Basti Sugar Mills Co. Ltd. Vs. State of
U.P. & ANR  INSC 162 (11 September 1978)
CITATION: 1979 AIR 262 1979 SCR (1) 590 1979
SCC (2) 88
Payment of Bonus Act 1965-Sec. 34-U.P.
Industrial Disputes Act, -1947 s. 3(b) 3(c) Trade Unions Act 1926 (S.
2h) Whether bonus can be paid under order
passed under s. 3 of U.P. I.D. Act-Whether appointment. of a Tripartite
Committee amounts to agreement within meaning of s. 31 of Bonus Act-Whether an
association of employers can bind individual employer.
The appellant runs two Sugar Factories at two
different places. There are about 71 such factories in U.P. The economy of U.P.
in large measure , depends on the sugar industry. Moreover, sugar is an
essential commodity. Thus, these factories and the army of workers employed
therein fall within the strategic sector of the State economy.
Section 3 of the U.P. Industrial Disputes
Act, 1947 provides that if in the opinion of the State Govt., it is necessary
or expedient so to do for securing the public safety or convenience or the
maintenance of public order or supplies and services essential to the life of
the community or for maintaining employment it may by general or special order
make provision for prohibiting strikes lock-outs and for appointing committees
representative both of employers and workmen for securing amity and good
relations between the employer and the workmen and for settling industrial
disputes by conciliation. The Payment of Bonus Act, 1965 lays down what bonus
is payable to the workmen. Using the power under S. 3(c) of the 1947 Act and
based on the suggestion of the State Labour Conference (Sugar), the State Govt.
appointed a tripartite committee in October 1968 consisting of 3 nominees of
the Indian Sugar Mills Association and there. u representatives of the workmen,
the Labour Commissioner being Chairman of the Committee. The notification under
s. 3 (b) who issued we have view to consider and make recommendations to
Government on The question of grant of bonus for 1967-68 by the Vacuum Pan
Sugar Factories of the State on the basis of the Payment of Bonus Act 1965,
subject to such modifications as may be mutually agreed upon. The Association
is a Trade Union registered under the Trade Unions Act, 1926. Its functions are
indicated in the definition of 'trade union' in Section 2(h) of that Act, and
include regulation of relations between the workmen and employers. Thus, the
Association was within its competence to nominate three representatives to sit
on the Committee to regulate the relations between the Member-employees and the
workmen employed. The appellant is a Member of the said Association.
The Committee held several sitting and at
some stages, the appellant or his representative did participate directly or
indirectly in the deliberations. The workers' representatives actually accepted
the formula put forward by the President of the Management's Association. On
receipt of the recommendation under Section 3(c) the Govt. issued an order
under s. 3(b) implementing Those recommendations.
Although section 3(b) does not depend for
Coming into play upon any report under 5. 3(c), the Govt. constituted the
Committee under s. 3 (c) before taking any step under 5. 3 (b) as a measure to
ensure the fairness to the concerned parties. The appellant filed a writ
petition in 591 the High Court. The learned single Judge dismissed the writ
petition taking a view that an agreement which is recognised by s. 34 of the
Bonus Act, existed in this case and, therefore, the order which merely gave
effect to that agreement was not bad in law. On appeal the two Judges of the
Bench disagreed and the case went before the third learned Judge of the High
Court who upheld the order of the learned single Judge on the ground that there
was an agreement under s. 34 of the Bonus Act.
The appellant contended:-
1. The State Govt. cannot act in the area of
bonus without breach of the embargo in s. 34 of the Bonus Act, and, therefore,
the impugned notification must fail for want of power.
2. Since the Bonus Act is a complete Code
covering profit sharing bonus, no other law can be pressed into service to
force payment of Bonus by the Management.
3. Section 3(b) of the U.P. Act is
independent of any agreement between the affected parties and the notification
there under operates on its own and not by force of consensus or contract
between the workmen and the management. It was, therefore, wrong for the High
Court to have salvaged the notification under s. 3(b) as embodying the
agreement to pay bonus.
4. As a matter of fact, there was no
agreement between the appellant and the workmen within the meaning of section
34 since the representatives or the Association had no power to bind its
members by any agreement on bonus having been appointed solely to make certain
recommendations. The appellant had specifically informed the Association that
it did not agree to any variation from the approved balance- sheet of the
Company. E Dismissing the appeal the Court.
HELD: The effect of s. 34 is that anything
inconsistent with the Bonus Act in any other law will bow. and bend before it.
If concluded agreement could be read into the recommendations of tripartite
committee relating to bonus it would be valid despite s. 34. The two Courts
have accordingly found that there was an agreement. This Court is rarely
disposed to reverse a factual affirmation concurrently reached by the High
Court at two tiers. [601 A, B, D] The contention that the authority of the
tripartite committee was limited to making recommendations on the grant of
bonus subject to such modifications as mutually agreed upon is formally correct
but why could the committee which had representatives of both the wings of the
industry not mutually agree upon bonus formula ? There was nothing in the
notification prohibiting it. There was everything in the notification promoting
it. The whole process was geared to mutually agreed solutions. Once the
representatives of management and labour reached an agreement, substantially on
the basis of the Bonus Act, they would proceed to recommend to Govt. the
acceptance of that agreement. The first notification did not shut out, but, on
the other hand, welcomed mutual agreement. As between the two wings, an
agreement materialised. Then it became Government's responsibility effectively
to resolve the crisis and behoved it to rut teeth into the agreement by making
it a binding order under s. 3(b). The Association is a Trade Union. It can bind
its members. The notification under s. 3(c) itself authorised the Committee
consider the grant of bonus on terms mutually agreed upon.
