PETITIONER:
COX & KINGS (AGENTS) LTD.
Vs.
RESPONDENT:
THEIR WORKMEN AND ORS.
DATE OF JUDGMENT18/03/1977
BENCH:
SARKARIA, RANJIT SINGH
KRISHNAIYER, V.R.
SINGH, JASWANT
CITATION:
1977 AIR 1666 1977 SCR (3) 332
1977 SCC (2) 705
ACT
Industrial Disputes Act, 1947--S. 2(b) and s.
19(3)--Scope of--Decision given without going into merits of
a dispute--If an award--Second reference in such a case--If
could be made within a year.
HEADNOTE
The term ’Award’ has been defined by s. 2(b) of the
Industrial Disputes Act, 1947 to mean an interim or a final
determination of any industrial dispute or of any question
relating thereto by a Labour Court. Section 10, which
describes the matters that can be referred to a Labour Court
etc. for adjudication ’provides in sub s.(1) that where an
appropriate government is of opinion that any industrial
dispute exists or is apprehended it may, at any time, by
order in writing...(c) refer the dispute or any matter
appearing to be connected with or relevant to the dispute,
if it relates to any matter specified in the second sched-
ule, to a Labour Court for adjudication. Under s. 19(3) an
award shall remain in operation for a period of one year
from the date on which the award becomes enforceable under
s. 17A.
An industrial dispute relating to the dismissal of three
workmen of the appellant had been referred to a Labour
Court. The Labour Court held that the reference was in-
valid because, as the workmen had not served demand notice
on the management prior to the reference, no industrial
dispute could legally come into existence before the refer-
ence. After serving a demand notice on the management
within a month thereafter the workmen raised an industrial
dispute relating to the same matter. The Labour Court
rejected the employer’s preliminary objection that in view
of s. 19, the second reference was not competent in that it
was made within one year of the first award, and decided the
case on merits. The Labour Court held that the termination
of the services of the workmen was illegal and ordered
reinstatement with back wages from the date of termination.
The employer’s writ petition under Art. 226 of the
Constitution impugning the Labour Court’s decision was
dismissed by the High Court.
Dismissing the appeal,
HELD: The Labour Court’s determination in the first
reference did not possess the attributes essential to bring
it within the definition of an award. The mere fact that
this order was published by the Government under s. 17(1),
did not confer that status on it. [339 D]
1(a) The definition of ‘award’ under s. 2(b) falls in
two parts (i) determination, final or interim, of any indus-
trial dispute and (ii) of any question relating to an indus-
trial dispute. The basic postulate common to both the parts
of the definition is the existence of an industrial dispute,
actual or apprehended. The ‘determination’ contemplated by
the definition is of an industrial dispute or a question
relating thereto on merits. [338 D]
(b) In the instant cases the order of the Labour Court
in the first reference did not determine the question or
points specified in government order of reference, nor was
it an adjudication on merits of any industrial dispute or a
question relating thereto. The only question determined by
the Labour Court was about the existence of an industrial
dispute which in its opinion was a sine qua non for the
validity of the reference. Rightly or wrongly it found that
this preliminary jurisdictional fact did not exist because
no industrial dispute had come into existence in accordance
with law and in consequence the reference was invalid.
There was, therefore, no determination of the dispute on
merits on the question relating thereto. [339 C-D]
333
Technological Institute of Textiles v. Its Workmen and
Ors. [1965] 2 LLJ 149, followed.
Management of Bangalore Woollen, Cotton & Silk Mills
Co. Ltd. v. The Workmen and Anr. [1968] 1 SCR 581, referred
to.
Workmen of Swadeshi Cotton Mills Co. Ltd. v. Swadeshi
Cotton Mills Co. Ltd. Kanpur and Ors. 42 Indian Factories
Journal p. 255, not approved.
(b) Moreover the decision of the Labour Court in the
first reference did not impose any continuing obligation on
the parties bound by it. The second reference was, there-
fore, not barred by anything contained in sub s. (3 ) or
other provisions of s. 19. [340 C]
2. The Labour Court was not justified in awarding com-
pensation to the workmen for wages relating to the period
prior to the date on which the demand notice for reinstate-
ment was served on the management. [340 H]
JUDGMENT
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 375 of 1976.
