Rohtas Industries Ltd. & ANR Vs.
Rohtas Industries Staff Union & Ors  INSC 329 (18 December 1975)
CITATION: 1976 AIR 425 1976 SCR (3) 12 1976
SCC (2) 82
R 1980 SC1896 (80) R 1988 SC1340 (7) D 1990
Constitution of India Article 226 and
226(1A)-Powers of High Court to issue Writ against arbitrators under section
10A of Industrial Disputes ActArbitration Act-Error apparent on the face of the
record-Speaking awardError of Law. Industrial Disputes Act, 1947-Secs. 2(k)
10-A, 23, 24, 33CWhether employers can be awarded compensation for loss of
profit due to illegal strike under Industrial Disputes Act-Industrial
Dispute-Enforcement of special rights created by special statute whether
confined to remedies provided by the statute.
During the year 1948, the respondent, workmen
working with both the appellants went on illegal strike on account of Trade
Union rivalry. The workmen were not paid wages for the strike period and the
appellants lost their profit during the period. The employers and the workmen
entered into an agreement during the pendency of the conciliation proceedings
and referred the claims of workmen for salaries during the strike period and
the claims of the employers for compensation for loss due to the strike to the
joint arbitration of two retired High Court Judges and one retired Member of a
Labour Appellate Tribunal under section 10-A of the Industrial Disputes Act
The arbitrator delivered their award and held
that the workmen participating in the strike were not entitled to wages for the
strike period. The arbitrators however, awarded huge compensation to the
employers against the workmen for the losses incurred by the employers during
the strike period. The workmen challenged the award as illegal and void by
filing two writ petitions in the High Court. The High Court upheld that part of
the award which directed that the workmen participating in tho strike were not
entitled to wages. The High Court however, quashed the part of the award which
directed payment of compensation by the workers to the management.
In appeal by Special Leave under Article 136,
the appellants contended:
1. The award under section 10-A of the Act
savours of a private arbitration and is not amenable to correction under
Article 226 of the Constitution.
2. The award of compensation by the
arbitrators suffers from novice which can be regarded as recognised grounds for
the High Court interference.
HELD: (1) The expansive and extraordinary
powers of the High Court under Article 226, as wide as the amplitude of the
language used, indicates and so can affect "any person", even a
private individual and be available for "any other purpose", even one
for which another remedy may exist. The insertion of Article 226(1A) reiterates
that writ power can be exercised against any person by reference to the
residence of such person. It is one thing to affirm the jurisdiction and
another to authorise free exercise. This Court has spelt out wise and clear
restraints on the use of this extraordinary remedy and High Courts will not go
beyond those wholesome inhibitions except where the monstrosity of the
situation or other exceptional circumstances cry for timely judicial interdict
or mandate. [17C-E]
2. An arbitrator exercising powers under
section 10A can bind even those who are not parties to the reference or
agreement and the whole exercise under section 10A as well as the source of the
force of the award on publication derive from the statute. It is legitimate to
regard such an arbitrator now as part of the methodology of the sovereign's
dispensation of justice, thus falling within the rainbow of statutory tribunals
amenable to judicial review. The award in the present case is not beyond the
legal reach of Article 226. [18B-C] 13
3. The answer to the question whether the
High Court should have exercised its powers under Article 226 in the present
case will depend upon whether the arbitrator has tied himself down to obviously
unsound legal proposition in reaching his verdict appearing from the face of
The arbitrator may not state the law such,
eventhen such cute silence confers no greater or subtler: immunity on the award
than plain speech. The need for speaking order, where considerable numbers are
affected in their substantial rights, may well be a facet of natural justice or
fair procedure although in this case we do not have to go so far.
The law sets no premium on juggling with
drafting the award or hiding the legal error by balancing out. The inscrutable
face of the sphinx has no better title to invulnerability than a speaking face
which is a candid index of the mind.
4. According to the arbitrators, the strike
was illegal being in violation of section 24 of the Act. the illegal strike was
animated by inter-union power struggle and that it inflicted loss on the
management by forced closure and that the loss flowing from the strike was
liable to be recompensed by award of damages. In this chain of reasoning the
question of law whether an illegal strike causing loss of profit justifies
award of damages is necessarily involved. The arbitrator held in the affirmative
and according to us it is an unhappy error of law. In the present case the
arbitrators have made a sufficiently speaking award both on facts and on law.
After coming to the conclusion that the strike was illegal they held that
compensation necessarily follows based on the rule of English common law. The
English cases laying down the rule of common law were a response to the
requirement of Industrial civilization of the 19th Century England. Trade and
industry on the laissez faire doctrine flourished and the law of torts was
shaped to serve the economic interests of the trading and industrial community.
