Rohtas Industries Ltd. Vs. Brijnandan
Pandey  INSC 55 (11 October 1956)
BHAGWATI, NATWARLAL H.
AIYYAR, T.L. VENKATARAMA MENON, P. GOVINDA
CITATION: 1957 AIR 1 1956 SCR 800
Industrial Dispute-Temporary employees-Discharge
of workmenApplication before the Labour Appellate Tribunal-Scope of
enquiry-Discretion of the Tribunal-Industrial Disputes (Appellate Tribunal)
Act, 1950 (XLVIII of 1950), s. 22.
The scope of an enquiry under s. 22 of the
Industrial Disputes (Appellate Tribunal) Act, 1950, is whether there is a prima
facie case made out for the proposed discharge of the workman and the employer
has not resorted to any unfair practice or victimisation.
Though an Industrial Tribunal can create new obligations
or modify contracts in the. interests of industrial peace or to prevent unfair
practice or victimisation, its discretion has to be exercised in accordance
with well recognised principles and it cannot ignore altogether an existing
agreement or existing obligations.
The Automobile Products of India Ltd. v.
Rukmaji Bala ( 1 S.C.R. 1241) and Atherton West & Co. Ltd. v. Suti
Mill Mazdoor Union, ( S.C.R. 780), relied on.
Where, as in the present case, the Labour
Appellate Tribunal did not direct its mind to the real question to be decided
on an application under s. 22 of the Act for permission to discharge the
temporary employees and without deciding whether the workmen were temporary
employees or not, passed an order dismissing the application on the basis of a
finding which was not determinative of the real point or question at issue,
held that the decision must be set aside and the proper order passed.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 144 of 1955.
Appeal by special leave from the judgment and
order dated September 25, 1953, of the Labour Appellate Tribunal of India,
Calcutta in Miscellaneous Case No. C-112 of 1953.
C. K. Daphtary, Solicitor-General of India,
A. B. N. Sinha and B. P. Maheshwari, for the appellant.
S. P. Sinha, R. Patnaik and A. D. Mathur, for
801 1956. October 11. The Judgment of the
Court was delivered by S. K. DAS J.,-This is an appeal by special leave from a
decision of the Labour Appellate Tribunal, Calcutta, dated the 25th September,
1953. The relevant facts lie within a narrow compass. On the 4th of May 1953
the appellant, the Rohtas Industries Limited, Dalmianagar, made an application
to the said Labour Appellate Tribunal under section 22 of the Industrial
Disputes (Appellate Tribunal) Act, 1950 (XLVIII of 1950), hereinafter referred
to as the Act, for permission to discharge ninety six temporary employees in
the following circumstances. The appellant company have a number of factories
at Dalmianagar including a cement factory, power house, pulp mill, paper
factory, chemical factory, factory for the manufacture of certain acids and an
asbestos cement factory. The company had a number of temporary employees who
were engaged temporarily in connection with certain erection works for the
extension and enlargement of those factories. The terms of employment of these
employees were embodied in a temporary appointment form which was signed by the
employees as well as the management. The said terms stated, inter alia, that
"the company could discharge the employee at any time without notice,
compensation and giving any reason therefor, whether on completion of the work
on which the employee was engaged or earlier"; the terms also made it
clear that whether the employee was on the same job or some other job, in the
same department or some other, either on temporary work or permanent work, he
would remain a temporary employee until the Works Manager issued a written
letter expressly making him a permanent employee. As and when the various erection
works were completed, the temporary employees were first put on a list of spare
men and then discharged. Some time prior to the 3rd of July 1952, sixty nine of
these temporary employees were spared for being discharged. The names of these
sixty nine employees were given in two lists, Appendix 802 A and Appendix B. It
was alleged that on the 3rd of July 1952, a number of these employees headed by
one Brij Nandan Pandey entered the office of Shri L. C. Jain, Manager of the
Cement Factory, and Brij Nandan Pandey assaulted the Manager. A serious
situation resulted from that 'incident and the company stopped the sixty nine
temporary employees from coming to their factories or to their Labour Office
and issued a notice to them stating that the company were applying to the
Industrial Tribunal for permission to terminate their services. At that time an
industrial dispute relating to, among other things, the payment of bonus to the
employees was pending adjudication in the Court of the Industrial Tribunal,
Bihar. On the 5th of July 1952, the appellant company made an application to
the said Tribunal for permission to discharge the sixty nine employees.