(Appeal by Special Leave-from the Judgment and Order
dated 7.11.1975 of the High Court at New Delhi in Civil Writ
No. 1123 of 1975)
G.B. Pai, O.C. Mathur and D.N. Mishra, for the appellant.
M.K. Ramamurthi, S.C. Jain and Madan Mohan, for respond-
ent No. 1.
The Judgment of the Court was delivered by
SARKARIA, J.--The principal question that arises in this
appeal by special leave is: Whether an order of the Labour
Court to the effect, that since no demand of the workmen had
been served on the employer, no industrial dispute had come
into existence in accordance with law, and as such the
Reference was invalid and the Court had no jurisdiction to
adjudicate the matter referred to it by the Government, is
an "award" for the purposes of Section 19 of the Industrial
Disputes Act, 1947, (for short, called the Act)?
Cox & Kings (Agents) Ltd. (for short, the Management)
dismissed from service three of their workmen after a domes-
tic enquiry conducted against them on certain charges.
In May 1967, the Lt. Governor of Delhi made a Refer-
ence under s. 10 read with s. 12(5) of the Act to the Labour
Court, Delhi, to determine:
"Whether the terminations of services of S/Shri H.S.
Rawat, Bidhi Chand and Ram Sarup Gupta were unlawful and
unjustified, and if so, to what relief are these workmen
entitled?"
By an amendment of their written statement in February,
1969, augmented by an application dated 17.8.1971; the
Management raised a preliminary objection that since no
demand notice had been ,served on the Management, no indus-
trial dispute had legally come into existence, and as such
the Reference was invalid and the Labour
334
Court had no jurisdiction to adjudicate it. By an order,
dated September 27, 1972, the Labour Court accepted the
objection, holding:
"... that no industrial dispute came into
existence before this reference as the workmen
have failed to establish serving of demand on
the management prior to this reference. The
effect of this finding is that the reference
could not have been made for adjudication and
the same is accordingly invalid and hence the
question of deciding the issue as in the
reference or other issues does not arise as
the industrial dispute under reference did not
come into existence in accordance with law
before this reference. This award is made
accordingly."
Thereafter, the workmen on 25.10.1972, raised a dispute by
serving demand notices on the Management. By his order
dated 2.5.1973, the Lt. Governor, Delhi, again made a Refer-
ence to the Labour Court, under the Act for adjudication of
the same matter relating to the termination of the services
of the aforesaid workmen.
The Management raised, inter alia, a preliminary objec-
tion that a second Reference within one year of the first
‘award’, dated September 27, 1972, was not competent in view
of what is contained in sec. 19 of the Act.
By an order dated 2.5.1973, the Labour Court dismissed
the preliminary objections. After recording the evidence
produced by the parties, the Court held on merits, that the
termination of the services of 3 workmen was illegal and
unjustified. The Court further found that Bidhi Chand work-
man had become gainfully employed elsewhere as a driver with
better emoluments and it was therefore sufficient to
award him compensation without any relief of reinstatement,
at the rate of 50% of his wages for three years from 1966
to 1969 to the date of his getting employment elsewhere. It
further found that Ram Sarup Gupta had remained unemployed
after his dismissal in 1966. It therefore directed his
reinstatement with full back wages and continuity of serv-
ice. As regards H.S. Rawat, the Court found that he could
not have remained unemployed throughout but was doing some
work or the other for his living, may be with occasional
spells. The Court therefore held that Rawat was entitled to
reinstatement and continuity of service with 50% back wages
till the award Came into operation and he got his reinstate-
ment. This award was made by the Labour Court on 1-5-1975.
The Management impugned this award by filing a writ
petition under Art. 226 of the Constitution in the High
Court of Delhi. Only three contentions were canvassed by
the Management at the preliminary heating before the High
Court: (i) That the determination, dated 27.9.1972, by the
Labour Court was an ’award’ as defined in s. 2(b) of the
Act, and in view of sub-s. (3) of s. 19, it had to be in
operation for a period of one year. It could be terminated
only by a notice given under sub-ss. (4) & (6) of s. 19.