Whatever the merits of the norms, violation of which constituted 'conspiracy'
in English Law, it is a problem for creative Indian Jurisprudence to consider
how far a mere combination of men working for furthering certain objective can
be prohibited as a tort according to the Indian value system. Our constitution
guarantees the right to form associations, not for gregarious pleasure, but to
fight effectively for the redressal of grievances. Our constitution is
sensitive to workers rights. English history, political theory and life style
being different from Indian conditions where the Father of the Nation organised
boycotts and mass satyagrahas we cannot incorporate English conditions without
any adaptation into Indian Law. [21B-C, 22A, B-C, D]
5. Even in England, till recently it could
not be said with any certainty that there was any such tort as conspiracy. The
tort is unusual because it emphasizes the purpose of the defendants rather than
the result of their conduct. Even when, there are mixed motives liability will
depend on ascertaining which is the predominant object of the true motive or
the real purpose of the defendant. The motive of an illegal strike may be to
advance the workers' interest or steal a march over a rival union but never or
rarely to destroy or damage the industry. However if some individuals destroy
the plant and machinery willfully to cause loss to the employer such
individuals will be liable for the injury so caused. Sabotage is no weapon in
workers' legal armoury. It is absolutely plain that the tort of conspiracy
necessarily involves advertence to the object of the combination being the
infliction of damage on The plaintiff. The strike may be illegal but if the
object is to bring the employer to terms with the employees or to bully the
rival trade union into submission there cannot be an actionable combination in
tort. In the present case, the arbitrators did not investigate the object of
The arbitrators assumed that if the strike is
illegal the tort of conspiracy is made out. The counsel for the appellants
fairly conceded that the object of the strike was inter-union rivalry. There is
thus a clear lapse in the law on the part of the arbitrators manifest on the
face of the award. [22F, 231B-C, E, H. & 24A-B]
6. It is common case that the demand for the
wages during the strike period constitutes an industrial Dispute within section
2(k) of the Act. It is agreed by both the sides that section 23 read with
section 24 makes the strike in question illegal. An illegal strike is the
creation of the statute and the remedy for the illegal strike and its fall, out
has to be sought within the statute and not de hors 14 it. No other relief
outside the Act can be claimed on general principles of jurisprudence. The case
of Premier Automobiles followed. [25 B-C]
7. The enforcement of a right or obligation
under the Act must be by a remedy provided in the Statute. The right of the
management to claim compensation is not provided by the Act, and, therefore,
the arbitrators Committed an ex facie legal error. The consent of the parties
cannot create arbitral jurisdiction under the Industrial Disputes Act. The
claim for compensation cannot be a lawful subject for arbitration because it is
not covered within the definition of Industrial Disputes in section 2(k). We
are unable to imagine a tort of liability or compensation based on loss of
business being regarded as an industrial dispute as defined in the Act. Section
33 provides for speedy recovery of money due to a workman from an employer
under a settlement or award. It does not provide for recovery of money by the
employer from the workman. Obviously because the workman belongs to the weaker
section. Claims by employers against the workmen on grounds of tortious
liability have not found a place in the pharmacopeia of Indian Industrial Law.
[26 D, 27A, C, D-E]
CIVIL APPELLATE JURISDICTION: Civil Appeals
Nos. 17211728 of 1969.
Appeals by Special Leave from the Judgment
and order dated the 2nd May 1962 of the Patna High Court of Judicature at
Patna, in M.J.C. Nos. 475 and 498 of 1959.
A. B. N. Sinha, B. P. Maheshwari and Suresh
Sethi for the Appellants (in both the appeals).
B. C. Ghose, S. S. Jauhar, D. N. Pandey, A.
Sinha and D. P. Mukherjee for Respondent 1 (In C.A. 1727) and Respondents 1-3
(In CA 1728).
D. P. Singh, S. C. Agarwal and V. J. Francis
for respondents 7 and 8 (In CA 1727 and Respondent 4 in (1728/69).
The Judgment of the Court was delivered by
KRISHNA IYER, J.-We permit ourselves a few preliminary observations
disturbingly induced by the not altogether untypical circumstances of these two
appeals, before proceeding to state the facts, set out the submissions and
decide the points.
Industrial law in India has not fully lived
up to the current challenges of industrial life, both in the substantive norms
or regulations binding the three partiesthe States, Management and Labour-and
in the processual system which has baulked, by dawdling dysfunction, early
finality and prompt remedy in a sensitive area where quick solution is of the
very essence of real justice. The legislative and judicial processes have promises
to keep if positive industrial peace, in tune with distributive economic
justice and continuity of active production, were to be accomplished. The
architects of these processes will, we hopefully expect, fabricate creative
changes in the system, normative and adjectival.
The two appeals before us, passported by
special leave under Art. 136, relate to an industrial dispute with its roots in
1948, meandering along truce union rivalry and the like, into strikes and
settlements, the last of which led to an arbitration award in 1959 which, in
turn, prompted two writ petitions before the High Court. After a spell of a few
years they ripened into a judgment. Appeals to this Court followed and, after
long gestation of six years for preparation of papers and a 15 like period the
cases are ready for final hearing or parturition, in all 12 years after the
grant of leave. By this cumulative lapse of time the generation of workers who
struck work two decades ago have themselves all but retired, the representative
Union itself which sponsored the dispute has, the other side faintly states,
ceased to command representative character, the Managements themselves have,
out of many motives, disclaimed the intention to recover the huge sums awarded
to them by the arbitrators and the only survival after death, as it were, is a
die-hard litigation tied up to a few near-academic, but important, legal points
for adjudication by the highest Bench! On this elegiac note we will enter the
relevant area of facts and law since we must decide cases brought before us,
however stale the lis.
At this stage we may mention our strong
feeling that where the superior courts, after hearing full arguments, are
clearly inclined to, affirm the judgment under appeal for substantially similar
reasons as have weighed with the lower Court, there is no need to give lengthy
reasons for dismissing the appeal. Brevity, except in special cases, may well
fill the bill where the fate is dismissal. On this score we are disposed to
make short shrift of the appeals with stating but the necessary facts and
focusing on the larger legal facets. Nevertheless, the significance and
plurality of the points pressed have defeated condensation.
