The Associated Cement Companies Ltd. Vs.
Their Workmen  INSC 34 (3 March 1960)
GUPTA, K.C. DAS
CITATION: 1960 AIR 777 1960 SCR (3) 157
CITATOR INFO :
R 1960 SC1012 (5) D 1969 SC 306 (11)
Industrial Dispute-Award-Notice, of
Termination-Whether can be given by minority union-Industrial Disputes Act,
1947, (14 Of 1947), ss. 18, 19(6).
The appellant's workmen were represented by a
Union called Kamdar Mandal Cement Works, Porbandar. The registration of the
said union was cancelled and that led to the formation of two Unions, the
Cement Kamdar Mandal and Cement Employees Union. The Cement Kamdar Mandal gave
two notices one after another to the appellant, purporting to terminate two
previous awards, wherein the defunct union represented the workmen. Thereafter
the Mandal presented fresh demands and the dispute was referred to the
Tribunal. The second union, the Cement Employees' Union which represented the
majority of the appellant's workmen at Porbandar had been impleaded in the
proceedings. The appellant raised preliminary objections before the Tribunal
against the competency of the reference inter alia on the ground that the award
in question by which the parties were bound had not been duly terminated under
s. 19(6) of the Act in as much as the union which purported to terminate the
said award represented only a minority of workmen bound by it. The Tribunal by
its interlocutory judgment found against the appellant.
The dispute between the parties centres round
the question as to who can issue the notice terminating the award on behalf of
workmen who are bound by the award as a result of s. 18 of the Act. The
question therefore for decision is whether a registered trade union
representing a minority of workmen governed by an award can give notice to the
other party intimating its intention to terminate the award under s. 19(6) of
the Industrial Disputes Act, 1947.
Held, that the effect of s. 18 is that an
award properly made by an industrial tribunal governs the employer and all
those who represent him under s. 18(c) and the employees who are parties to the
dispute and all those who are included in s. 18(b) and (d). On a fair and
reasonable reading of s. 19(6), the true position is that, though the
expression "any party bound by the award" refers to all workmen bound
by the award, notice to terminate the said award can be given not by an
individual workman but by a group of workmen acting collectively either through
their union or otherwise, and it is not necessary that such a group of workmen
acting collectively either through their union or otherwise, should represent
the majority of workmen bound by the award. Thus it is open to a minority of
workmen or a minority union to terminate 158 the award by which they, along
with other employees, are bound just as much as it is open to them to raise an
industrial dispute under the Act.
The Central Provinces Transport Services
Limited v. Raghunath Gopal Patwardhan,  S.C.R. 956 and The Newspapers
Limited v.The State Industrial Tribunal, U. P.,  S.C.R. 754, referred to.
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 404 of 1958.
Appeal by special leave from the decision
dated March 10, 1958, of the Industrial Tribunal, Rajkot, in Adjudication Case
No. 67 of 1955.
M. C. Setalvad, Attorney-General for India,
R. J. Kolah, S. N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra,
for the appellants.
Janardan Sharma, for respondent No. 2.
1960. March, 3. The Judgment of the Court was
delivered by GAJENDRAGADKAR, J.-Can a registered trade union representing a
minority of workmen governed by an award give notice to the other party
intimating its intention to terminate the award under S. 19(6) of the Industrial
Disputes Act XIV of 1947 (hereinafter called the Act)? That is the short
question which arises for decision in the present appeal.
In answering the said question it would be
necessary to examine the scheme of the Act and to ascertain the true meaning.
and effect of s. 19(6) on its fair and reasonable construction. The controversy
thus raised undoubtedly lies within a narrow compass; but before addressing
ourselves to the merits of the dispute, it is necessary to state the material
facts which led to the present proceedings.
The present appeal has been brought before
this Court by the Associated Cement Companies Limited (hereinafter called the
appellant) against their workman (hereinafter called the respondents), and it
arises from an industrial dispute between them which was referred for
adjudication to the Industrial Tribunal for the State of Saurashtra by the
Saurashtra Government under s. 10(1) of the Act. Several items of demand
presented by the respondents constituted the subject-matter of the reference.
When the tribunal began its proceedings the appellant raised four preliminary
objections against the competence of the reference itself. The tribunal heard
parties on these preliminary objections, and by its interlocutory judgment
delivered on March 10, 1958, it has found against the appellant on all the
points. In the result it set down the reference for further hearing on the
merits. It is against this interlocutory judgment and order that the appellant
has come to this Court by special leave. Out of the four points urged by the
appellant as preliminary objections we are concerned with only one in the
present appeal, and that relates to the incompetence of the reference on the
ground that the award in question by which the parties were bound has not been
duly terminated under s. 19(6) of the Act inasmuch as the union which purported
to terminate the said award represents only a minority of workmen bound by it.