The application was made under section 33 of
the Industrial Disputes Act, 1947. On the 12th of July 1952, forty nine out of
the said sixty nine employees made an application, under section 33-A of the Industrial
Disputes Act, to the Chairman, Industrial Tribunal, Bihar, on the allegation
that the appellant company had discharged sixty nine employees on the 5th July
1952 and had thereby contravened section 33 of the Industrial Disputes Act,
1947. On the 20th of August 1952, thirty six more temporary employees were put
on the spare list and an application was made to the Industrial Tribunal Bihar,
for including these thirty six persons also in the application which had been
made for permission to discharge the temporary men; thus, all told, the
application related to one hundred and five temporary men. The case of the
appellant company was that the completion of the erection works for which these
temporary men were originally employed was a gradual process and so far as the
Cement Factory erection work was concerned, it was completed by the end of
March 1952 except for certain minor additions and alterations. Therefore, the
appellant company no longer required the services of the temporary employees
and they were put on the spare list as and 803 when their services were no
The two applications which had been made to
the Industrial Tribunal, Bihar, the one under section 33 of the Industrial Disputes
Act and the other under section 33-A of the said Act, remained pending with the
Industrial Tribunal till the 17th of December 1952 on which date the
application under section 33-A filed by forty nine of the sixty nine temporary
employees, was dismissed. On the 3rd of January 1953, the Chairman of the
Industrial Tribunal, Bihar, intimated to the appellant company that the
Tribunal was no longer competent to pass any orders on the application under
section 33 of the Industrial Disputes Act, 1947, as the adjudication
proceedings on the main reference had already concluded.
Two appeals were taken to the Labour
Appellate Tribunal, one from the award made on the main adjudication and the
other from the order made on the application under section 33-A of the Industrial
Disputes Act, 1947. On the 20th May 1953, the appeal from the order under
section 33-A was dismissed.
As we are not concerned with that appeal in
any way, nothing further need be said about it in this judgment.
The appeal from the main award was pending on
the 4th of May 1953 on which date the appellant company made their application
under section 22 of the Act to the Labour Appellate Tribunal for permission to
discharge ninety six of the temporary employees. Though there were one hundred
and five temporary employees originally, with regard to whom an application had
been made to the Industrial Tribunal, Bihar, nine out of them voluntarily left
the service of the company; therefore, the number of temporary employees
regarding whom the application under section 22 of the Act was made was ninety.
six only., The application was contested by forty two of the temporary
employees, and in their affidavit they denied that any of the sixty nine
workmen were originally recruited as temporary workmen and they further denied
that they were involved in the incident relating to the assault on Shri L.C.
Jain on the 3rd of July 1952. They said that in effect they were 804 permanent
employees and enjoyed all the benefits of permanent employees. They further
"The erection work of the cement plants
of the petitioners was completed towards the end of 1950 and it is therefore
patently false to suggest that we became redundant as a result of the
completion of the erection of the cement plants. It is significant to note that
a large number of workmen who had worked on the job of erecting the cement
plants were discharged shortly after the completion of the said work on the ground
that they were surplus. The cement plants started to Work in full swing from
about the first quarter of 1951 and we were working in the said cement plant
producing cement from the very beginning. right up to 5th July 1952, when we
were informed that we were surplus. In fact the real reason for the proposed
retrenchment is the petitioner's desire to increase the rate of exploitation of
its workmen by increasing the workload".
With regard to the terms embodied in the
appointment form, it was alleged that on or about the 3rd of December 1948 the
employees of the appellant company were forced to go on strike on account of an
industrial dispute; towards the end of the strike the workmen became exhausted
and drifted back to work. The strike was ultimately called off and the
appellant company taking full advantage of their victory compelled a section of
the workmen, who did not return to work until the strike was called off, to
sign the appointment form with the purpose of humiliating and terrorising them.
The Labour Appellate Tribunal gave its
decision on the 25th September 1953 which is the decision under appeal. It
dismissed the application of the appellant. company on a finding which the
Tribunal expressed in the following words:
"It is thus clear that these 96 workmen
had been working in the production departments from as far back as the
beginning of the year 1951 and so the completion of the erection work cannot be
put forward as the ground for their retrenchment".
805 Referring to the Directors' Report dated
the 10th of July 1951, the Tribunal came to the conclusion that the workmen's
version that the erection works had been completed by the end of 1950 was
supported by the said report. In other words, the decision of the Labour
Appellate Tribunal was primarily based on the finding that the erection works
were completed by the end of 1950 and therefore there was no ground for
discharging the ninety six temporary men.