D The facts Two connected managements of
industries in the same locality, who figure as appellants before us, had a
running industrial dispute with their workers, which has had a long history
moving in a zigzag course and sicklied over by alleged internecine trade-union
strife. There were two trade unions which were perhaps of competitive strength
and enjoying recognition. One of them, the Rohtas Industries Mazdoor Sangh (for
short, the Mazdoor Sangh) was the representative union during the relevant
period while the other, the Rohtas Industries Seva Sangh (for brevity, the Seva
Sangh) is not a party before this Court and so we are not concerned with it
except for the purpose of noticing its presence in the settlement of the
dispute which starts the story so far as the litigation is concerned. There was
a strike in the Industry (for our purposes this expression embraces both the
appellants) which came to an end by virtue of a memorandum of agreement dated
October 2, 1957, to which not merely the management but also the two registered
unions aforementioned and the two unregistered unions which had a lesser
following, were party. The terms of the said agreement provided inter alia that
"The employees' claim for wages and
salaries for the period of strike and the company's claim for compensation for
losses due to strike shall be submitted for arbitration of Sri J. N. Majumdar
and Sri R. C. Mitter, ex-High Court Judges and Ex Members of the Labour
Appellate Tribunal of India as joint arbitrators and their decisions on the two
questions shall be final and binding on all the parties." (Clause 7 of
agreement) 16 This agreement was admittedly arrived at during conciliation
proceedings contemplated by the Industrial Disputes Act, 1947 (for short, the
Act) and the reference to arbitration spelt out in clause 7 directly and.
admittedly fell under s. 10A of the Act.
It is apparent that the arbitrators were
seized of two questions: (a) the claim of the workers for wages for the period
of strike; and (b) the claim of the management for compensation for its losses
flowing from the strike. The Board of arbitrators, two retired Judges of the
Calcutta High Court-held extensive hearings spread over a year and a half, made
a lengthy award marshalling the evidence, adducing the reasons, discussing the
law and recording its decision on the two vital issues. At the end of the
detailed and reasoned record of conclusions, the award runs thus :
"Our award accordingly is:(1) That the
workmen participating in the strike are not entitled to wages and salaries for
the period of the strike.
(2) That the company do recover from the
workmen participating in the strike, compensation assessed at Rs. 80,000(rupees
(3) That the workmen jointly and severally do
pay to the company one eighth of the total costs of the arbitration. In default
of payment the company will be at liberty to recover the same in such manner as
it thinks fit. Subject to this the parties do bear their respective
costs." The workmen were deprived of their wages during the period of the.
strike on the score that it was an illegal strike. Both sides seem to have
accepted this finding after an unsuccessful challenge in the High Court and
happily industrial peace is said to be prevailing currently. What did hurt the
Mazdoor Sangh more and what the management did try to have and to hold as a
bonanza was the second finding that the strikers, apart. from forfeiting wages,
do pay compensation in the huge sum of Rs. 6,90,000/in one case and Rs. 80,000/in
the other, for the loss of profits suffered by the manufacturing business of
the management, a pronouncement unusual even according to counsel for the
appellant, although sustainable in law, according to him.
For the workers this unique direction of
industrial law is fraught with ominous consternation and dangerous detriment.
The Mazdoor Sangh challenged the award as
illegal and void by filing two writ petitions but the High Court quashed that
part of the award which directed payment of compensation by the workers to the
management and, as earlier pointed out, both sides have chosen to abide by the
award in relation to the denial of wages during the strike period.
The Main Points Urged The short but important
issue, which has projected some serious questions of law, is as to whether the
impugned part of the award has; been rightly voided by the High Court. We may
as well formulate 17 them but highlight the only major submission that merits
close examination, dealing with the rest with terse sufficiency. In logical
order, counsel for the appellant urged that (1) (a) an award under s. 10A of the
Act savours of a private arbitration and is not amenable to correction under
Art. 226 of the Constitution. (b) Even if there be jurisdiction, a
discretionary desistance from its exercise is wise, proper and in consonance
with the canons of restraint this Court has set down. (2) The award of
compensation by the arbitrators suffers from novice which can be regarded as a
recognised ground for the High Court's interference. (3) The view of law taken
by the High Court on (1) the supposed flaw in the award based on 'mixed
motives' for the offending strike; (ii) the exclusion of remedies other than
under s. 26 of the Act; and (iii) the implied immunity from all legal
proceedings against strikers allegedly arising from s. 18 of the Trade Unions
Act, 1926 is wrong. A few other incidental arguments have cropped up but the
core contentions are what we have itemised above.
(1)-(a) & (b) The expansive and
extraordinary power of the High Courtís under Art. 226 as wide as the amplitude
of the language used indicates and so can affect any person-even a private
individual-and be available for any (other) purposeeven one for which another
remedy may exist. f The amendment to Art. 226 in 1963 inserting Art. 226(1A)
reiterates the targets of the writ power as inclusive of any person by the
expressive reference to 'the residence of such person'. But it is one thing to
affirm the jurisdiction, another to authorise its free exercise like a bull in
a China shop.