The circumstances under which this contention
was raised must now be stated in some detail. The appellant is a limited
company and owns and runs a number of cement factories spread out in different
States in India as well as in Pakistan. It has a factory at Porbandar in
The factory is known as the Porbandar Cement
Works. An industrial dispute arose between the appellant and the respondents in
1949 and it was referred for adjudication to the industrial tribunal on March
22, 1949. This reference ended in an award made on September 13, 1949.
Thereafter the said award was terminated by the appellant; and on disputes
arising between it and the respondents another reference was made to the same
tribunal for adjudication of the said disputes. A second award was made on July
24, 1951, by which the earlier award with slight modifications was ordered to
continue in operation. In the proceedings in respect of both the references the
appellant's workmen were represented by their Union called Kamdar Mandal,
Cement Works, Porbandar. It appears that the registration of the said union was
cancelled on July 2,1954, and that led to the formation of two unions of the
appellant's workmen, the Cement Kamdar Mandal which was registered on 160 July
7, 1954, and the Cement Employees' Union which was registered on September 18,
The Cement Kamdar Mandal gave notice to the
appellant's manager on September 23, 1954, purporting to terminate the first
award pronounced on September 13, 1949, at the expiration of two months' notice
from the date of the said communication. By another letter written on December
20,1954, the same union purported to terminate the second award pronounced on
July 24, 1951, in a similar manner. On November 22, 1954, the said Mandal
presented fresh demands most of which were covered by the two previous awards.
The said demands were referred to the Conciliation Officer for conciliation but
the efforts at conciliation failed., and on receiving a failure report from the
officer the Saurashtra Government made the present reference purporting to
exercise its jurisdiction under s. 10(1)(c) of the Act. The appellant's case is
that the Cement kamdar Mandal was not authorised to terminate either of the two
awards under s. 19(6) of the Act, that the second award is thus still in
operation, and so the reference is invalid.
Meanwhile it appears that the Cement
Employees' Union, which represents the majority of the appellant's workmen at
Porbandar, instead of giving notice of termination under s. 19(6) raised
disputes with the appellant and the same were referred to the Conciliation
Officer. Efforts at conciliation having failed the conciliation officer made a
failure report to the Government of Saurashtra; the Saurashtra Government,
however, did not refer the' said dispute for adjudication. In the present
proceedings this Union has been impleaded and it has supported the demands made
by the Cement Kamdar Mandal; in other words, notwithstanding the rivalry
between the two Unions, the demands made by the minority union were supported
by the majority union, and in fact, in the appeal before us, it is the latter
union that has appeared to contest the appeal.
The tribunal has dealt with the point of law
raised by the appellant under s. 19(6) on the assumption that the Cement Kamdar
Mandal which purported to terminate the awards under the said section
represents the minority 161 of the workmen employed at Porbandar, and we
propose to deal with the point raised in the appeal on the same assumption.
The main sections which fall to be considered
in dealing with the dispute are ss. 18 and 19 as they stood in 1954.
Section 18 provides, inter alia, that an
award which has become enforceable shall be( binding on (a) all parties to the
industrial dispute, (b) all other parties summoned to appear in the proceedings
as parties to the dispute, unless the Board or tribunal, as the case may be,
records the opinion that they were so summoned without proper cause, (c) where
a party referred to in cl. (a) or cl. (b) is an employer, his heirs, successors
or assigns in respect of the establishment to which the dispute relates, and
(d) where a party referred to in cl. (a) or cl. (b) is composed of workmen, all
persons who were employed in the establishment or part of the establishment, as
the case may be, to which the dispute relates on the date of the dispute, and
all persons who subsequently became employed in that establishment or part. It
is thus clear that though an industrial dispute may be raised by a group of
workmen who may not represent all or even the majority of workmen, still, if
the said dispute is referred to the industrial, tribunal for adjudication and
an award is made, it binds not only the parties to the dispute or other parties
summoned to appear but all persons who were employed in the establishment or
who would be employed in future are also governed by the award ; in other
words, the effect of s. 18 is that an award properly made by an industrial
tribunal governs the employer and all those who represent him under s. 18(c)
and the employees who are parties to the dispute and all those who are included
in s. 18(b) and (d).
