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PETITIONER: THE BAGALKOT CEMENT CO. LTD.

       Vs.

RESPONDENT: R. K. PATHAN & ORS.

DATE OF JUDGMENT: 22/01/1962

BENCH: GAJENDRAGADKAR, P.B. BENCH: GAJENDRAGADKAR, P.B. SARKAR, A.K. WANCHOO, K.N.

CITATION:  1963 AIR  439            1962 SCR  Supl. (2) 697  CITATOR INFO :  D          1968 SC 585  (13,16,18)

ACT:      Standing   Orders-Certification    of   draft submitted by  employer-Power of Certifying Officer and Appellate  Authority-If  can  fix  quantum  of leave    and    holidays-Indussrial    Employrnent (Standing orders)  Act,  1946  (20  of  1946),  as amended  by   Amending  Act  of  1956,  ss.  4,10, Schedule, cl. 5.

HEADNOTE:      The   appellant   company   submitted   draft Standing  orders  as  required  by  s.  3  of  the Industrial Employment (Standing Orders) Act, 1946, to the  Certifying Officer. The Certifying Officer in certifying  the said  draft added  a clause  to paragraph 11  of the  said draft  which  provided, inter alia,  for  certain  festival  holidays  and causal and  annual leave  for a number of days. On appeal the  Appellate Authority in substance agree with the additions made by the Certifying Officer. The question  raised in the appeal was whether the Certifying Officer  or the Appellate Authority had the  jurisdiction   under  the  Act  to  make  the additions in  the draft Standing Orders. Section 4 of the  Act provides,  inter alia,  that the draft standing  orders   could  be   certified  if  they provided  for   every  matter   mentioned  in  the Schedule to  the Act  and cl.  5 of  the  Schedule provided as follows:      "conditions of,  procedure in  applying  for,      and the  authority which may grant, leave and      holidays." ^      Held, that  the Certifying  Officer  and  the Appellate Authority had the jurisdiction in making the addition that they did.      The word  "conditions" in  cl.  5  should  be construed not  in a  narrow way but in a broad and liberal sense  consistently with the object of the

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Act and,  so construed,  there could  be no  doubt that cl.  5 was  not merely procedural but covered the substantive  provision for  fixing the quantum of 698 holidays and  leave  so  that  the  conditions  of employment might  be made precise and definite and prescribed in  the form  of Standing Orders having statutory effects.      Held, further, that the Certifying Officer as well as  the Appellate Authority were in substance industrial authority,  and having  regard  to  the power given to them under the Schedule there could be no  inconsistency in holding that they had also the power  of fixing  the quantum  of holidays and leave as  well. Any  hardship that might be caused by their  orders could be rectified under s. 10 of the Act.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION :  Civil Appeal No. 577 of 1960.      Appeal by special leave from the judgment and order dated  October 15,  1959, of  the  Appellate Authority (Chief Labour Commissioner, Central, New Delhi), in  Appeal under  s. 6  of the  Industrial Employment (Standing Orders) Act, 1946.      B. Narayanaswamy,  S. N. Andley and Rameshwar Nath, for the appellant.      M. K. Ramamurthi, for the respondent.      1962. January  22.-The Judgment  of the Court was delivered by      GAJENDRAGADKAR,  J.-This  appeal  by  special leave raises  a short question about the scope and effect  of   clause  5  in  the  Schedule  to  the Industrial Employment  (Standing Orders) Act, 1946 (20 of  1946) (hereinatter  called the Act ). That question  arises   in  this   way.  The  appellant Bagalkot Cement  Co. Ltd.  is  a  Limited  Company registered under  the Indian  Companies Act, 1930; it carries on the business of manufacturing cement and for that purpose, it owns a factory as well as a limestone  Quarry at  Bagalkot in  the State  of Mysore. As  required by  s.  3  of  the  Act,  the appellant submitted  draft Standing  Orders on the 3rd March, 1958, to the Certifying Officer and the Regional Labour Commissioner (Central), Madras, in order  that   they  should   be   certified.   The Certifying Officer considered 699 the draft  submitted by  the appellant,  heard the appellant and  its employees,  the respondents and passed an order of certification on the 16th June, 1959. While  considering the draft for the purpose of certification, the Certifying Officer, however, made certain  amendments in, and additions to, the a said  draft. Amongst  the additions made, clause (7) in  paragraph 11  was one  and it is with this addition made  by the  Certifying Officer  that we are concerned in the present appeal.      Paragraph 11  of the  draft  Standing  Orders submitted by the appellant dealt with the question of leave.  Paragraph 11  (1) of the draft provided