This Court has spelt out wise and clear
restraints on the use of this extra-ordinary remedy and High Courts will not go
beyond those wholesome inhibitions except where the monstrosity of the
situation or other exceptional circumstances cry for timely judicial interdict
The mentor of law is justice and a potent
drug should be judiciously administered. Speaking in critical retrospect and
portentous prospect, the writ power has, by and large, been the people's
sentinel on the qui vive and to cut back on or liquidate that power may cast a
peril to human rights.
We hold that the award here is not beyond the
legal reach of Art. 226, although this power must be kept in severely judicious
Many rulings of the High Courts, pro and con,
were cited before us to show that an award under s. 10A of the Act is insulated
from interference under Art. 226 but we respectfully agree with the
observations of Gajendragadkar J., (as he then was) in Engineering Mazdoor
Sabha v. Hind Cycles Ltd(1) which nail the argument against the existence of
jurisdiction. The learned Judge clarified at p. 640:
"Article 226 under which a writ of
certiorari can be issued in an appropriate case, is, in a sense, wider than
Art. 136, because the power conferred on the High Courts to issue certain writs
is not conditioned or limited by the requirement that the said writs can be
issued only against the orders of Courts or Tribunals.
Under Art. 226(1), an appropriate writ can
(1)  Supp. I S.C.R. 625.
18 be issued to any person or authority,
including in appropriate cases any Government, within the territories
prescribed. Therefore even if the arbitrator appointed under section 10A is not
a Tribunal under Art. 136 in a proper cases, a writ may lie against his award
under Art. 226". (p. 640) We agree that the position of an arbitrator
10A of the Act (as it then stood) vis a vis
Art. 227 might have been different. Today, however, such an arbitrator has
power to bind even those who are not parties to the reference or agreement and
the whole exercise under s. 10A as well as the source of the force of the award
on publication derive from the statute. It is legitimate to regard such an
arbitrator now as part of the methodology of the sovereign's dispensation of
justice, thus falling within the rainbow of statutory tribunals amenable to
judicial review. i This observation made en passant by us is induced by the
discussion at the bar and turns on the amendments to s. 10A and cognate
provisions like s. 23, by Act XXXVI of 1964.
Should the Court invoke this high prerogative
under Art. 226 in the present case ? That depends. We will examine the grounds
on which the High Court has, in the present case, excised a portion of the
award as illegal, keeping in mind the settled rules governing judicial review
of private arbitrator's awards. Suffice it to say, an award under s. 10A is not
only not invulnerable but more sensitively susceptible to the writ lancet being
a quasi-statutory body's decision. Admittedly, such an award can be upset if an
apparent error of law stains its face. The distinction, in this area, between a
private award and one under s. 10A is fine, but real. However it makes slight
practical difference in the present case; in other cases it may. The further
grounds for invalidating an award need not be considered as enough unto the day
is the evil thereof.
(2) Thus, we arrive at a consideration of the
appellants second submission, perhaps the most significant in the case, that
the High Court had no legitimate justification to jettison the compensation
portion of the award. Even here, we may state that counsel for the appellants,
right at the outset, mollified possible judicial apprehensions springing from
striking workers being held liable for loss of management's profits during the
strike period by the assurance that his clients were inclined to abandon
realisation of the entire compensation, even if this Court up held that part of
the award in reversal of the judgment of the High Court a generous realism. He
fought a battle for principle, not pecunia. We record this welcome fact and
proceed on that footing.
The relevant law which is beyond controversy
now has been clearly stated in Halsbury's Laws of England thus :
"Error of law on the face of award: An
arbitrator's award may be set aside for error of law appearing on the face of
it, though the jurisdiction is not lightly to be exercised. . . The
jurisdiction is one that exists at common law independently of statute.
In order to be a ground for setting aside the
award, an error in law on the face of the award must be such that there can be
found in the award, or in a document actually 19 incorporated with it, some
legal proposition which is the basis of the award and which is erroneous.
....where the question referred for
arbitration is a question of construction, which is, generally speaking, a
question of law, the arbitrator's decision cannot be set aside only because the
court would itself have come to a different conclusion; but if it appears on
the face of the award that the arbitrator has proceeded illegally, as for
instance, by deciding on evidence which was not admissible, or on principles of
construction which the law do s not countenance, there is error in law which
may be ground for setting aside the award.
(para 623, p. 334, Vol. 2, Fourth Edn) We
adopt this as sound statement of the law. Not that English law binds us but
that the jurisprudence of judicial review in this branch is substantially
common for Indian and Anglo-American systems and so Halsbury has considerable
persuasive value. The wider emergence of common canons of judicial review is a
welcome trend towards a one world public law. Indeed, this Court has relied on
the leading English decisions in several cases. We may content ourselves with
adverting to Bungo Steel Furniture(1) and to the unreported decision Babu
Ram(2). In simple terms, the Court has to ask itself whether the arbitrator has
not tied himself down to an obviously unsound legal proposition in reaching his
verdict as appears from the face of the award.
Bhargava J., speaking for the majority, in
Bungo Steel(1) stated the law:
"It is now a well-settled principle that
if an arbitrator, in deciding a dispute before him, does not record his reasons
and does not indicate the principles of law on which he has proceeded, the
award is not on that account vitiated. It is only when the arbitrator proceeds
to give his reasons or to lay down principles on which he has arrived at his
decisions that the Court is competent to examine whether he has proceeded
contrary to law and is entitled to interfere if such error in law is apparent
on the face of the award itself." (p. 640-641) In Bharat Barrel & Drum
Manufacturing Co. (8) dealing with a private award and the conditions necessary
for exercise of writ jurisdiction to correct an error of law apparent on the
record, did not lay down the law differently from what we have delineated.
