforesaid. The contention on behalf of the
workmen is that they are not parts of one establishment but are separate
establishments. The learned Chairman of the Industrial Tribunal held, for reasons
which we shall presently discuss, that the limestone quarry was not part of the
establishment known as the Chaibasa Cement Works and the workmen in the latter
were not disentitled to lay-off compensation by reason of cl. (iii) of s. 25E. The
correctness of this view is the principal point for decision in this appeal.

On behalf of the respondent workmen it has been contended that the conclusion of the
Industrial Tribunal that the factory at Jhinkpani and the limestone quarry at Rajanka
are not parts of one establishment is a finding of fact and this appeal should be
disposed of on that footing. We do not think that this contention is correct and we
shall presently deal with it. We propose, however, to examine first the relation
between the limestone quarry at Rajanka and the cement factory at Jhinkpani in the
light of the evidence given before the Tribunal and the findings arrived at by it;
because they will show the process of reasoning by which the Tribunal came to its
final conclusion.

The evidence was really one sided and the only witness examined was Mr. Dongray,
Manager of the Chaibasa Cement Works. Now, the relation between the limestone
quarry and the factory can be considered from several points of view, such as (1)
ownership, (2) control and supervision, (3) finance, (4) management and employment,
(5) geographical proximity and (6) general unity of purpose and functional
integrality, with particular reference to the industrial process of making cement. On
all that above points Mr. Dongray gave evidence. It was not disputed that the
Company owned the limestone quarry as also the factory and there was unity of
ownership. Mr. Dongray's evidence further showed that there was unity of control,
management and employment. He said that the limestone quarry was treated as a part
and parcel of the Chaibasa Cement Works, that is, as a department thereof and he as
the Manager was in overall charge of both, though there was a Quarry Manager in
charge as a departmental head under him. On this point Mr. Dongray said:-

" There is a Manager appointed for the quarries. The Manager is working under me.
The Cement Works itself has about eight or nine departments under it. There are
heads of each department. The Manager of the quarry has the same status as the heads
of other departments at the Cement Works."

This was supported by a circular letter dated March 11, 1952, which said that the
entire factory and the associated quarries were under the sole control of the Manager,
who was responsible for maintaining full output at economic cost up to the expected
standard. The circular letter further stated that all orders and contracts were to be

316
issued by the Manager for the working of the factory and quarries and the relevant
bills were to be passed by him. As to finance and conditions of employment, Mr.
Dongray said:- " All requirements of the quarry are sent by the Manager there to the
office of the Cement. Works and if they are available in the Cement Works Stores,
they are issued from there; otherwise I indent them from the Bombay office or
purchase them locally. There is no account office in the quarries and their account is
maintained in the Cement Works' Office. I as Manager of the Chaibasa Cement
Works make payment for the indents or requirements of the quarries stated above.
The quarry has no separate banking account. The Quarry Manager is not entitled to
operate banking account apart from myself At the quarries there are daily- rated
workers and monthly-paid staff.

To the daily-paid workers in the quarries, the cashier of the Cement Works or his
Assistant makes payment, when required. The monthly-paid staff of the quarries come
to the Cement Office for receiving payment. In the Cement Works we have got a
system of allocation of work for different jobs every day. It is done by the
Departmental Heads. Same system prevails in the quarries also. The Quarry Manager
does the distribution as head of that department. Attendance Register is maintained at
the quarry in the same way as it is done in the different departments of the Cement
Works. There is only one common pay sheet for all the monthly-paid staff, whether
he is at the factory or in the quarries. For the daily-rated workers we have got
different sheets department-wise and there is one such sheet for the daily workers of
the quarry as well. There is one summary sheet of the payment showing the payment
of all the departments including the payment in the quarries as well. I have to send
statutory intimation to the authorities under the Mines Act regarding the quarries for
working faces and other accidents etc. The staff and workers working in the quarries
are transferable to the Cement Works according to the exigencies of the work and also
vice versa. There have been a few instances of such transfers. The terms and
conditions of service, for instance, T. A., leave, provident fund, gratuity, etc., are
same for workers in the Cement Works as also the workers in the quarries. We got the
application of the statutory provident fund rules extended to our department in the
quarries also. The report of the working of the quarry comes to me from the Manager
there from time to time. I as Manager of the Cement Marks make payments of
royalties in in respect of limestones raised from the quarries. Payments for
compensation, maternity benefits, accidents, etc., in the quarry are made under my
authority by the factory office and not by the Quarry Manager."

