7 LABOUR LAW

7

LABOUR LAW

S. L. Agarwal*

I GENERAL IDENTIFICATION OF LABOUR PROBLEMS

THE LABOUR climate of the country during the year 1976 had the full taste of national emergency. Industrial relations were reported to be peaceful—perhaps because of fear and terror all around. The working class was helpless to raise any grievance. Their feelings were suppressed by force of circumstances. Minor disputes in the central sphere received by the government in this year were 5058, out of which 2527 were settled informally and 682 were settled in conciliation. In 1009 disputes the conciliation failed. The total number of disputes in which reference was made to the tribunal was 104.1

The government took several measures to improve industrial relations and had set up various bodies to study labour problems in a wider perspective. Concrete steps were taken to identify bonded labour, to evolve a national wage policy, to link bonus with production and productivity, to enlarge the area of workers' participation in management and to lay guidelines to deal with strikes and lock-outs and to prevent lay-offs and closures. According to the Labour Ministry's estimate, somewhere between five million and seven million people in villages are leading a sub-human existence as bonded labour but, so far only 75,000 of them have been identified in eight of the states. The other state governments have refused to admit that the system existed in their areas. A plan was, therefore, worked out to involve government

* Research Professor, Indian Law Institute, New Delhi. 1 Information supplied by the chief labour commissioner's office, Ministry of Labour,

Government of India, New Delhi.

www.ili.ac.in The Indian Law Institute

176 Annual Survey of Indian Law [ 1976

officials, bank managers and social workers for purposes of identification. It was the year when steps were taken to see that unreasonable disparities were avoided in the wage structure as between different enterprises in the same industry or region and as between public enterprises on the one hand and government departments on the other. The government announced that bonus would be payable by a concern even if there was no allocable surplus, provided its profit and loss account showed a net profit. A tribunal adjudicating a bonus dispute would be competent to direct the employer to furnish detailed information in respect of its accounts and produce books under challenge. The scheme of workers' participation in management was extended to cover all commercial and service organisations in the public sector including hospitals, P. & T. offices, railway stations and booking offices, road transport organizations, state electricity boards, banks, insurance, etc. A standing committee was set up to sort out the problems of strikes and lock-outs and to inform the appropriate government about the apprehension of such situations. Similarly, stringent measures were contemplated to check unnecessary lay-offs, retrenchments and closures. The Factories Act, 1948 was amended making it obligatory for the factories employing more than 1,000 workers to appoint qualified safety officers. Secondly, the workers employed through contractors with or without the knowledge of the principal employer were brought within the purview of the Act. The workmen who suffer permanent total disablement as a result of accidents or certain occupational diseases would, under the amended workmen's compensation law, get compensation at rates 4 per cent higher than those for death. The 500 rupees monthly wage ceiling for coverage under the Act was also raised to Rs. 1,000,

The important development had been the labour minister's conference and the meeting of labour secretaries and labour commissioners in New Delhi in October, 1976 which discussed the identification of bonded labour, their release from bondage and consequential rehabilitation, workers' participation in industries, the working of the Apprenticeship Act, 1961, the fixing and revision of agricultural wages under the Minimum Wages Act of 1948 and the review of industrial relations with special emphasis on lay-offs leading to retrenchment and closures. It was pointed out that the bonded labour system was a symptom of acute deprivation and poverty which was prevalent among certain categories of weaker sections of the community. The problem could be solved only through economic upliftment of these people by creating gainful employment opportunities and by providing for massive credit facilities. Mere existence of indebtedness or infringement of the Minimum Wages Act, 1948 or Contract Labour (Regulation and Abolition) Act, 1970 or contract of service following advance of wages were not to


Vol. XII] Labour Law 111

be construed as bonded labour system. All that was required was its interpretation in actual cases and its enforcement where ingredients of the system in the legislation were found to be in existence. On the subject of rehabilitation, the view of the conference was that the ongoing plan and non-plan development schemes would be inadequate, especially in areas where there was a concentration of bonded labour. In such tribal areas and rural areas, separate programmes with exclusive and adequate financial assistance would have to be thought of and central assistance would be separately required in this regard. Coming to the scheme of participative management, the conference considered it necessary that the workers should also be entitled to a share in the increased production/productivity. If that becomes effective, the objective of prohibition of outsiders from holding offices in trade unions could well be achieved. While reviewing the progress of the apprenticeship training, the conference laid down the following programme of action:

(a) special efforts to make up the shortfall in the management of the apprentices in respect of the states where it existed;

(b) special and concerted efforts to increase the number of apprentices belonging to the weaker sections; and

(c) special efforts to provide adequate facilities for basic training, particularly, in chemical, catering, printing, textile trades and imparting related instruction to the apprentices.

Regarding the implementation of minimum wages in agriculture, the view was that intensive efforts should be made to make the revenue departments, rural development departments and tribal welfare departments of the states more active in the matter of such implementation. Further, the conference recommended that the Industrial Disputes Act, 1947, be amended so as to prevent transfer of assets by the employers after they served notices of lay-offs or closures. The concerned ministries of the Government of India and other agencies should take effective steps to prevent closure of industries due to sickness by continuous monitoring of the health of the industry and by taking appropriate remedial action in time.3

II THE BONUS ISSUE

The question of the payment of bonus has assumed great significance in the past years because the government's policy in this regard has changed

1 See 'Main Conclusions of the 28th Session of the Labour Minister's Conference' held at New Delhi on the 26th Oct., 1976, Min. of Labour Handout, Nov. 5, 1976.


178 Annual Survey of Indian Law [1976

time to time.3 The major surgery was done in 1976 when the Payment of Bonus Act introduced substantial modifications. The gross profits derived by an employer from an establishment in respect of any accounting year will now be computed in the following manner:4

(i) Net profit as per profit and loss account.

(ii) Bonus to employees.

(Hi) Depreciation.

(iv) Direct taxes.5

(v) Development rebate/development allowance reserve.

(vi) Bonus paid to employees in respect of previous accounting years.

(vii) The amount paid as gratuity.

(viii) Donations in excess of the amount admissible for income tax.

(ix) Capital expenditure.

(A:) Losses.

(xi) Incomes, profits or gains credited directly to reserves.

Minus

(i) Capital receipts and capital profits.

(ii) Profits and receipts of business outside India and expenditure or losses debited directly to reserves.

(Hi) Proportionate administrative expenses.

(iv) Refund of any direct tax paid for previous accounting years.

(v) Cash subsidy.

Where an employee has not worked for all the working days in any accounting year, the bonus payable to him shall be proportionately

8 In the beginning, every employer was bound to pay to every employee, in an accounting year, a minimum bonus of 4% of his salary, whether there were profits in the accounting year or not. Then the percentage was raised to 8.33%. Then again, in 1976 it came down to 4% on the condition that the company had earned profits. There was also a scheme to link payment of bonus with production and productivity.

4 See s. 4 and the first schedule of the Act. 5 The tribunal has to compute direct taxes at the rate at which income, gains and

profits of the employer are fixed under the Income-tax Act.



reduced.6 Where an establishment is newly set up, the employees would get bonus only of the accounting year in which the employer derives profit. Subsequently, for the sixth and seventh accounting years the provisions of set-on and set-off shall apply.7 If the employees have reached an agreement or settlement with their employer for the payment of an annual bonus linked with production and productivity in lieu of bonus based on profits, they would get the bonus due to them under this agreement.

In Workmen v. National and Grindlay's Bank,6 the question of computation of bonus was raised with regard to the interpretation of item 2(a) of the first schedule of the Act which says that in the computation of gross profits, the employer has to add back the provision for bonus to employees. To this, the court replied that what was liable to be added back under item 2(a) of the first schedule was not the amount of bonus payable to the workmen, nor the amount of bonus in fact paid, but the provision for bonus made in the profit and loss account. The amount paid to the employees in the accounting year 1965 was Rs. 13.27 lakhs and the workmen claimed that this amount should also be added back under item 3(a) of the first schedule.9 The bank in the computation sheet also showed this amount as an add-back and, therefore, there should really have been no dispute at all on this question. But the industrial tribunal refused to permit the bank to add this figure on the ground that the 1965 account must not be allowed to adulterate the 1966 account. The Supreme Court held it to be an error on the part of the tribunal because what was done by the bank and what was demanded by the workmen, were both clearly legal under item 3(a) of the first schedule, and liable to be added back.

Though the judgment may be right in conformity with the language of the statute, yet one wonders as to what could be the justification of inserting such an item like 3(a) in the first schedule of the Bonus Act. If one has to find out the gross profits of an establishment for a particular year, the accounts of that year alone should be taken into consideration and not the accounts of the previous years. What was the purpose and object of legislators behind it is not known. But on the face of reading of the first schedule it seems that item 3(a) was not necessary or relevant to be inserted in the schedule.

• See s. 13 of the amended Act. 7 See s. 15 (1) and (2), Payment of Bonus Act, 1965. M1976) I L.LJ. 463. 9 Item 3 (a) allows add-back of bonus paid to employees in respect of previous account

ing years.



In Mumibai Kamgar Sabha v. A. Faizullabhai,10 the interesting question was whether the Payment of Bonus Act, 1965, being a self-contained code, dealt only with profit bonus and barred customary bonus and bonus based on service conditions. In this case, some hardware merchants were huddled together in a small area and their relations with their workmen were happy and cordial and this goodwill manifested itself in ex-gratia payments to them of small amounts for a number of years. After enactment of the 1965 Act, they abruptly declined to show the goodwill. A dispute arose and a Board of Arbitrators was appointed under section 10A of the Industrial Disputes Act.11 The board, however, rejected the demand for bonus. The dispute was then referred by the government for adjudication to an industrial tribunal who declared the reference illegal as the principle of res judicata applied to the board's award.

