Cox & Kings (Agents) Ltd. Vs.
Their Workmen & Ors  INSC 92 (18 March 1977)
SARKARIA, RANJIT SINGH SARKARIA, RANJIT SINGH
CITATION: 1977 AIR 1666 1977 SCR (3) 332 1977
SCC (2) 705
Industrial Disputes Act, 1947--S. 2(b) and s.
19(3)--Scope of--Decision given without going
into merits of a dispute--If an award--Second reference in such a case--If
could be made within a year.
The term 'Award' has been defined by s. 2(b)
of the Industrial Disputes Act, 1947 to mean an interim or a final
determination of any industrial dispute or of any question relating thereto by
a Labour Court. Section 10, which describes the matters that can be referred to
a Labour Court etc. for adjudication 'provides in sub s.(1) that where an
appropriate government is of opinion that any industrial dispute exists or is
apprehended it may, at any time, by order in writing...(c) refer the dispute or
any matter appearing to be connected with or relevant to the dispute, if it
relates to any matter specified in the second schedule, to a Labour Court for
adjudication. Under s. 19(3) an award shall remain in operation for a period of
one year from the date on which the award becomes enforceable under s. 17A.
An industrial dispute relating to the
dismissal of three workmen of the appellant had been referred to a Labour
Court. The Labour Court held that the reference was invalid because, as the
workmen had not served demand notice on the management prior to the reference,
no industrial dispute could legally come into existence before the reference.
After serving a demand notice on the management within a month thereafter the
workmen raised an industrial dispute relating to the same matter. The Labour
Court rejected the employer's preliminary objection that in view of s. 19, the
second reference was not competent in that it was made within one year of the
first award, and decided the case on merits. The Labour Court held that the
termination of the services of the workmen was illegal and ordered
reinstatement with back wages from the date of termination.
The employer's writ petition under Art. 226
of the Constitution impugning the Labour Court's decision was dismissed by the
Dismissing the appeal,
HELD: The Labour Court's determination in the
first reference did not possess the attributes essential to bring it within the
definition of an award. The mere fact that this order was published by the
Government under s. 17(1), did not confer that status on it. [339 D] 1(a) The
definition of `award' under s. 2(b) falls in two parts (i) determination, final
or interim, of any industrial dispute and (ii) of any question relating to an
industrial dispute. The basic postulate common to both the parts of the
definition is the existence of an industrial dispute, actual or apprehended.
The `determination' contemplated by the definition is of an industrial dispute
or a question relating thereto on merits. [338 D] (b) In the instant cases the
order of the Labour Court in the first reference did not determine the question
or points specified in government order of reference, nor was it adjudication
on merits of any industrial dispute or a question relating thereto. The only
question determined by the Labour Court was about the existence of an
industrial dispute which in its opinion was a sine qua non for the validity of
the reference. Rightly or wrongly it found that this preliminary jurisdictional
fact did not exist because no industrial dispute had come into existence in
accordance with law and in consequence the reference was invalid.
There was, therefore, no determination of the
dispute on merits on the question relating thereto. [339 C-D] 333 Technological
Institute of Textiles v. Its Workmen and Ors.  2 LLJ 149, followed.
Management of Bangalore Woollen, Cotton &
Silk Mills Co. Ltd. v. The Workmen and Anr.  1 SCR 581, referred to.
Workmen of Swadeshi Cotton Mills Co. Ltd. v.
Swadeshi Cotton Mills Co. Ltd. Kanpur and Ors. 42 Indian Factories Journal p.
255, not approved.
(b) Moreover the decision of the Labour Court
in the first reference did not impose any continuing obligation on the parties
bound by it. The second reference was, therefore, not barred by anything
contained in sub s. (3 ) or other provisions of s. 19. [340 C]
2. The Labour Court was not justified in
awarding compensation to the workmen for wages relating to the period prior to
the date on which the demand notice for reinstatement was served on the
management. [340 H]
CIVIL APPELLATE JURISDICTION: Civil Appeal
No. 375 of 1976.
