The Bagalkot Cement Co. Ltd. Vs. R. K.
Pathan & Ors [1962] INSC 17 (22 January 1962)
GAJENDRAGADKAR, P.B.
GAJENDRAGADKAR, P.B.
SARKAR, A.K.
WANCHOO, K.N.
CITATION: 1963 AIR 439 1962 SCR Supl. (2) 697
CITATOR INFO :
D 1968 SC 585 (13,16,18)
ACT:
Standing Orders-Certification of draft
submitted by employer-Power of Certifying Officer and Appellate Authority-If
can fix quantum of leave and holidays-Industrial Employment (Standing orders)
Act, 1946 (20 of 1946), as amended by Amending Act of 1956, ss. 4,10, Schedule,
cl. 5.
HEADNOTE:
The appellant company submitted draft
Standing orders as required by s. 3 of the Industrial Employment (Standing
Orders) Act, 1946, to the Certifying Officer. The Certifying Officer in
certifying the said draft added a clause to paragraph 11 of the said draft
which provided, inter alia, for certain festival holidays and causal and annual
leave for a number of days. On appeal the Appellate Authority in substance
agree with the additions made by the Certifying Officer.
The question raised in the appeal was whether
the Certifying Officer or the Appellate Authority had the jurisdiction under
the Act to make the additions in the draft Standing Orders. Section 4 of the
Act provides, inter alia, that the draft standing orders could be certified if
they provided for every matter mentioned in the Schedule to the Act and cl. 5
of the Schedule provided as follows:
"conditions of, procedure in applying for,
and the authority which may grant, leave and holidays." ^ Held, that the
Certifying Officer and the Appellate Authority had the jurisdiction in making
the addition that they did.
The word "conditions" in cl. 5
should be construed not in a narrow way but in a broad and liberal sense
consistently with the object of the Act and, so construed, there could be no
doubt that cl. 5 was not merely procedural but covered the substantive
provision for fixing the quantum of 698 holidays and leave so that the conditions
of employment might be made precise and definite and prescribed in the form of
Standing Orders having statutory effects.
Held, further, that the Certifying Officer as
well as the Appellate Authority were in substance industrial authority, and
having regard to the power given to them under the Schedule there could be no
inconsistency in holding that they had also the power of fixing the quantum of
holidays and leave as well. Any hardship that might be caused by their orders
could be rectified under s. 10 of the Act.
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 577 of 1960.
Appeal by special leave from the judgment and
order dated October 15, 1959, of the Appellate Authority (Chief Labour
Commissioner, Central, New Delhi), in Appeal under s. 6 of the Industrial Employment
(Standing Orders) Act, 1946.
B. Narayanaswamy, S. N. Andley and Rameshwar
Nath, for the appellant.
M. K. Ramamurthi, for the respondent.
1962. January 22.-The Judgment of the Court
was delivered by GAJENDRAGADKAR, J.-This appeal by special leave raises a short
question about the scope and effect of clause 5 in the Schedule to the
Industrial Employment (Standing Orders) Act, 1946 (20 of 1946) (hereinatter
called the Act ). That question arises in this way. The appellant Bagalkot
Cement Co. Ltd. is a Limited Company registered under the Indian Companies Act,
1930;
it carries on the business of manufacturing
cement and for that purpose, it owns a factory as well as a limestone Quarry at
Bagalkot in the State of Mysore. As required by s. 3 of the Act, the appellant
submitted draft Standing Orders on the 3rd March, 1958, to the Certifying Officer and the Regional Labour Commissioner (Central), Madras, in order that
they should be certified. The Certifying Officer considered 699 the draft
submitted by the appellant, heard the appellant and its employees, the
respondents and passed an order of certification on the 16th June, 1959. While considering the draft for the purpose of certification, the Certifying Officer,
however, made certain amendments in, and additions to, the a said draft.
Amongst the additions made, clause (7) in paragraph 11 was one and it is with
this addition made by the Certifying Officer that we are concerned in the
present appeal.
