http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 14  

PETITIONER: DELHI CLOTH & GENERAL MILLS CO.  LTD.

       Vs.

RESPONDENT: THE WORKMEN & ORS.

DATE OF JUDGMENT: 14/10/1966

BENCH: MITTER, G.K. BENCH: MITTER, G.K. WANCHOO, K.N.

CITATION:  1967 AIR  469            1967 SCR  (1) 882

ACT: Industrial  Disputes Act (14 of 1947), s.  10(1)--Industrial Tribunal  Limits  of jurisdiction with respect to  order  of reference of industrial dispute-"Incidental", meaning of.

HEADNOTE: Four issues, arising out of industrial disputes between  the Management  of Delhi Cloth Mills and Swatantra Bharat  Mills (two  units  of the same company) and  their  workmen,  were referred  to the Industrial Tribunal.  Issue 3 in the  order of  reference raised the question whether the strike at  the Delhi Cloth Mills and the lockout declared by the Management were justified and legal; and issue 4, whether the, sit-down strike  at  the  Swatantra Bharat Mills  was  justified  and legal.   As  regards  these issues  the  contention  of  the Management was that the issues were framed on the basis that there were strikes at the two units, and the only  questions referred  to  the  Tribunal  for  decision  related  to  the legality  of  and justification for, the said  strikes.   As regards  issue 1, relating to the calculation of  the  bonus table,  the  case  of the Management  was  that  there  were settlements on various dates between the Management and  the Unions  of workmen, and in view of those settlements it  was not open to the workmen to reopen the matter., The  Tribunal overruled the pleas of the Management.  It held that as  the existence  of  the strikes was disputed by the  workmen,  it would  be  its duty and within its  jurisdiction  to  decide whether  there  were strikes at the Mills at  all;  that  in doing  so, it would not be going beyond the scope and  ambit of  the reference; and that the parties would be at  liberty to  adduce  evidence  in  confirmation  or  denial  of   the existence  of the strikes.  As regards issue 1, relating  to bonus,  the Tribunal held that if after taking  evidence  it was found that as a result of the settlements referred to by the  Management,  the  claim was barred,, it  would  not  be allowed. In appeal to this Court, HELD  : (1) The basis of issues 3 and 4 was that there  were strikes  at  the two units and a lock-out  declared  by  the Management at one.  On the issues as framed, it would not be open to the workmen to question the existence of the strikes or to the Management to deny the declaration of a  lock-out.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 14  

The  parties could place before the Tribunal such  facts  as would  show that the dispute referred was not an  industrial dispute at all, or explain their conduct or their respective stands  on  the propriety and legality of  the  strikes  and lock-out.   But they could not be allowed to argue that  the order  of  reference was wrongly worded and  that  the  very basis  of  the  order of reference was  open  to  challenge. Therefore, the Tribunal had to examine issues 3 and 4 on the basis that there was a strike at the Delhi Cloth Mills and a sit-down  strike  at the Swatantra Bharat  Mills,  and  that there  was a lock-out declared with regard to the former  as stated in the order of reference, and decide on the evidence adduced, whether the strikes and lock-out were justified and legal. [887 G-H; 892 F-H; 893 E-G] The Industrial Tribunal must confine its adjudication to the points  of dispute referred and matters incidental  thereto. It is not free to 883 enlarge  the  scope of the dispute referred to it  but  must confined its attention to the points specifically  mentioned and  anything  which  is  "incidental’  thereto.   Something "incidental  to  a dispute" means something happening  as  a result  of or in connection with the dispute  or  associated with  the  dispute.  The dispute is  the  fundamental  thing while something incidental thereto is an adjunct to it.   It cannot Cut at the root of the main thin.- to which it is  an adjunct. [887 C-D, E-F] Express Newspapers v. Their Workmen,[1962] 2 L.L.227 (S.C) and  Syndicate  Bank  v. Its Workmen, [1966]  2  L.L.J.  194 (S.C.), explained. (2)  The parties were not bound by any agreement with regard to  the  first  issue and the Tribunal would  have  to  take evidence to come to a finding on it. [897 D]