(Appeal by Special Leave-from the Judgment
and Order dated 7.11.1975 of the High Court at New Delhi in Civil Writ No. 1123
of 1975) G.B. Pai, O.C. Mathur and D.N. Mishra, for the appellant.
M.K. Ramamurthi, S.C. Jain and Madan Mohan,
for respondent No. 1.
The Judgment of the Court was delivered by
SARKARIA, J.--The principal question that arises in this appeal by special
leave is: Whether an order of the Labour Court to the effect, that since no
demand of the workmen had been served on the employer, no industrial dispute
had come into existence in accordance with law, and as such the Reference was
invalid and the Court had no jurisdiction to adjudicate the matter referred to
it by the Government, is an "award" for the purposes of Section 19 of
the Industrial Disputes Act, 1947, (for short, called the Act)? Cox & Kings
(Agents) Ltd. (for short, the Management) dismissed from service three of their
workmen after a domestic enquiry conducted against them on certain charges.
In May 1967, the Lt. Governor of Delhi made a
Reference under s. 10 read with s. 12(5) of the Act to the Labour Court, Delhi,
"Whether the terminations of services of
S/Shri H.S. Rawat, Bidhi Chand and Ram Sarup Gupta were unlawful and
unjustified, and if so, to what relief are these workmen entitled?" By an
amendment of their written statement in February, 1969, augmented by an
application dated 17.8.1971; the Management raised a preliminary objection that
since no demand notice had been ,served on the Management, no industrial
dispute had legally come into existence, and as such the Reference was invalid
and the Labour 334 Court had no jurisdiction to adjudicate it. By an order,
dated September 27, 1972, the Labour Court accepted the objection, holding:
"... that no industrial dispute came
into existence before this reference as the workmen have failed to establish
serving of demand on the management prior to this reference. The effect of this
finding is that the reference could not have been made for adjudication and the
same is accordingly invalid and hence the question of deciding the issue as in
the reference or other issues does not arise as the industrial dispute under
reference did not come into existence in accordance with law before this
reference. This award is made accordingly." Thereafter, the workmen on
25.10.1972, raised a dispute by serving demand notices on the Management. By
his order dated 2.5.1973, the Lt. Governor, Delhi, again made a Reference to
the Labour Court, under the Act for adjudication of the same matter relating to
the termination of the services of the aforesaid workmen.
The Management raised, inter alia, a
preliminary objection that a second Reference within one year of the first
`award', dated September 27, 1972, was not competent in view of what is
contained in sec. 19 of the Act.
By an order dated 2.5.1973, the Labour Court
dismissed the preliminary objections. After recording the evidence produced by
the parties, the Court held on merits, that the termination of the services of
3 workmen was illegal and unjustified. The Court further found that Bidhi Chand
workman had become gainfully employed elsewhere as a driver with better emoluments
and it was therefore sufficient to award him compensation without any relief of
reinstatement, at the rate of 50% of his wages for three years from 1966 to
1969 to the date of his getting employment elsewhere. It further found that Ram
Sarup Gupta had remained unemployed after his dismissal in 1966. It therefore
directed his reinstatement with full back wages and continuity of service. As
regards H.S. Rawat, the Court found that he could not have remained unemployed
throughout but was doing some work or the other for his living, may be with
occasional spells. The Court therefore held that Rawat was entitled to
reinstatement and continuity of service with 50% back wages till the award Came
into operation and he got his reinstatement. This award was made by the Labour
Court on 1-5-1975.
The Management impugned this award by filing
a writ petition under Art. 226 of the Constitution in the High Court of Delhi.
Only three contentions were canvassed by the Management at the preliminary hearing
before the High Court: (i) That the determination, dated 27.9.1972, by the
Labour Court was an 'award' as defined in s. 2(b) of the Act, and in view of
sub-s. (3) of s. 19, it had to be in operation for a period of one year. It
could be terminated only by a notice given under sub-ss. (4) & (6) of s.