Paragraph 11 of the draft Standing Orders
submitted by the appellant dealt with the question of leave. Paragraph 11 (1)
of the draft provided that holidays with pay will be allowed as provided for in
the Factories Act, 1948, and other holidays in accordance with law and
contract. Clauses (2) to (6) dealt with allied matters. In the Standing Orders
as they were finally certified, clause (1) of paragraph 11 was slightly changed
and it provided that holidays with pay will be allowed as provided for in the
Mines Act. No grievance is made of this alteration. Clause (7) has been added
to paragraph 11. It reads thus:
"7. The workmen shall be allowed during
the course of a year:- (a) Ten festival holidays with pay for the celebration
of important festivals (which will be fixed before the commencement of every
calendar year in consultation with the workmen) including the Republic Day
(26th January) and the Independence Day (15th August) and or any other paid
holidays as may be declared and notified by the Government from time to time.
Those workmen that are required to work on festivals and National Holidays
shall be given an equal number of compensatory holidays on day convenient to
the company, and 700 (b) Fifteen days' casual leave with wages. This will
include all kinds of leave due to sickness or any other cause.
(c) Casual leave will not be allowed for more
than 3 days at a time except in the case of sickness and emergencies at the
discretion of the company.
(d) Wages shall be allowed for those days
remaining un-availed by the workers at the end of the year.
(e) Fourteen days annual leave to all classes
of workers who have put in 265 attendances in a year as defined in the Mines
Act. This includes statutory leave.
All leave should be applied for only in the
prescribed form. The workmen after filling the particulars of the leave
required by them shall hand over the same to the head of the section in which
they are working." The appellant apparently contended before the
Certifying Officer that it was outside his jurisdiction to deal with the topics
covered by clause (7) which he wanted to add but its objection was over ruled.
Against the order passed by the Certifying
Officer certifying the Standing Orders with the additions and amendments made
by him, the appellant preferred an appeal under section 6 of the Act to the
appellate authority, viz., the Chief Labour Commissioner (Central), New Delhi,
on the 5th July 1959. The appellate authority, in substance, agreed with the
view taken by the Certifying Officer and retained the addition made by him by
the insertion of clause (7) to paragraph
11. He, however, made slight modifications by
directing that in clause (a) there will be seven festival holidays instead of
ten festival holidays and in clause (b) there will be ten days' casual leave
instead of fifteen days. Clause 701 (d) was amended by the appellate authority
by substituting a new clause in its place. The substituted clause reads thus:
"Casual leave will not be allowed to be
accumulated. Unavailed casual leave shall lapse at the close of the calendar
year." Then in regard to cl. (e), the appellate authority held that the
said clause amounted to a repetition of statutory provision. Therefore, the
said clause was amended to read thus:
"Annual leave with wages will be allowed
as per provisions of the Mines Act." The appellate authority made certain
other amendments in the Standing Orders as they were certified by the
Certifying Officer and ultimately. the Standing Orders were certified, with the
modifications and alterations suggested by the order of the appellate
authority. The order of the appellate authority was passed on October 15, 1959.
Against this order, the appellant applied for
special leave to this Court and special leave was granted to it on the 1st
February, 1960. It is with the special leave thus granted that the appellant
has come to this Court and on its behalf Mr, Narayanaswami has urged that the
addition made by cl. (7) in paragraph 11 of the Standing Orders is outside the
jurisdiction of the certifying authority. He contends that the jurisdiction
conferred on the certifying authority by clause 5 in the Schedule does not
empower the certifying authority to deal with the substantive question of the
extent and quantum of leave and holidays. It only requires the Standing Orders
to provide for conditions subject to which leave and holidays can be granted
and the procedure in respect thereof and the authority which may grant such
leave and holidays. The quantum of leave and holidays which should be granted
to the workmen is outside the purview of the Schedule 702 and as such, cannot be
included in the Standing Orders. That is how the narrow question which arises
for our decision in the present appeal is to determine the scope and effect of
cl. 5 in the Schedule.
Before dealing with this question, it would
be convenient to consider broadly the scheme of the Act. The Act was passed in
1946 because the Legislature thought that it was "expedient to require
employers in individual establishments to define with sufficient precision the
conditions of employment under them and to make the said conditions known to
workmen employed by them." Prior to the passing of the Act, conditions of
employment obtaining in several industrial establishments were governed by
contracts between the employer and their employees. Sometimes the said conditions
were reduced to writing and in many cases they were not reduced to writing but
were governed by oral agreements. Inevitably in many cases, the conditions of
service were not well-defined and there was ambiguity or doubt in regard to
their nature and scope. That is why the Legislature took the view that in
regard to industrial establishments to which the Act applied, the conditions of
employment subject to which industrial labour was employed should be
well-defined and should be precisely known to both the parties. With that
object, the Act has made relevant provisions for making Standing Orders which,
after they are certified, constitute the statutory terms of employment between
the industrial establishments in question and their employees. That is the
principal object of the Act.