In one of the leading English cases Champsey
Bhara & Co. (4) followed in India, Lord Dunedin defined 'error of law on the
face of the award' as 'where the question of law necessarily arises on the face
of the award or upon some paper accompanying and forming part of the award' and
said that then only the error of law therein would warrant judicial correction.
The Law Lord expressed himself lucently when he stated:
"An error in law on the face of the
award means, in their Lordships' view, that you can find in the award . . .
some legal (1)  1 S.C.R.633. (2) C.A.107 of 1966 decided on 5-12-68.
(3) A.I.R 1967 S.C. 361. (4) 50 I.A. 324.
20 proposition which is the basis of the
award and which you can, then say is erroneous." Williams J., in the case
of Hodkinson v. Verne(1) hit the nail on the head by using the telling test as
firmly established, viz., 'where the question of law necessarily arises on the
face of the award'. In this view the enquiry by the Court before venturing to
interfere is to ascertain whether an erroneous legal proposition is the basis
of the award. Nay, still less. Does a question of law (not even a proposition
of law) necessarily arise on the award followed by a flawsome finding explicit
or visibly implicit? Then the Court can correct.
Tucker J., in James Clark (2) formulates the
law to mean that if the award were founded on a finding which admits of only
one proposition of law as its foundation and that law is erroneous on its face,
the Court has the power and, therefore, the duty to set right. While the Judge
cannot explore, by changing subterranean routes or ferret out by delving deep
what lies buried in the unspoken cerebration of the arbitrator and ` interfere
with the award on the discovery of an error of law by such adventure, it is
within his purview to look closely at the face of the award to discern the law
on which the arbitrator has acted if it is transparent, even translucent but
lingering between the lines or merely wearing a verbal veil. If by such an
intelligent inspection of the mien of the award-which is an index of the mind
of the author-an error of law forming the basis of the verdict is directly
disclosed, the decision is liable to judicial demolition. In James Clark (2),
the issue was posed with considerable clarity and nicety. If, at its face
value, the award appears to be based on an erroneous finding of law alone, it
must fail. The clincher is that the factual conclusion involving a legal
question must necessarily be wrong in point of law. Even though the award
contains no statement of the legal proposition, if the facts found raise 'a
clear point of law which is erroneous on the face of it', the Court may rightly
hold that an error of law on the face of the award exists and invalidates.
Let us put the proposition more expressively
and explicitly. What is important is a question of law arising on the face of
the facts found and 'F its resolution ex facie of sub silentio. The arbitrator
may not state the law as such. Even then such cute silence confers no greater
or subtler immunity on the award than plain speech. The need for a speaking
order, where considerable numbers are affected in their substantial r t rights,
may well be a facet of natural justice or fair procedure, although, in this
case, we do not have to go so far. If, as here, you find an erroneous law as
the necessary buckle between the facts found and the conclusions recorded, the
award bears its condemnation on its bosom. Not a reference in a narrative but a
clear legal nexus between the facts and the finding. The law sets no premium on
juggling with drafting the award or hiding the legal error by blanking out. The
inscrutable face of the sphinx has no better title to invulnerability than a
speaking face which is a candid index of the mind. We may, by way aside,
express hopefully the view that a minimal judicialisation by statement, laconic
or lengthy, of the essential law that guides the decision, is not only
reasonable and desirable but has, over the ages, been observed by arbitrators
and quasi-judicial tribunals as a norm of processual justice. We (1)  3
C.B. (N.S.) 189, (2) 1 K.B. 566.
21 do not dilate on this part of the argument
as we are satisfied that be the test the deeply embedded rules to issue
certiorari or the traditional grounds to set aside an arbitration award 'thin
partition do their bounds divide' on the facts and circumstances of the present
The decisive question now comes to the fore.
Did the arbitrators commit an error of law on the face of the award in the
expanded sense we have explained ? The basic facts found by the arbitrators are
beyond dispute and admit of a brief statement. We summarise the fact situation
succinctly and fairly when we state that according to the arbitrators, the
strike in question was in violation of s. 24 of the Act and therefore illegal.
This illegal strike animated by inter-union power struggle, inflicted losses on
the management by forced closure. The loss flowing from the strike was liable
to be recompensed by award of damages. In this 2chain of reasoning is
necessarily involved the question of law as to whether an illegal strike
causing loss of profit is a delict justifying award of damages. The arbitrators
held, yes. We hold this to be an unhappy error of law-loudly obtrusive on the
face of the award. We may as well set out, for the sake of assurance, the
simple steps in the logic of the arbitrators best expressed in their own words
which we excerpt:
"(a) It is argued that strike is a
legitimate weapon in the hands of workmen for redressal of their grievances and
if they are made liable for loss on account of strike then the basic idea of
strike as a means for having the grievances redressed will be taken away. The
fallacy in this argument is that it presupposes the strike not to be illegal
and unjustified. In the pre sent case we found the strike to be otherwise. The
workmen have got no right of getting their grievances redressed by resorting to
illegal means which is an offence.