Exhibits 1 to 26 filed on behalf of the management, which showed the working of the
quarry and thefactory, supported the aforesaid evidence of Mr. Dongray; they
showed, as has been observed by the Tribunal itself, that the management was
maintaining one common account and the final authority on the spot in respect of the
quarry as also in respect of other departments of the factory was Mr. Dongray, the
Manager. There were also other documents to show that the transfer of members of
the staff from the quarry to the factory and vice versa was made by Mr. Dongray
according to the exigencies of service. It is worthy of note here that the Union itself
gave notice to the Manager of the factory with regard to the intended strike in the
limestone quarry. The geographical proximity of the limestone quarry was never in
dispute. It was adjacent to the factory, being situate within a radius of about a mile.
As to general unity of purpose -and functional integrality, this was also not seriouly in
dispute. Mr. Dongray said that limestone was the principal raw material for the

317
manufacture of cement and the cement factory at Jhinkpani depended exclusively on
the supply of limestone from the quarry at Rajanka. His evidence no doubt disclosed
that some excess limestone was sent to the factory at Khelari as well. On this point
Mr. Dongray said:-

" Limestone from this quarry is at times sent to the Khelari Cement Works, but that is
very rare and in small quantity. It is done only in cases of emergency."

Mr. Dongray explained that the normal number of departmental workers in the quarry
before the strike was in the neighbourhood of 250; but there were about 1,000
workers employed by contractors. The number of daily-rated workers was in the
neighbourhood of 950 and the total monthly-paid staff varied from 100 to 105. The
wages paid to the workers in the quarry were debited to limestone account of the
Cement Works, and in the matter of costing, the amount spent on limestone was also
debited. The bank accounts, however, were in the name of the Company and the
persons who were entitled to operate on those accounts were Mr. Dongray, the
Manager, the Chief Engineer, and the Chief Chemist of the Cement Works.

All the aforesaid evidence, oral and documentary, was apparently accepted by the
Tribunal as correct; for the learned Chairman summarised the evidence of Mr.
Dongray without any serious adverse comment. He then referred to certain
contentions urged on behalf of the Union, which he said were not without force. We
may now state those contentions. The first contention was that under the provisions of
the Act, the appropriate authority in respect of the factory at Jhinkpani was the State
Government of Bihar, whereas the appropriate authority in respect of the limestone
quarry, which was a mine as defined in the Mines Act, 1952, was the Central
Government. The second con- tention was that there were two sets of Standing
Orders, one for the workmen of the factory and the other for the workmen in the
limestone quarry. The third contention was that the limestone quarry had an office of
its own and a separate attendance register, and the fourth contention was that under
the provisions of the Mines Act, 1952, Mr. Dongray was an Agent in respect of the
limestone quarry and there was a separate Manager who was responsible for the
control, management and direction of the mine under the provisions of s. 17 thereof.
The learned Chairman referred to certain criticisms made in respect of the evidence of
Mr. Dongray. One criticism was that though the Company was the owner of both the
factory and the limestone quarry, it had also factories and limestone quarries at other
places in India and Pakistan and if the test of one ownership were the determining
test, then all the factories and limestone quarries of the Company wherever situtate
would be one establishment. This criticism was not, however, pertinent because the
Company never claimed that all its factories in different parts of India and Pakistan
formed one establishment by reason of unity of ownership only. The other criticism
was that Mr. Dongray admitted that, if necessary in the interest of service, the
workmen at the Chaibasa Cement Works could be transferred to some other factory of
the Company and therefore transferability was not a sure test. This criticism was also
not germane, because the Company never claimed that transferability was the only
sure test. A third criticism also advanced on behalf of the workmen was that Mr.
Dongray admitted that all the accounts of the different factories and limestone
quarries of the Company were ultimately consolidated into one Profit and Loss
Account, a criticism which in our view was equally not pertinent to the question at
issue. The learned Chairman then expressed his final finding in the following words:-