Since no such notice was given, the award
continued to be in operation. The second award, dated 1-5-1975, could not be
validly made during the period, the 335 first award was in operation; (ii) The
demand for reinstatement was not made by the workmen till 1972 and the Labour
Court was not justified in awarding them the relief of reinstatement together
with compensation for back wages from 1966 onwards; (iii) The onus to show that
the workmen had not obtained alternative employment, after their dismissal, was
on the workmen and this onus has not been discharged. On the other hand, the
Labour Court wrongfully did not permit the Management to adduce additional
evidence to show that the workmen had obtained alternative employment and, in
consequence, were not entitled to back wages.
Regarding (i), the High Court held that since
the `award' dated 27.9.1972, was not one which imposed any continuing
obligation on the parties, but had ended with its pronouncement, nothing in
subsections (3) and (6) of sec. 19 was applicable to it.
As regards (ii), the High Court held that
once the dismissal of the workmen was found illegal, it was inevitable to award
the compensation from the dates of dismissal till they found alternative
employment or till the date of the award, as the case may be.
In regard to (iii), the High Court said that
the question of burden of proof as to who is to prove, whether the workmen did
not get alternative employment for the period for which back wages have 'been
awarded to them could arise only if no evidence was given by either party or if
the evidence given by them was evenly balanced. Neither of these circumstances
was present before the Labour Court, and there was no good reason to disturb
the finding of fact recorded by the Labour Court on this point.
The High Court thus rejected all the three
contentions, and, in the result, dismissed the writ petition in limine, with a
speaking order. Hence this appeal.
Shri G.B. Pai has reagitated all the three
points before us. He assails the findings of the High Court, thereon.
Regarding point No. (i) Mr Pai's argument is
that the determination, dated 27.9.1972, also, was an `award' within the second
part of the definition of the term in a. 2(b) of the Act, inasmuch as it
determined a question relating to an industrial dispute. Emphasis has also been
laid on the point that this `award', dated 27.9.1972 was duly published by the
Government under s. 17(1) and had assumed finality under sub-s. (2) of the same
section. This award dated 27.9.1972--proceeds the argument had to remain
operative under sub-s. (3) of s. 19 for a period of one year from the date on
which it became enforceable under s. 17A i.e., a date one month after its
publication. It is submitted that no second Reference could be validly made by
the Government during the period the first award remained operative, and since
the second Reference, dated 2.5.1973 was made before the expiry of such period
of the first award (which had not been terminated in the manner laid down in s.
19), it was invalid and the consequential adjudication by the Labour Court on
its basis, was null and void. In this connection counsel has relied upon a 7
--436SCI/77 336 judgment of this Court in Management of Bangalore Woollen,
Cotton & Silk Mills Co. Ltd,. v. The Workmen and ant.(1) wherein it was
held that when there is a subsisting award binding on the parties, the Tribunal
has no jurisdiction to consider the same points in a fresh reference. In that
case, the earlier award had not been terminated and the Reference was therefore
held to be incompetent. Reference has also been made to a single Bench Judgment
of the Allahabad High Court in Workmen of Swadeshi Cotton Mill, Co. Ltd.
v Swadeshi Cotton Mills Co., Ltd., Kanpur and
ors. (2) As against this, Shri M.K. Ramamurthi maintains that the Labour
Court's order, dated May 1, 1972 was not an 'award' within the definition of
the term in s 2(b) inasmuch as it was not a determination, on merits, of any
industrial dispute or of any question relating to an industrial dispute.
In this connection reliance has been placed
on a judgment of this Court in Civil Appeal No. 241 of 1964 (Technological
Institute of Textiles v. Its Workmen and ors.(3).
Before dealing with the while to notice the
relevant contentions canvassed, it will be worthwhile to notice the relevant
The terms `award' and `industrial dispute'
have been defined in the Act as follows:
`Award' means an interim or a final
determination of any industrial dispute or of any question relating thereto by
any Labour Court, Industrial Tribunal or National Industrial Tribunal and
includes an arbitration award made under s. 10A". [vide s. 2 (b)].
"Industrial dispute" means
"any dispute or difference between employers and employers, or between
employers and workmen, or between workmen and workmen, which is connected with
the employment or non-employment or the terms of employment or with the
conditions of labour, of any person", [vide s. 2 (k)].