(b) It has been argued that the claim for
compensation is not an industrial dispute as defined in the Industrial Disputes
Act. Considering the issue of compensation in a water-tight compartment the
argument might appear to be attractive. But, in our opinion, in this case the
claim for compensation by the company is a consequence flowing from an admitted
industrial J dispute, which in this case is whether the strike was illegal
and/or unjustified and as against the condition of service as laid down in the
certified standing order on which point our finding has been against the
workmen. ." The award of the Tribunal, in its totality, is quite prolix
the reasons stated in arguing out its conclusions many and thus it is just to
state that in the present case the arbitrators-two retired Judges of the
Calcutta High Court-have made a sufficiently speaking award both t on facts and
on law. They have referred to the strike being illegal with specific reference
to the provisions of the Act, but faulted themselves in law by upholding a case
for compensation as axiomatic, necessarily based on a rule of common law i.e.,
English common law. The rule of common law thus necessarily arising on the face
of the award is a clear question of law.
22 What is this rule of common law? Counsel
for the appellants inevitably relied on the tort of 'conspiracy' and referred
us to Moghul Steamship Co.(1); Allen v. Floor(2);
Quinn v. Leathem(3) and Sorrel v. Smith (4).
These decisions of the English Courts are a response to the societal
requirements of the industrial civilisation of the 19th Century England. Trade
and Industry on the laissez faire doctrine flourished and the law of torts was
shaped to sene the economic interests of the trading and industrial community.
Political philosophy and economic necessity of the dominant class animate legal
theory. Naturally, the British law in this area protected business from the
operations of a combination of men, including workers, in certain
circumstances. Whatever the merits of the norms, violation of which constituted
'conspiracy' in English law, it is a problem for creative Indian jurisprudence
to consider, detached from anglo-phonic inclination, how far a mere combination
of men working for furthering certain objectives can be prohibited as a tort,
according to the Indian value system. Our Constitution guarantees the right to
form associations, not for gregarious pleasure, but to fight effectively for
the redressal of grievances. Our Constitution is sensitive to workers' rights.
Our story of freedom and social emancipation led by the Father of the Nation
has employed, from the highest of motives, combined action to resist evil and
to right wrong even if it meant loss of business profits for the Liquor vendor,
the brothel keeper and the foreign-cloth dealer. Without expatiating on these
seminal factors, we may observe that English history, political theory and
life-style being different from Indian conditions replete with organised
boycotts and mass satyagrahas, we cannot incorporate English torts without any
adaptation into Indian law. A tort transplant into a social organism is as
complex and careful an operation as a hearttransplant into an individual
organism, law being life's instrumentality and rejection of exotics being a
natural tendency. Here, judges are sociological surgeons.
Let us examine 'conspiracy' in the English
Law of Torts to see if even there it is possible to hold that an illegal strike
per se spells the wrong. We may state that till recently it could not be said
with any certainty that there was any such tort as 'conspiracy'. Salmond
thought that there was not (See Salmond-Law of Torts-p. 505, 15 s Ed.).
It is interesting that in Edition of Salmond,
Mogul is linked up by the learned author with a capitalist economy.
Be that as it may, the common law of England
today is more or less clear, some rumblings notwithstanding.
"A combination wilfully to do an act
causing damage to a man in his trade or other interests is unlawful and if
damage in fact is caused is actionable as a conspiracy. To this there is an
exception where the defendants' real and predominant purpose is to advance
their own lawful interests in a matter in which they honestly believe that
those interests would directly suffer if the action against the plaintiff was
not taken. In truth, the Crofter case has made section 1 1, (1)  A.C. 25.
(2)  A.C. 1.
(3)  A.C. 495. (4)  A.C. 700.
23 of the Trade Disputes Act, 1906, largely
unnecessary, for there will now be few conspiracies arising out of trade
disputes which are not protected at common law." (pp. 508-509, 15th Edn.,
Sweet & Maxwell) (emphasis, ours) The essence of actionable conspiracy is
best brought out by Salmond:
"The tort is unusual because it
emphasises the purpose of the defendants rather than the results of their
conduct." (p.513, 15th Edn., Sweet & Maxwell) (emphasis, ours) Even when
there are mixed motives, 'liability will depend on ascertaining which is the
predominant object or the true motive or the real purpose of the defendant.
Mere combination or action, even if it be by illegal strike, may be far away
from a 'conspiracy' in the sense of the law because in all such cases, except
in conceivably exceptional instances, the object or motive is to advance the
workers' interests or to steal a march over a rival union but never or rarely
to destroy or damage the industry. It is difficult to fancy workers who live by
working in the industry combining to kill the goose that lays the golden eggs.
The inevitable by-product of combination for cessation of work may be loss to
the management but the obvious intendment of such a collective bargaining
strategy is to force the employer to accept the demand of the workers for
betterment of their lot or redressal of injustice, not to inflict damage on the
boss. In short, it is far too recondite for an employer to urge that a strike,
albeit illegal, was motivated by destruction of the industry. A scorched earth
policy may, in critical times of a war, be reluctantly adopted by a people, but
such an imputed motive is largely imaginary in strike situations. However, we
are clear in our minds that if some individuals destroy the plant or damage the
machinery wilfully to cause loss to the employer, such individuals will be
liable for the injury so caused.