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that holidays with pay will be allowed as provided for in the Factories Act, 1948, and other holidays in accordance  with law  and contract. Clauses (2) to (6)  dealt with allied matters. In the Standing Orders as  they were finally certified, clause (1) of  paragraph  11  was  slightly  changed  and  it provided that holidays with pay will be allowed as provided for  in the  Mines Act.  No grievance  is made of this alteration. Clause (7) has been added to paragraph 11. It reads thus:      "7. The  workmen shall  be allowed during the course of a year:-           (a) Ten  festival holidays  with pay for      the celebration of important festivals (which      will be  fixed  before  the  commencement  of      every calendar  year in consultation with the      workmen) including  the  Republic  Day  (26th      January)  and   the  Independence  Day  (15th      August) and or any other paid holidays as may      be declared  and notified  by the  Government      from time  to time.  Those workmen  that  are      required to  work on  festivals and  National      Holidays shall  be given  an equal  number of      compensatory holidays  on day  convenient  to      the company, and 700           (b)  Fifteen  days’  casual  leave  with      wages. This  will include  all kinds of leave      due to sickness or any other cause.           (c) Casual leave will not be allowed for      more than 3 days at a time except in the case      of sickness and emergencies at the discretion      of the company.           (d) Wages  shall be  allowed  for  those      days remaining  un-availed by  the workers at      the end of the year.           (e) Fourteen  days annual  leave to  all      classes  of  workers  who  have  put  in  265      attendances in a year as defined in the Mines      Act. This includes statutory leave.           All leave  should be applied for only in      the  prescribed   form.  The   workmen  after      filling the particulars of the leave required      by them  shall hand over the same to the head      of the section in which they are working." The  appellant  apparently  contended  before  the Certifying  Officer   that  it   was  outside  his jurisdiction to  deal with  the topics  covered by clause  (7)   which  he  wanted  to  add  but  its objection was over ruled.      Against the  order passed  by the  Certifying Officer certifying  the Standing  Orders with  the additions  and   amendments  made   by  him,   the appellant preferred  an appeal  under section 6 of the Act  to the  appellate  authority,  viz.,  the Chief Labour Commissioner (Central), New Delhi, on the 5th  July 1959.  The appellate  authority,  in substance, agreed  with  the  view  taken  by  the Certifying Officer  and retained the addition made by him by the insertion of clause (7) to paragraph 11. He,  however,  made  slight  modifications  by directing that  in clause  (a) there will be seven festival holidays instead of ten festival holidays and in  clause (b)  there will be ten days’ casual leave instead of fifteen days. Clause