Learned counsel for the appellant has
contended before us that (1) the Appellate Tribunal did not correctly
appreciate the true scope and effect of section 22 of the Act; (2) the
Appellate Tribunal gave attention to only one point, namely, the completion of
erection works, and did not consider the other circumstances put forward on behalf
of the appellant in support of their application; (3) instead of considering
the real point which arose for determination on an application under section 22
of the Act, the Appellate Tribunal confined its attention to a point which was
not decisive of the question before it; and (4) by reason of its failure to
consider the real point for determination, the order of the Appellate Tribunal
has resulted in manifest injustice. In our opinion, these contentions are
correct and should be upheld.
It was pointed out in The Automobile Products
of India Ltd. v. Rukmaji Bala(1) that section 22 of the Act confers on the
Appellate Tribunal a special jurisdiction which is in the nature of original
jurisdiction and the Tribunal being an authority of limited jurisdiction must
be confined to the exercise of such functions and powers as are actually
conferred on it. With regard to the scope of section 22 of the Act, it was
"The object of section 22 of the 1950
Act like that of section 33 of the 1947 Act as amended is to protect the
workmen concerned in disputes which form the subject-matter of pending
proceedings against victimisation by the employer on account of their having
raised industrial disputes or their continuing the (1)  1 S.C.R. 1241.
105 806 pending proceedings. It is further the object of the two sections to
ensure that proceedings in connection with industrial disputes already pending
should be brought to a termination in a peaceful atmosphere and that no
employer should during the pendency of those proceedings take any action of the
kind mentioned in the sections which may give rise to fresh disputes likely to
further exacerbate the already strained relation between the employer and the
workmen. To achieve this object a ban has been imposed upon the ordinary right
which the employer has under the ordinary law governing a contract of
employment. Section 22 of the 1950 Act and section 33 of the 1947 Act which
impose the ban also provide for the removal of that ban by the granting of
express permission in writing in appropriate cases by the authority mentioned
therein. The purpose of these two sections being to determine whether the ban
should be removed or not, all that is required of the authority exercising
jurisdiction under these sections is to accord or withhold permission".
The earlier decision of this Court in
Atherton West & Co. Ltd. v. Suti Mill Mazdoor Union(1) dealt with clause 23
of the U. P. Government Notification dated the 10th March 1948 made in exercise
of the powers conferred by sections 3 and 8 of the U. P. Industrial Disputes
Act, 1947, and it was there observed that the scope of the enquiry was to come
to a conclusion whether there was a prima facie case made out for the discharge
or dismissal of the workman and the employer, his agent or manager was not
actuated by any improper motives or did not resort to any unfair practice or
victimisation in the matter of the proposed discharge or dismissal of the workman.
That being the scope of the enquiry on an application under section 22 of the
Act, what the Labour Appellate Tribunal had to decide in the present case was
whether the appellant company had made out a Prima facie case for the proposed
discharge and whether they were resorting to any unfair practice or
victimisation in the matter of the proposed discharge.
(1)  S.C.R. 780.
807 Instead of doing that, the Labour
Appellate Tribunal dismissed the application of the appellant company on the
only ground that the version of the workmen that the erection works had been
completed by the end of 1950 was supported by the Report of the Directors dated
the 10th July 1951. Learned counsel for the appellant has rightly pointed out
that even in respect of the completion of erection works the conclusion of the
Appellate Tribunal is a complete non sequitur. First of all, the Directors'
Report was dated the 10th July 1951 though the balance-sheet of the company
with which the report was dealing related to the period ending on the 31st
October 1950 The report naturally referred to such works as were completed on
or before the 10th of July 1951.
It should be obvious that the completion of
erection works must be a gradual process, and while some of the erection works
might have been completed by the end of 1950 or July 1951, some were still in
the process of completion. Under their terms of employment, temporary employees
could be moved from one work to the other and the mere circumstance, that they
were employed in a production department for some time, even if true, did not
make them permanent employees;
nor did the circumstance that they enjoyed
some of the benefits of permanent employees make them permanent. These are
circumstances which have been completely ignored by the Labour Appellate
It is worthy of note that in their
application dated the 12th of July 1952, the forty nine workmen admitted:
"though most of us were originally
recruited for erection work in the Cement Factory, many of us were later on
transferred as permanent workers to sugar and paper factories and some of us
were absorbed as permanent workers in the maintenance section of the Cement
Factory". (Vide paragraph 3 of the application).
In the joint affidavit filed on the 12th
August, 1953, in reply to the appellant's application under section 22 of the
Act, the said workmen denied however that 808 they were at any time engaged
temporarily for temporary work vide paragraphs 3 and 6 of the affidavit.