JUDGMENT: CIVIL  APPELLATE  JURISDICTION  : Civil  Appeals  Nos.  2100 to 2102 of 1964. Appeals  by special leave from the judgments and orders  (1) dated  the  16th  June,  1966  of  the  Special   Industrial Tribunal,   Delhi  in  Reference  No.  53  of  1966   (Delhi Administration) and (ii) and (iii) dated the 13th July, 1966 and  12th  August  1966 of the Punjab  High  Court  (Circuit Bench)  at Delhi in Civil Writ Petitions Nos. 488-D and  122 of 1966 respectively. M.   C.  Setalvad, G. B. Pai, Rameshwar Dial  and  Rameshwar Nath, for the appellant (in all the appeals). A.   S.  R. Chari and M. K. Ramamurthi, for respondent No. 1 (a) (in all    the three appeals). S.   Venkatakrishnan and N. K. Bhatt, for respondent No. 1 (in all the three appeals). A.   C. Shubh, Ram Kishan and S. S. Khanduja, for respondent No. 1(c) (in all the three appeals). A.   S. R. Chari, D. K. Aggarwal and M. V. Goswami, for res- pondents Nos. 1(d) and 1(e) (in all the three appeals). D.   R.  Gupta and H. K. Puri, for respondent No. 2 (in  all the three appeals). S.   S.  Khanduja,  for respondent No. 2 (in all  the  three appeals) M.   V. Goswami, for respondent No. 3(a) (in all the three appeals). The Judgment of the Court was delivered by Mitter,  J. On March 4, 1966 an order under s. 10(1) and  s. 12(5)  of the Industrial Disputes Act (hereinafter  referred

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 14  

to  as the Act) was passed over the signature  of  Secretary (Industries   and  Labour),  Delhi   Administration,   Delhi referring to the Special Industrial Tribunal certain matters setforth in the Schedule 884 annexed thereto for adjudication.  According to the recitals in the order, it appeared to the Delhi Administration from a report submitted by the Conciliation Officer under s.  12(4) of  the Act that an industrial dispute existed  between  the managements of Delhi Cloth Mills and Swatantra Bharat  Mills and  their workmen represented by four different Unions  and the   Chief   Commissioner,  Delhi,  was  satisfied   on   a consideration  of  the  said report that  the  said  dispute should be referred to an Industrial Tribunal.  The terms  of reference specified in the Schedule are reproduced below:               "1. Whether in calculating the bonus table for               the  accounting  year  ending  30-6-1965   the               allocations separately made by the Delhi Cloth               & General Mills Co., Ltd. towards the  Capital               and  Reserves  of the Delhi  Cloth  Mills  and               Swatantra  Bharat Mills, the two units of  the               Company is fair and reasonable?  If not,  what               directions are necessary in this regard ?               2.    Whether  the workmen of these Mills  are               entitled to bonus at a rate higher than 6  per               cent  of  the wages for  the  accounting  year               ending 30-6-1965?  If so, what directions  are               necessary in this regard?               3.    Whether  the strike at the  Delhi  Cloth               Mills   and  the  lock-out  declared  by   the               management on the 24-2-1966 are justified  and               legal and whether the workmen are entitled  to               wages for the period of the lock-out?               4.    Whether  the  ’sit-down’ strike  at  the               Swatantra  Bharat  Mills  from  23-2-1966   is               justified  and legal and whether  the  workmen               are entitled to wages during the period of the               strike?" The  report of the Conciliation Officer shows  that  trouble had  arisen over the claim of bonus in the Delhi  Cloth  and General  Mills and Swatantra Bharat Mills, two units of  the same  company.   The  report also shows that  at  a  meeting convened  at  2-30  p.m. on February  23,  1966,  the  Works Committee  recommended that the payment of bonus  should  be suspended  pending  examination  of  the  entire  issue   in conciliation  or  otherwise.   But  before  this  could   be announced,  workers started demonstration outside  the  mill premises  of  the first named unit and became  violent.   To quote from the report               "As the situation became tense inside the mill               premises  and  the  workers  left  work,   the               management closed down the turbine at about  4               p.m.  on 23-2-1966.  Later on, at about  11-00               p.m.  the management put up a notice  that  in               view  of the prevailing circumstances  in  the               Mills,  it was not possible to work the  mills               until conditions become normal....... As               885               there was no improvement in the situation  and               as  workers  who were inside  the  mills  were               reported to have caused further damage to  the               mill  property,  the  management  declared   a               lockout  at  about 6 p.m.  on  24th  February,               1966.  ...... The workers, however,  are  very               much restive over the management’s declaration