318
" From these and other admissions made by Mr. Dongray it would appear that it is
only for economy and convenience that he was given charge of the control of both the
concerns but his capacity was dual. While he was controlling the Cement Works as it
Works Manager he had the control of the quarries as its Agent under the Mines Act. It
has also to be noted that if both these establishments which are inherently different by
their very nature are treated as one and the same, anomalous position may arise in
dealing with the employees in the quarries in matters of misconduct and such other
things if there is a pendency of a dispute in the Cement Works and vice versa.
Obviously, the employees of the Cement Works have to be dealt with by the State
Tribunal while the employees of the quarries by the Central Tribunal. This also
nullifies the force of the management's contention that both are parts of the same
establishment. Considering these it has to be held that the contention of the
management fails and that of the Union must prevail." We now revert to the
contention urged on behalf of the respondent that this appeal should be disposed of on
the footing that the final conclusion of the Industrial Tribunal is a finding of fact. The
judgment of the Tribunal itself shows that the final conclusion was arrived at by a
process of reasoning which involved a consideration of several provisions of the Act
and some provisions of the Mines Act, 1952. The Tribunal accepted a major portion,
if not all, of the evidence of Mr. Dongray; but it felt compelled to hold against the
appellant despite that evidence by reason of an anomalous position which, it thought,
would arise if the factory and the quarry were held to be one establishment. The
question before the Tribunal, and this is also the question before us, was the true
scope and effect of cl.

(iii) of s. 25E of the Act, with particular reference to the expression " in another part
of the establishment " occurring therein. That question was not a pure question of fact,
as it involved a consideration of the tests which should be applied in determining
whether a particular unit is part of a bigger establishment. Indeed, it is true that for the
application of the tests certain preliminary facts must be found; but the final
conclusion to be drawn therefrom is not a mere question of fact. Learned counsel for
the respondent is not, therefore, justified in asking us to adopt the short cut of
disposing of the appeal on the footing that a finding of fact should not be-disturbed in
an appeal by special leave. In this case we cannot relieve ourselves of the task of
determining the true scope and effect of cl. (iii) of s. 25E by adopting the short cut
suggested by learned counsel.

We proceed now to consider what should be the proper tests in determining what is
meant by " one establishment ". Learned counsel for the respondent has suggested
that the test has been laid down by the Legislature itself in the Explanation to s.
25A of the Act. That Explanation states:- " In this section and in sections
25C, 25D and 25E, "industrial establishment " means-

(i) a factory as defined in clause (m) of section 2 of the Factories Act, 1948; or

(ii) a mine as defined in clause (j) of section 2 of the Mines Act, 1952; or

(iii) a plantation as defined in clause (f ) of section 2 of the Plantations Labour Act,

1951."

319
The argument is that the Explanation states in clear terms what an industrial
establishment means in certain sections of the Act including s. 25E, and on a proper
construction it negatives the idea of a factory and a mineforming parts of one
establishment. Curiously enough, s. 25E does not contain theexpression "industrial
establishment". It uses the word " establishment " only. We agree, however, that if s.
25E is read with s. 25C and the definition of " layoff " in s. 2 (kkk) of the Act, as it
must be read, the word " establishment " in s. 25E has reference to an industrial
establishment. On the footing that the word " establishment " in s. 25E means an
industrial establishment, what then is the effect of the Explanation ? The contention of
the respondent is that an industrial establishment may be either a factory as defined in
clause (m) of s. 2. of the Factories Act, 1948, or a mine as defined in cl. (j) of s. 2of
the Mines Act, 1952, or a plantation as defined in cl. (f) of s. 2 of the Plantations
Labour Act, 1951; but it cannot be a combination of any two of the aforesaid
categories; therefore, a factory and a mine together, as in the present case, cannot
form one establishment. This argument proceeds on the assumption that the
Explanation while stating what undertakings or enterprises come within the
expression " industrial establishment " necessarily lays down the test of 'one
establishment' also. We do not think that there is any warrant for this assumption. The
Explanation only gives the meaning of the expression " industrial establishment " for
certain sections of the Act; it does not purport to lay down any test as to what
constitutes one ' establishment'. Let us take, for example, a factory which has different
departments in which manufacturing processes are carried on with the aid of power.
Each department, if it employs ten or more workmen, is a factory within the meaning
of cl. (m) of s. 2 of the Factories Act, 1948; so is the entire factory where 1,000
workmen may be employed. The Explanation merely states that an undertaking of the
nature of a factory as defined in cl. (m) of s. 2 of the Factories Act, 1948, is an
industrial establishment. It has no bearing on the question if in the example taken, the
factory as a whole or each department thereof should be treated as one establishment.
That question must be determined on other considerations, because the Explanation
does not deal with the question of one establishment. In our view, the true scope and
effect of the Explanation is that it explains what categories, factory, mine or
plantation, come within the meaning of the expression " industrial establishment " ; it
does not deal with the question as to what constitutes one establishment and lays
down no tests for determining that question. We cannot, therefore, accept the
argument of learned counsel for the respondent that a factory and a mine, a mine
which supplies the raw material to the factory, can never be one establishment under
the Act; that we do not think is the effect of the Explanation to s. 25A.