The authority to reach agreement on behalf of
the appellant is implicit under the notification under s. 3(b). Throughout the
several meetings and investigations of the tripartite Committee, the appellant
supplied all the facts and details sought concerning the formulation and the
data for arriving at an acceptable solution. The formula of the Committee was
based largely on the Bonus Act. What the employees' representatives did was
merely to accept the proposal of the President of the Association of employers.
There was a written agreement dt. 5th June, 1969 to which the representatives
of both sides were signatories. To dismiss the whole consensual adventure and
the culminating written agreement as nothing but an exercise in recommendatory
or advisory futility is to bid farewell to raw realities.
Social justice is made of rugged stuff.
Industrial jurisprudence does not brook nice nuances and torturesome
technicalities to stand in the way of just solutions reached in a rough and
ready manner. Broad consensus between the two parties does exist here, as is
emphatically underlined by the circumstances that, all the mill owners except
the appellant have stood by it and all the workers. There is no substance in
the submission of the appellant that there was no agreement for payment of
bonus within the meaning of s.
34. [601 E-H, 602 F, G, 603 A-C, F] Section 3
of the U.P. Act is not inconsistent with the Bonus Act. The Bonus Act is a long
range remedy to produce peace. The U.P. Act provides a distress solution to
produce truce. The Bonus Act adjudicates rights of parties, The U.P. provision
meets an emergency situation on an administrative basis. [604 B-C] These social
projections and operational limitations of the two statutory provisions must be
grasped to resolve the legal conundrum. A broad national policy on bonus, however
admirable, needs negotiation, consultation, inter-state co- ordination and
diplomacy and causes delay. Hungry families of restive workman in militant
moods urgently ask for bonus for onam in Kerala, Puja in Bengal, Dewali in
Gujarat, or other festivals elsewhere for a short spell of cheer in a long span
of sombre life. The State Govt. with economic justice and welfare of workers
brooding order its head is hard pressed for public order and maintenance of
essential supplies. [604 D-607 G, H]
CIVIL APPELLATE JURISDICTION : Civil Appeal
No. 2148 of 1977.
Appeal by Special Leave from the Judgment and
order dated 19-10-76 of the Allahabad High Court in Special Appeal No. 412 of
Y. S. Chitale, S. Swarup and Sri Narain for
G. N. Dikshit, M. V. Goswami and o. P. Rana
for Respondent No.
Yogeshwar Prasad, Miss Meera Bali and Rani
Chhabra for Respondent No. 2.
The Judgment of the Court was delivered by
KRISHNA IYER, J. Undaunted by a direction of the State Government under the
Uttar Pradesh Industrial Disputes Act, 1947 (the U.P.
593 Act, for short), unsuccessfully attacked
before a learned Single Judge and in appeal from his judgment, the
appellant-owner of two sugar factories in Uttar Pradesh-has secured special
leave to reach this Court and press before us few jurisdictional points which,
it' valid, are deprivatory us a few impugned notification under s. 3(b) of the
Act. Before we open the discussion, and, indeed, as paving the way for it, we
may remind ourselves of a jural fundamental articulated elegantly ill a
different context by Mr. Justice Cardozo(1):
"More and more we lawyers are awaking to
a perception of the truth that what divides and distracts us in the solution of
a Legal problem is not so much uncertainty about the law as uncertainty About
the facts-the facts which generate the law. Let the facts be known as they are,
and the law will sprout from the need and turn its branches toward the
light." Social realities mould social justice and the compulsions of
social justice, in the context of given societal conditions" constitute
the basic facts from which blossom law which produces order.
The search for the social facts behind s. 3
of the U.K.. Act takes us to the Objects and Reasons Act set out therein:
"Following the lapse of Rule 81-A of the
Defence of India Rules, the Government of India enacted the Industrial Disputes
Act, 1947 but this Act was found inadequate to deal with the spate of strikes,
lock-outs and industrial disputes occurring in the province. Government were,
therefore, compelled to promulgate the United Provinces Industrial Disputes
ordinance, 1947, as an emergency measure till more comprehensive Legislation on
the subject was enacted.
Although more than two years have passed
since the termination of the war, normal life is still far from sight.
There is a shortage of foodgrains and all
other essential commodities and necessities of life. Maximum production is
required to relieve the common want and misery. Prices continue to be rising
and life has become very difficult for the common man. The loss of every
working hour adds to the suffering of the community. In these circumstances, it
is essential that Government should have powers for maintaining industrial
peace and production and for the speedy and amicable settlement of industrial
disputes. The bill, which is similar to the ordinance already in force,
provides for such powers." (emphasis added) (1) Benjamin Nathan Cardozo
"what Medicine can do for Law" address before the New York Academy of
Medicine, Nov. 1. 1928-Readings in law and Psychiatry.