In an appeal to the Supreme Court, the main contention of the workmen was that the ex-gratia payment to them for a number of years was based on custom or condition of service and they had a rightful claim to it. On the- other hand, the counter plea of the management was that free acts of grace, even if repeated, could neither amount to a custom nor usage or condition of service. Krishna Iyer J. set aside the award of the tribunal holding that the doctrine of constructive res judicata could not be extended to industrial law.12 Then, relying on the earlier view of the court on the subject,13 he observed that the Act did not bar claims to customary bonus or the claims based on conditions of service. He further stated:

What is legally telling is whether by an unbroken flow of annual payments a custom or usage has flowered, so that a right to bonus based thereon can be predicated. The custom itself precipitates from and is proved by the periodic payments induced by the sentiment of the pleasing occasion, creating a mutual consciousness, after a ripening passage of time, of an obligation to pay and a legitimate expectation to receive.14

10 (1976) II L.L.J. 186. 11 The s. deals with voluntary arbitration. 12 For details, see part III of this survey. 13 See Ispahani Ltd. y. Ispahani Employees Union, (1959)11 L.L.J. 4; Graham Trading

Co. v. Their Workmen, (1959) II L-LJ. 393; M/s. Tulsidar Khimji y. Workmen, (1962) I L.L.J. 435; Bombay Company Ltd. v. Its Workmen, (1964) II L.L.J. 109: Churakulam Tea Estate y. Workmen, (1969) II L-LJ. 407.

11 Supra note 10 at 193.



The labour's claim for bonus was not inflexible and solely pegged to profit as the one and only right. Merely calling the Bonus Act a complete code was not to silence the claimant for bonus under heads which have nothing to do with the subject matter of the code.

It was for the first time in this case that the court went into the history of the concept of bonus and related it to the directive principles in the Constitution, especially to articles 39(a), (c) and 43,15 to prove that the Bonus Act was a welfare legislation and the whole scheme, its prohibitions, exclusions and exemptions, all spoke of profit-oriented bonus with incidental incursions into other allied claims like customary or attendance bonus and the scheme could not be stretched to supersede what it never meant to touch. The court further observed:

The end product of our study of the anatomy and other related factors is that the Bonus Act spreads the canvas-wide to exhaust profit-based bonus but beyond its frontiers is not void but other cousin claims bearing the caste name "bonus" flourish—miniatures of other colours : The Act is neither proscriptive nor predicative of other existences.... We hold that the Bonus Act speaks and speaks as a whole Code on the sole subject of profit-based bonus but is silent on, and cannot, therefore, annihilate by implication, other distinct and different kinds of bonus such as the one oriented on custom. We confess that the gravitational pull on judicial construction of Part IV of the Constitution has, to some extent, influenced our choice.18

The court insisted on the follow-up of the Ghewar Chand17 decision in this matter and very vividly explained the values which precedents generally carry. The following excerpt exhibits the judicial mind:

It is tribe, (sic) going by Anglophonic principles, that a ruling of a superior Court is binding law. It is not of scriptural sanctity but is on of ratio-wise luminesity within the edifice of facts where the judicial lamp plays the legal flame. Beyond those walls and de hors the milieu we cannot impart eternal vernal value to the decision, exhalting the doctrine of precedents into a prison-house of bigotry; regardless of varying circumstances and myriad developments. Realism dictates that a judgment

15 See Constitution of India. i e Supra note 10 at 200. 11 M/s. Sanghir JivraJ Ghewar Chand v. Secretary, Madras Chillis Grain and Kriana

Merchants—Workers Union, (1969) I L.LJ. 719.



has to be read, subject to the facts directly presented for consideration and not affecting those matters which may lurk in the record. Whatever be the position of subordinate Courts, casual observations, generalisations and sub-silentio determinations must be judiciously read by Courts of co-ordinate jurisdiction and, so viewed, we are able to discern no impediment in reading Ghawar Chand (supra) as confined to profit-bonus, leaving room for non-statutory play of customary bonus.18

A typical situation arose in Madurai Coats Limited v. Workmen of Madurai Coats Limited19 where the appeal before the Supreme Court was concerned with the interpretation of section 31A of the Payment of Bonus (Amendment) Act of 1976. The section makes a special provision with respect to payment of bonus linked with production or productivity. It says :

Notwithstanding anything contained in this Act,—

(0 where an agreement or a settlement has been entered into by the employees with their employer before the commencement of the Payment of Bonus (Amendment) Act, 1976 or

(ii) where the employees enter into any agreement or settlement with their employer after such commencement,

for payment of an annual bonus linked with production or productivity in lieu of bonus based on profits payable under this Act, then, such employees shall be entitled to receive bonus due to them under such agreement or settlement, as the case may be :

Provided that such employees shall not be entitled to be paid sucrx bonus in excess of twenty percent of the salary or wage earned by them during the relevant accounting year.

In this case the workmen entered into an agreement with the employer whereby the company agreed to pay Rs. 135 lakhs by way of bonus for the period January 1, 1974 to June 30, 1975. Since the Bonus Amendment Ordinance came into force on September 25, 1975, the company

18Swpranotel0at200. 19 (1976) II L.L.J. 424.



gave notice to the workmen that their agreement stood superseded by that ordinance and that the bonus would be recalculated on the basis of the new provisions. Thus calculated, the bonus amount came to Rs. 48 lakhs. A dispute arose and the Government of Tamil Nadu referred the matter for adjudication. The tribunal held that the agreement was not hit by the amending Act of 1976. The Supreme Court setting aside the award held that as the Act had been given retrospective effect from the date of the ordinance, the circumstance that the agreement was entered into prior to that date was not a matter of relevance.20

It is submitted that the decision needs reconsideration because what is really meant by section 31A in the amended Act is the retrospective application of the provision to all agreements relating to the payment of bonus linked with production and productivity and it does not in any case cover agreements with respect to profit sharing bonus. This is a special provision relating to a special circumstance. Notwithstanding anything in the Act, the 1975 agreement with regard to the payment of bonus entered into between the company and the workmen related to bonus profit-oriented bonus and not to productivity-oriented bonus.

The question whether bonus is a 'wage' under the Payment of Wages Act, 1936 has been decided affirmatively by the High Courts as well as by the Supreme Court in a number of cases.21 But once it becomes due from an employer the question is how a worker can recover the amount or what remedy does he have against the employer for the vindication of his right ? Statutory bonus payable under the Bonus Act of 1965 can be claimed by making an application under the Payment of Wages Act to the payment of wages authority. If the bonus is payable under an award, settlement or agreement, then under section 21 of the Bonus Act,22 the employee may make an application to the appropriate government for the recovery of the money due to him. Where any workman is entitled to receive from the employer any money or any benefit which is capable of being computed in terms of money and if any question arises as to the amount of money due or as to the amount at which such benefit should be computed, then the question may be decided by the labour court.23

20 Id. at 425. 21Rajaram (B.S.) y. Patel {B.C.), (1958) I L.LJ. 773; Muhammad Qasim Larry v.

Muhammad Samsuddin, (1964) II L.L J. 430; DP. Kelkar v. Ambadas Kesho Bajaj, A.l.R. 1971 Bom. 124; Sreedharan Nair y. Sanker Sreedhamn, (1969) I L.LJ. 627.

"Sees. 21. 23 See s. 33C(2) of the Industrial Disputes Act.



These are the different ways of recovering bonus or any other money due from an employer. In Labour Inspector v. Authority, Payment of Wages Act,** the employees made an application before the authority for the claim of bonus payable by the employer under section 10 of the Bonus Act which provides for the payment of minimum bonus which the employer had to pay irrespective of profits. It says:

[Wjhere an employer has any allocable surplus in any accounting year, then, he shall be bound to pay to every employee in respect of that accounting year a minimum bonus which shall, not be less than four per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees whichever is higher, or, in a case where the allocable surplus exceeds the said amount of minimum bonus payable to the employees, an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage.25

The authority dismissed the application on the ground that bonus claimed was not 'wages' under the Payment of Wages Act. The High Court of Madhya Pradesh relying on the Supreme Court and High court rulings26 held that bonus was a wage and a claim for statutory bonus could be entertained by the authority under the Payment of Wages Act. The court in this case analysed those decisions in the light of various provisions of law and their implications, namely, sections 10, 21, 22 and 39 of the Bonus Act,27 sections 2(vi) and 15 of the Payment of Wages Act, 193628 and section 33-C(2) of the Industrial Disputes Act, 194729

and observed that if the bonus claim was neither under a settlement nor under an award or agreement, section 21 of the Bonus Act or section 33-C(2) of the Industrial Disputes Act was not attracted.

III. RES JUDICATA IN INDUSTRIAL PROCEEDINGS

The concept of res judicata is based on certain principles. They are :

(a) The principle of constructive res judicata applies with equal force to writ petitions under article 226.

"(1976) I L.L.J. 511. 25 For further details, see s. 10* u Supra notGll. *7 See the Payment of Bonus Act, 1965. «• See s. 15. 29 Supra note 23.



(b) Finality of decisions rendered by courts of competent jurisdiction is recognised.

(c) Parties should not be encouraged to fight twice over the same kind of litigation.

(d) A plea which could be taken by a party in a proceeding between him and his opponent, if not taken at a proper time, that party should not be permitted to take the plea against the same party in a subsequent proceeding on the same cause of action.

The courts in India have not been static in their opinion as to whether at all the principle of res judicata applies or not to industrial proceedings. No hard and fast rule has been laid. It has all depended on the facts and circumstances of each case. For example, in a situation where a claim petition was dismissed by the lower court on the ground that benefit in section 33-C(2) of the Industrial Disputes Act, 1947, was only confined to computation of non-monetary benefits and when again, the employees preferred petition for computation of back wages, it was held that the order of the lower court dismissing the earlier application operated as res judicata in the proceedings relating to the second application.30 On the other hand, a finding given by the workmen's compensation court on the question whether a workman was permanently partially disabled to the extent of 45 per cent for the purpose of deciding the compensation payable to him did not constitute res judicata in a proceeding arising subsequently under different statutes like the Industrial Disputes Act on the same issue.31 This is the position with the High Courts. Now, even in the Supreme Court, no uniform view has so far been expressed on this subject. In a case where the labour court had held that the standing orders of the company would not apply to those employees who joined the organisation before the standing orders were certified, the Supreme Court was of opinion that res judicata would not apply to such a situation and the employer was not precluded from reagitating the same question in order to get the situation corrected.32 If the standing orders were to bind only those who were subsequently employed the result would be that there would be different conditions of employment for different classes of workmen. Such a result could never have been intended by the legislature, for that would render the conditions of service of workmen indefinite and diversified as was the case before the enactment of the Industrial Employment

80 See S. Pandubhai v. Bombay Cycle Importing Co., Madras, (1970) II L.LJ. 559. 81 Union of India v. Nanak Singh, (1970) I L.L.J. 10. 82 Agra Electric Supply Co. Ltd. y. Alladin, (1969) II L.LJ. 540.