Section 19 prescribes the period of operation
of settlements and awards. Section 19(3) provides that an award shall, subject
to the provisions of this section, remain in operation for a period of one
year. This is subject to the provisos to suubs. (3) as well as to sub s. (4)
but we are not concerned with the said provisions. Section 19(6) provides that notwithstanding
the expiry of the period of operation under 21 162 sub-s. (3) the award shall
continue to be binding on the parties until a period of two months has elapsed
from the date on which the notice is given by any party bound by the award to
the other party or parties intimating its intention to terminate the award. The
effect of this sub-section is that unless the award is duly terminated as
provided by it shall continue to be binding notwithstanding the expiration of
the period prescribed by sub-s. (3). This position is not in dispute. The
dispute between the parties centers round the question as to who can issue the
notice terminating the award on behalf of workmen who are bound by the award as
a result of s. 18 of the Act. What the sub- section requires is that a notice
shall be given by any party bound by the award to the other party or parties.
To whom the notice should be given may not present much difficulty. Where the
award is sought to be terminated on behalf of the employees the notice has to
be given to the employer and that is the party entitled to receive notice.
Then, as to " the parties " to whom
also notices are required to be given, it may perhaps be that the parties
intended are those joined under s. 10, sub-s. (5) or under s. 18, sub-s. (2) or
are otherwise parties to the dispute;
but with that aspect of the question we are
not concerned in the present appeal, because notice has been given to the
appellant and all the workmen concerned in the dispute have appeared before the
tribunal through the two respective unions. The question with which we are
concerned and which is not easy to determine is the true interpretation of the
word " any party bound by the award ". We have already noticed the
effect of s. 18, and we. have seen how wide is the circle of persons who are
bound by the award as a result of the said section. , Literally construed, any
party bound by the award may mean even a single employee who is bound by the
award, and on this literal construction even one dissatisfied employee may be
entitled to give notice terminating the award. On the other hand, it may be
possible to contend that any party in the context must mean a party that
represents the majority of the persons bound by the award.
163 Terminating the award is a serious step
and such a step can be taken by a party only if it can claim to represent the
will of the majority on that point. It is for this construction that the
appellant contends before us.
In construing this provision it would be
relevant to remember that an industrial dispute as defined by s. 2(k) of the
Act means any dispute or difference between employers and employers, or between
employers and workmen, or between workmen and workmen which is connected with
the employment or non-employment, or the terms of employment, or with the
conditions of labour of any person. This definition emphatically brings out the
essential characteristics of the dispute with which the Act purports to deal.
The disputes must relate to the terms of employment or with the conditions of
labour and they must arise, inter alia, between workmen and their employer.
Ordinarily, an individual dispute which is not sponsored by the union or is
otherwise not supported by any group of workmen is not regarded as an
industrial dispute for the purposes of the Act. A provision like that contained
in s. 33A is of course an exception to this rule. The basis of industrial
adjudication recognised by the province of the Act clearly appears to be that
disputes between employers and their employees would be governed by the Act
where such disputes have assumed the character of an industrial dispute. An
element of collective bargaining which is the essential feature of modern trade
union movement is necessarily involved in industrial adjudication. That is why
industrial courts deal with disputes in relation to individual cases only where
such disputes assume the character of an industrial dispute by reason of the
fact that they are sponsored by the union or have otherwise been taken up by a
group or body of employees. In The Central Provinces Trans- port Services
Limited v. Raghunath Gopal Patwardhan (1) this Court has observed that "
the preponderance of judicial opinion is clearly in favour of the view that an
individual dispute cannot per se be an industrial dispute but may become one if
taken up by a (1) [ 1956] S.C.R. 956.
164 trade union or a number of persons
". These observations have been cited with approval by this Court in the
case of The Newspapers Limited v. The State Industrial Tribunal, U. P. Having
regard to this aspect of the matter it would be difficult to hold that
"any party bound by the award " can include an individual workman,
though speaking literally he is a party bound by the award. In our opinion,
there- fore, the said expression cannot include an individual workman. We ought
to add that this position is fairly conceded by'. Sharma for the respondents.