The Act not having prescribed any specific tests for determining what is 'one
establishment', we must fall back on such considerations as in the ordinary industrial
or business sense determine the unity of an industrial establishment, having regard no
doubt to the scheme and object of the Act and other relevant provisions of the Mines
Act, 1952, or the Factories Act, 1948. What then is ' one establishment' in the
ordinary industrial or business sense ? The question of unity or oneness presents
difficulties when the industrial establishment consists of parts, units, departments,
branches etc. If it is strictly unitary in the sense of having one location and one unit
only, there is little difficulty in saying that it is one establishment. Where, however,
the industrial undertaking has parts, branches, departments, units etc. with different
locations, near or distant, the question arises what tests should be applied for
determining what constitutes 'one establishment'. Several tests were referred to in the

320
course of arguments before us, such as, geographical proximity, unity of ownership,
management and control, unity of employment and conditions of service, functional
integrality, general unity of purpose etc. To most of these we have referred while
summarising the evidence of Mr. Dongray ,and the findings of the Tribunal thereon. It
is, perhaps, impossible to lay down any one test as an absolute and invariable test for
all cases. The real purpose of these tests is to find out the true relation between the
parts, branches, units etc. If in their true relation they constitute one integrated whole,
we say that the establishment is one; if on the contrary they do not constitute one
integrated whole, each unit is then a separate unit. How the relation between the units
will be judged must depend on the facts proved, having regard to the scheme and
object of the statute which gives the right of unemployment compensation and also
prescribes disqualification therefor. Thus, in one case the unity of ownership,
management and control may be the important test; in another case functional
integrality or general unity may be the important test; and in still another case, the
important test may be the unity of employment. Indeed, in a large number of cases
several tests may fall for con- sideration at the same time. The difficulty of applying
these tests arises because of the complexities of modern industrial organisation; many
enterprises may have functional integrality between factories which are separately
owned; some may be integrated in part with units or factories having the same
ownership and -in part with factories or plants which are independently owned. In the
midst of all these complexities it may be difficult to discover the real thread of unity.
In an American decision (Donald L. Nordling v. Ford Motor Company (1)) there is an
example of an industrial product consisting of, 3,800 or 4,000 parts, about 900 of
which came out of one plant; some came from other plants owned by the same
Company and still others came from plants independently owned, and a shutdown
caused by a strike-or other labour dispute at any one of the plants might conceivably
cause a closure of the main plant or factory.

Fortunately for us, such complexities do not present themselves in the case under our
consideration. We do not say that it is usual in industrial practice, to have one
establishment consisting of a factory and a mine; but we have to remember the special
facts of this case where the adjacent limestone quarry supplies the raw material,
almost exclusively, to the factory ; the quarry is indeed a feeder of the factory and
without limestone from the quarry, the factory cannot function. Ours is a case where
all the tests are fulfilled, (1) (1950) 28 A.L.R., 2d. 272.

as shown from the evidence given on behalf of the appellant to which we have earlier
referred. There are unity of ownership, unity of management, supervision and control,
unity of finance and employment, unity of labour and conditions of service of
workmen, functional integrality, general unity of purpose and geographical proximity.
We shall presently deal with the legal difficulties at which the Tribunal has hinted and
which have been elaborated by learned counsel for the respondent. But apart from
them, the only fair conclusion from the facts proved in the case is that the Chaibasa
Cement Works consisting of the factory and the limestone quarry form one
establishment. The existence of two sets of Standing Orders and a separate attendance
register for the limestone quarry have already been adverted to. They have been
sufficiently explained by Mr. Dongray, particularly the existence of two sets of
Standing Orders by reason of the statutory requirement of approval by different
authorities-one set by the Labour Commissioner, Bihar, and other by the relevant
Central authority.