(Standing Orders) Act, 1946.33 On the other hand, in a situation where the order of termination of services of a person was challenged on two alternative grounds in the High Court and the court decided against him only on one ground and dismissed the petition, the Supreme Court held that even if the High Court was in error in holding that the appeal could be decided only on the first point, the order dismissing the petition must still operate as res judicata in respect of both the points on which the petition was founded.34 Similarly, in Bombay Gas Co., it was held that the contentions which were not raised before the High Court could not be raised for the first time before the Supreme Court.35

It was observed :

The doctrine of res judicata is a wholesome one which is applicable not only to matters covered by the provisions of the Civil Procedure Code but to all litigations. It proceeds on the principle that there should be no unnecessary litigation and whatever defences and claims are open to parties should all be put forward at the same time, provided no confusion is likely to arise by so putting forward all claims.36

In 1976 again, the principle of res judicata was applied in a case relating to the payment of customary or contract bonus. In Mumbai Kamgar Sabha v. A. Faizullabhai?1 the Arbitration Board under section 10A of the Industrial Disputes Act rejected the demand for bonus to the workers. The matter was referred by the government for adjudication to the industrial tribunal, who said that the award of the board operated as res judicata to the demand of the workmen and, therefore, it had no jurisdiction. On appeal by special leave, the Supreme Court allowed the customary bonus on the ground that the Bonus Code, being a self sufficient one dealing with only profit bonus, did not bar customary or contract bonus. The company then emphasized that since no case of customary bonus was urged by the workmen before the board they could not raise it then and the claim was barred by the general principles of res judicata?8 Krishna Iyer J. expressed his doubt about the extension of such a doctrine to industrial proceedings by saying :

33 See also Salem-Erode Electricity Distribution Company Pvt. Ltd. v- Their Employees* Union, (1966) I L.LJ. 443 ; Guest, Keen, Williams Pvt. Ltd. v. Sterling {P.J.), (1959) II L.LJ. 5405 ; Workmen of Kettlewell Bullen Co. Ltd. v. Kettlewell Bullen and Co. Ltd., (1964)IILLJ. 146.

3* Cf. Union of India v. Nanak Singh, (1970) I L.LJ. 10. 35 See Bombay Gas Co. Ltd. v. Pandurang, (1975) II L.LJ. 345. 36 Id. at 346. 37 Supra note 10. 38 The ruling of the Supreme Court given in Bombay Gas Company Ltd. y. Pandurang,

supra note 35, was relied upon.



It is clear law, so long as the above ruling [Pandurang, (1975) II LLJ(345)] stands, that industrial litigation is no exception to the general principle underlying the doctrine of res judicata. We do entertain doubt about the extension of the sophisticated doctrine of constructive res judicata to industrial law which is governed by special methodology of conciliation, adjudication and considerations of peaceful industrial relations, where collective bargaining and pragmatic justice claim precedence over formalised rules of decision based on individual contests, specific causes of action and findings on particular issues....39

He was of the view that if a fresh dispute had been raised after terminating the prior award no bar of res judicata could be urged. He left open the question concerning the dangers of constructive res judicata in the area of suits vis-a-vis writ petitions under article 226 and as between proceedings under article 226 and article 32 of the Constitution of India for a closer study. He stated :

Dispute-processing is not by Court litigation alone. Industrial peace best flourishes where non-litigative mechanisims come into cheerful play before tensions develop or disputes braw. Speaking generally, alternatives to the longish litigative process is a joyous challenge to the Indian activist jurist and no field is in need of the role of avoidance as a means of ending of preempting disputes as industrial life. Litigation, whoever wins or loses, is often the funeral of both. We are a developing country and need techniques of maximising mediatory methodology as potent processes even where litigation has erupted.40

The whole philosophy of the principle of res judicata, so far as industrial proceedings are concerned, revolves round the idea that, as far as possible, the principle should not be applied to industrial law because it deals with a different system of grievance settlement which allows free play of the workers' voice in a walfare state.

VI WRIT JURISDICTION UNDER ARTICLE 226

The extent of jurisdiction of a High Court in issuing a writ has covered a wide range of subjects. For example, a writ could not be

89 Supra note 10 at 203. 40 Id. at 203. See also Burn & Co. v. Their Employees, (1975) I L.LJ. 226; Workmen of

Balwar Lawsie &Co.y. Balwer Lawsie & Co., (1964) I L.LJ. 380; Dunlop India Ltd. v. Their Workmen, (1972) II L.LJ. 1; Jhagrakhan Collieries (P) Ltd. y. G.S. Agrawal, (1975) I L.LJ. 163; Indian Drugs and Pharmaceutical Limited v. Government ofU. P., (1976HI L.LJ. 438



issued for the enforcement of non-statutory rule and administrative instructions;41 it could rarely lie against the findings of disciplinary authorities;42 a non-statutory body could not be asked or forced to do any duty,43 a single writ petition was maintainable at the instance of several petitioners when a common question of law or fact was involved and if the petitioners were jointly interested in the cause of action,44 the refusal of the Supreme Court to exercise its discretion under acticle 136 by granting the leave asked for could not affect the High Court jurisdiction under article 226.45

The year 1976 witnessed some more interesting issues in this area, for example, whether a writ under article 226 could lie against a cooperative society to enforce a contract qua contract, whether an arbitration award under section 10A of the Industrial Disputes Act could be subject to writ jurisdiction and whether a nationalized bank could also be covered by such jurisdiction.

In Kulchhinder Singh v. Hardyal Singh BrarAG a writ was asked for against a society registered under the Punjab Co-operative Societies Act of 1961 seeking to set aside a selection list at the instance of the aggrieved appellants who were not included therein. The main emphasis was that the State Bank, though registered under the Societies Act, was a public authority and, therefore, fell within the bounds of article 226. The provision was also said to be so widely worded that a writ could be issued for any person against any person. The specific grievance of the appellant was that promotions to the higher posts in the bank were made by direct recruitment contrary to rules or agreement worked out as a result of collective bargaining with the management and, therefore, a writ of mandamus be issued to stop the bank from proceeding further in the matter. The High Court held that no writ could issue against a cooperative society.

Krishna Iyer J. of the Supreme Court, affirming the High Court judgment and analysing the scope of writ jurisdiction, observed :

[T]he distinction between a body with a personality created by an (sic) owing its existence solely to a statute and an entity which is

4X See State of Assam y. A.K. Sharma, (1966) I L.LJ. 451; Ratnakar Vishwanatha Joshi v. Life Insurance Corp., (1975) I L.LJ. 501.

42 Railway Board y. Niranjan Singh, (1969) II L.LJ. 743. 43 P.T. Corporation y. Imanuel, (1969) II L.LJ. 749. 44 Management of Singarani Collieries v. Industrial Tribunal, A.P., (1975) I L.LJ. 470. 45 Hamidas Malakar v. Jay Engineering Works, (1975) II L.LJ. 26. 48 (1976) II L.LJ. 204.



recognized by and is registered under a statute is real, dramatic and makes for a world of difference in jural impact.47

The court found that, essentially, the appellant was seeking merely the enforcement of the agreement entered into between the employees and the co-operative bank and in order to do that he wanted to take shelter under article 226 to stop the respondents to take action in the matter. If that be the situation it was not material whether the bank of the co-operative society was a 'public authority' or not but whether the remedy of that article was available to enforce a contract qua contract. The writ petition itself emphasized on the contract between the staff and the society, agreeing upon a certain percentage of promotions to various posts or an omnibus all embracing promise to give a quota to the existing employees. Krishna Iyer J. was of opinion that a mere contract agreeing to a quota could not be exalted into a service rule or a statutory duty. A constitutional remedy under article 226 was out of question in the event of a breach of contract, bypassing the normal channels of civil litigation. He observed:

Private Law may involve a State, a statutory body, or a public body in contractual or tortuous actions. But they cannot be siphoned off into the writ jurisdiction.48

Whether an arbitration of a dispute under section 10A of the Industrial Disputes Act49 was amenable to writ jurisdiction came up for consideration in Rohtas Industries v. Rohtas Industries Staff Union.** In this case, there was a dispute between the management and workers over the payment of enhanced wages and it led to a strike in the company. The matter was handed over to an arbitrator under section 10A of the Industrial Disputes Act and the arbitrator held that the workmen participating in the strike were not entitled to wages for the strike period and that the workmen were liable to pay to the company l/8th of the total costs of the arbitration. The Mazdoor Union challenged the arbitrator's award. Whether an award under section 10A was insulated from interference under article 226 was the main issue for decision. Krishna Iyer J. held that the writ power had by and large been the people's sentinel on the qui vive and to cut back or liquidate that power might cast a peril to human rights and, therefore, the arbitrator's award was not beyond the legal reach of article 226 although

47 Id. at 207. 48 Ibid. *» Supra note 11. 50 (1976) I L.LJ. 274.



this power must be kept in severely judicious leash.51 He further observed :

The expensive and extraordinary power of the High Courts under Art. 226 is wide (sic) as wide as the amplitude of the langu-age used indicates and so can affect any person—even a private individual — and be available for any (other purpose) even one for which another remedy may exist. The amendment to Art. 226 in 1963 inserting Art. 226(IA) reiterates the targets of the writ power as inclusive of any person by the expressive reference to "the residence of such person." But it is one thing to affirm the jurisdiction, another to authorise its free exercise like a bull in a China shop. This Court has spelt out wise and clear restraints on the use of this extraordinary remedy and High Courts will not go beyond those wholesome inhibitions except where the monstrosity of the situation or other exceptional circumstances cry for timely judicial interdict or mandate. The mentor of law is justice and a potent drug should be judiciously administered.62

It was, therefore, held that an award under section 10A was not only not invulnerable but more sensitively susceptible to the writ lancet, being a quasi-statutory body's decision.53

In Kalyanmal Bhandari v. State of Rajasthan,u the view was that a writ could also lie against statutory corporations. The dismissal of a servant by statutory authorities or bodies in breach of the provisions of statutes or orders or schemes made under the statute which regulate the exercise of their power is invalid or ultra vires and the principle of master and servant contractual relationship has no application to such

51 Id. at 278. 62 Ibid. See also Engineering Mazdoor Sabha v. Hind Cycles Ltd., (1962) II L.LJ, 760.

Gajendragadkar J. observes: 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 be issued to any person or authority, including in appropriate cases any Government, within the territories prescribed. Therefore, even if the arbitrator appointed under S. 10A is not a tribunal under Art. 136 in a proper case, a writ may He against his award under Art. 226. [Id. at 768].