Section 10 describes the matters which can be
referred to Boards, Courts or Tribunals for adjudication. Only clause (i) of
subsection (1) is material for our purpose.
"Where the appropriate Government is of
opinion that any industrial dispute exists or is apprehended, it may at any
time by order in writing-(a)....
(c) refer the dispute or any matter appearing
to be connected with, or relevant to the dispute, if relates to any (1) 
1 S.C.R. 581.
(2) 42 Indian Factories Journal p. 255.
(3)  2 L.L.J. 149.
337 matter specified in the Second Schedule
to a Labour Court for adjudication".
Sub-section (4) requires the Labour Court to
confine its adjudication to those points of dispute and matters incidental
thereto which the appropriate Government has referred to it for adjudication.
The material part of section 19 reads as
(3) An award shall, subject to the provisions
of this section remain in operation for a period of one year from the date on
which the award becomes enforceable under s. 17A;
Provided that the appropriate Government may
reduce the said period and fix such period as it thinks fit:
"Provided further that the appropriate
Government may, before the expiry of the said period, extend the period of
operation by any period not exceeding one year at a time as it thinks fit so,
however, that the total period of operation of any award does not exceed three
years from the date on which it came into operation.
(4) Where the appropriate. Government,
Whether of its own motion or on the application of any party bound by the
award, considered that since the award was made, there has been a material
change in the circumstances on which it was based, the appropriate Government
may refer the award or a part of it to a Labour Court, if the award was that of
a Labour Court or to a Tribunal, if the award was that of a Tribunal or of a
National Tribunal for decision whether the period of operation should not, by
reason of such change, be shortened and the decision of Labour Court or the
Tribunal, as the case may be, on such reference shall be final.
(5) Nothing contained in sub section (3)
shall apply to any award which by its nature, terms or other circumstances does
not impose, after it has been given effect to, any continuing obligation on the
parties bound by the award.
(6) Notwithstanding the expiry of the period
of operation under sub-section (3), the award shall continue to be binding, on
the parties until a period of two months has elapsed from the date on which
notice is given by any party bound by the award to the other party or parties
intimating its intention to terminate the award.
338 (7) No notice given under sub-section (2)
or sub-section (6) shall have effect, unless it is given by a party
representing the majority of persons bound by the settlement or award, as the
case may be." There is no dispute that the order on the earlier Reference
was made by the Labour Court on 27-9-1972, while the second Reference with the
same terms of Reference to that Court was made by the Government on 2.5.1973,
i.e., within one year of the earlier order. It is common ground that the period
of one year for which an award normally remains in operation under sub-s. (3)
was not reduced or curtailed by the Government under sec. 19 or under any other
provision of the Act. It is further admitted between the parties that no notice
was given by any party of its intention to terminate the Order dated 27.9.1972.
The controversy with regard to the first point
therefore narrows down into the issues whether the determination dated
27.9.1972, of the Labour Court was an award as defined in s. 2(b) of the Act?
The definition of award in s. 2(b) falls in two parts.
The first part covers a determination, final or
interim, of any industrial dispute. The second part takes in a determination of
any question relating to an industrial dispute.
But the basic postulate common to both the
parts of the definition, is the existence of an industrial dispute, actual or apprehended.
The "determination" contemplated by the definition is of the
industrial dispute or a question relating thereto, on merits. It is to be noted
further that Sec. 2, itself, expressly makes the definition subject to
"anything repugnant in the subject or context". We have therefore to
consider this definition in the context of sec.
19 and other related provisions of the Act.
Mr. Pai concedes that the order dated
27.9.1972, is not a determination of any industrial dispute, as such, falling
under the first part of the definition. However, Iris argument is that the
expression any question relating thereto" in the second part of the
definition is of wide amplitude and should be spaciously construed. It is maintained
that a question, whether or not an industrial dispute exists, will itself be a
question relating to an industrial dispute within the tendment of the second
part of the definition.
The contention appears to be attractive but
does not stand a close examination.