594 The immediate concern of the court in
this case is with s. 3 which, in its opening part, luminously projects the
State control obligated by community well-being. Even here, we may read the
relevant part of s. 3.
3. Power to prevent strikes, lock-outs,
etc.-If, ill the opinion of the State Government it is necessary or expedient
so to do for securing the public other or convenience or the maintenance of
public order or supplies and services essential to the life of the community,
or for maintaining employment, it may, by general or special order, make
provision- (emphasis. added) (a) for prohibiting, subject to the provisions of
the order, strikes or lock-outs generally, or a strike or lock-out in
connection with any industrial dispute;
(b) for requiring employers, workman or both
to observe for such period, as may be specified in the order, I) such terms and
conditions of employment as may he determined in accordance with the order;
(c) for appointing committees, representative
both of them. employer and workmen for securing amity and good relations
between the employer and workmen and for settling industrial disputes by
conciliation; for consultation and advice on matters relating to production,
organisation, welfare and efficiency:
(d) for constitution and functioning of
Conciliation Board for settlement of industrial disputes in the manner
specified in the order;
Provided that no order made under clause (b)-
(i) shall require an employer to observe terms and conditions of employment
less favourable to the workmen than those which were applicable to them at any
time within three months preceding the date of the order;
The testimony from these texts, which are
part of the legislative package, is the critical factor underlying governmental
order in our constitutional system. An insight into it is worthwhile as a tool
of interpretation of s. 3 of the U.P. Act and its harmonisation with s. 34 595
of the Payment of Bonus Act, 1965 (the Bonus Act, for brief). A A synthesis of
these two statutes is the key to the problems posed by Shri Chitale before us,
arguing the case for the appellant.
When crisis conditions grip the community the
first imperative of good government, 'order', takes precedence;
and the Executive transfixed between 'govern'
or 'get out' and guided by value judgments resorts to firm action.
Exigent solution of problems affecting the
well-being of the have-nots, in a social justice setting, desiderates
provisional directives to the haves to disgorge payments, not as final
pronouncements on rights but as immediate palliatives to preserve the peace,
This is police power at its sensitive finest when State and society are con-
fronted by the dilemma of 'do or die'. And, in a broader perspective,
Governments of the Third World must hear the voice which moved the objective
Resolution in the Constituent Assembly, while seeking light to keep loving
`'The service of India means the service of
the millions who suffer. It means the ending of poverty and ignorance and
disease and inequality of opportunity. The ambition of the greatest man of our
generation has been to wipe every tear from every eye.
That may be beyond us, but as long as there
are tears and sufferings, so long our work will not be over.(l) E The problems
of law are, at bottom, projections of life.
"Law is a form of order and good law
must necessarily mean good order."(2) We touch these chords because the
roots of jurisprudence lie ill the soil of society's urges, and its bloom in
the nourishment from the humanity it serves. To petrify statutory construction
by pedantic impediments and to forget the law of all laws, viz. the welfare of
the people is to bid farewell to the grammar of our constitutional order. Its
practical application arises in the present case. Before going further we
sketch the facts of the present case and then on to the larger principles, an
understanding of which will unlock the crucial questions arising in the case.
The appellant, as stated earlier, runs two
sugar factories . It two different places. There are around 71 such factories
in Uttar Pradesh whose economy, in large measure, depends on the sugar
(1) The Indian Constitution-Cornerstone of a
Nation by Granville Austin, (2) Politica. Book VII Chapter 4 Section 5.
596 Moreover, sugar is an essential
commodity. Thus, these factories and the any of workers employed therein fall
within the strategic sector of the State economy. It is but natural that
Governments is highly sensitive in the matter of maintenance of sugar supplies
and the smooth working of the sugar factories., Any explosive situation in the
shape of an industrial dispute and any disruptive factor throwing out of gear
the employment in factories is sure to throw into disarray public safety,
public order, public production and distribution system and public employment,
using these expressions in their social connotation. Roscoe Pounds' words are
jurisprudentially apt : (1) "Law is; more than a set of abstract norms or
legal order. It is a process of balancing conflicting interests and securing
the satisfaction of the maximum wants with tile minimum friction." And,
Paton has set the tone for Part IV of our Constitution to be used as background
music, if we may say so:
"the law itself cannot be
impartial...for its very raison d'etre is to prefer one social interest of
another."(2) As was the wont, presumably, there was apparently a clamour
in 1968 for workers' bonus which hotted up, threatening community tranquillity,
smooth supplies essential to the life of the community and maintenance of
employment and public safety.