68 The court relied on some of the English decisions on the point, e.g., see James Clark {Brush Materials) Ltd. y. Carters {Merchants) Ltd., (1944) LK.B. 566.

fi4 (1976) I L.LJ. 54.



cases.55 The Orissa High Court in Braja Sunder Das v. Union of India** went to the extent of holding that the orders of the government issued under section 10 of the Industrial Disputes Act refusing to make a reference in a particular case could be quashed under article 226 and the government could be asked to make a reference.

V TERMINATION OF SERVICE

It has been well established that before any action of discharge or dismissal by way of punishment for a misconduct can be taken against a workman, the employer is bound to draw up regular proceedings against him on the principles of natural justice apart from what the standing orders say. In the context of industrial adjudication the theory of the employers' freedom of contract as such cannot have any application. The power to terminate one's service on one month's notice or a month's salary in lieu of notice cannot be used as a termination of service for alleged misconduct.57 To accept the claim of the employer to terminate the service of his workmen under the contract of employment or under the standing orders without scrutinising the underlying motive behind such termination would be to set at naught the right to security of service which the industrial employees have got through industrial adjudication. Therefore, the exercise of such power to be valid must always be bonafi.de?*

These principles were reiterated by the Kerala High Court in Premier Tyres Ltd. v. V. A. Abraham?* where the services of the respondent were terminated on the basis of certain allegations against him in respect of which he was not given any opportunity to defend himself. He was not given any show cause notice nor was there any enquiry conducted against him. The court observed that in such cases of misconduct, the employer had to show and the tribunal had to consider and decide whether there was reasonable cause irrespective of whether or not that cause amounted to misconduct. Since the services of the workman were terminated while he was on medical leave and while he was availing sickness benefit under the Employees' State Insurance Act, the employer's action was illegal under section 73 of the Act. This means

6 S 5. R, Tiwari v. District Board, Agra, 1964) I LLJ. 1; LLC. of India v. S. K. Mukherjee, (1964)1 L.LJ. 442; Mafatlal Naraindas Barot v. / . O. Rathod, (1966) I L.LJ. 437; Indian Airlines Corporation y. Sukhdev Rai, (1971) I L.LJ. 496.

66 (1976) I L.LJ. 362. 57 Cf. Utkal Machinery Ltd. v. Santi Patnaick, (1966) I L.LJ. 398. 58 See also Assam Oil Company Ltd. y. Its Workmen, (1960) I L.LJ. 687; Chartered

Bank y. Its Employees Union, (1960) II L.LJ. 222, Tata Oil Mills Co. v. Their Work-men, (1966) II L.LJ. 602.

58 (1976) I L.LJ. 161.


http://bonafi.de?*

192 A nnual Survey of Indian Law [ 1976

that even if the management exercises its power under the standing orders or the contract of employment in dismissing a person for alleged misconduct it cannot do so if the person comes within the provisions of section 73 of the Act. The section provides :

(1) No employer shall dismiss, discharge, or reduce or otherwise punish an employee during the period the employee is in receipt of sickness benefit or maternity benefit, nor shall he, except as provided under the regulations, dismiss, discharge or reduce or otherwise punish an employee during the period he is in receipt of disablement benefit for temporary disablement or is under medical treatment for sickness or is absent from work as a result of illness duly certified in accordance with the regulations to arise out of the pregnancy or confinement rendering the employee unfit for work.

(2) No notice of dismissal or discharge or reduction given to an employee during the period specified in sub-section (1) shall be valid or operative....

The Orissa High Court in Hatakishore Sahu v. Industrial Tribunal, Orissa?0 was of opinion that where the employer passed an order of termination whether without holding an enquiry or after holding a defective enquiry, the order of the termination would be effective from the date it was passed by the employer if it had been held to have been justified by the tribunal and not retrospectively from the date of suspension. In exercise of the writ jurisdiction the High Court has no power to take further evidence to justify an order of termination otherwise held without enquiry or after improper enquiry.61 In a case where the services were terminated without holding a domestic enquiry, but the order of termination was substantiated by the management by placing all the evidence before the labour court, the action of the management could be held justified.62 Of course, the labour court cannot call upon the parties to adduce evidence without deciding as a preliminary issue whether the domestic enquiry was according to the principles of natural justice. When that question itself becomes controversial then evidence has to be taken on that question,63

60 (1976) II L X J . 60. 61 Id. at 64. 68 Workmen v. Premier Tyres Ltd., (1976) II L-LJ. 251. See also Workmen of Fire

stone Tyres and Rubber Co. v. Management, (1973) I LXJ. 278. *3 Madurai-Devakottai Transport {P) Ltd. v. Labour Court, Madurai, (1976)11 L.LJ.

257—substantiated by Cooper Engineering Ltd. v, P. P. Mundhe, (1975) I L.LJ. 379.



In cases of dismissals or termination of service during the pendency of proceedings before the tribunal, the employer has to seek prior permission from the tribunal to do so as required under section 33(2)(6) of the Industrial Disputes Act.64 If the tribunal is satisfied that the management has not acted mala fide and that there has been proper enquiry without resort to any unfair practice or victimisation, it has to accord the permission to the employer. But the approval granted in sucrfcases does not debar an industrial dispute being raised by the petitioner. This has been the position for several years and it still gets emphasis in the judicial policy today.65

Several interesting questions concerning the power of the tribunal under section 33, like the tribunal's permission, the difference between termination simpliciter and termination for misconduct and the tribunal's power to pierce the veil of the termination order, came up for consideration before the Supreme Court in M.S. Dantwal v. Hindustan Motors.™ Here, the appellant workman, because of habitual absence from duty was dismissed from service on the ground of misconduct under the company's standing orders. Even though an industrial dispute was pending between the company and its workmen at the time of termination, the company did not ask for approval of its order from the tribunal as required under section 33(2)(£). The workman made a complaint to the tribunal, under section 33A,67 who ordered for reinstatement. The company's contention was that the termination was termination simpliciter in exercise of its right under a written contract of service and in accordance with the standing orders of the company and it was not meted out as a punishment and, therefore, the tribunal's prior permission under section 33(2)(&) was not necessary. In other words, termination simpliciter or automatic termination of service under the conditions of service or under the standing orders was outside the scope of section 33.

The court analysed the applicability of sections 33 and 33A in such situations and held that the jurisdiction of the tribunal to entertain a complaint under section 33A was only when there was a contravention of section 33 of the Act. The employer's point that since the termination of service was not for misconduct as defined in

64 See s. 33(2)(6). «5 See Chunni Lai Rathore v. Presiding Officer, Industrial Tribunal, (1976) I. L.LJ: 155;

Cf. also Management of Rampur Colliery y. Bhuban Singh, (1959) II L.LJ. 231; East India Coal Co. v. P.S. Mukerjee, (1959) II L.LJ. 227; L.K. Textile Mills y. Its Workmen, (1961) I L X J . 211; D.C. & G. Mills v. L.B. Singh, (1972) I L.LJ. 180.

66 (1976) II L X J . 259. •7 See s. 33A, Industrial Disputes Act, 1947.



the standing orders and as contemplated under section 33(2) (b), the application under section 33A was not maintainable, was negatived by the court on the ground that the misconduct under section 33(2) (b) need not necessarily be a misconduct described in the company's standing orders. Section 33(2) (b) makes it obligatory upon the employer to make an application to the tribunal under the proviso when he dismisses a workman for any misconduct. It was not a correct proposition of law that in case of a complaint under section 33A, the tribunal would be debarred from going into the question whether in substance it was a case of dismissal for misconduct and not termination simpliciter.™ It was open to the tribunal to pierce the veil of the employer's order of termination of service and have a close look at all the circumstances and come to a decision whether the order was passed on account of certain misconduct. It was, however, unquestionable that if an employer passed such an order in exercise of his right under a contract or in accordance with standing orders and the tribunal found that the order was not on account of any misconduct, the question of violation of section 33 would not arise.69 It was further said in Bhaskaran Nair v. Premier Tyres Ltd. 70 that even if the transfer of a workman by his employer was motivated or was prejudicial to the workman, when certain disputes were already pending before tribunal, then such transfer would be violative of section 33.

VI RECOVERY OF MONEY DUE FROM AN EMPLOYER

Section 33-C(2) of the Industrial Disputes Act provides for the recovery of money due from an employer under any award or settlement or under the provisions of chapter VA of the Act concerning lay-off and retrenchment and the labour court has the jurisdiction to decide all questions relating to the amount of money due or as to the amount at which such benefit should be computed.71 In Central Bank of India v. S.Kumar Shant,™ the point was again raised about the extent of jurisdiction of the labour court under section 33-C(2). In this case, the respondent was working as a clerk in the Central Bank and was performing

68 Supra note 66 at 267; see also Air India Corporation, Bombay v. A. Rebbelow, (1972) I L.LJ. 501; Hindustan General Electric Corp.y. Biskwanath Prasad, (1971) II L.LJ. 340.