The Act applies to every industrial
establishment wherein one hundred or more workmen are employed or were employed
on any day of the preceding twelve months. It can be extended even to
establishments whose complement of labour is less than 703 one hundred and it
does not apply to any industry to which Chapter VII of the Bombay Industrial
Relations Act, 1946, applies or to any industrial establishment to which the
provisions of the Madhya Pradesh Industrial Workmen (Standing Orders) Act,
1959, apply. In other words, normally, Standing Orders have to be drafted by
the employer and their certification obtained under the Act wherever the
employer employ a more than one hundred industrial workmen: s. 1(3). The
certifying authority under the Act means a Labour Commissioner or a Regional
Labour Commissioner and includes any officer appointed by the appropriate
Government by notification in the Official Gazette to perform all or any of the
functions of a Certifying Officer under the Act: s. 2(c). The Act provides for
an appeal against the order passed by the Certifying Officer and the
"appellate authority" means an Industrial Court, wherever it exists
or in its absence an authority appointed by the appropriate Government by
notification in the Official Gazette to exercise in such area as may be
specified in the notification the functions of an appellate authority under the
Act: sec. 2(a).
"Standing Orders" are defined to
mean rules relating to matters set out in the Schedule: s.
2(g). Thus, the matters which have to be
covered by the Standing Orders and in respect of which the employer has to make
a draft for submission to the Certifying Officer are matters specified in the
Schedule. Section 3 requires the submission of the draft of Standing orders
within six months from the date on which the Act becomes applicable to an
industrial establishment. Under s. 4, the Standing Orders become certifiable if
provisions are made therein for every matter set out in the Schedule and they
are found to be otherwise in confirmity with the provisions of the Act. After
the amendment of this section made in 1956, the Legislature has imposed upon
the Certifying Officer and the appellate authority the duty to adjudicate 704
upon the fairness or reasonableness of the provisions of any standing orders.
Prior to the amendment, it was not open to the said authorities to examine the
fairness of the Standing Orders submitted by the employer. The result of s. 4,
therefore, is that the Standing Orders have to provide for all the topics
specified in the Schedule and they have to be in conformity with the Act. Their
reasonableness can be examined by the appropriate authorities and suitable
modifications can be made by them in accordance with their decision. Section 5
provides for the procedure which has to be followed by the Certifying Officer
before certifying the Standing Orders. The procedure is intended to give an
opportunity to both the parties to be heard before the final order is passed.
Section 6 provides for an appeal and s. 7 lays down that the Standing Order
shall come into operation on the expiry of 30 days from the date on which
authenticated copies thereof are sent as required by s. 5. sub- s. (3), or
where an appeal is preferred, on the expiry of seven days from the date on
which the copies of the appllate order are sent under s. 9, the said Standing
orders Certifying Officer to keep a register of standing orders and under s. 9,
the said Standing Orders have to be prominently posted by the employer in
English and in the language understood by the majority of the workmen on
special boards. Section 10 deals with the duration and modification of standing
orders. It provides that except by agreement, the standing orders, after they
are certified, shall not be liable to modification until the expiry of six
months from the date on which they came into operation. Section 10(2) empowers
both the employer or the workman to apply for a modification in the said
standing orders. It would thus be clear that after they are certified, the
standing orders have to remain in force for six months unless, of course, they
are modified in the meanwhile by, consent. After six months are over, an
application 705 for modification in the standing orders can be made either by
the employer the employees and the problem would be considered after following
the procedure prescribed by the Act for certifying the original standing
orders. Section 11 confers the necessary powers of a Civil Court on the
Certifying Officer and the appellate authority and s. 12 prohibit admission of
oral evidence which has the effect of adding or otherwise varying or
contradicting standing orders as finally certified under the Act, in any Court.
Section 13 provides for penalties and the procedure to enforce them.