Sabotage is no weapon in workers' legal
The leading case of Sorrel v. Smith (supra)
emphasizes that a combination of two or more persons for the purpose of
injuring a man in his trade is unlawful and, if it results in damage to him, is
actionable. The real purpose of the combination is the crucial test between
innocence and injury. It may well be that even where there is an offending
object, it may be difficult for a court to hold that there is a tort if one may
read into the facts an equal anxiety for the defendants to promote their
success which produces the plaintiff's extinction. There is a penumbral region,
as Lord Sumner pointed out in Sorrel (Supra): ` "How any definite line is
to be drawn between acts whose real purpose is to advance the defendant's
interests, and acts, whose real purpose is to injure the plaintiff in his
trade, is a thing which I feel at present beyond my power." It is
absolutely plain that the tort of conspiracy necessarily involves advertence to
and affirmation of the object of the combination being the infliction of damage
or distraction on the plaintiff. The strike 3-L390SCI/76 24 may be illegal but
if the object is to bring the employer to terms with the employees or to bully
the rival trade union into submission, there cannot be an actionable
combination in tort. In the present case, it is unfortunate that the arbitrators
simply did not investigate or pass upon the object of the strike. If the strike
is illegal, the tort of conspiracy is made out, appears to be the proposition
of law writ tersely into the award. On the other hand, it is freely conceded by
counsel for the appellant that the object was inter-union rivalry. There is
thus a clear lapse in the law on the part of the arbitrators manifest. , on the
face of the award.
We have earlier referred to the need for a
fresh look at conspiracy F as a tort when we bodily borrow the elements of
English law and apply them to Indian law. It is as well that we notice that
even in England considerable criticism is mounting on the confused state of 1
the law of conspiracy. J.T. Cameron has argued (in 1965 Vol. 28 Modern Law
Review p. 448) that:
"experience has already shown that
conspiracy is a hydra perfectly capable of growing two heads to replace an
amputated one, and the authorities contain material which could be used to
impose liability in very wide and varied circumstances. It is time, therefore,
to consider what form legislation should take, and to urge that the proper
answer is to remove the tort of conspiracy from the law altogether, and with it
the Rookes v. Barnard version of intimidation, and to put in its place a
different basis of liability.
(CONSPIRACY AND INTIMIDATION: An
Anti-Meta-physical Approach) The author complains that the fundamental basis is
unsatisfactory and uncertain and demands that a complete rewriting of the
principles on which the tort of conspiracy and intimidation is necessary.
We may as well suggest that, to silence
possible mischief flowing from the confused state of the law and remembering
how dangerous J it would be if long, protracted, but technically illegal
strikes were to be followed by claims by managements for compensation for loss
of profits, a legislative reform and re-statement of the law were under taken
at a time when the State is anxious for industrial harmony consistent with
workers' welfare, This rather longish discussion has become necessary because
the problem is serious and sensitive and the law is somewhat slippery even in
England. We are convinced that the award is bad because the error of law is
The High Court has touched upon another fatal
frailty in the ten ability of the award of compensation for the loss of profits
flowing from the illegal strike. We express our concurrence with the High Court
that the sole and whole foundation of the award of compensation by the
arbitrators, ignoring the casual reference to an ulterior , motive of
inter-union rivalry, is squarely the illegality of the strike, The workers went
on strike claiming payment of bonus as crystalized 25 by the earlier settlement
(d/2-10-1957). There thus arose an industrial dispute within s. 2(k) of the
Act. Since conciliation proceedings were pending the strike was ipso jure
illegal (ss. 23 and 24,. The consequence, near or remote, of this combined
cessation of work caused loss to the management. Therefore the strikers were
liable in damage to make good the loss. Such is the logic of the award.
It is common case that the demands covered by
the strike and the wages during the period of the strike constitute an
industrial dispute within the sense of s. 2(k), of the Act. Section 23, read
with s. 24, it is agreed by both sides, make the strike in question illegal. An
'illegal strike' is a creation of the Act. As we have pointed out earlier, the
compensation claimed and awarded is a direct reparation for the loss of profits
of the employer caused by the illegal strike. If so, it is contended by the
respondents, the remedy for the illegal strike and its fallout has to be sought
within the statute and not de hors it.
If this stand of the workers is right, the
remedy indicated in s. 26 of the Act, viz., prosecution for starting and
continuing an illegal strike, is the designated statutory remedy. No other
relief outside the Act can be claimed on general principles of jurisprudence.
The result is that the relief of compensation by proceedings in arbitration is
contrary to law and bad.
The Premier Automobiles Case(1) settles the
legal issue involved in the above argument. The industrial Disputes Act is a
comprehensive and self-contained Code so far as it speaks and the enforcement
of rights created thereby can only be through the procedure laid down therein.
Neither the civil court nor any other Tribunal or body can award relief.
Untwalia J., speaking for an unanimous court,
has, n Premier Automobiles (Supra) observed:
"The object of the Act, as its preamble
indicates, is to make provision for the investigation and settlement of
industrial disputes, which means adjudication of such disputes also. The Act
envisages collective bargaining, contracts between Union representing the
workmen and the management, a matter which is outside the realm of the common
law or the Indian law of Contract." After sketching the scheme of the Act,
the learned Judge stated the law thus.
". . . the Civil Court will have no
jurisdiction to try and adjudicate upon an industrial dispute if it concerned
enforcement of certain right or liability created only under the Act." * *
* * * "In Deo v. Bridges (1831 1B and Ad, 847 (2)(1898)) A.C. 387 at p.