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701 (d) was  amended by  the  appellate  authority  by substituting  a  new  clause  in  its  place.  The substituted clause reads thus:      "Casual leave  will  not  be  allowed  to  be accumulated. Unavailed casual leave shall lapse at the close of the calendar year."      Then in  regard to  cl.  (e),  the  appellate authority held  that the said clause amounted to a repetition of  statutory provision. Therefore, the said clause was amended to read thus:      "Annual leave  with wages  will be allowed as per provisions of the Mines Act."      The appellate  authority made  certain  other amendments in  the Standing  Orders as  they  were certified   by    the   Certifying   Officer   and ultimately. the  Standing Orders  were  certified, with the  modifications and  alterations suggested by the order of the appellate authority. The order of the  appellate authority  was passed on October 15, 1959.      Against this order, the appellant applied for special leave  to this Court and special leave was granted to  it on  the 1st  February, 1960.  It is with the  special  leave  thus  granted  that  the appellant has come to this Court and on its behalf Mr, Narayanaswami has urged that the addition made by cl.  (7) in paragraph 11 of the Standing Orders is outside  the  jurisdiction  of  the  certifying authority.  He   contends  that  the  jurisdiction conferred on  the certifying authority by clause 5 in the  Schedule does  not empower  the certifying authority to deal with the substantive question of the extent  and quantum  of leave and holidays. It only requires  the Standing  Orders to provide for conditions subject to which leave and holidays can be granted  and the  procedure in  respect thereof and the  authority which  may grant such leave and holidays. The  quantum of leave and holidays which should be  granted to  the workmen  is outside the purview of the Schedule 702 and as  such, cannot  be included  in the Standing Orders. That  is how  the  narrow  question  which arises for  our decision  in the present appeal is to determine  the scope and effect of cl. 5 in the Schedule.      Before dealing  with this  question, it would be convenient  to consider  broadly the  scheme of the Act.  The Act  was passed  in 1946 because the Legislature thought  that  it  was  "expedient  to require employers  in individual establishments to define with sufficient precision the conditions of employment  under   them  and  to  make  the  said conditions known  to workmen  employed  by  them." Prior to  the passing  of the  Act, conditions  of employment   obtaining   in   several   industrial establishments were  governed by contracts between the employer  and their  employees. Sometimes  the said conditions  were reduced  to writing  and  in many cases  they were  not reduced  to writing but were governed  by oral  agreements. Inevitably  in many cases,  the conditions  of service  were  not well-defined and  there was  ambiguity or doubt in regard to  their nature and scope. That is why the

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Legislature  took  the  view  that  in  regard  to industrial  establishments   to  which   the   Act applied, the  conditions of  employment subject to which industrial  labour was  employed  should  be well-defined and should be precisely known to both the parties.  With that  object, the  Act has made relevant provisions  for  making  Standing  Orders which, after  they are  certified, constitute  the statutory  terms   of   employment   between   the industrial establishments  in question  and  their employees. That  is the  principal object  of  the Act.      The   Act   applies   to   every   industrial establishment wherein  one hundred or more workmen are employed  or were  employed on  any day of the preceding twelve  months. It  can be extended even to establishments  whose complement  of labour  is less than 703 one hundred  and it does not apply to any industry to which  Chapter VII  of  the  Bombay  Industrial Relations Act,  1946, applies or to any industrial establishment  to  which  the  provisions  of  the Madhya  Pradesh   Industrial   Workmen   (Standing Orders)  Act,   1959,  apply.   In  other   words, normally, Standing  Orders have  to be  drafted by the  employer  and  their  certification  obtained under the  Act wherever the employer employ a more than one  hundred industrial workmen: s. 1(3). The certifying authority  under the Act means a Labour Commissioner or a Regional Labour Commissioner and includes any  officer appointed by the appropriate Government by notification in the Official Gazette to perform  all or  any  of  the  functions  of  a Certifying Officer under the Act: s. 2(c). The Act provides for an appeal against the order passed by the  Certifying   Officer   and   the   "appellate authority" means  an Industrial Court, wherever it exists or in its absence an authority appointed by the appropriate  Government by notification in the Official Gazette  to exercise  in such area as may be specified  in the notification the functions of an appellate  authority under  the Act: sec. 2(a). "Standing  Orders"   are  defined  to  mean  rules relating to  matters set  out in  the Schedule: s. 2(g). Thus,  the matters  which have to be covered by the Standing Orders and in respect of which the employer has to make a draft for submission to the Certifying Officer  are matters  specified in  the Schedule. Section 3 requires the submission of the draft of  Standing orders  within six  months from the date on which the Act becomes applicable to an industrial establishment. Under s. 4, the Standing Orders become  certifiable if  provisions are made therein for  every matter  set out in the Schedule and they  are found  to be otherwise in confirmity with  the   provisions  of   the  Act.  After  the amendment  of  this  section  made  in  1956,  the Legislature  has   imposed  upon   the  Certifying Officer and  the appellate  authority the  duty to adjudicate 704 upon  the   fairness  or   reasonableness  of  the provisions of  any standing  orders. Prior  to the amendment, it was not open to the said authorities