69 Id at 265. 7 0(1976)IILXJ101. 71 Cf. Chief Mining Engineer, Mjs. East India Coal Co. Ltd., Dhanbady* Rameshwar,

(1968)1 L.LJ. 6; New Taj Mahal Cafe Pvt. Ltd. v. Labour Court, Hubli, i\910) U L.LJ. 51; R.B. Bansdal Abirchand Mills Co. Ltd. v. Labour Court, Nagpur, (1972)1 L X J . 231.

72 (1976) I L X J . 90.



the duties of the clearing house representative on behalf of the bank. He claimed that according to the terms of the bipartite agreement he was entitled to the special allowance fixed for special assistants and claimed the amount due. The bank denied that he was a special assistant and that the labour court had no jurisdiction under section 33-C(2) to go into the question whether at all he held that post. The Supreme Court said that the labour court had the jurisdiction to interpret the bipartite agreement in order to allow the claim of the respondent.73

A new point in this connection was raised before the Bombay High Court as to whether it was open for the labour court to entertain an application under section 33-C(2) regarding the claim barred by limitation under the provisions of the Minimum Wages Act. What happened in Bombay Municipal Council v. Second Labour Court,™ was that 170 employees of the Municipal Council filed an application with the Minimum Wages Authority to get minimum wages under the Act and as per the government notification of August 1965. The authority, because of the period of limitation prescribed by the Minimum Wages Act, restricted their claim to the period which was within limitation. The employees moved the labour court under section 33-C(2) of the Industrial Disputes Act for recovery of the remaining amount. The Municipal Council objected on the ground that when the authority dismissed the application filed by the employees for condonation of delay, it was not open for the employees to make a claim relating to the same period in the proceedings under section 33-C(2).

The court held that though the authority constituted under the Minimum Wages Act had no jurisdiction to entertain the claim made by the employees which was within the period of limitation, no period of limitation was prescribed for filing an application under the section. What the employers did was that they made a claim before the authority restricting it to a period of six months which was within limitation, whereas, under section 33-C(2) they claimed wages for the period different than the one for which the earlier claim was made. Therefore, one could not operate as res judicata to the other situation because both the claim periods were distinct and separate.75

In R. Krishnaswami Reddiar v. Labour Court, Madurai ™ section 15 of the Payment of Wages Act and sections 10 and 33-C(2) of the Industrial

7 8 See supra note 71. 74 (1976) I L.LJ. 334. 76 The Supreme Court decision given in Town Minicipal Council v. Presiding Officer,

Labour Court, Hubli, (1969) II L.LJ. 651, was relied upon. n (1976) II LXJ. 281.



Disputes Act were invoked to decide the question of status or classification of an employee. The transport workers governed by the Motor Transport Workers Act, 1961, applied to the labour court under section 33-C(2) for compensation in terms of money, certain benefits and allowances they claimed to be entitled to and which were in arrears over many years. The employers objected to the jurisdiction of the labour court in this matter under section 33-C(2) and instead pointed out that the claim should have been filed with the Payment of Wages Authority under section 15 of the Payment of Wages Act. Regarding the question whether a particular workman belonged to the category of a clerk or an attendant the plea was that it was a question not within the purview of either section 33-C(2) or section 15.

The Madras High Court analysed these provisions and held that section 15 could not be invoked for the purpose of determining the question of compensation because it only dealt with the deductions from the wages and delay in its payment. Such claim was competent only under section 33-C(2). The scope of the two sections were not concurrent.77 But, for deciding the question of status of categorisation of employees the power under section 33-C(2) could not be invoked because any incidental question which could be brought within the scope of section 33-C(2) would have to be inherently related to the problem of computation. The status, could not be such a question and could only be decided by raising an industrial dispute under section 10(1) of the Industrial Disputes Act.78

VII SOCIAL LEGISLATION

Employees9 insurance

The first problem in this area related to the definition of 'workman' under the Employees' State Insurance Act. Before any reference to this enactment is made, it would be relevant here to see the position in the other labour enactments.

The term 'workman' has been subjected to various interpretations under the industrial law as a result of which discriminatory situations have arisen affecting the rights of employees employed in different organisations. For instance, an employee may be a 'workman' for the purposes of the Industrial Disputes Act but may not be so under the Employees'

77 The judgment of the Supreme Court in Central Bank of India v. Rajagopalan, (1963) II L.LJ. 89, was relied upon.

78 Supra note 16 at 222.



State Insurance Act. A perusal of some of the industrial laws would show the disparity.

The Workmen's Compensation Act, 1923, defines 'workman' as a person (other than that employed on casual basis and not connected with employers' trade or business) employed on monthly wages not exceeding Rs 1,000 and employed, otherwise than in a clerical capacity, in any manufacturing process under the Factories Act, employed for the purpose of making, repairing or transporting articles, employed in mines under the Mines Act, employed as the master or seaman of a ship, employed for the purposes of construction, loading, cleaning, etc.79 The Industrial Disputes Act has a wider connotation in the sense that a workman under that statute means any person (including an apprentice) employed in any industry to do any skilled or unskilled, manual, supervisory, technical or clerical work for hire or reward, whether the terms of employment be 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 who is employed mainly in a managerial or administrative capacity or who, being employed in a supervisory capacity draws wages exceeding Rs. 500 per month or exercises functions mainly of a managerial nature.80

Under the Employees'State Insurance Act, 1948, the definition was again narrowed down, excluding an apprentice within the purview of the Act. An employee here means any person employed for wages in any factory or establishment either directly or through an immediate employer or whose services are temporarily lent on hire to the principal employer by the person who has entered into a contract of service with that employer.81 Under the Factories Act of 1948 he is a person employed directly or through a contractor with or without the knowledge of the principal employee, whether for remuneration or not, in any manufacturing process.82 In the Minimum Wages Act, 1948, again, the word 'employee' is used and it means any person employed for hire or

79 See s. 2{ii) and the second schedule. *° See s. 2(5) of the Act. 81 See s. 2(9). In Employees' State Insurance Corp. v. Shalimar Tar Products, where

certain persons were employed for water-proofing work outside the factory at the contract site, it was held that they were not 'employees* within the meaning of the E.S.I. Act.

saS.2{e)oftheAct.



reward to do any skilled, unskilled, manual or clerical work in employments where minimum rates of wages have be'en fixed and includes an outworker whether or not the trade or business is being carried on within the premises.83 So also, the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, defines an 'employee' as a person who is employed for wages in any kind of work, directly or indirectly getting wages from the employer and includes a person employed by or through a contractor.84

The different interpretations of a particular term under different enactments have led to serious litigation. How can one word be interpreted broadly as well as narrowly when it squarely falls within the bounds of labour-management relations ? A person today may be a workman for purposes of the Industrial Disputes Act but he may not be so for purposes of the Workmen's Compensation Act, Employees' State Insurance Act, Factories Act, Minimum Wages Act and vice versa. As a matter of fact, a workman should be so defined as to be within the bounds of all labour legislation uniformly.

In E.S.I. Corporation v. Tata Engineering and Locomotives Ltd.,S5 the question was whether an apprentice could be treated as a 'workman' within the provisions of the Employees' State Insurance Act and the court stated that he was not a workman for the purpose of availing the benefits of the Insurance Act. It observed :

The heart of the matter in apprenticeship is, therefore, the dominant object and intent to impart on the part of the employer and to accept on the part of the other person learning under certain agreed terms. That certain payment is made during the apprenticeship, by whatever name called, and that the apprentice has to be under certain rules of discipline do not convert the apprentice to a regular employee under the employer. Such a person remains a learner and is not an employee. An examination of the provisions of the entire agreement leads us to the conclusion that the principal object with which the parties enter into an agreement of apprenticeship was offering by the employer an opportunity to learn the trade or craft and the other person to acquire such theoretical or practical knowledge that may be obtained in the course of

88 See s.2(/) of the Act. 8* S. 2(f). 88 (1976) I L.LJ. 81.



the training. This is the primary feature that is obvious in the agreement.850

Referring to legislative intent, the court further observed :

[T]he Industrial Disputes Act, 1947, which is a piece of beneficial labour welfare legislation of considerable amplitude defines "workman" under S. 2(a) of that Act and includes apprentice in express terms. It is significant that although the Legislature was aware of this definition under S. 2(s) under the Industrial Disputes Act, 1947, the very following year while passing the Employees'State Insurance Act, 1948, it did not choose to include apprentice while defining the word "employee" under S. 2 (9) of the Employees' State Insurance Act, 1948. Such a deliberate omission on the part of the Legislature can be only attributed to the well-known concept of apprenticeship which the Legislature assumed and took note of for the purpose of the Act. This is not to say that if the Legislature intended it could not have enlarged the definition of the word "employee" even to include the "apprentice" but the Legislature did not choose to do so.856

Taking such disparities into consideration, it is suggested, that a broader definition of the term 'workman' be worked out so that it could be interpreted alike and uniformly for the purposes of all labour law statutes.