Since no such notice was given, the award continued to be in
operation. The second award, dated 1-5-1975, could not be
validly made during the period, the
335
first award was in operation; (ii) The demand for reinstate-
ment was not made by the workmen till 1972 and the Labour
Court was not justified in awarding them the relief of
reinstatement together with compensation for back wages from
1966 onwards; (iii) The onus to show that the workmen had
not obtained alternative employment, after their dismissal,
was on the workmen and this onus has not been discharged. On
the other hand, the Labour Court wrongfully did not permit
the Management to adduce additional evidence to show that
the workmen had obtained alternative employment and, in
consequence, were not entitled to back wages.
Regarding (i), the High Court held that since the
‘award’ dated 27.9.1972, was not one which imposed any
continuing obligation on the parties, but had ended with its
pronouncement, nothing in subsections (3) and (6) of sec. 19
was applicable to it.
As regards (ii), the High Court held that once the
dismissal of the workmen was found illegal, it was inevita-
ble to award the compensation from the dates of dismissal
till they found alternative employment or till the date of
the award, as the case may be.
In regard to (iii), the High Court said that the ques-
tion of burden of proof as to who is to prove, whether the
workmen did not get alternative employment for the period
for which back wages have ’been awarded to them could arise
only if no evidence was given by either party or if the
evidence given by them was evenly balanced. Neither of these
circumstances was present before the Labour Court, and there
was no good reason to disturb the finding of fact recorded
by the Labour Court on this point.
The High Court thus rejected all the three contentions,
and, in the result, dismissed the writ petition in limine,
with a speaking order. Hence this appeal.
Shri G.B. Pai has reagitated all the three points before
us. He assails the findings of the High Court, thereon.
Regarding point No. (i) Mr Pai’s argument is that the
determination, dated 27.9.1972, also, was an ‘award’ within
the second part of the definition of the term in a. 2(b) of
the Act, inasmuch as it determined a question relating to an
industrial dispute. Emphasis has also been laid on the
point that this ‘award’, dated 27.9.1972 was duly published
by the Government under s. 17(1) and had assumed finality
under sub-s. (2) of the same section. This award dated
27.9.1972--proceeds the argument had to remain operative
under sub-s. (3) of s. 19 for a period of one year from the
date on which it became enforceable under s. 17A i.e., a
date one month after its publication. It is submitted that
no second Reference could be validly made by the Government
during the period the first award remained operative, and
since the second Reference, dated 2.5.1973 was made before
the expiry of such period of the first award (which had not
been terminated in the manner laid down in s. 19), it was
invalid and the consequential adjudication by the Labour
Court on its basis, was null and void. In this connection
counsel has relied upon a
7 --436SCI/77
336
judgment of this Court in Management of Bangalore Woollen,
Cotton & Silk Mills Co. Ltd,. v. The Workmen and ant.(1)
wherein it was held that when there is a subsisting award
binding on the parties, the Tribunal has no jurisdiction to
consider the same points in a fresh reference. In that
case, the earlier award had not been terminated and the
Reference was therefore held to be incompetent. Reference
has also been made to a single Bench Judgment of the Allaha-
bad High Court in Workmen of Swadeshi Cotton Mill, Co. Ltd.
v Swadeshi Cotton Mills Co., Ltd., Kanpur and ors. (2)
As against this, Shri M.K. Ramamurthi maintains that the
Labour Court’s order, dated May 1, 1972 was not an ’award’
within the definition of the term in s 2(b) inasmuch as it
was not a determination, on merits, of any industrial dis-
pute or of any question relating to an industrial dispute.
In this connection reliance has been placed on a judgment of
this Court in Civil Appeal No. 241 of 1964 (Technological
Institute of Textiles v. Its Workmen and ors.(3).
Before dealing with the while to notice the relevant conten-
tions canvassed, it will be worthwhile to notice the rele-
vant statutory provisions.
The terms ‘award’ and ‘industrial dispute’ have been
defined in the Act as follows:
‘Award’ means an interim or a final
determination of any industrial dispute or of
any question relating thereto by any Labour
Court, Industrial Tribunal or National Indus-
trial Tribunal and includes an arbitration
award made under s. 10A". [vide s. 2 (b)].
"Industrial dispute" means "any dispute
or difference between employers and employers,
or between employers and workmen, or between
workmen and workmen, which is connected with
the employment or non-employment or the terms
of employment or with the conditions of la-
bour, of any person", [vide s. 2 (k)].