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We proceed now to consider the legal difficulties which according to learned counsel
for the respondent stand in the way of treating the limestone quarry and the factory as
one establishment. The Tribunal has merely hinted at these difficulties by saying that
an anomalous position will arise if the quarry and the factory are treated as one
establishment. It is necessary to refer briefly to the scheme and object of lay-off
compensation and the disqualifications therefor as envisaged by the relevant
provisions in Chapter VA of the Act. That chapter was inserted by the Industrial
Disputes (Amendment) Act, 1953 (43 of 1953), which came into effect from October
24, 1953. The right of workmen to lay-off compensation is obviously designed to
relieve the hardship caused by unemployment due to no fault of the employee;
involuntary unemployment also causes dislocation of trade and may result in general
economic insecurity. Therefore, the right is based on grounds of humane public policy
and the statute which gives such right should be liberally construed, and when there
are disqualifying provisions, the latter should be construed strictly with reference to
the words used therein. Now, s. 25 gives the right, and there are three disqualifying
clauses in s. 25E. They show that the basis of the right to unemployment
compensation is that the unemployment is involuntary; in other words, due to no fault
of the employees themselves; that is why no unemployment compensation is payable
when suitable alternative employment is offered and the workman refuses to accept it
as in cl. (1) of s. 25E ; or the work- man does not present himself for work at the
establishment as in cl. (ii); or when the laying-off is due to the strike or slowing down
of production on the part of workmen in another part of the establishment as in cl.
(iii). Obviously, the last clause treats the work men in one establishment as one class
and a strike of slow-down by some resulting in the laying-off of other workmen
disqualifies the workmen laid-off from claiming unemployment compensation, the
reason being that the unemployment is not really involuntary.

It is against this background of the scheme and object of the relevant provisions of the
Act that were must now consider the -legal difficulties alleged by the respondent. The
first difficulty is said to arise out of s. 17 of the Mines Act, 1952. That section says in
effect that every mine shall be under a Manager having prescribed qualifications who
shall be responsible for the control, management and direction of the mine; it is then
pointed out that the word 'agent' in relation to a mine means a person who acts as the
representative of the owner in respect of the management of the mine and who is
superior to a Manager. The argument is that the limestone quarry at Rajanka had a '
Manager' under the Mines Act, 1952, and Mr. Dongray acted as the agent, that is,
representative of the owner, viz., the Company; and this arrangement which was in
consonance with the provisions of the Mines Act, 1952, it is argued, made the factory
and the quarry two separate establishments. We are unable to accept this argument as
correct. We do not think that s. 17 of the Mines Act, 1952, has any relevance to the
question whether the limestone quarry was part of a bigger establishment. It
prescribes the appointment of a Manager for purposes of the Mines Act, 1952, and
does not deal with the question of 'one establishment' within the meaning of cl. (iii)
of s. 25E of the Act. The fact that the quarry Manager worked under the overall
control and supervision of Mr. Dongray showed, on the facts proved in this case, just
the contrary of what learned counsel for the respondent has contended ; it showed that
the factory and the quarry were treated as one establishment. The second difficulty is
said to arise out of certain provisions of the Act which relate to the constitution of
Boards of Conciliation, Courts of Inquiry, Labour Courts and Tribunals and the
reference of industrial disputes to these bodies for settlement, inquiry or adjudication.

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The scheme of the Act is that except in the case of National Tribunals which are
appointed by the Central Government, the appropriate Government makes the
appointment of Boards of Conciliation, Courts of Inquiry, Labour Courts and
Tribunals and it is the appropriate Government which makes the refer- ence under s.
10 of the Act. Now, the expression appropriate Government is defined in s. 2(a) of the
Act. So far as it is relevant for our purpose, it means the Central Government in
relation to the limestone quarry at Rajanka and the State Government of Bihar in
relation to the factory at Jhinkpani. We had stated earlier in this judgment that in this
very case the original dispute between the management and the workmen in the
limestone quarry was referred to the Central Tribunal at Dhanbad, while the latter
dispute about lay-off compensation to workmen of the factory was referred by the
Government of Bihar to the Industrial Tribunal at Patna. The argument before us is
that when the statute itself brings the two units, factory and mine, under different
authorities, they cannot be treated as one establishment for the purposes of the same
statute. Our attention has also been drawn to s. 18(3) of the Act under which in certain
circumstances, a settlement arrived at in the course of conciliation proceedings under
the Act or an award of a Labour Court or Tribunal is made binding " on 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." It is contended that it
will be difficult to apply s. 18(3) if the factory and the limestone quarry are treated as
one establishment. Lastly, learned counsel for the respondent has referred us to s.
33 of the Act. Sub-section (1) of that section, in substance, lays down that during the
pendency of any conciliation proceedings or of any proceeding before a Labour Court
or Tribunal in respect of any industrial dispute, no employer shall alter the conditions
of service to the prejudice of workmen or punish any workmen, save with the
permission in writing of the authority before which the proceeding is pending. Sub-
sections (2) and (3) we need not reproduce, because for the purposes of this _ appeal,
the argument is the same, which is that if a proceeding is pending before a Central
Tribunal, say in respect of the limestone quarry, there will be difficulty in applying
the provisions of s. 33 in respect of workmen in the factory over which the Central
Tribunal will have no jurisdiction. The Industrial Tribunal did not specifically refer to
these provisions, but perhaps, had them in mind when it said that an anomalous
position would arise if the factory and the quarry were treated as one establishment.