Every industrial dispute has a potential for
large scale breach of the peace when the factories and workmen affected are
numerous. But the general unrest induced by industrial demands and resistance
may, on critical occasions, blow up unless quiatimet action to de-fuse are
taken. This measure has necessarily to be at the administrative level, since
the judicial process is prone to suffer from slow motion. The U.P. Legislature,
with comprehensive vision, provided for long-range adjudicative resolution of
industrial disputes and short-run executive remedies to pre-empt and contain
outbreaks which may get out of control once ignited, and may even cost human
lives in the. 'firefighting' police actions:
"A government ought to contain in itself
every power requisite to the full accomplishment of the objects committed to
its care, and to the complete execution of the trusts for (1) Interpretation of
Legal History, p. 165, quoted in "Criminal law - Principles of Liability
by T. S. Batra, p. 612`.
(2) A Text Book of Jurisprudence p.31, quoted
in ' Criminal Law Principles of Liability by T. S. Batra, p. 612.
597 which it is responsible, free from every
other control but a regard to the public good and to the sense of the
people.(') From this angle, s. 3 has been designed as an emergency provision to
be exercised in an excited phase of industrial collision.
Using the power under s. 3(c) of the Act and
based on the suggestion of the state Labour Conference (Sugar) the state
Government appointed a tripartite committee in October, 1968 consisting of
three nominees of the Indian Sugar Mills Association and three representatives
of the workmen, the Labour Commissioner being the Chairman of the Committee.
The notification under s. 3(c) Was issued with a view to- "consider and
make its recommendations to Government on the question of grant of bonus for
1967- 68 to workmen by the Vacuum pall Sugar factories of the State on the
basis of the Payment of Bonus Act 1965, subject to such modifications as may be
mutually agreed upon."(2) No one, at any stage, has assailed the presence
of the statutory preconditions of social urgency. We proceed on the footing
that a flare-up was in the offing and the state acted to pre-empt a break-down.
It is pertinent to note that the Association
is a trade union registered under the Trade Unions Act, 1926. Its functions are
indicated in the definition of "trade union" in s. 2(h) of that Act
and include regulating The relations "between workmen and employers".
Thus, the Association was functionally within its competence to nominate three
representatives to sit on the Committee to regulate the relations between the
member-employers and the workmen employed. The appellant is a member of the
It is significant to remember that the State
Government constituted the tripartite committee under s, 3(c) as an emergency
measure before taking steps under s. 3(b) of the Act so that it may inform
itself in a responsible way through the recommendations made by the Committee
which represents both the wings of the industry. Although s. 3(b) does not
depend, for coming into play, upon any report under s. 3(c) this was a measure
to ensure fairness to the concerned elements. The Committee held several
sittings and, at some stages, the appellant or his representative did
participate directly or indirectly in the deliberations.
Equally relevant is the circumstance that the
worker's representatives (1) The Administration of Justice-Melvin P. Sikes,
Chapter 7, Pawns of Politics and of power, P. 120 (2) Notification dated 17.10.
1968 of the U.P. Govt. Labour (C) Dept.
598 actually accepted the formula put forward
by the President of the Managements' Association. We mention these
circumstances to indicate that the scales, if at all, were tilted in favour of
the mill owners and Government, on receipt of the recommendations and anxious
to freeze the situation, issued an order under s. 3(b) incorporating and implementing
those recommendations. That notification which was impugned before the High
Court and is challenged before us reads:
"WHEREAS on the recommendations of the
state Labour Tripartite Conference (Sugar) held on June 16, 1968, a Committee
was constituted under Labour (C) Department, notification No.
7548(HI)XXXVI-C-109(HI)/ 68, dated October 17, 1968, to consider the question
of grant of bonus for the season 1967-68 to their workmen by the vacuum pan
sugar factories of the state on the basis of the Payment of Bonus Act, 1965
subject to such modifications as may be mutually agreed upon and to make its
AND WHEREAS, the said Committee has
considered this question in various meetings the last meeting having been held
on June 5? 1969, and has submitted its recommendations to the state Government:
AND WHEREAS, the said Committee has succeeded
in bringing about an agreement in regard to the payment of bonus for the season
1967-68 between the representatives of employers and employees on the basis of Payment
of Bonus Act, 1965, with certain modifications and adjustments and has made
recommendations on the subject accordingly which have been accepted by the
AND WHEREAS, in the opinion of the state
Government it is necessary to enforce the recommendation of the said Committee
for securing the public convenience and the maintenance of public order and
supplies and services essential to the life of the community and for
NOW, THEREFORE, in exercise of the powers
under clause (b) of section 3 of the U.P. Industrial Disputes Act, 1947 (U.P.
Act No. XXVIII of 1947), the Governor of Uttar Pradesh is pleased to make the
following order and to direct with reference to section 19 of the said Act that
the notice of this be given by publication in the office Gazette;
599 ORDER xx xx xx
2. (a) All the Vacuum Pan Sugar Factories in
the state whose names have been mentioned in the Annexure 'A' except the Kisan
Co-operative Sugar Factory, Majhola (Pilibhit), shall pay bonus for the year
1967-68 to all their employees, permanent seasonal or temporary including
contract labour who have worked for not less than 30 working days in the
accounting year 1967-68;
xx xx xx The High Court repelled the
challenge and upheld the notification, taking the view that an agreement as
recognised in S. 34 of the Bonus Act existed in this case and so the order
which merely gave effect to that agreement was not bad in law.