Section 10 describes the matters which can be referred
to Boards, Courts or Tribunals for adjudication. Only
clause (i) of subsection (1) is material for our purpose.
It provides;
"Where the appropriate Government is of opin-
ion that any industrial dispute exists or is
apprehended, it may at any time by order in
writing--
(a)....
(b) ..
(c) refer the dispute or any matter appear-
ing to be connected with, or relevant to the
dispute, if if relates to any
(1) [1968] 1 S.C.R. 581.
(2) 42 Indian Factories Journal p. 255.
(3) [1965] 2 L.L.J. 149.
337
matter specified in the Second Schedule to a
Labour Court for adjudication".
Sub-section (4) requires the Labour Court
to confine its adjudication to those points of
dispute and matters incidental thereto which
the appropriate Government has referred to it
for adjudication.
The material part of section 19 reads as
under:
"(1) ....
(2) ....
(3) An award shall, subject to the provi-
sions of this section remain in operation for
a period of one year from the date on which
the award becomes enforceable under s. 17A;
Provided that the appropriate Government
may reduce the said period and fix such period
as it thinks fit:
"Provided further that the appropriate Govern-
ment may, before the expiry of the said peri-
od, extend the period of operation by any
period not exceeding one year at a time as it
thinks fit so, however, that the total period
of operation of any award does not exceed
three years from the date on which it came
into operation.
(4) Where the appropriate. Government, Whether
of its own motion or on the application of
any party bound by the award, considered that
since the award was made, there has been a
material change in the circumstances on which
it was based, the appropriate Government may
refer the award or a part of it to a Labour
Court, if the award was that of a Labour Court
or to a Tribunal, if the award was that of a
Tribunal or of a National Tribunal for
decision whether the period of operation
should not, by reason of such change, be
shortened and the decision of Labour Court or
the Tribunal, as the case may be, on such
reference shall be final.
(5) Nothing contained in sub section (3) shall
apply to any award which by its nature, terms
or other circumstances does not impose, after
it has been given effect to, any continuing
obligation on the parties bound by the award.
(6) Notwithstanding the expiry of the period
of operation Under sub-section (3), the award
shall continue to be binding, on the parties
until a period of two months has elapsed from
the date on which notice is given by any party
bound by the award to the other party or
parties intimating its intention to terminate
the award.
338
(7) No notice given under sub-section (2) or
sub-section
(6) shall have effect, unless it is given by a
party representing the majority of persons
bound by the settlement or award, as the case
may be."
There is no dispute that the order on the earlier Refer-
ence was made by the Labour Court on 27-9-1972, while the
second Reference with the same terms of Reference to that
Court was made by the Government on 2.5.1973, i.e., within
one year of the earlier order. It is common ground that the
period of one year for which an award normally remains in
operation under sub-s. (3) was not reduced or curtailed by
the Government under sec. 19 or under any other provision of
the Act. It is further admitted between the parties that no
notice was given by any party of its intention to terminate
the Order dated 27.9.1972.
The controversy with regard to the first point there-
fore narrows down into the issues whether the determination
dated 27.9.1972, of the Labour Court was an award as defined
in s. 2(b) of the Act?
The definition of award in s. 2(b) falls in two parts.
The first part covers a determination, final or interim, of
any industrial dispute. The second part takes in a determi-
nation of any question relating to an industrial dispute.
But the basic postulate common to both the parts of the
definition, is the existence of an industrial dispute,
actual or apprehended. The "determination" contemplated by
the definition is of the industrial dispute or a question
relating thereto, on merits. It is to be noted further
that Sec. 2, itself, expressly makes the definition subject
to "anything repugnant in the subject or context". We have
therefore to consider this definition in the context of sec.
19 and other related provisions of the Act.
Mr. Pai concedes that the order dated 27.9.1972, is not
a determination of any industrial dispute, as such, falling
under the first part of the definition. However, Iris
argument is that the expression any question relating there-
to" in the second part of the definition is of wide ampli-
tude and should be spaciously construed. It is main-
tained that a question, whether or not an industrial dispute
exists, will itself be a question relating to an industrial
dispute within the tendment of the second part of the defi-
nition.