859 are the famous and of quoted words of Lord Tenterden, C.J., saying:
"where an Act creates an obligation and
enforces the performance in a specified manner, we take it to be a general rule
that performance cannot be enforced in any other." (1)  1 S.C.R.
26 Barraclough v. Brown & Ors(1), decided
by the House of Lords is telling, particularly Lord Watson's statement of the
law at p. 622:
"The right and the remedy are given uno
flatu and one cannot be dissociated from the other." In short, the
enforcement of a right or obligation under the Act, must be by a remedy
provided uno flatu in the statute.
To sum up, in the language of the Premier
"If the industrial dispute relates to
the enforcement of a right or an obligation created under the Act, then the
only , remedy available to the suitor is to get an adjudication under the
Act." Since the Act which creates rights and remedies has to be considered
as one homogeneous whole, it has to be regarded uno flatu, in one breath, as it
were. On this doctrinal basis, the remedy for the illegal strike (a concept
which is the creature not of the common law but of s. 24 of the Act) has to be
sought exclusively in s. 26 of the Act. The claim for compensation and the
award thereof in arbitral proceedings is invalid on its face'on its face' we
say because this jurisdictional point has been considered by the arbitrators
and decided by committing an ex-facie legal error.
It was argued, and with force in our view,
that the question of compensation by workers to the management was wholly
extraneous to the Act and therefore, outside the jurisdiction of a voluntary
reference of industrial dispute under s. 10 A. While we are not called upon to
pronounce conclusively on the contention, since we have ex pressed our
concurrence with the High Court on other grounds, we rest content with briefly
sketching the reasoning and its apparent tenability. The scheme of the Act, if
we may silhouette it, is to codify the law bearing on industrial dispute. The
jurisdictional essence of proceedings under the Act is the presence of an
'industrial dispute'. Strikes and lock-outs stem from such disputes. l he
machinery for settlement of such disputes at various stages is provided for by
the act. The statutory imprimatur is given to settlement and awards, and norms
of discipline during the pendency of proceedings are set down in the Act. The
proscriptions stipulated, as for example the prohibition of a strike, are
followed by penalties, if breached. Summary procedures for adjudication as to
whether conditions of service etc., of employees have been changed during the s
pendency of proceedings, special provision for recovery of money due to workers
from employers and other related regulations, are also written into the Act.
Against this backdrop, we have to see whether a claim by an employer from his
workmen of compensation . consequent on any conduct of theirs, comes within the
purview of the Act. Suffice it to say that a reference to arbitration under s.
10 A is restricted to existing or apprehended industrial disputes.
Be it noted that we are not concerned with a
private arbitration but a statutory one governed by the Industrial Disputes Act,
deriving its validity, enforceability and protective mantle during the pendency
of the proceedings, from 10 A. No industrial dispute, no valid arbitral (1)
 A.C. 615.
27 reference. Once we grasp this truth, the
rest of the logic is simple. What is the industrial dispute in the present
case? Everything that overflows such disputes spills into areas where the
arbitrator deriving authority under s. 10 A has no jurisdiction. The consent of
the parties cannot create arbitral jurisdiction under the Act. In this
perspective, the claim for compensation can be a lawful subject for arbitration
only if it can be accommodated by the definition of 'industrial dispute' in s.2
Undoubtedly this expression must receive a
wide coll notation, calculated as it is to produce industrial peace.
Indeed, the legislation substitutes for free
bargaining between the parties a binding award; but what disputes or
differences fall within the scope of the Act? This matter fell for the
consideration of the Federal Court in Western India Automobile Association (1).
Without launching on a long discussion, we may state that compensation for loss
of business is not a dispute or difference between employers 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'. We are unable to imagine a
tort liability or compensation claim based on loss of business being regarded
as an industrial dispute as defined in the Act, having regard to the language
used, the setting and purpose of the statute and the industrial flavour of the
dispute as one between the management and workmen.
In this context, we are strengthened in our
conclusion by the provisions of s. 33C which provides for speedy recovery of
money due to a workman from an employer under a settlement or an award, but not
for the converse case of money due to an employer from workmen. There is no
provision in the Act which contemplates a claim for money by an employer from
the workmen and indeed; it may be a little startling to find such a provision,
having regard to workmen being the weaker section and Part IV of the
Constitution being loaded in their favour. The new light shed by the benign
clauses of Part IV must illumine even pre Independence statutes in the interpretative
process. As yet, and hopefully, claims by employers against workmen on ground
of tortious liability have not found a place in the pharmacopoeia of Indian
Industrial Law. However, as earlier stated, we do not pronounce finally as it
is not necessary.
There was argument at the bar that the High
Court was in error in relying on s. 18 of the Trade Unions Act, 1926 to rebuff
the claim for compensation. We have listened to the arguments of Shri B.C.
Ghosh in support of the view of the High Court, understood on a wider basis.
Nevertheless, we do not wish to rest our judgment on that ground. Counsel for
the appellants cited some decisions to show that an award falling outside the
orbit of the Indian Arbitration Act can be enforced by action in court. We do
not think the problem so posed arises in the instant case.
We dismiss the appeal but, in the
circumstances, there will be no order as to costs.
P.H.P. Appeal dismissed.
(1)  I L. L. J. 245.