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to examine  the fairness  of the  Standing  Orders submitted by  the employer.  The result  of s.  4, therefore, is  that the  Standing Orders  have  to provide  for  all  the  topics  specified  in  the Schedule and  they have  to be  in conformity with the Act.  Their reasonableness  can be examined by the   appropriate    authorities   and    suitable modifications can  be made  by them  in accordance with their  decision. Section  5 provides  for the procedure  which   has  to   be  followed  by  the Certifying Officer  before certifying the Standing Orders. The  procedure  is  intended  to  give  an opportunity to both the parties to be heard before the final  order is passed. Section 6 provides for an appeal  and s.  7 lays  down that  the Standing Order shall  come into  operation on the expiry of 30 days  from  the  date  on  which  authenticated copies thereof  are sent as required by s. 5. sub- s. (3),  or where  an appeal  is preferred, on the expiry of  seven days  from the  date on which the copies of  the appllate order are sent under s. 9, the said  Standing orders  Certifying  Officer  to keep a register of standing orders and under s. 9, the said  Standing Orders  have to  be prominently posted by  the employer  in  English  and  in  the language understood by the majority of the workmen on special  boards.  Section  10  deals  with  the duration and  modification of  standing orders. It provides that  except by  agreement, the  standing orders, after  they are  certified, shall  not  be liable to  modification until  the expiry  of  six months from  the date  on  which  they  came  into operation.  Section   10(2)  empowers   both   the employer  or   the  workman   to   apply   for   a modification in the said standing orders. It would thus be  clear that  after they are certified, the standing orders  have to  remain in  force for six months unless, of course, they are modified in the meanwhile by,  consent. After six months are over, an application 705 for modification  in the  standing orders  can  be made either  by the employer the employees and the problem would  be considered  after following  the procedure prescribed by the Act for certifying the original standing  orders. Section  11 confers the necessary  powers   of  a   Civil  Court   on  the Certifying Officer and the appellate authority and s. 12  prohibit admission  of oral  evidence which has the  effect of  adding or otherwise varying or contradicting standing orders as finally certified under the  Act, in  any Court. Section 13 provides for penalties  and the  procedure to enforce them. Section   13A    deals   with   the   problem   of interpretation of  the standing  orders and s. 13B provides    for     exemption    of     industrial establishments  therein   specified.  Section   14 confers on  the appropriate  Government  power  to exempt,  conditionally   or  unconditionally,  any industrial establishment, and s. 15 confers on the appropriate Government  the power to make rules to carry  out  the  purposes  of  the  Act,  and,  in partioular, to  provide for the matters covered by cls.(a) to  (e)  of  sub-cl.  (2).  Section  15(3) contains the  salutary provision  that every  rule

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made by  the Central  Government under s.15 has to be  placed   before  the   House  in   the  manner prescribed by it. The Schedule to the Act contains 11 clauses,  clauses 1 to 10 deal with the several topics in respect of which standing orders have to make a  provision and  cl. 11  refers to any other matter which  may be  prescribed. This last clause shows  that   an  addition  may  be  made  by  the appropriate Government  if it is thought necessary to do  so, That,  in brief,  is the  scheme of the Act.      Mr. Narayanaswami contends that having regard the nature  and scope of the several clause in the Schedule, it would be appropriate to construe cl.5 as not  including a  provision for the quantum and extent of  leave and holidays His argument is that cl, 5 is really intended to provide merely for 706 the conditions  and the procedure to be adopted in applying for  leave and  holidays Clause  5  reads thus:           "Conditions of,  procedure  in  applying      for, and the authority which may grant, leave      and holidays." How many  holidays the  employee will have and how much leave, either casual or on medical ground, he would be  entitled to get, are matters outside the scope of  the Schedule;  they would be governed by the relevant  provisions of  any other  law or  by contract between  the parties;  they cannot be the subject-matter of  standing orders.  The  standing orders would provide for the conditions subject to which leave  and holidays  can be applied for, for the procedure in applying for the same and for the authority fying  may grannt  the same.  That being so,  the  certifying  Officer  and  the  appellate authority exceeded  their jurisdiction  in  making substantive provisions in that behalf by paragraph 11(7). That  is the  case  for  the  appellant  as presented by Mr. Narayanaswami.      In support  of this  contention, reliance has been placed  on cl.3  in the Schedule which refers to shift  working. It  is  urged  that  since  the clause refers  to shift  working, the  substantive provision in  respect of  shift working as well as the conditions  subject  to  which  it  should  be allowed  would   legitimately  fall   within   its purview. If  the Legislature had intended that the substantive provision  as  to  leave  and  holiday should be  the subject-matter of standing order it may will  have referred to leave and holidays only in  cl   5  without   any  further  addition.  The additional words  introduced in cl. 5 are words of limitation and  they  show  that  the  substantive provision as  to leave and holidays is outside the purview of  that clause,  It may  be conceded that there is some force in this contention. 707      There  are,   however,  other  considerations which have  to be  borne in mind in construing cl. 5. The  object of the Act as we have already seen, was  to   require  the   employers  to   make  the conditions of  employment precise and definite and the act  ultimately intended  to  prescribe  these conditions in  the from of standing orders so that