Another problem in the area of employees' insurance arose in Alembic Glass Industries Ltd., Baroda v. Its Workmen™ which was concerned with the interpretation of section 61 of the Employees'State Insurance Act, 1948. The section provides that when a person is entitled to any of the benefits under the Act he shall not receive any similar benefit admissible under any other enactment. The question arose whether sickness benefit barred workmen's claim for sick leave. The court, answering the question in the negative, held that section 61 was not attracted because the benefits granted to workmen by the industrial tribunal were not similar to the benefits of sickness leave. The Act, in fact, does not deal with the question of sick leave. The court relied on its earlier rulings87 on this point where it was observed that in

8ea Id. at 84. 8 5 & Uat85. 86 (1976) II L.L-J. 316. 87 Cf. The Hindustan Times Ltd., New Delhi y. Its Workmen, (1963)1 L.LJ. 108;

Technological Institute of Textiles v. Its Workmen, (1965) II L.LJ. 149.



providing for periodical payments to an insured worker in case of sickness benefit or for medical treatment or attendance to him or the members of his family, the legislature did not intend to substitute any of these benefits for the workmen's right to get leave on full pay on the ground of sickness. Moreover, section 49 clearly stated that a person qualified to claim sickness benefit shall not be entitled to the benefit for an initial waiting period of two days except in the case of a spell of sickness following an interval of not more than 15 days, the spell of sickness for which benefit was last paid. It was apparent that the Act did not cover all contingencies of sickness. Sick leave was, therefore, allowed. Moreover, the court found in this case that the award of the industrial tribunal allowing sickness leave was neither illegal nor unjust, nor would it adversely affect the economy or industrial peace or result in imbalance in service conditions in other industrial establishments.

This decision is undoubtedly a welfare step in the interest of industrial workers to save them from hardships of employment and from the harassing attitude of the employers.

Similarly, in Corborundum Universal Ltd. v. E.S.I. Corporation, Trichur,6* the Kerala High Court held that the incentive bonus paid to the workers would be taken as wages for the purpose of calculating the remuneration payable under the Employees' State Insurance Act, though, of course, everything paid in cash to any employee might not be treated as remuneration. If there was an objection on the part of the employer to pay and the employees had a right to demand it because of the contract of employment, it was a part of wages.89

Workmen's compensation

This was the year when the Supreme Court decided for the first time that the liability of the employer to pay compensation to his employee arises the moment personal injury is caused during and in the course of employment and it cannot be deemed to be computed after the determination of this question by the commissioner. In Pratap Narain Singh Deo v. Srinivas Sabata90 a workman carpenter of the appellant fell down while working on a cinema hall resulting in the amputation of his left arm from the elbow. He demanded compensation but the appellant on one or the other plea did not pay any attention to his

88 (1976) I L.LJ. 17; see also Mahalaxmi Glass Works Pvt. Ltd. y. Employees' State Insurance Corp., (1976) II L.LJ. 238.

89 The Supreme Court decision in Braithwaite & Co. v. Employees'State Insurance Corporation, (1968) I L.LJ. 550 was distinguished.

90 (1976) I L.LJ. 235.



claim. Ultimately, the workman moved the workmen's compensation commissioner for compensation. The commissioner allowed the compensation from the day of injury with 5 per cent penalty over it together with interest at 6 per cent per annum. The appellant, after moving the High Court in vain, got special leave to appeal in the Supreme Court. He tried to make a distinction between the total disablement and the permanent disablement under the Workmen's Compensation Act emphasizing this incident to be considered in the second category. Further, his contention was that the compensation had not fallen due until it was settled by the commissioner under section 19 of the Workmen's Compensation Act and, therefore, there was no question of any penalty being imposed on him for not paying the compensation.

The court observed that what was material was that by loss of arm above the elbow, the workman was evidently rendered unfit for carpentry and he lost 100 per cent of his earning capacity. It was wrong, the court said, that the compensation did not fall due until after the commissioner gave the order under section 19 of the Act.91 Section 3 of the Act puts the liability on the employer from the time personal injury is caused to a workman by accident arising out of and in the course of his employment.

In such cases, of course, there has to be some nexus between the duty and employment. The courts have termed this as a doctrine of notional extension of employment. The Supreme Court in several cases had explained this doctrine which it said must be tested against a particular situation and it could not be applied to all fact situations uniformly. The doctrine enunciated is as follows :

As a rule, the employment of a workman does not commence until he has reached the place of employment and does not continue when he has left the place of employment, the journey to and from the place of employment being excluded. It is now well-settled, however, that this is subject to the theory of notional extension of the employer's premises so as to include an area which the workman passes and repasses in going to and in leaving the actual place of work. There maybe some reasonable extension in both time and place and a workman may be regarded as in the course of his employment even though he had not reached or had left his employer's premises.92

91 See s. 19 of the Workmen's Compensation Act, 1923. 92 See Saurashtra Salt Mfg. Co. y. B. V. Raja, (1958) II L.LJ. 249 at 251.



In all such cases, the exigencies of the service, the practice obtaining therein and the nature of the service would be the guiding factors to ascertain the scope of duty.93 There must be some nexus between the time and place of the accident and the employment. In Chairman, Cochin D.L. Board v. George^ the accident occurred when the workman was returning from work and was crossing over to Mattencherry in a rowing boat when a water transport boat collided with the rowing boat. The accident took place sometime just after the duty hours. At that time for a cross-over to the mainland the only conveyance available was the mutchwa and the workman availed of it. The question arose as to whether the doctrine of notional extension of employment should be applied to this kind of situation so as to make the workman entitled to compensation.

The High Court of Kerala was of the view that, if the presence of the workman concerned at the particular point was so related to his employment as to lead to the conclusion that he was acting within the scope of employment, it would be sufficient to deem the accident as having occurred in the course of his employment. The circumstances in the case justified that but for the employment he would not have found himself there in a mutchwa at that part of the night. There was sufficient nexus between the employment and the accident. The employer was, therefore, held liable to pay compensation.

Another related problem in this area arose in Supdt., Kockhart Estate v. Kaliappan^ where the question was—who was responsible to pay compensation under the workmen's compensation law the principal employer or the immediate employer ? The court's view was that if the responsibility lay on the shoulders of the principal employer to look after the comforts and working conditions of the employees, the immediate employer was not liable. If an enactment provides that the employer has a duty to give proper housing to the employees or the usual requirement of the business or the terms of employment say so, then, of course, the construction of housing would be part of the employer's business. In the impugned case, therefore, even though the work was entrusted to a contractor, the employer could not escape the liability.

Provident fund

How long the sanctity of providenf fund is to be maintained or whether the judgment-debtor can get it attached and what is the locus standi of

93 See B.E.S.T. Undertaking, Bombay v. Mrs. Agnes, (1963) II L.LJ. 615. 84 (1976) II L.LJ. 65. 65 (1976) I L.LJ. 354.



the Union of India in objecting to such attachment were some of the important points raised in the Union of India v. Jyoti Chit Fund and Finance.™ Here, a money decree for about Rs. 2,000 was passed in favour of respondent 1 and against respondents 2 to 4 who were employees in the Rajya Sabha Secretariat. A warrant of attachment of the funds in the hands of the secretariat was ordered. The Union of India objected on the ground that provident fund amounts and pensionary benefits were not liable to attachment and, therefore, the order was sought to be rescinded. The Supreme Court, in this case, was faced with the following questions :

(a) Is it permissible in law for amounts representing provident fund contributions and pensionary benefits to be attached ?

(b) Is the Union of India entitled to move the court for non-attachment of such funds ?

The main contention of the Jyoti Chit Fund was that the amount in the hands of the government was admittedly being held on behalf of the Rajya Sabha Secretariat servant who had just retired and, therefore, it had lost the character of provident fund or pension. The inhibition of its attachment, even if valid, could not apply to such funds which had suffered a metamorphosis. Secondly, the government had no right to move the court raising objection to the attachment since the judgment-debtor was the only appropriate person who could do so.

Krishna Iyer J. said that these sums, if they were of the character set up by the Union of India, were beyond the reach of the courts' power to attach. The provident fund, pension and other compulsory deposits retain their character until they reach the hands of the employee. The government is a trustee for those sums and has an interest in the maintenance of objection in court to attachment. It was further observed :

The moral of this case is that a short cut may often be a wrong out—in law, as in life. The ratio of this appeal is that technicality will not triumph in the Courts of law and justice, where substantial public policy is involved and it is such public policy which humanistically protects provident fund and pensionary dues of Government servants from claims of judgment—(sic) creditors to attach in satisfaction of decrees.97

"(1976) II L.LJ. 69. 97 Id. at 69-70.



The court went on further to state :

Processual law is neither petrified nor purblind but has a simple mission—the promotion of justice. The Court cannot content itself with playing umpire in a technical game of legal skills but must be activist in the cause of deciding the real issues between the parties. And one guiding principle is not to exaggerate the efficacy of procedural defects where issues of public concern are involved and a public authority vitally interested in the correct principle alerts the attention of the Court to the problem. A broadened view of locus standi leads to the futility of technical flaws where larger issues are involved—and that is the trend of modern processual jurisprudence. These general considerations were tried, yet too often ignored, and so need reiteration. Further, the consumers of justice can have scant respect for a procedural policy which is obsessed more with who sparks the plugs of the Court system than with what the merits of the rights or wrongs of the relief are. A shift on the emphasis, away from technical legalistics, is overdue if the judicature is not to aid its grave diggers. We express the view strongly so that hopefuls may be dissuaded from taking up Court time by playing up technicalities.98

The discussion leads to the conclusion that attachment is possible and lawful only after such amounts are received by the employees. In other words, so long as the amounts remain provident fund dues till they are actually paid to the government servant who is entitled to them on retirement or otherwise, the nature of the dues is not altered.

This, again is a test case ventilating a cause in which a large number of employees are vitally involved. One has to appreciate the state's anxiety to fulfil the policy of the statute on behalf of the weaker sections by taking up the burden on itself.