The contention appears to be attractive but does not
stand a close examination.
Sub-section (1) of sec. 10 indicates when and what
matters can be referred to the Labour Court for adjudica-
tion. The sub-section expressly makes formation of opinion
by the appropriate Government, that any industrial dispute
exists or is apprehended" a condition precedent to the
exercise of the power of making a Reference. Subsection
(4) gives a mandate to the Labour Court to confine its
adjudication to those points of dispute which have been
specified in the Order of Reference, or are incidental
thereto. From a conjoint reading of cl.(b) of s. 2 and
sub-section (1) and (4) of sec. 10, it is
339
clear that in order to be an ‘award’ within the second part
of the definition, a determination must be--(i) an adjudica-
tion of a question or point relating to an industrial dis-
pute, which has been specified in the Order of Reference or
is incidental thereto: and (ii) such adjudication must be
one on merits.
Now let us test the Labour Court’s order, dated 27.9.72
in the light of the above enunciation. That Order did not
satisfy any of the criteria indicated above. It did not
determine the questions or points specified in the Govern-
ment Order of Reference. Nor was it an adjudication on
merits of any industrial dispute or a question relating
thereto. The only question determined by the Order, dated
27.9.1972, was about the existence of a preliminary fact,
viz., existence of an industrial dispute which in the Labour
Court’s opinion was a sine qua non for the validity of
the Reference and the exercise of further jurisdiction by
the Court. Rightly or wrongly, the Court found that this
preliminary jurisdictional fact did not exist, because "no
industrial dispute had come into existence in accordance
with law", and, in consequence, the Reference was invalid
and the Court was not competent to enter upon the Reference
and determine the matter referred to it. With this find-
ing, the Court refused to go into the merits of the question
referred to it. There was no determination on merits of an
industrial dispute or a question relating thereto. We are
therefore of opinion that Labour Court’s determination
dated 27.9.1972, did not possess the attributes essential to
bring it within the definition of an award. The mere fact
that this order was published by the Government under s.
17(1) of the Act did not confer that status on it.
In the view we take we are fortified by the principle
laid down by this Court in Technological Institute of Tex-
tiles v. Its Workmen (supra). In that case, there was a
settlement which in the absence of necessary formalities,
was not binding on the parties. Certain items of dispute
were not pressed and withdrawn under the terms of such
settlement. In the subsequent reference before the Indus-
trial Tribunal some of the items of dispute were withdrawn
and no award was made in respect thereto. Thereafter, these
items were again referred for adjudication along with cer-
tain other matters to the Tribunal. It was contended on
behalf of the Management that subsequent reference with
regard to the items which had been withdrawn and not pressed
in the earlier reference, was barred under sec. 19, because
the earlier award had not been terminated in full. Ramaswa-
mi J., speaking for the Court, repelled this contention,
with these observations:
"It is manifest in the present case that
there has been no adjudication on merits by
the industrial tribunal in the previous
reference with regard to the matters covered
by items (1) and (3) of the present reference,
because the workmen had withdrawn those mat-
ters from the purview of the dispute. There
was also no settlement in Ex. R. 4, because
the demands in question had been withdrawn by
the workmen and there was no agreement between
the parties
340
in regard thereto. Our conclusion, therefore,
is that the bar of s. 19 of the Industrial
Disputes Act does not operate with regard to
the matters covered by items (1) and (3) of
the present reference and the argument put
forward by the appellant on this aspect of the
case must be rejected."
Although the facts of the case before us are different,
yet the principle enunciated therein viz., that the bar of
sec. 19 operates only with regard to a determination made on
merits, is fully applicable. By any reckoning, the decision
dated 27.9.1972 of the Labour Court by its very nature
did not impose any continuing obligation on the parties
bound by it. This was an additional reason for holding that
the earlier reference was not barred by anything contained
in sub-section (3) or other provisions of section 19.
We have gone through the single Bench decision of the
Allahabad High Court in Workmen of Swadeshi Cotton Mills Co.
Ltd. case (supra). That decision is to the effect that the
finding recorded by the Labour Court that the matter re-
ferred to it for adjudication was not an industrial dispute
as defined in the Act is itself a determination of a ques-
tion relating to an industrial dispute, and would fall
within the definition of the term "award" under the Act. In
our opinion. this is not a correct statement of the law on
the point.