Sub-section (1) of sec. 10 indicates when and
what matters can be referred to the Labour Court for adjudication. The
sub-section expressly makes formation of opinion by the appropriate Government,
that any industrial dispute exists or is apprehended" a condition
precedent to the exercise of the power of making a Reference. Subsection (4)
gives a mandate to the Labour Court to confine its adjudication to those points
of dispute which have been specified in the Order of Reference, or are
incidental thereto. From a conjoint reading of cl.(b) of s. 2 and sub-section
(1) and (4) of sec. 10, it is 339 clear that in order to be an `award' within
the second part of the definition, a determination must be--(i) an adjudication
of a question or point relating to an industrial dispute, which has been
specified in the Order of Reference or is incidental thereto: and (ii) such
adjudication must be one on merits.
Now let us test the Labour Court's order,
dated 27.9.72 in the light of the above enunciation. That Order did not satisfy
any of the criteria indicated above. It did not determine the questions or
points specified in the Government Order of Reference. Nor was it adjudication
on merits of any industrial dispute or a question relating thereto. The only
question determined by the Order, dated 27.9.1972, was about the existence of a
preliminary fact, viz., existence of an industrial dispute which in the Labour
Court's opinion was a sine qua non for the validity of the Reference and the
exercise of further jurisdiction by the Court. Rightly or wrongly, the Court
found that this preliminary jurisdictional fact did not exist, because "no
industrial dispute had come into existence in accordance with law", and,
in consequence, the Reference was invalid and the Court was not competent to enter
upon the Reference and determine the matter referred to it. With this finding,
the Court refused to go into the merits of the question referred to it. There
was no determination on merits of an industrial dispute or a question relating
thereto. We are therefore of opinion that Labour Court's determination dated
27.9.1972, did not possess the attributes essential to bring it within the
definition of an award. The mere fact that this order was published by the
Government under s. 17(1) of the Act did not confer that status on it.
In the view we take we are fortified by the
principle laid down by this Court in Technological Institute of Textiles v. Its
Workmen (supra). In that case, there was a settlement which in the absence of
necessary formalities, was not binding on the parties. Certain items of dispute
were not pressed and withdrawn under the terms of such settlement. In the
subsequent reference before the Industrial Tribunal some of the items of
dispute were withdrawn and no award was made in respect thereto. Thereafter,
these items were again referred for adjudication along with certain other
matters to the Tribunal. It was contended on behalf of the Management that
subsequent reference with regard to the items which had been withdrawn and not
pressed in the earlier reference, was barred under sec. 19, because the earlier
award had not been terminated in full. Ramaswami J., speaking for the Court,
repelled this contention, with these observations:
"It is manifest in the present case that
there has been no adjudication on merits by the industrial tribunal in the
previous reference with regard to the matters covered by items (1) and (3) of
the present reference, because the workmen had withdrawn those matters from the
purview of the dispute. There was also no settlement in Ex. R. 4, because the
demands in question had been withdrawn by the workmen and there was no
agreement between the parties 340 in regard thereto. Our conclusion, therefore,
is that the bar of s. 19 of the Industrial Disputes Act does not operate with
regard to the matters covered by items (1) and (3) of the present reference and
the argument put forward by the appellant on this aspect of the case must be
rejected." Although the facts of the case before us are different, yet the
principle enunciated therein viz., that the bar of sec. 19 operates only with
regard to a determination made on merits, is fully applicable. By any
reckoning, the decision dated 27.9.1972 of the Labour Court by its very nature
did not impose any continuing obligation on the parties bound by it. This was
an additional reason for holding that the earlier reference was not barred by
anything contained in sub-section (3) or other provisions of section 19.
We have gone through the single Bench
decision of the Allahabad High Court in Workmen of Swadeshi Cotton Mills Co. Ltd.
case (supra). That decision is to the effect that the finding recorded by the
Labour Court that the matter referred to it for adjudication was not an
industrial dispute as defined in the Act is itself a determination of a question
relating to an industrial dispute, and would fall within the definition of the
term "award" under the Act. In our opinion. this is not a correct
statement of the law on the point.