The main ground of attack before us is that
the state Government cannot act in the area of bonus without breach of the
embargo in s. 34 of the Bonus Act and so the impugned notification must fail
for want of power. Although this is the thrust of the submission, Shri Chitale
has trichotomised it, as it were. First, the Bonus Act being a complete Code
covering profit-sharing bonus, no other law can be pressed into service to
force payment of bonus by the managements.
Secondly, s.3(b) of the U.P. Act is
independent of any agreement between the affected parties and the notification
there under operates on its own and not by force of consensus or contract
between the workmen and the managements. In this view, it was wrong for the
High Court to have salvaged the notification under s. 3(b? as embodying an
agreement to pay bonus. The third submission of counsel was that ac a fact
there was no agreement between the appellant and his workmen within the scope
of s. 34 of the Bonus Act since the representatives of the Association had no
power to bind its members by any agreement on bonus, having been appointed
solely to make certain recommendations. Moreover, the appellant had
specifically informed the representatives of the Association that it did not
agree to any variation from the approved balance-sheet of the company and had
withdrawn its consent to the formula which found favour with the Committee,
Finally, though feebly, it was argued that if an agreement could be spelt out
under s. 34 of the Bonus Act enforcement should be left to s. 21 of that Act
and not to the punitive recovery provisions of the U.P. Act.
600 The Single Judge of the High Court
dismissed the writ petition reading an agreement into the Committee's
recommendations and the eventual order under s. 3(b) of the Act. This agreement
was valid under s. 3(b) of the Bonus Act. On appeal, the Two Judges on the
Bench disagreed and the case went before a third Judge, who in an elaborate judgment,
agreed with the learned Single Judge and upheld the order of the Government as
an agreement under s. 34 of
the Bonus ACT. We now proceed to discuss the
We focus our attention on two principal
facets of the question. They are (a) whether s. 3(b) is inconsistent with the
Bonus Act; and (b) whether an agreement within the meaning of S. 34(1) (as the
law then stood) could be spelt out of the facts of the present case.
There is no challenge to the competence of
the state Legislature to enact s. 3 of the Act. Indeed, more than one item in
Lists II and III will embrace legislation of the pattern of s. 3. Even so the
short point sharply raised by Shri Chitale is that Parliaments having enacted
the Bonus Act in 1965, occupied that part of industrial law, and s. 34 in terms
contains a non-obstante clause. That section reads:
Effect of laws and agreements inconsistent
with the Act.
34. (1) Save as otherwise provided in this
section, the provisions of this Act shall have effect notwithstanding anything
inconsistent therewith contained in any other law for the time being in force
or in the terms of any award, agreement, settlement or contract of service made
before the 29th May, 1965.
34. ( 3 ) Nothing contained in this Act shall
be constructed to preclude employees employed in any establishment or class of
establishments from entering into agreement with their employer for granting
them an amount of bonus under a formula which is different from that under this
Provided that any such agreement whereby the
employees relinquish their right to receive the minimum bonus 601 under section
10 shall be null and void ill so far as it purports to deprive them of such
right." The effect of this provision is that anything inconsistent with
the Bonus Act contained in any other law will bow and bend before it. Secondly,
agreements made after 29th May 1965 will be valid regarding bonus even if they
be inconsistent with the formulae in the bonus Act.
Shri Chitale did not dispute the proposition
that if a concluded agreement could be read into the recommendations of the
tripartite Committee relating to Bonus, it would be valid despites. 34; but he
urged before us that it was impossible to weave out of mere recommendations the
web of a concluded contract on bonus. He canvassed before us, further, that if
an agreement on bonus was necessarily inferable from the proceedings of the
tripartite committee, the enforcement thereof could be only under s. 21 of the
Bonus Act and not by reliance on the more drastic processes of the U.P. Act.
A torrent of objective circumstances has
emerged in this case to wash out these submissions. This Court is rarely
disposed to reverse a factual affirmation concurrently reached by the High
Court at two tiers. Even so, we may rush past the more potent circumstances
which have a compulsive force in arriving at the conclusion aforesaid.
Shri Chitale stressed that the Committee
itself had a functional limitation writ on the face of the order under s. 3(c)
. Its authority was limited to making recommendations on the grant of bonus for
1967-68 on the basis of the Bonus Act, subject to such modifications as
mutually agreed upon.
Formally, this is correct. But why could the
Committee which had representative of both the wings of the industry not
mutually agree upon a bonus formula? There was nothing in the notification
prohibiting it. There was everything in the notification promoting it. The
whole process was geared to mutually agreed solutions. Of course, once the
representatives of managements and labour reached an agreement, substantially
on the basis of the Bonus Act, they would proceed to recommend to Government
the acceptance of that agreement. The notification under s. 3(c) contemplated
mutual agreement upon bonus as the first step and the recommendation of the
formula so reached as the second step.