The next submission of Mr. Pai is that since the demand
for reinstatement was not duly made by the workmen before
28.10. 1972, the Courts below were not justified in award-
ing to the workmen, compensation for back wages from 1966
onwards.
On the other hand, Mr. Ramamurthi maintains that such a
claim was presumably agitated by the workmen in proceedings
before the Conciliation Officer, in 1966. While conceding
that technically, no demand notice for reinstatement was
served by the workmen on the Management before 25.10. 1972,
Counsel submits that the Management were aware of the work-
men’s claim to reinstatement, since 1966, and in these
circumstances, the Management should not be allowed to take
shelter behind this technical flaw, and deny just compensa-
tion to them from the date of wrongful dismissal.
We have carefully considered the contentions advanced on
both sides. After taking into consideration all the circum-
stances of the case, we are of opinion that the Labour
Court was not justified in awarding compensation to the
workmen, for wages relating to the period prior to
25.10.1972 i.e., the date on which the demand notices for
reinstatement were served on the Management. To this ex-
tent, we would accept the contention of the appellants.
341
The third contention of the appellants is that the onus
of proving that they had not obtained alternative employment
elsewhere after the termination of their services, was on
the workmen, and they had failed to discharge that onus.
We find no merit in this contention.
The question of onus oft loses its importance when both
the parties adduce whatever evidence they had to produce.
In the instant case, both the parties led their evidence
and closed their respective cases. Subsequently, at a
late stage, the Management made an application for adducing
additional evidence. The Labour Court declined theft appli-
cation. The High Court found--and we think rightly, no good
reason to interfere with the discretion of the Labour Court.
It may be remembered further, that this appeal arises out of
a petition under Art. 226 of the Constitution, and in the
exercise of that special jurisdiction, the High Court
does not reopen a finding of fact based on legal evidence.
The findings of the Labour Court to the effect, that after
their dismissal, Ram Swamp Gupta was unable to find any
alternative employment elsewhere, while Rawat was able to
find only intermittent employment elsewhere, were based on
evidence produced by the parties. The High Court was there-
fore right in not interfering with those findings of fact.
Lastly it was urged by Mr. Pai, that the employers had
lost confidence in the employees, and therefore, compensa-
tion, without reinstatement, would have been adequate re-
lief. It is submitted that the business of the employers
is that of Travel Agents and such a sensitive business can
be successfully carried on only with the aid of employees
whose fidelity and integrity is beyond doubt. It is
stressed that the employees of the appellants, have to
handle daily lot of cash received from their clients in the
discharge of their duties. It is pointed out that the
charge against H.S. Rawat was one of misappropriation of
such funds and this charge was established in the domestic
enquiry. The Labour Court, proceeds the argument, did not
displace that finding of the domestic Tribunal, but ignored
it on the ground that the charge was stale and had been
condoned. In short, the argument is that the employers had
lost confidence in this employee who could no longer be
entrusted to perform sensitive jobs on behalf of the
Management, without detriment to its business.
We are unable to accept this contention.
Firstly, this point was not argued before the High
Court. Secondly, the observations of the Labour Court, read
as a whole, show that, in its opinion, the charge of misap-
propriation of funds had not been proved against H.S.
Rawat. This is what the Labour Court said on the point:
"I am therefore of opinion that the
charges had been condoned and they could not
be revived again and the act of reviving the
charge on account of his Union activities
was an act of unfair labour practice on the
part of the Management and amounted to
victimisation. Even the
342
charges in the charge-sheet Ex. M/5 have not
been established before me, that the workman
withdrew the funds from the company on false
pretences for revenue stamps and misappropri-
ated the same."
Thus there is no factual basis for this belated conten-
tion, and we repel the same.
For the foregoing reasons, we dismiss this appeal with
the modification that in addition to the relief of rein-
statement with continuity of service, S/Shri H.S. Rawat and
Ram Swarup Gupta shall be entitled to 50%, and full back
wages, respectively, from 25.10.1972.
It may be recalled that the special leave to appeal in
this case, was granted on the condition that the appellants
shall pay the costs of this appeal to the respondents, in
any event. We order accordingly.
P.B.R. Appeal dismissed.
343