Section 13A deals with the problem of
interpretation of the standing orders and s. 13B provides for exemption of
industrial establishments therein specified. Section 14 confers on the
appropriate Government power to exempt, conditionally or unconditionally, any
industrial establishment, and s. 15 confers on the appropriate Government the
power to make rules to carry out the purposes of the Act, and, in particular,
to provide for the matters covered by cls.(a) to (e) of sub-cl. (2). Section
15(3) contains the salutary provision that every rule made by the Central
Government under s.15 has to be placed before the House in the manner
prescribed by it. The Schedule to the Act contains 11 clauses, clauses 1 to 10
deal with the several topics in respect of which standing orders have to make a
provision and cl. 11 refers to any other matter which may be prescribed. This
last clause shows that an addition may be made by the appropriate Government if
it is thought necessary to do so, That, in brief, is the scheme of the Act.
Mr. Narayanaswami contends that having regard
the nature and scope of the several clause in the Schedule, it would be
appropriate to construe cl.5 as not including a provision for the quantum and
extent of leave and holidays His argument is that cl, 5 is really intended to
provide merely for 706 the conditions and the procedure to be adopted in
applying for leave and holidays Clause 5 reads thus:
"Conditions of, procedure in applying
for, and the authority which may grant, leave and holidays." How many
holidays the employee will have and how much leave, either casual or on medical
ground, he would be entitled to get, are matters outside the scope of the
Schedule; they would be governed by the relevant provisions of any other law or
by contract between the parties; they cannot be the subject-matter of standing
orders. The standing orders would provide for the conditions subject to which
leave and holidays can be applied for, for the procedure in applying for the
same and for the authority fying may grannt the same. That being so, the
certifying Officer and the appellate authority exceeded their jurisdiction in
making substantive provisions in that behalf by paragraph 11(7). That is the
case for the appellant as presented by Mr. Narayanaswami.
In support of this contention, reliance has
been placed on cl.3 in the Schedule which refers to shift working. It is urged
that since the clause refers to shift working, the substantive provision in
respect of shift working as well as the conditions subject to which it should
be allowed would legitimately fall within its purview. If the Legislature had
intended that the substantive provision as to leave and holiday should be the
subject-matter of standing order it may will have referred to leave and
holidays only in cl 5 without any further addition. The additional words
introduced in cl. 5 are words of limitation and they show that the substantive
provision as to leave and holidays is outside the purview of that clause, It
may be conceded that there is some force in this contention.
707 There are, however, other considerations
which have to be borne in mind in construing cl. 5. The object of the Act as we
have already seen, was to require the employers to make the conditions of
employment precise and definite and the act ultimately intended to prescribe
these conditions in the from of standing orders so that what used to be
governed by a contract hereto before would now be governed by the statutory
standing orders and it would not be reasonable to hold that conditions of employment
to which the preamble of the Act specifically refers would not include a
provision for the quantum of leave and the quantum of holidays to which the
employee would be entitled. Therefore, the word "conditions" in cl.
5. of the Schedule has to be reasonably construed in a broad and liberal sense.
The dictionary meaning of the word
"condition" is a provision or a stipulation. Now a provision or a
stipulation as to leave and holidays would necessarily include a provision for
the quantum of holidays and leave and this construction would be consistent
with the meaning of the word "condition" as employed in the preamble
to the Act. Mr. Ramamurthi who appeared amicus curiae for the respondents at
our request contended that to adopt the narrow construction of the word
"conditions" in cl. 5 would defeat the very purpose of cl. 5. He
argued that merely providing for the procedure of application and for the
authority who would grant leave and holidays without stipulating as to the
quantum of leave and holidays would be almost meaningless. In our opinion,
there is force in this contention and so, we, are inclined to adopt the broad
and liberal construction of the word "condition" in cl.5.
Besides, the first three clauses dealing with
the conditions, the procedure and the authority would apply both to leave and
holidays and it is not easy to appreciate what conditions could be 708
prescribed by the standing orders for the purpose of holidays. No doubt Mr.
Narayanaswami suggested that the conditions in the context of holidays may mean
conditions as to holidays with pay, or without pay or with half pay and that is
what is contemplated by the first clause in relation to holidays.
Theoretically, it may be conceivable that the word "conditions" may
have that meaning in respect of holidays; but it seems to us that it would
serve no useful purpose merely to provide for such conditions and to prescribe
the procedure to be adopted in applying for leave and holidays unless the
quantum of leave and the quantum of holidays are also intended to be prescribed
by the standing orders. On the broad construction of cl.