The good offices of the Labour Commissioner
was also available. In short, the first notification did not shut out, but, on
the other hand, welcomed mutual agreement. As between the two wings, an
agreement materialised. Then it became Government's responsibility effectively
to resolve the crisis and behoved it to put teeth into the agreement by making
it a binding order under s. 3(b). Thereafter, the arm of the law, as provided
in the U.P. Act.
602 went into action if there was violation.
The object of the Government being to keep the peace and to interdict
disruption it did not rest content with an agreement within the meaning of s.
34 and resort to the leisurely processes of s. 21. Exigent situations demand
urgent enforcement; and therefore government went a step further than the
agreement and embodied it in an order under s. 3(b). This incorporation in a
notification under s. 3(b) did not negate the anterior agreement between the
parties. The order of Government under s. 3(b) makes the dual stages perfectly
plain. For instance, there is the following tell-tale recital "Whereas the
said Committee has succeeded in bringing about an agreement in regard to the
payment of bonus for the season 1967-68 between the representatives of the
employers and employees on the basis of Payment of Bonus Act, 1965, with
certain modifications and adjustments". In unmincing language, the
notification states that an agreement on the payment of bonus has been
successfully brought about substantially on the lines of the Bonus Act.
In the same notification, Government proceeds
to state that the said agreement has been forwarded to it in the shape of
recommendations which have been accepted and enforced in exercise of the powers
conferred by clause (b) of s. 3 of the Act. The anatomy of the order under s.
3(b) being what we have explained above, the inference is inevitable that there
is a clear agreement in regard to the payment of bonus for the relevant season
between the employers and employees and ingenious argument cannot erode that
The next limb of the argument of Shri Chitale
is that in fact there is no evidence of his. client having authorise the
representatives of the Association to act on its behalf in agreeing to the
bonus formula. On the contrary, he had withdrawn the authority originally
conferred. We cannot agree with this specious, though plausible, submission. lt
admits of no doubt that the Association is a trade union registered under the Trade
Unions Act and the functional competence of a trade union definitionally
extends to regulating the relations between workmen and employers. S.
2(h) to negotiate an agreement on. payment of
bonus surely falls within the scope of regulation of the relations between the
workmen and the employers. Secondly, the notification under s. 3(c) itself
authorises the Committee to consider the grant of bonus on terms mutually
agreed upon. Authority to reach agreement on behalf of the managements is thus
implicit in the notification under s.
3(c). Moreover, the Association, having the
capacity to represent all the members within the area of its authority, sat on
the committee though its representatives and became effective proxies of the
appellant was present in the tripartite Conference at Naini Tal on June 16,
1968 and it was at that Conference the decision to set up 603 the Committee was
made and a resolution to that effect passed, leading to the notification of
October 17, 1968.
Moreover, throughout the several meetings and
investigations of the tripartite Committee. the appellant supplied all the
facts and details sought concerning the formulation and the data for arriving
at an acceptable solution. The formula of the Committee was based largely on
the Bonus Act itself with some variation regarding the valuation of the closing
Importantly, what the employees`
representatives did was merely to accept the proposal of the President of the
Association of employers. There was a written agreement dated June 5, 1969 to
which the representative of both sides were signatories. To dismiss the whole
consensual adventure and the culminating written agreement as nothing but an
exercise in recommendatory or advisory futility is to bid farewell to raw
realities. Industrial jurisprudence does not brook nice nuances and torturesome
technicalities to stand in the way of just solutions reached in a rough and
ready manner. Grim and grimy life situations have no time for the finer manners
of elegant jurisprudence. Social justice is made of rugged stuff. Broad
consensus between the two parties does exist here, as is emphatically underline
by circumstance that 'all the mill owners except the appellant have stood by
it-and all the workers'. Where social justice is the touch- stone, where
industrial peace is the goal, where the weak and the strong negotiate to reach
workable formulae unruffled by the rigidities and formalisms of the law of
contracts, it is impermissible to Frown down the fair bonus agreement reached
by the representatives of both camps and accepted by the employees in entirety and
the whole block of employers minus the appellant, on a narrow construction of
the notification under s. 3 (b) of the U.P.
Industrial Disputes Act, 1947 or s. 34'. Of
the Bonus Act or s. 2(c) of the Contract Act. Labour law is rough hewn and
social justice sings a different tune. We reject, without hesitation, the
appellant's submission that there was no agreement for payment of bonus within
the meaning of s. 34 of the Bonus Act and affirm the concurrent finding of the
High Court on that issue.
The second seminal problem of power that
falls for consideration here has deeper jurisprudential import and wider
political constitutional portent, so much so decisional elucidation becomes
necessitous. We have stated earlier that s. 34 of the Bonus Act has a
monopolistic tendency of excluding other laws vis-a-vis profit-sharing bonus.
The basic condition for nullification of s.3(b) of the U.P. Act is that. when
it enters the area of bonus, it is inconsistent with the provisions of the
"Inconsistent", according to
black's Legal Dictionary, means 'mutually repugnant or contradictory; contrary,
the one to the other so that both cannot stand, but the acceptance or establish
604 ment of the one implies the abrogation or abandonment of the other'. So we
have to see whether mutual co-existence between s. 34 of the Bonus Act and s.