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 14  

             of lock-out."               With  regard  to Swatantra Bharat  Mills,  the               report runs:               "........  the situation is peaceful  although               the  workers  resorted to  the  stay-in-strike               from  7.30 p.m. on the 23rd February 1966  and               the  strike still continues.  It appears  that               their attitude is that whatever is decided  at               the   D.C.M.  level  will   automatically   be               applicable  to them as well.  The  workers  do               not  seem  to be in a mood to start  the  work               unless  the workers of the Delhi  Cloth  Mills               also start work." The recommendation in the report was that the dispute should be immediately referred to a Tribunal for adjudication along with  the issue of prohibitory orders under s. 10(3) of  the Act.  The report notes that the Unions’ leaders had  pressed that the question of workers’ claim for wages for the strike period in the Swatantra Bharat Mills and lock-out period  in the  Delhi  Cloth  Mills should also  be  included  and  the Tribunal to be constituted should proceed immediately in the matter. The Management filed a statement of case before the  Special Tribunal  on  April 9, 1966 and the  Unions  filed  separate statements  of  case between April 10, 1966  and  April  13, 1966.  There were Replications and Rejoinders up to May  21, 1966. On  June 3, 1966, the Company prayed before  the  Industrial Tribunal  that  issues 1, 3 and 4 (set out in the  terms  of reference)  may  be decided before the parties  were  called upon to lead their evidence.  As regards issues 3 and 4, the contention of the management was that the fundamental  basis of  these  two matters was that there was a  strike  at  the Delhi  Cloth  Mills and a sit-down strike at  the  Swatantra Bharat Mills and the only question referred to the  Tribunal for  decision related to the legality and  justification  of the said strikes.  All the four Unions contended before  the Tribunal that there was no strike at the Delhi Cloth  Mills. Two  of  the Unions’ case was that the strike  at  Swatantra Bharat  Mills was in sympathy with the workmen of the  Delhi Cloth Mills; while the other two Unions’ case was that there was  a lock-out in the Swatantra Bharat Mills.   As  regards the  first issue, the case of the Management was that  there was  a  settlement  on December 13,  1965  relating  to  the computation  of  bonus  for the  year  1963-64  between  the Company  and  the two major Unions.  It was  stated  further that the settlement referred to the computation of bonus  in accordance with the provisions of the Payment of Bonus  Act, 1965 and in arriv- 886 ing  at  the  settlement, all  the  available  and  relevant financial  statements  had been shown to  the  Unions  which accepted  the accounts based on allocation of share  capital and  reserves  during the years previous  to  and  including 1963-64.   Further, according to the Management, one of  the Unions   had  entered  into  another  settlement  with   the Management  of  the D.C.M. Silk Mills with  regard  to  that Union   for  the  year  1964-65,  and  in  view   of   these settlements,  it  was not open to the workmen of  the  Delhi Cloth  Mills  and  Swatantra Bharat Mills  to  question  the correctness  and reasonableness of the allocations  made  by the  Management towards share capital and reserves of  these two units. The Tribunal considered the pleas put forward before it  and several   decisions  cited  in  support  and  came  to   the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 14  