5, it becomes a self sufficient and
reasonable provision. The standing orders will provide for the leave to which
the employees are entitled and will prescribe the number of holidays which they
will be able to enjoy. Having provided for the quantum of leave and holidays,
the standing orders will also provide for the conditions in respect of them,
for the procedure in applying for them and for the authority which may grant
them. It is true that it is not easy to understand why an application has to be
made for holidays, but it may be that if there are sectional holidays,
employees belonging to a particular section entitled to them may have to apply
for them. Therefore, in our opinion, it cannot be said that the authorities
below have adopted an unreasonable constructions of cl. 5 in the Schedule when
they held that they were entitled to make the additional provisions in respect
of leave and holidays which they have purported to make by adding cl. 7 in
paragraph 11 of the standing orders.
In this connection reference, may be made to
the Model Standing Orders framed by the Central Government in 1946. Clause 9 of
the Model Orders provides that holidays with pay will be allowed as 709
provided for in Chapter VI of the Factories Act, 1948, and other holidays
accordance with law contract, custom and usage. In fact, it is significant that
paragraph 11 (1) of the draft- submitted by the appellant has also provided
that holidays with pay will be allowed as provided for in the Factories Act and
other holiday in accordance with law and contract. If this provision is
legitimately included in the Standing Orders and that too under clause 5 of the
Schedule, it is difficult to understand why a more specific provision cannot be
made under the said clause by clearly stating the number of holidays to which
the employees would be entitled and that is precisely what paragraph 11 (7)
purports to do.
Then cl. 10 of the Model Standing Orders
provides for casual leave. It lays down that a workman may be granted casual
leave of absence with or without pay not exceeding 10 days in the aggregate in
a calendar year. Then it lays down further conditions in respect of the grant
of the said causal leave. It would be noticed that the quantum of casual leave
to which the employee is entitled is thus specifically provided by. cl. 10 of
the Model Standing Orders. It is perfectly true that if clause 5 of the
Schedule is read in the narrow sense for which Mr. Narayana swamy contends, cl.
10 of the Model Standing Orders would be invalid and from that point of view
the existence of clause 10 in the Model Standing Orders cannot be of any
assistance in interpreting cl. 5 of the Schedule. But if clause 5 is construed
the broad sense for which Mr. Ramamurthi contends, it would follow that clause
10 of the Model Standing Orders is consistent with the aim and object of the
Schedule and that, incidentally, may support the agreement for the broad
construction. That is about all.
In regard to the argument based on the scope
of the 10 clauses in the Schedule, it is certainly 710 not correct to say that
the scope of the Schedule is intended to be very narrow. Take for instance,
clause 8 which deals with the termination of employment or clause 9 which deals
with the suspension or dismissal for misconduct, and acts or omissions which
constitute misconduct. These are matters of general importance and it is
conceded that all relevant and material provisions in respect of these matters
have to be included in the Standing order. Therefore, it would not be
inconsistent with the scheme of the Schedule if we were to hold that the
substantive provisions for the granting of leave and holidays along with the
conditions in respect of them have to be made by the Standing Orders under cl.
5 of the schedule.
It would be recalled that s. 10 of the Act
provides for the duration of the standing orders and if any standing orders are
found by experience to be unreasonable or inconvenient either by the employer,
or the employees, an application can be made for the modification of the said
standing orders after the expiration of six months from the date on which they
came into operation. Therefore.
there would be no hardship in requiring the
standing orders to include a provision as to leave and holiday. The provisions
made in that behalf can be modified after following the procedure prescribed by
s. 10. It is not disputed that the claim for leave and holidays can become the
subject matter of an industrial dispute and if such a dispute is referred for
adjudication to an Industrial Tribunal, the Tribunal can fix the quantum of
holidays and leave. What the Tribunal can do on such reference is now intended
to be achieved by the Standing orders themselves in respect of Industrial
establishments to which the Act applies. We have noticed that the Certifying
officer as well as the appellate authority are, in substance, industrial
authorities and if they are given power to make provision for leave and
holidays as 711 they undoubtedly are given power to provide for termination of
employment and suspension or dismissal for misconduct, there is nothing
inconsistent with the spirit of the Schedule or with the object of the Act.
Therefore. we are not satisfied that the authorities below were in error in
holding that it was competent to them to make the additional provision in the
Standing orders as prescribed by paragraph 11(7).
In the result, the appeal fails and is
dismissed. No order as to costs.
Appeal dismissed.
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