The next submission of Mr. Pai is that since
the demand for reinstatement was not duly made by the workmen before 28.10.
1972, the Courts below were not justified in awarding to the workmen,
compensation for back wages from 1966 onwards.
On the other hand, Mr. Ramamurthi maintains
that such a claim was presumably agitated by the workmen in proceedings before
the Conciliation Officer, in 1966. While conceding that technically, no demand
notice for reinstatement was served by the workmen on the Management before
25.10. 1972, Counsel submits that the Management were aware of the workmen's
claim to reinstatement, since 1966, and in these circumstances, the Management
should not be allowed to take shelter behind this technical flaw, and deny just
compensation to them from the date of wrongful dismissal.
We have carefully considered the contentions
advanced on both sides. After taking into consideration all the circumstances
of the case, we are of opinion that the Labour Court was not justified in
awarding compensation to the workmen, for wages relating to the period prior to
25.10.1972 i.e., the date on which the demand notices for reinstatement were
served on the Management. To this extent, we would accept the contention of the
341 The third contention of the appellants is
that the onus of proving that they had not obtained alternative employment
elsewhere after the termination of their services, was on the workmen, and they
had failed to discharge that onus.
We find no merit in this contention.
The question of onus oft loses its importance
when both the parties adduce whatever evidence they had to produce.
In the instant case, both the parties led
their evidence and closed their respective cases. Subsequently, at a late
stage, the Management made an application for adducing additional evidence. The
Labour Court declined theft application. The High Court found--and we think
rightly, no good reason to interfere with the discretion of the Labour Court.
It may be remembered further, that this
appeal arises out of a petition under Art. 226 of the Constitution, and in the
exercise of that special jurisdiction, the High Court does not reopen a finding
of fact based on legal evidence.
The findings of the Labour Court to the
effect, that after their dismissal, Ram Swamp Gupta was unable to find any
alternative employment elsewhere, while Rawat was able to find only
intermittent employment elsewhere, were based on evidence produced by the
parties. The High Court was therefore right in not interfering with those
findings of fact.
Lastly it was urged by Mr. Pai, that the
employers had lost confidence in the employees, and therefore, compensation,
without reinstatement, would have been adequate relief. It is submitted that
the business of the employers is that of Travel Agents and such a sensitive
business can be successfully carried on only with the aid of employees whose
fidelity and integrity is beyond doubt. It is stressed that the employees of
the appellants, have to handle daily lot of cash received from their clients in
the discharge of their duties. It is pointed out that the charge against H.S.
Rawat was one of misappropriation of such funds and this charge was established
in the domestic enquiry. The Labour Court precedes the argument, did not
displace that finding of the domestic Tribunal, but ignored it on the ground
that the charge was stale and had been condoned. In short, the argument is that
the employers had lost confidence in this employee who could no longer be
entrusted to perform sensitive jobs on behalf of the Management, without
detriment to its business.
We are unable to accept this contention.
Firstly, this point was not argued before the
High Court. Secondly, the observations of the Labour Court, read as a whole,
show that, in its opinion, the charge of misappropriation of funds had not been
proved against H.S. Rawat. This is what the Labour Court said on the point:
"I am therefore of opinion that the
charges had been condoned and they could not be revived again and the act of
reviving the charge on account of his Union activities was an act of unfair
labour practice on the part of the Management and amounted to victimisation.
Even the 342 charges in the charge-sheet Ex. M/5 have not been established
before me, that the workman withdrew the funds from the company on false
pretences for revenue stamps and misappropriated the same." Thus there is
no factual basis for this belated contention, and we repel the same.
For the foregoing reasons, we dismiss this
appeal with the modification that in addition to the relief of reinstatement
with continuity of service, S/Shri H.S. Rawat and Ram Swarup Gupta shall be
entitled to 50%, and full back wages, respectively, from 25.10.1972.
It may be recalled that the special leave to
appeal in this case, was granted on the condition that the appellants shall pay
the costs of this appeal to the respondents, in any event. We order
P.B.R. Appeal dismissed.