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what used  to be  governed by  a  contract  hereto before would  now be  governed  by  the  statutory standing orders  and it would not be reasonable to hold that  conditions of  employment to  which the preamble of  the Act specifically refers would not include a  provision for  the quantum of leave and the quantum   of  holidays to  which the  employee would   be    entitled.   Therefore,    the   word "conditions" in  cl. 5.  of the Schedule has to be reasonably construed in a broad and liberal sense. The dictionary  meaning of the word "condition" is a provision or a stipulation. Now a provision or a stipulation  as   to  leave   and  holidays  would necessarily include a provision for the quantum of holidays and  leave and this construction would be consistent  with   the   meaning   of   the   word "condition" as  employed in  the preamble  to  the Act. Mr. Ramamurthi who appeared amicus curiae for the respondents  at our  request contended that to adopt  the   narrow  construction   of  the   word "conditions"  in  cl.  5  would  defeat  the  very purpose of  cl. 5. He argued that merely providing for the  procedure  of  application  and  for  the authority  who  would  grant  leave  and  holidays without stipulating as to the quantum of leave and holidays  would  be  almost  meaningless.  In  our opinion, there is force in this contention and so, we, are  inclined to  adopt the  broad and liberal construction of the word "condition" in cl.5.      Besides, the first three clauses dealing with the conditions,  the procedure  and the  authority would apply  both to  leave and holidays and it is not easy to appreciate what conditions could be 708 prescribed by  the standing orders for the purpose of holidays.  No doubt Mr. Narayanaswami suggested that the conditions in the context of holidays may mean  conditions  as  to  holidays  with  pay,  or without pay  or with  half pay and that is what is contemplated by  the first  clause in  relation to holidays. Theoretically,  it  may  be  conceivable that the  word "conditions"  may have that meaning in respect of holidays; but it seems to us that it would serve  no useful  purpose merely  to provide for such conditions and to prescribe the procedure to be  adopted in  applying for leave and holidays unless the  quantum of  leave and  the quantum  of holidays are also intended to be prescribed by the standing orders.  On the broad construction of cl. 5, it  becomes a  self sufficient  and  reasonable provision. The  standing orders  will provide  for the leave  to which the employees are entitled and will prescribe  the number  of holidays which they will be  able to  enjoy. Having  provided for  the quantum of leave and holidays, the standing orders will also provide for the conditions in respect of them, for  the procedure  in applying for them and for the authority which may grant them. It is true that  it   is  not   easy  to  understand  why  an application has  to be  made for  holidays, but it may be  that  if  there  are  sectional  holidays, employees  belonging   to  a   particular  section entitled to them may have to apply for them. There fore, in  our opinion,  it cannot be said that the authorities below  have  adopted  an  unreasonable