VIII MISCELLANEOUS MATTERS

Several working tests have been laid down by the Supreme Court to find out whether an activity is an 'industry' for the purposes of the Industrial Disputes Act but, such tests have not been uniform—rather they have been guided more by an empirical rather than a strictly theoretical approach. Sometimes, the tests were liberally conceived,

88 Id. at 71.



sometimes, narrowly. The general principles laid down by the court are, (a) the activity should be systematically and habitually undertaken for the production and distribution of goods or for rendering material services to the community at large; (b) it should not be casual or for pleasure; (c) it should be carried on with the co-operation of employers and employees and that co-operation must be direct and essential ; (d) presence of profit motive is not essential but the activity should be analogous to trade or business and its object should be the satisfaction of material human needs.99

Since no definite criterion has so far been worked out, case-to-case decisions on the subjective satisfaction of individual judges have led to an uncertain state of affairs.100 In the year 1976, again, the court had to face another situation in Workmen v. Management of Indian Standards Institution,1®1 where the workmen raised certain demands and the dispute was referred to the industrial tribunal for adjudication. The institution raised a preliminary objection that it was not an 'industry' within the meaning of the Industrial Disputes Act and, therefore, the dispute was not an industrial dispute and the tribunal, consequently, had no jurisdiction. Further, it is an autonomous organisation set up with the object of serving public interest by laying down certain standards as authentic representation to the consumer that the article or process in respect of which it is used conforms to the relevant Indian standard, which, thus, becomes meaningful and advantageous by reason of the use of the standard mark. The existence of laboratories and libraries are incidental and in furtherance of the specifications of standards and the application of standard marks. The institution has no capital, it does not distribute profits and even when it is wound up the assets would not go to any private individual. The ^material service which the institute renders is, in fact, a subsidised service and is in the public interest.

The only question was that, keeping its objects in view, whether the institution could be categorised as an 'industry' for the purposes of the

99 Cf State of Bom. y. Hospital Mazdoor Sabha, (1961) I L.LJ. 251 ; The National Union of Commercial Employees v. M.P. Mehar, (1962) I L.LJ. 241 ; University of Delhi y. Ramnath, (1963) II L.LJ. 335 ; Gymkhana Club Employees Union v. Gymkhana Club, (1967) II L.LJ. 720 ; Ahmedabad Textile Industry's Research Association y. State of Bom., (1960) II L.LJ. 720. The Management of Safdarjang Hospital v. Kuldeep Singh Sethi, (1970)11 L.LJ. 266; Management of FICCI v. Workmen, (1971) II L.LJ. 630.

100 For details, see S.L. Agarwal, 'Labour Law*, VII A.S.I.L. 365 (1971). 101 (1976) I L.LJ. 33.



Industrial Disputes Act. The court found that the institution prepared and published standards on different subjects so as to keep abreast with the latest developments in manufacturing and testing techniques and to improve the quality of goods. Indian standards, thus, published were sold by the sales service of the institution and had a brisk sale and the sale proceeds increased steadily year to year. Considering those activities and the huge income the institution had, the court, relying on the working test laid down in the previous decisions on the point,102 held that the activities of the institution were analogous to trade or business and, therefore, it was an industry.

The judgment, again, has created an uncertainty in the field of industrial relations and no prudent employer^would ever know whether his activity could be called an industry within the meaning of the Industrial Disputes Act so as to hold him liable under certain circumstances. Inspite of judgments after judgments that uncertainty still persists and everything is virtually left to the subjective satisfaction of the bench concerned—though, of course, an activity which is not done in a trading or commercial sense but for public interest and without any profit motive or in the form of social service could never be branded as an 'industry'. To avoid any inconsistency in judicial approach, it is suggested that the legislature should define the term 'industry' more precisely and clearly without leaving any scope for premises, interpretations or speculations.

The Supreme Court, for the first time, has broadened the definition of 'retrenchment' so as to include termination for any reason whatsoever. Termination takes place where a term expires either by the active step of the employer or the running out of the stipulated term. In State Bank of 'India v. Sundammoney10Z the respondent was appointed as cashier by the bank in July, 1970 and he worked till November, 1972. The intermittent breaks notwithstanding, his total number of days of employment answered the test of 'deemed' continuous service within section 25B(2) of the Industrial Disputes Act.104 His order of appointment read as follows :

(1) The appointment is purely a temporary one for a period of nine days but may be terminated earlier without assigning any reason therefor at the bank's discretion.

*02 Special emphasis was laid on the cases of Ahmedabad Textile Industry's Research Assott Safdarjang Hospital and FICCI, supra note 99.

108 (1976) I L.LJ. 478. 104 See s. 25B(2).



(2) The employment, unless terminated earlier, will automatically cease after November 18, 1972.

That this nine days employment, tacked on to what has gone before, has ripened into a continuous service for a year within section 25B(2) is not denied. The question is whether the expiry of contract appointments for a particular term would also mean 'retrenchment'. It would, indeed, mean termination according to the terms and conditions of service but, would that also fall within the definition of retrenchment under section 2(oo) of the Act ? The section provides :

"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) .... (b) .... (c) ....

The court interpreted this definition as including all types of termination whether bona fide or mala fide and held :

Statutory construction, when Courts consider welfare legislation with an economic justice bias, cannot turn on cold print glorified as grammatical construction but on teleological purpose and protective intendment. Here Ss. 25F, 25B and 2(oo) have a workers' mission and the input of Part IV of the Constitution also underscores this benignant approach. While canons of traditional sanctity cannot wholly govern, Courts cannot go haywire interpreting provisions, ignoring the text and context.105

This judgment has created confusion and uncertainty on the subject of'retrenchment'and it is not clear as to what it actually means. In earlier decisions, the Supreme Court never interpreted the term so broadly as to include virtually all types of termination of service. It only meant the discharge of the surplus staff.106 The present position is that an employer has to pay retrenchment compensation if the service of an

105 Supra note 103 at 481. 106 See, e.g.,Banaras Ice Factory Ltd. v. Their Workman, (195)1 L X J . 253. Pipraich

Sugar Mills Ltd. v. Pipraich Sugar Mill's Mazdoor Union, (1957) I L.LJ. 235.


2C8 Annual Survey of Indian Law [1976

employee is terminated irrespective of any reason whatsoever, and if that is so, sections 25G and 25H become meaningless because they speak for a particular procedure to be adopted by the employer in all cases of retrenchment on the basis of 'first come last go' and, in cases of reemployment, opportunity has to be given first to the persons retrenched. This judgment, it is submitted, needs reconsideration.

Inspite of certain definite principles having been laid down as to the jurisdiction of the Supreme Court under article 136 of the Constitution regarding the entertainment of appeals, the parties have tried to invoke the jurisdiction in contradiction of these principles. The Supreme Court, again, in Statesman Ltd. v. The Workmen101 forcefully emphasized the role of the court under article 136. It was a case of an illegal strike and consequent lockout. Inspite of the workers undertaking to keep peace, the management continued the lockout. The question arose as regards wages for the period of strike and lockout and the tribunal apportioned the blame partly on the workers and partly on the employees and allowed 50 per cent of the wages. The management moved the Supreme Court in special leave appeal under article 136, and the appeal was dismissed. But, the court analysed its position under article 136, once again quoting its previous decisions on the point. It held that the crux of the matter is that the very width of the court's power under article 136 is a warning against its free wheeling exercise save in grave situations. The discretionary jurisdiction has to be exercised only in cases where awards are made in violation of the principles of natural justice causing substantial and grave injustice to parties or raising an important principle of industrial law requiring elucidation and final decision by the court or disclosing such other exceptional or special circumstances which merit the consideration of the court.108

Another interesting case which came up before the Supreme Court was that of Workmen v. Firestone Tyres and Rubber Co109 where quaere raised was whether the management had a right under the Industrial Disputes Act to lay-off their workmen, and to what relief the laid-off workmen of the establishments employing less than fifty people were entitled to.

Chapter VA of the Industrial Disputes Act deals with lay-off and retrenchment and specifically says that sections 25C to 25E of the

107 (1976) I L.LJ. 484, 108 Cf. Bengal Chemical & Pharmaceutical Works Ltd. v. Their Employees, (1959)1

L.LJ. 413; Associated Cement Companies Ltd. v. Cement Workers Kamdar Union> (1972) II L.LJ. 40.

109 (1976) I L X J . 493.



Act shall not apply to industrial establishments employing less than fifty people and also to those which are of a seasonal character. Section 25C deals with the right of workmen to 50 per cent laid-off compensation for all the days during which he was so laid off. Section 25D makes it obligatory for the employer to maintain a muster roll of workmen and 25E lays down certain circumstances under which the workmen are not entitled to compensation.110 Since the Act excludes the smaller establishments, what right do these workmen have in case they are laid-off by their employer and whether the employer has really a right to layoff under the Act were the questions raised before the court. The company manufactures tyres and since there was a strike in its Bombay factory, tyres were in short supply and the business went down considerably. Consequently, the management laid off 17 out of 30 workmen. The dispute arose as to the laid-off compensation for these workmen. The management's plea was that their case was not covered under the Act because chapter VA applies to establishments employing more than fifty workmen.

Lay-off under section 2 clause (kkk) of the Act means the failure, refusal or inability of an employer on account of shortage of coal, power or raw materials or the accumulation of stocks or the breakdown of machinery or for any other reason to give employment to a workman whose name is borne on the muster rolls of his industrial establishment and who has not been retrenched. This shows very clearly that there is neither a temporary discharge of the workman nor a temporary suspension of his contract of service. Mere refusal or inability of the employer to give employment does not convey the sense of temporary discharge because such a laid-off workman under section 25E (//) has to present himself for work at the establishment at the appointed time during normal working hours at least once a day. Since the establishment is a small one it has no standing orders or contracts of service which speak of such lay-off. Therefore, in the opinion of the court, the workman would be entitled to their full wages. The case being outside the purview of chapter VA is akin to suspension cases. Even if it is covered under chapter VA, Untwalia J. is of the view that the employer has got no inherent right to resort to lay-off unless the reasons given are present.111

He relied on section 25J which provides that chapter VA will not come in the way if the workmen are entitled to benefits more favourable than under the Act or under any other rule, order, award, contract of service

110 See ss. 25C, 25D and 25E of the Industrial Disputes Act, 1947. 111 Cf. The Management of Hotel Imperial, New Delhi \. Hotel Workers Union, (1959) II

LXJ. 544; V.P. Gindroniya v. State of Madhya Pradesh, (1970) II LXJ. 143; Workmen ofDewan Tea Estate v. The Management, (1964) I L.LJ. 358.



or otherwise and, therefore, it is open to the tribunal under section 10(1) of the Act to award any compensation it deems fit. The court, in this case, instead of sending back the case to the tribunal, awarded 75 per cent of the basic wages and dearness allowance to the laid-off workmen.