3(b) of the U.P. Act is impossible. If they relate to the same subject-matter,
to the same situation, and both substantially overlap and are co-extensive and
at the same time so contrary and repugnant in their terms and impact that one
must perish wholly if the other were to prevail at all-then, only then, are
they inconsistent. In this sense, we have to examine the two provisions. Our
conclusion, based on the reasoning which we will presently indicate, is that
'inconsistency' between the two provisions is the produce of ingenuity and
consistency between the two laws flows from imaginative understanding informed
by administrative realism. The Bonus Act is a long- range remedy to produce
peace; the U.P. Act provides a distress solution to produce truce. The Bonus
Act adjudicate rights of parties; The U.P. provision meets on emergency
situation on an administrative basis. These social projections and operational
limitations of the two statutory provisions must be grasped to resolve the
When 'the sequestered vale of life' is in
imminent peril of disruption immediate tranquillisers are the desideratum. The
escalating danger to law and order, to public safety, to maintenance of
supplies essential to the life of the community, the break-down of production
and employment-these anti-social consequence of 'the madding crowds' 'ignoble
strife' are sought to be controlled by a quick shot in the arm by use of s.
3(2). It is a balm for the time, not a cure which endures. Indeed, it is an
administrative action, not a quasi-Judicial determination. We may easily
visualise other explosive occasions which traumatise society and so attract s.
The specific fact-situation which confronted
the State must be seen in perspective. Labour and capital are partners in
production. When one of the partners numerous but needy, demands a share in the
profits, beyond wages, to better its lot, industrial legislation chalks out
rights and limits, prescribes formulae, creates adjudicatory machinery, awards
are made, reviewed and enforced and parties seek social justice through the
judicial process. The Bonus Act, read with the Industrial Disputes Act,
codifies this branch of rights and remedies. But it is a notorious infirmity of
the noble judicative methodology that adherence to certain basic processual
norms makes procrastinatory delay a besetting sin and an inevitable evil. The
end product is good were it delivered promptly but the operation tantalises and
The working class though a weaker class, when
organised, is militant. Their privations are too desperate to stand delay
Policy formulation by Government takes time, involves consultation;
adjudication involves long hearing and appeal
The discussion of legal prophylaxis as part
of the dynamics of Jurisprudence becomes relevant at this stage.
Necessity is the mother of tension; tension
frays temper and maddened men turn violent. When both sides are psyched up into
frenzy, public safety, maintenance of essential supplies, people's employment
and societal order become..
casualties. A wise administration anticipates
and acts before the flams spread. Once the industrial war is sparked off, the
use of force become un obviale. And police force pitted against mob fury may
mean blood and tears. And Indian lives in Free India, even though of workers,
are more precious than the profits of the corporate sector, Confronted by
escalating disorder, the wise ruler cannot afford wait for lethargic legal
justice to deliver its verdict but armed with crisis pouters and anxious to
arrest a blow-up, adopts administrative nostrums which give quick relief but do
not frustrate ultimate justice. Prophylatic processes are not the enemy of
Sociallyoriented prompt action tranquillises
where- drift, vacillation and inaction may traumatize. Section 3 serves this
limited purpose of legalising administrative intervention to prevent disorder
without prejudice to judicial justice which will eventually be allowed to take
its course. An order under Sec. 3(b) is administrative; a proceeding under the
Bonus Act is judicial. The former manages a crisis, the latter determines
rights. Even when a direction under. the exigency power involve payments
towards bonus or other claim it never can possess finality and is subject to
judicial decision-except, of course, where parties agree to settle their
claims, and then the agreement gives it vitality.
The jural scheme of Sec. 3 is duel, each
operating in its own stage and without contradicting the power of the other.
The first say, in crisis management, belongs to the administrator; the last
word in settlement of substantive rights belongs to the tribunal. The pragmatic
dichotomy of the law is flexible enough not to put all its peacekeeping eggs in
the judicial basket. Government acts when the trouble brews and when the storm
has blown over, judicial technology takes over. There are no rigid
compartmentalisations. Sometimes, the judicial process itself has quick-acting
procedures. Likewise, sometimes the executive prefers to consult before going
into action. Under our constitutional order, guidelines are given by the status
to ensure reasonableness in administrative orders. And in a Government with
social justice as the watchword, value judgments are essential to exclude
arbitrariness. So it is that the executive power under Sec. 3 606 has the
leading strings writ right at the top. The power shall be used only for 'public
safety or convenience or the maintenance of public order or supplies and
services' essential to the life of the community or for maintaining employment.
It prevails for the nonce, produces (hopefully) tentative truce, and then the
judicial process decides decisively. It is like an executive magistrate passing
a prohibitory order regarding disputed possession or unruly assembly to prevent
breach of the peace and making over to a judicial magistrate to hear and decide
who is in actual possession or whether the restriction on movement was right.