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constructions of  cl. 5  in the Schedule when they held  that   they  were   entitled  to   make  the additional provisions  in  respect  of  leave  and holidays which  they have  purported  to  make  by adding cl.  7 in  paragraph  11  of  the  standing orders.      In this  connection reference, may be made to the Model  Standing Orders  framed by  the Central Government in  1946. Clause  9 of the Model Orders provides that holidays with pay will be allowed as 709 provided for  in Chapter  VI of the Factories Act, 1948, and  other holidays    accordance  with  law contract,  custom   and  usage.  In  fact,  it  is significant that  paragraph 11  (1) of  the draft- submitted by  the appellant has also provided that holidays with  pay will be allowed as provided for in  the   Factories  Act   and  other  holiday  in accordance  with   law  and   contract.  If   this provision is legitimately included in the Standing Orders  and   that  too  under  clause  5  of  the Schedule, it is difficult to understand why a more specific provision  cannot be  made under the said clause by  clearly stating  the number of holidays to which  the employees would be entitled and that is precisely what paragraph 11 (7) purports to do.      Then cl.  10 of  the  Model  Standing  Orders provides for  casual leave.  It lays  down that  a workman may  be granted  casual leave  of  absence with or  without pay  not exceeding 10 days in the aggregate in  a calendar  year. Then  it lays down further conditions  in respect of the grant of the said causal  leave. It  would be  noticed that the quantum of  casual leave  to which the employee is entitled is  thus specifically provided by. cl. 10 of the Model Standing Orders. It is perfectly true that if  clause 5  of the  Schedule is read in the narrow sense for which Mr. Narayanaswamy contends, cl. 10  of the  Model  Standing  Orders  would  be invalid and  from that point of view the existence of clause  10 in  the Model Standing Orders cannot be of  any assistance in interpreting cl. 5 of the Schedule. But  if clause  5 is construed the broad sense for  which Mr. Ramamurthi contends, it would follow that clause 10 of the Model Standing Orders is consistent  with the  aim  and  object  of  the Schedule and  that, incidentally,  may support the agreement for  the  broad  construction.  That  is about all.      In regard  to the argument based on the scope of the 10 clauses in the Schedule, it is certainly 710 not correct  to say that the scope of the Schedule is intended  to be very narrow. Take for instance, clause   8 which  deals with  the  termination  of employment  or  clause  9  which  deals  with  the suspension or  dismissal for  misconduct, and acts or omissions  which constitute  misconduct.  These are  matters  of  general  importance  and  it  is conceded that all relevant and material provisions in respect of these matters have to be included in the Standing  order. Therefore,  it would  not  be inconsistent with the scheme of the Schedule if we were to  hold that  the substantive provisions for the granting  of leave and holidays along with the

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conditions in  respect of  them have to be made by the Standing Orders under cl. 5 of the schedule.      It would  be recalled  that s.  10 of the Act provides for  the duration  of the standing orders and if any standing orders are found by experience to be  unreasonable or  inconvenient either by the employer, or  the employees, an application can be made for  the modification  of the  said  standing orders after the expiration of six months from the date on which they came into operation. Therefore. there  would  be  no  hardship  in  requiring  the standing orders to include a provision as to leave and holiday.  The provisions  made in  that behalf can be  modified  after  following  the  procedure prescribed by  s. 10.  It is not disputed that the claim  for  leave  and  holidays  can  become  the subject matter  of an  industrial dispute  and  if such a  dispute is referred for adjudication to an Industrial Tribunal,  the  Tribunal  can  fix  the quantum of  holidays and  leave. What the Tribunal can do  on such  reference is  now intended  to be achieved by  the  Standing  orders  themselves  in respect of  Industrial establishments to which the Act applies.  We have  noticed that the Certifying officer as well as the appellate authority are, in substance, industrial  authorities and if they are given  power  to  make  provision  for  leave  and holidays as 711 they undoubtedly  are given  power to  provide for termination  of   employment  and   suspension  or dismissal  for   misconduct,  there   is   nothing inconsistent with  the spirit  of the  Schedule or with the  object of the Act. Therefore. we are not satisfied that the authorities below were in error in holding  that it  was competent to them to make the additional provision in the Standing orders as prescribed by paragraph 11(7).      In the  result, the  appeal    fails  and  is dismissed. No order as to costs.                                  Appeal dismissed.