Obviously, they were shifting from the position which they had originally taken
up. No evidence was given that the men who were employed temporarily were
afterwards made permanent. They filed a schedule, marked 'A', to their
affidavit wherein they showed their period of service and the name of the
factory or plant from where their duties stopped. On an examination of the
schedule (Annexure A) it appears that a number of them were put on the spare
list when the erection work was completed sometime in 1952. 'Annexure 'A'
therefore supports the case of the appellant company that the completion of the
erection works was a gradual process, some were completed in 1950, some in 1951
and some in 1952.
The first batch of sixty-nine employees with
whom we are concerned were put on the spare list between March and July 1952
and the second batch were put on the spare list in August 1952 when the
relevant erection works were completed.
The finding of the Labour Appellate Tribunal
with regard to the completion of erection works was vitiated by reason of the
failure to take into consideration the circumstances stated above.
With regard to the terms of employment
embodied in the temporary appointment form, the respondents' case was that the
appointment forms were signed as a result of the strike in 1948; it was never
suggested that these forms were never signed at all and the comment of learned
counsel for the respondents that the appellant company have not produced the
appointment forms has very little force. The respondents gave no evidence in
support of the allegation that the appointment forms were taken from them for
the purpose of humiliating or terrorising them, nor did the Appellate Tribunal
come to any such finding. None of the affidavits filed on behalf of the
respondents suggested, even in a remote way, that the appellant company were
resorting to any unfair practice or victimisation in the matter of the proposed
809 Learned counsel for the respondents has
contended before us that the finding of the Labour Appellate Tribunal is a finding
on a question of fact, namely, whether the respondents were temporary or
permanent employees. He has argued that this Court should not interfere even
though the finding is based on reasons which may not appear convincing to us.
We have, however, pointed out that the Labour Appellate Tribunal gave no
finding on the question whether the respondents were temporary employees or
not. The only finding which the Tribunal gave related to a different matter,
namely, the completion of erection works. Secondly, learned counsel for the
respondents has contended that under section 22 of the Act the Appellate
Tribunal had a discretion either to lift the ban or not to lift it and in a
matter of discretion this Court should not interfere. It is true that this
Court does not sit upon the decisions of Industrial Tribunals like an ordinary
Court of appeal, and there must be special circumstances to justify the
exercise of our special power under article 136 of the Constitution.
In our opinion, such special circumstances exist
in the present case where the Labour Appellate Tribunal has not directed its
mind to the real question to be decided on an application under section 22 of
the Act and has passed an order on the basis of a somewhat irrelevant finding
which has resulted in manifest injustice.
The discretion which an Industrial Tribunal
has must be exercised in accordance with well recognised principles.
There is undoubtedly a distinction between
commercial and industrial arbitration. As has been pointed out by Ludwig Teller
(Labour Disputes and Collective Bargaining) Vol. 1, page 536:
"Industrial arbitration may involve the
extension of an existing agreement, or the making of a new one, or in general
the creation of new obligations or modifications of old ones, while commercial
arbitration generally concerns itself with interpretation of existing
obligations and disputes relating to existing agreements".
810 A Court of law proceeds on the footing
that no power exists in the courts to make contracts for people; and the parties
must make their own contracts. The courts reach their limit of power when they
enforce contracts which the parties have made. An Industrial Tribunal is not so
fettered and may create new obligations or modify contracts in the interests of
industrial peace, to protect legitimate trade union activities and to prevent
unfair practice or victimisation.
We cannot, however, accept the extreme
position canvassed before us that an Industrial Tribunal can ignore altogether
an existing agreement or existing obligations for no rhyme or reason
It has been necessary for us to go into the
facts and circumstances of this case in greater detail than is usual with this
Court, because the Labour Appellate Tribunal did not do so. The Act under which
the Appellate Tribunal purported to pass its order has now been repealed by the
Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956. A
question of some nicety as to the correct interpretation of section 33 of the
Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 might
have arisen if we had thought fit to remand this case. We do not, however,
think it necessary to pass an order of remand in this case and therefore
abstain from expressing any opinion as to the correct position in law under
subsection (2) of section 33 of that Act. No new facts need investigation in
this case. Learned counsel for the parties have taken us through all the
affidavits filed and the facts necessary for an enquiry under section 22 of the
Act clearly emerge from those affidavits. We are satisfied Prima facie that the
respondents were temporary employees and were put on the spare list as and when
the erection works were gradually completed. The appellant company have made
out a prima facie case for the permission which they have asked for and there
is no suggestion even of any unfair practice or victimisation.
In these circumstances, we would allow the
appeal, set aside the decision of the Labour Appellate Tribunal dated the 25th
September 1953 and pass the order 811 Which that Tribunal should have passed in
this case, namely, that permission be granted to the appellant to discharge
ninety six temporary workmen. In the circumstances of this case, we think that
the parties must bear their own costs throughout.