Or, maybe, it is like a magistrate quickly
passing orders regarding a possessory dispute leaving it to the civil court to
adjudicate on valid title. No one can argue that preventive magisterial power,
admittedly provisionally and reasonably. is inconsistent with the civil
judicial machinery which speaks finally.
Dealing with the identical provisions in an
identical situation where dn appeal reached this Court and the parties were
identical, Mudholker, J., speaking for the Court, explained the scheme or the
same Section(1) 3 and its scope which fits into the pattern we have explained.
The learned judge observed(2):- "The opening words of s. 3 themselves
indicate that the provisions thereof are to be availed of in an emergency. It
is true that even reference to an arbitrator or a conciliator could he made
only if there is an emergency. But then an emergency may be acute.
Such an emergency may necessitate the
exercise of powers under cl. (b) and a mere resort to those under cl. (d) may
be inadequate to meet this situation.
Whether to resort to one provision or other
must depend upon the subjective satisfaction of the State Government upon which
powers to act under s. 3 have been conferred by the legislature. Dealing with
the canons of statutory construction the learned judge observed: No doubt this
result is arrived at by placing a particular construction on the provisions of
that section but we think where justified in doing so. As Mr. Pathak himself
suggested in the course of his arguments, we must try and construe a statue ill
such a way, where it is possible to so construe it, as to obviate a conflict
between its various provisions and also so as to render the statute or any of
its provisions constitutional. By limiting the operation of the provisions of
cl. (b) to an (1) An amendment to Sec 3 (e) has since been made.
(2)  2 SCR 330 at 342-343, State of
U.P. & Ors.
v. Basti Sugar Mills Co. Ltd.
607 emergency we do not think that we are
doing violence assuming that the width of the language could not be limited by
construction it can be said that after the coming into force of the
Constitution the provisions can, by virtue of Art. 13, have only a limited
effect as stated above and to the extent that they are inconsistent with the
Constitution, they have been rendered void.
In the strain, the court rebuffed the
unreasonable argument based on 'reasonableness' in Art. 19(6): In our view,
therefore, the provisions of cl. (b) of s. 3 are not in any sense alternative
to those of cl. (d) and that the former could be availed of by the State
Government only in an emergency and as a temporary measure. The right of the
employer or the employee to require the dispute to be referred for conciliation
or adjudication would still be there and could be exercised by them by taking
appropriate steps. Upon the construction we place on the provisions of cl. (b)
of S. 3 it is clear that no question of discrimination at all arises. Similarly
the fact that action was taken by the Government in all emergency in the public
interest would be a complete answer to the argument that action is violative of
the provisions of Art. 19(1) (g). The restriction placed upon the employer by
such an order is only a temporary one and having been placed in the public
interest would fall under cl. (6) of Art. 19 of the Constitution".
(emphasis added) In a practical sense, this
dichotomous reconciliation has humanistic value in administration. Let us take
the case of bonus. A broad national policy on bonus, however admirable, needs
negotiation, consultation inter-state co- ordination, diplomacy and causes
delay. Likewise, an industrial adjudication on bonus, with all the trappings of
natural justice, appeal and writ proceedings, consumes considerable time.
Hungry families of restive workers in militant moods urgently ask for bonus for
Onam in Kerala, Pooja in Bengal, Dewali in Gujarat or other festival elsewhere,
for a short spell of cheer in a long span of sombre life. The State Government,
with economic justice and welfare of workers brooding over its head, is
here-pressed for public order and maintenance of essential supplies.
Immediate action may take trigger-happy
policing, shape or emergency direction to make ad hoc payments, worked out in
5-549SCI/78 608 administrative fairness. This latter course may often be
favoured, given the correct orientation. But even here some governments may
prefer to confer, persuade parties to concur and make binding order. This
requires legislative backing.
So Sec. 3. But such an improvised solution
may leave one or the other or even both dissatisfied with regard to ultimate
rights. While enforcing the ad interim directive by the authority of law, the
door is left ajar for judicial take- over of the industrial dispute. If workers
have got more, the excess will have to be adjusted; if less the employers will
pay over. This will be taken care of by Section 3(e) (before amendment) and by
the Bonus Act now. A crisis is best solved by this procedure at the State level
on a fair administrative basis. But lasting policy solutions are best produced
at the Central level and final rights crystallised at the tribunal level. The
lengthy judicial process may, as here, be obviated if, by a tripartite
arrangement an agreement within the scope of s. 34 of the Bonus Act is reached.
The ruling of this court in State of U.P.
& Anr. v. Basti Sugar Mills Co. Ltd. (Supra) supports the synthesis we have
evolved. The only difference is that there is now Mo reference of a bonus
dispute under S. 3 (e) of the U.P. Act.
Instead, the same dispute will-where no
agreement or settlement stands in the way, as it does here-on application, be
referred for adjudication under the Bonus Act read with the Industrial Disputes
The analysis shows the absence of basic
inconsistency and presence f intelligent method in the U.P. and the Central
We hold. after this long tour, that the goal
of social justice and public peace, essential to good Government is best
reached by reading together and not apart. The High Court's order is upheld and
the appeal dismissed, of course, with costs.
P.H.P. Appeal dismissed.