We have given our most earnest consideration to these arguments, but are unable to
hold that they should prevail. It is indeed true that in the matter of constitution of
Boards of Conciliation, Courts of Inquiry, Labour Courts and Tribunals and also in
the matter of reference of industrial disputes to them, and perhaps for certain other
limited purposes, the Act gives jurisdiction to two distinct authorities, the Central
Government in respect of the limestone quarry and the State Government in respect of
the factory. The short question is-does this duality' of jurisdiction, dichotomy one may
call it, necessarily imply that for all purposes of the Act, and particularly for payment
of unemployment compensation as per the provisions in Ch. VA, the factory and the
quarry must be treated as separate establishments. We are unable to find any such
necessary implication. There is no provision in the Act which says that the existence
of two jurisdictions has the consequence contended for by learned counsel for the
respondent; nor do we find anything in the provisions creating two jurisdictions which
by reason of the principle underlying them or by their very nature give rise to an
implication in law that the existence of two jurisdictions means the existence of two

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separate establishments. On the contrary, such an implication or inference will be at
variance with the scheme and object of unemployment compensation as provided for
by the provisions in Ch. VA of the Act. We have pointed out earlier that the object of
unemployment compensation is to relieve hardship caused by involuntary
unemployment, that is, unemployment not due to any fault of the employees. If in the
ordinary business sense the industrial establishment is one, a lay-off of some of the
workmen in that establishment as a result of a strike by some other workmen in the
same establishment cannot be characterised as involuntary unemployment. To hold
that such an establishment must be divided into two separate parts by reason of the
existence of two jurisdictions is to import an artificiality for which we think there is
no justification in the provisions of the Act. Nor do we think that ss.
18(3) and 33 present any real difficulty. Section 18(3) clearly contemplates a
settlement or an award which is binding on a part of the establishment. It says so in
express terms. If, therefore, in the case before us there is a settlement or award in
respect of the limestone quarry, it will be binding in the circumstances mentioned in
the subsection, on the workmen in that part of the establishment which is the
limestone quarry. Similarly, a settlement or award in respect of the factory will be
binding on the workmen of the factory. Section 33, as far as it is relevant for the
argument now under consideration, is in two parts. Sub-section (1) relatesto a matter
connected with the dispute in respect of which a proceeding is pending. Sub-section
(2) relates to a matter not connected with the dispute in respect of which the
proceeding is pending. In one case permission of the authority before which the
proceeding is pending has to be obtained for punishing etc. ; in the other case, an
application for approval of the action taken by the employer has to be made. We see
no difficulty in applying s. 33 in a case like the one before us. For workmen in the
mine, the authority will be the one appointed by the Central Government; for the
factory, the authority will be that appointed by the State Government. This is the same
argument as the argument of two jurisdictions in another form. The assumption is that
there cannot be two jurisdic- tions for two parts of one establishment. This argument
is valid, if the assumption is correct. If, however, there is no warrant for the
assumption, as we have held there is none, then the argument has no legs to stand
upon. So far we have dealt with the case irrespective of and apart from reported
decisions, because there is no decision which really covers the point in controversy
before us. Learned counsel for the appellant has referred to the decisions in Hoyle v.
Cram (1) and Coles v. Dickinson (2 ). The question in the first case was if the
appellants there were liable to be convicted of an offence against the Bleaching
Works Act, 23 and 24 Vict. c. 78 in employing the child without a school master's
certificate. It was held that a child employed on the premises where the bleaching,
dyeing and finishing were performed was employed in an incidental printing process
within the second section of 8 and 9 Vict. c. 29; and that the place where he was so
employed formed part of " the establishment where the chief process of printing was
carried on " within the meaning of that Act. The decision proceeded mainly on the
words of the statute; but Earle, C.J., said:

" It appears that the works at Mayfield having some years ago become inadequate, by
reason of the (1) (1862) 12 C.B. (N.S.) 125; 142 E.R. 1090. (2) (1864) 16 C.B.(N.S.)
604; 143 E.R. 1264.

increase of the business and by the detorioration and deficiency of the water of the
river Medlock, the appellants transferred part of their works to Sandy Vale: but that

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the principal part of the work continued to be carried on at Mayfield, which was the
principal seat of the firm. In a commercial sense, therefore, Sandy Vale clearly was
part of one entire establishment. It was contended for the respondent that the statute
did not mean forming part in a commercial sense, but in a popular and local sense.
But I see no reason for confining the meaning to local proximity. The whole
substantially forms one establishment." In the second case the question was this : by
the 73rd section of 7 and 8 Vict. c. 15, premises which are used solely for the
manufacture of paper were excluded from the operation of the Factory Acts; there
were two mills, one at Manchester and the other in Hertfordshire. The Manchester
mill prepared what was called half-stuff which was sent to the mill in Hertfordshire to
be manufactured into paper, and the question was if the Manchester mill was
exempted from the operation of the Factory Acts. The answer given was in the
affirmative. It was stated that each step in the process was a step in the manufacture of
paper, and the distance between the two places where the several parts were carried
on was wholly immaterial in view of the words of the statute.

The last decision to which our attention has been drawn is the American decision in
Donald L. Nordling v. Ford Motor Company (1). This decision is perhaps more in
point as it related to unemployment compensatiOn. The statute in that case provided
that an individual losing his employment because of a strike or other labour dispute
should be disqualified during its process " at the establishment in which he is or was
employed ". The claimants there had been employed at a Minnesota automobile
assembly plant which was partially shut down because of a lack of parts due to a
strike at a manufacturing plant owned and operated by the same corporation in
Michigan. The Minnesota Supreme Court to which an application was made for (1)
(1950) 28 A.L.R. 2d. 272.

a certiorari to review a decision of the director of the division of employment and

security reviewed the tests which have generally been applied for determining what is
meant by the term ' establishment' within the meaning of the statute concerned; it
pointed out that there was no uniformity of decision on the question and it was not
possible to lay down an absolute or invariable test. The decision was based on the
broader ground that the tests of functional integrality, general unity and physical
proximity should all be taken into consideration in determining the ultimate question
of whether a factory, plant or unit of a larger industry is a separate establishment
within the meaning of the employment and security law. The test which was
emphasized in that case was the test of the unity of employment and on that footing it
was found that the evidence was ample to support the director's finding that the
Minnesota plant was a separate establishment.

We do not think that these decisions carry the matter any further than what we have
explained in earlier paragraphs of this judgment. We must have regard to the
provisions of the statute under which the question falls to be considered; if the statute
itself says what is one establishment, then there is no difficulty. If the statute does not,
however, say what constitutes one establishment, then the usual tests have to be
applied to determine the true relation between the parts, branches etc., namely,
whether they constitute one integrated whole or not. No particular test can be adopted
as an absolute test in all cases of this type and the word 'establishment' is not to be
given the sweeping definition of one organisation of which it is capable, but rather is
to be construed in the ordinary business or commercial sense.

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For the reasons which we have already given, we are of the view that the learned
Chairman of the Industrial Tribunal wrongly held that the limestone quarry at Rajanka
and the factory at Jhinkpani were separate establishments. In our view, they
constituted one establishment within the meaning of cl. (iii) of s.25E of the Act. It
was conceded on behalf the respondent workmen that the lay-off in the factory was
due to the non- supply of limestone by reason of the strike in the limestone quarry and
the strike was decided on by the same Union which consisted of the workmen at the
factory and the quarry. That being the position, the disqualification in cl. (iii)
aforesaid clearly applied and the workmen at the factory were not entitled to claim
lay-off compensation. The result, therefore, is that the appeal succeeds and is allowed
and the award of the Industrial Tribunal is set aside. In the circumstances of the case
in which a difficult question of interpretation arose for decision for the first time, we
pass no order as to costs. Appeal allowed.

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