This judgment indicates that the employers who have less than fifty work force stand to more disadvantage than those covered under the Act because the latter have to pay only 50 per cent wages to the laid-off workmen. In other words, they cannot resort to lay-off whatever the reasons may be since their financial liability would not be less in any case. This seems to be rather unreasonable and unfair to the small entrepreneurs who may be compelled by circumstances to lay-off their workmen but they cannot do so. The legislature under chapter VA has given some relief to the employers employing more than fifty people by allowing them to pay 50 per cent wages during the period of lay-off for the reasons mentioned therein. By the latest amendment of the Act in 1976, chapter VB is added which provides that if the employer has more than three hundred workmen in his employment he cannot lay-off any workman except with the previous permission of the government unless it is due to shortage of power or to natural calamity. This amendment also covers the big employers. But what is the relief for the small employers? They are virtualiy discriminated vis-a-vis others. The legislature, it is suggested, should amend the Act further to take care of those who employ less than fifty people and who may possibly be compelled by circumstances to resort to lay-off in their establishments.

In case the government refers a particular dispute for adjudication under section 10(1) of the Industrial Disputes Act and the terms of reference do not include the counter demands of the employer, could the High Court issue a writ of mandamus to the appropriate government for correction of the reference order ? In other words, could the management under section 10 ask the government to make a reference of its dispute with the employees to the tribunal for adjudication ? This question was raised for the first time in Burmah Shell Oil Storage and Distributing Co. of India Ltd. v. Government of Tamil Nadu,112 The company's contention was that the demands of the union could not be adjudicated upon without referring to the tribunal the claims of the company along with those of workers in respect of the matters in dispute.

The court was of the view that under section 10 no reference had so far been made at the instance of the management and that it was always

119 (1976) II L.LJ. 230.



the workmen's union which had raised industrial disputes and moved the government for adjudication. But that does not preclude the management from raising the industrial dispute and asking the government to refer it to a labour court or industrial tribunal.113 Apart from this, that the management could also seek a reference under section 10, it has also been held that all matters ancillary and incidental to the demands of workmen should also be referred under section 10(1 )(c) and (d). The court observed that the company could also approach the conciliation officer under section 12(1) if there was disagreement between the management and the workmen on certain vital matters which were likely to affect industrial peace and if that failed it could move the government for making a reference of that dispute. Keeping this in view the High Court quashed the reference and ordered the government to make a fresh reference as regards the demands of the workmen and the counter demands of the employer.

Very much related to this question is the point, whether the government could refuse to make a reference on its subjective satisfaction that the management had already taken action in the matter in accordance with canons of natural justice. This was raised in the Kerala High Court in Workmen of Cochin Chamber of Commerce v. State of Kerala11* where it was held that such a government decision was subject to scrutiny through a writ under article 226 whether the reasons recorded and communicated under section 12 were irrelevant or not.115 The refusal of the government on the ground that the action of the management was bona fide as it was taken in accordance with natural justice was not correct in view of the lack of rational connection between the two factors.

Another matter of far-reaching importance came up with regard to the production of evidence before the industrial tribunal. Although it

113 Maybe because of wide language used in sections 1C(1) and 12 of the Act, the Supreme Court did say that like all problems associated with industrial adjudication, the problem of wage structure must be based on proper consideration of the conflicting claims of labour and capital, that there must be a harmonisation on a reasonable basis, and that if it appeared that the employer could not really bear the burden of an increasing wage bill, industrial adjudication could not refuse to examine his case and should not hesitate to give him relief if it was satisfied that if such relief was not given the employer might close down his business. See Crown Aluminium Works v. Their Workmen, (1958) I L.LJ. 1; Ahmedabad Millowners* Association v. Textile Labour Association, Ahmedabad, (1966) I L.L.J.l.

114 (1976) II L.LJ. 108. 115 See State of Bombay v. Krishnan, (1960) II L.LJ. 592; Bombay Union of Journalists

v. State of Bombay, (1964) I L.LJ. 351.



has been held that an industrial tribunal is not a 'court' though it discharges functions very similar to those of a court, yet if the other party, during the course of the hearing of complaints examines witnesses and proves documents by fabricating and forging them, can the tribunal make a complaint that the party had committed an offence punishable under section 193 of the Indian Penal Code?116 The Patna High Court in R.S. Murthy v. R.K. Nang,117 considered this point. The court relied on section 17 of the Industrial Disputes Act118 which provides for the publication of all reports and awards and held that the award of a tribunal was final only when published in such manner as the government thought fit and not earlier. Therefore, the tribunal was not a 'court' even for purposes of the Indian Penal Code.

An regards legal representation before the tribunal and labour courts, section 36 of the Industrial Disputes Act debars an advocate to appear in industrial adjudication before the labour court or industrial tribunal unless the other party consents to it.139 On the other hand) section 30 of the Advocates Act, 1961 entitles every advocate to practice before all courts and before any tribunal. The question of reconciling those two provisions came up before the Supreme Court in Pradip Port Trust v. Their Workmen?™ In this case, an industrial dispute was raised by the workmen against the termination of their fellow workman and the dispute was referred to the industrial tribunal for adjudication by the Government of Orissa under section \0{\){d) of the Industrial Disputes Act. The workmen appeared before the tribunal through their adviser and the general secretary of their union, whereas, the management of Pradeep Port Trust was sought to be represented by an advocate, who was also their legal adviser. The union objected to the representation of a lawyer and the tribunal upheld the objection. The management appealed to the Supreme Court under special leave.

The court, tracing out the object of section 36 putting embargo on the representation by an advocate, observed that labour law operates in a field where there are two unequal contestants. Employers with their purse would naturally always secure the services of eminent counsel. Since the trade unions have the responsibility to safeguard the interest of their members they have been given the right to represent them in all proceedings. The entire perspective of an industrial dispute and the

116 See s. 193. 117 (1976) II LXJ . 53. 118 Sees. 17. 119 See s. 36. 120 (1976) II L.LJ. 409.



objects and purposes of the Industrial Disputes Act would have been frustrated without giving due recognition to the unions. But for the provision like section 36, there might have been difficulty under the general law in the way of the office bearers of the union representing workmen before the adjudicating authorities. Section 36 enumerates the persons entitled for representation before the court or the tribunal but that is not exhaustive. In any case, legal representation is possible only with the consent of the parties. So far as the contradiction of section 36 vis-a-vis section 30 of the Advocates Act is concerned, both can be harmoniously construed. The Industrial Disputes Act being a special piece of legislation with the avowed aim of labour welfare, representation before adjudicatory authorities has been specially tailored so. Representation by legal practitioners under the Act is allowed before the authority only under certain conditions mentioned in the Act. Therefore, this special Act shall prevail over the Advocates Act which is a general piece of legislation. The matter has to be looked into not only from the point of view of legal practitioners but also from the viewpoint of the employers and workmen who are the principal contestants in an industrial dispute.

If we analyse this judgment, are we not negativing the very idea of the legal aid to the poor and weaker sections of the community which could well be provided at least to the labour to plead their claim more forcefully and logically than it could be pleaded by their union, a non-legal entity ? Could a line be drawn that the conditional embargo under section 36(4) may be lifted or its vigour considerably reduced by leaving the matter to the tribunal's permission as has been the case under the English law ? m

IX CONCLUSION

This was the year when the interest of both the employees and the employers was safeguarded. The strikes, lay-offs, retrenchments and closures were minimum because the main thrust of policy was to boost production and productivity in the interest of national economy with the co-operation of workers' participation in management. The bonded labour system was abolished and efforts were made to rehabilitate them in productive employments. Agricultural wages were also revised. For the first time the payment of bonus to employees was linked with production and profitability. For purposes of computation of gross profits, adding back the bonus already paid to the employees in the previous year was a unique feature of the amended Act on which

121 See id. at 411.



considerable discontentment was expressed by the employers. Moreover, the Bonus Act, though being a self-contained code, was held not to bar claims to customary bonus or claims based on conditions of service. Whether the principle of res judicata applied to industrial proceedings was again a matter of controversy this year and the Supreme Court was of the view that although labour matters were no exception to the applicability of the doctrine of res judicata, yet the principle had to be applied with caution without stretching its basic policy. Industrial relations were governed by special methodology and the extension of this sophisticated doctrine in that area would not be proper.

On the question of the issuance of a writ against a co-operative society on the basis of a contract entered into between the staff and the society, it was held that the remedy under article 226 could not be made available to enforce a contract-gua-contract. Further, an arbitrator's award given under section 10A of the Industrial Disputes Act was held to be subject to writ jurisdiction, it being a quasi-statutory body's decision. In termination of service situations, when the dispute was already pending with the tribunal, the tribunal's prior permission under section 33(2)(b) of the Act was necessary whether the termination was under a contract or under the terms of the standing orders. It was sufficient if the services were terminated for any misconduct under section 33-C(2). The labour court was held to be competent to entertain a claim application even in cases barred by limitation under the Minimum Wages Act. In the social legislation area, the employer was held to be liable under the Workmen's Compensation Act from the time the personal injury was caused and not from the time the claim determination was made by the commissioner. The doctrine of notional extension of employment was relied upon in order to emphasize the nexus between the duty and employment in such cases. To the question whether the judgement-debtor could get the provident fund attached, the court's view was that such funds were beyond the court's power to attach because they retained their character until they reached the hands of the employees. A judgment of far-reaching importance in this year laid down that 'retrenchment' included termination for any reason whatsoever and termination took place where a term expired by the active step of the employer or the running out of the stipulated period.

These are some of the highlights of the year in the area of labour law which deserve careful analysis and consideration.


7 LABOUR LAW

Documents

Transcript of 7 LABOUR LAW