That takes us to the question as to whether
the expression " any party bound by the award " must mean a union
representing the majority of the workmen bound by it or a group of workmen
constituting such majority acting otherwise than through the union. The
expression " any party bound by the award " obviously refers to, and
includes, all persons bound by the award under s. 18. The learned
Attorney-General has urged before us that we should construe s. 19(6) so as to
preclude a minority of workmen bound by the award from disturbing the smooth
working of the award and thereby creating an industrial dispute. When an award
is made it binds the parties for the statutory period under s. 19(3); and even
after the expiration of the said period it continues to be binding on the
parties under s. 19(6) unless it is duly terminated. The policy of the Act,
therefore, appears to be that the smooth working. of the award even after the
prescribed statutory period should not be disturbed unless the majority of the
workmen bound by it feel that it should be terminated and fresh demands should
be made. If a minority of workmen or a minority union is allowed to terminate
the award it would lead to the anomalous result that despite the willingness of
the majority of workmen to abide by the award the minority can create
disturbance and raise an industrial dispute and that cannot be within the
contemplation of the Legislature when it enacted s. 19(6) of the Act. That in
substance is the argument urged before us; thus presented the argument no doubt
appears prima facie attractive;
(1)  S.C.R 754.
165 but, in our opinion, it would be
unreasonable to accept this construction and impose the limitation of the
majority vote in the matter of the termination of the award.
The effect of imposing such a limitation
would, in our opinion, seriously prejudice the interests of the employees.
It is well-known that the trade union
movement in this country cannot yet claim to cover all employees engaged in
several branches of industry. Membership of the important trade unions no doubt
shows an appreciable increase and progress, but the stage when trade unions can
claim to have covered all employees or even a majority of them has still not
been reached. If the majority rule for which the appellant contends is accepted
and s. 19(6) is accordingly construed, termination of the award would, we
apprehend, become very difficult, if not impossible, in a very large number of
cases. It is in this context that the effect of s. 18 has to be borne in mind.
As we have already indicated the class of employees bound by the award under s.
18 is very much wider than the parties to the industrial dispute in which the
award is made; the said class includes not only all the persons employed in the
establishment at the date of the award but it covers even the subsequent
employees in the said establishment. It is, therefore, obvious that if the
majority rule is adopted very few awards, if any, could be terminated because
very few unions would be able to claim a majority of members on their rolls,
and in their present stage of Organization in very few cases would a majority
of workmen be able to meet, decide and act together otherwise than through
their unions. That is why the majority rule would very seriously prejudice the
rights of employees to terminate awards when they feel that they need to be
modified or changed. That is one aspect of the matter which cannot be ignored
in construing the material words in s. 19(6).
There is another aspect of the question which
is also relevant and which, in our opinion, is against the construction
suggested by the appellant. We have already noticed that an industrial dispute
can be raised by a group of workmen or by a union even 166 though neither of
them represent the majority of the workmen concerned; in other words, the
majority rule on which the appellant's construction of s. 19(6) is based-is
inapplicable in the matter of the reference of an Industrial dispute under s.
10 of the Act. Even a minority group of workmen can make a demand and thereby
raise an industrial dispute which in a proper case would be referred for
adjudication under s. 10. It is true that an award pronounced on such reference
would bind all the employees under s. 18; but logically, if an industrial
dispute can be raised by a minority of workmen or by a minority union why
should it not be open to. a minority of workmen or a minority union to
terminate the award which is passed on reference made at their instance ? The
anomaly to which the learned Attorney-General refers has no practical
significance. If the majority of workmen bound by the award desire that the
award should continue and needs no modification, they may come to an agreement
in that behalf with their employer, and adopt such course as may be permissible
under the Act to make such agreement effective.
However that may be, we are satisfied that
both logic and fairplay would justify the conclusion that it is open to a
minority of workmen or a minority union to terminate the award by which they,
along with other employees, are bound just as much as it is open to hem to
raise an industrial dispute under the Act. hat is the view taken by the
industrial tribunal in he present case and we see no reason to differ from it.
It appears that when this question was argued
before the tribunal the appellant strongly relied on rule 83 framed by the
Government of Bombay under s. 38 of the Act; and it was urged that the said
rule is consistent with the construction sought to be placed by the appellant
on s. 19(6). It is conceded that at he relevant time this rule was not in
force; and so it s strictly not applicable to the present proceedings. hat
being so, we do not propose to consider the argument based on the said rule and
to examine the question as to whether the rule really supports the appellant's
construction, and, if yes, whether it would be valid. The question raised
before us must obviously be decided on a fair and reasonable construction of s.
19(6) itself, and the rule in question, even if applicable would not be
material in that behalf. We accordingly hold that, on a fair- and reasonable
construction of s. 19(6) the true position is that, though the expression
"any party bound by the award" refers to all workmen bound by the
award, notice to terminate the said award can be given not by an individual
workman but by a group of workmen acting collectively either through their union
or otherwise, and it is not necessary that such a group or the union through
which it acts should represent the majority of workmen bound by the award.
In the result the appeal fails and is
dismissed with costs.