conclusion  that  as the strike covered by issue No.  3  and sit-down strike covered by issue No. 4 were disputed by  the Unions, or at any rate not admitted by all of them "it would be  the duty of the Tribunal to decide whether there  was  a strike at D.C.M. as covered by issue No. 3 and whether there was a sit-down strike by S.B.M. as covered by issue No.  4." According  to  the Tribunal, it would not be  exceeding  its jurisdiction at all and would not be going beyond the  scope and ambit of the reference to examine issues 3 and 4 in  the above  light  and accordingly, the Tribunal  held  that  the parties would be at liberty to adduce such evidence as  they liked in confirmation or denial of the fact of a strike  and sit-down strike regarding issues 3 and 4. As  regards  issue No. 1 also, the Tribunal  over-ruled  the plea of the Management and held that it would be open to the parties  to adduce evidence regarding this issue and  if  in course  thereof  it  was  found that  as  a  result  of  the settlements  referred  to by the Management, the  claim  was barred,  the same would not be allowed This decision of  the Tribunal was announced on June 16, 1966. The Management moved a Writ Petition before the Punjab  High Court  on June 30, 1966 for quashing the order of 16th  June by  a writ of certiorari.  By an order dated July 13,  1966, the  petition  was summarily dismissed.  By  an  application under Art. 133(1) of the Constitution, the Management  moved the  Punjab  High Court for leave to appeal to  the  Supreme Court.   This  was also dismissed in limine  on  August  12, 1966.   The  Management  then  moved  three  Special   Leave Petitions  Nos. 1068 to 1070 of 1966 before this Court,  one from the order of the Tribunal, the second from the order of the  High Court dated July 13, 1966 and the third also  from the  order of the High Court dated August 12, 1966.   By  an order  made on September 12, 1966 special leave was  granted in  all these three petitions.  All these have now  come  up for hearing before us. Proceeding  in  the  order  in  which  the  arguments   were addressed,  we  propose to deal with issues 3 and  4  first. Under s. 10(1) (d) 887 of the Act, it is open to the appropriate Government when it is of opinion that any industrial dispute exists to make  an order  in  writing  referring "the  dispute  or  any  matter appearing  to  be  connected  with,  or  relevant  to,   the dispute.......  to  a Tribunal for adjudication."  Under  s. 10(4) "where in an order referring an industrial dispute  to a  Labour  Court, Tribunal or National Tribunal  under  this section or in a subsequent order, the appropriate Government has  specified the points of dispute for  adjudication,  the Labour  Court or the Tribunal or the National  Tribunal,  as the  case  may be, shall confine its adjudication  to  those points and matters incidental thereto." From the above it therefore appears that while it is open to the  appropriate  Government  to refer the  dispute  or  any matter appearing to be connected therewith for adjudication, the Tribunal must confine its adjudication to the points  of dispute  referred and matters incidental thereto.  In  other words, the Tribunal is not free to enlarge the scope of  the dispute referred to it but must confine its attention to the points   specifically  mentioned  and  anything   which   is incidental  thereto.  The word ’incidental’ means  according to Webster’s New World Dictionary:               "happening or likely to happen as a result  of               or   in   connection   with   something   more               important;  being an incident; casual;  hence,               secondary or minor, but usually associated:"

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 14  

"Something  incidental  to a dispute"  must  therefore  mean something  happening as a result of or; in  connection  with the dispute or associated with the dispute.  The dispute  is the fundamental thing while something incidental thereto  is an  adjunct to it.  Something incidental, therefore,  cannot cut at the root of the main thing to which it is an adjunct. In  the light of the above, it would appear that  the  third issue  was framed on the basis that there was a  strike  and there was a lock-out ’and it was for the Industrial Tribunal to examine the facts and circumstances leading to the strike and the lockout and to come to a decision as to whether  one or the other or both were justified.  On the issue as framed it  would  not  be  open to  the  workmen  to  question  the existence  of the strike, or, to the Management to deny  the declaration  of a lock-out.  The parties were to be  allowed to  lead evidence to show that the strike was not  justified or that the lock-out was improper.  The third issue has also a sub-issue, namely, if the lock-out was not legal,  whether the  workmen  were entitled to wages for the period  of  the lock-out.  Similarly, the fourth issue proceeds on the basis that  there  was a sit-down-strike in the  Swatantra  Bharat Mills  on 23-2-1966 and the question referred was as to  the propriety  or legality of the same.  It was not for  any  of the Unions to contend on the issues as framed that there was no sit-down strike.  On their success on the plea 888 of justification of the sit-down strike depended their claim to wages for the period of the strike. Apart from the consideration of the various decisions  cited at the Bar, the above is the view which we would take,  with regard  to  issues  3  and 4. We have  now  to  examine  the decisions cited and the arguments raised and see whether  it was competent to the Tribunal to go into the question as  to whether  there was a strike at all at the Delhi Cloth  Mills or  a  sit-down strike at the Swatantra Bharat  Mills  or  a lock-out declared by the Management on 24-2-1966. The decisions on the point to which our attention was  drawn are  as follows.  In Burma-Shell Oil Storage &  Distributing Co.,  of India Ltd. & Ors. v. Their Workmen & Others(1)  one of the disputes referred to the fifth industrial tribunal by the Government of West Bengal under s. 10 of the  Industrial Disputes Act was a claim for bonus for 1955 payable in  1956 for  the Calcutta Industrial area.  The Industrial  Tribunal heard both the parties and awarded 41 months basic salary as bonus  for  the  year 1955 to the  clerical  staff  and  the operatives  of  the companies.  This Court referred  to  the recital  in the order of the Government of West  Bengal  and observed that the reference was between the four  appellants and their workmen represented by the named Workers’ union on the  other.  According to this Court, it appeared  from  the record  that the said union represented only the workmen  in the categories of labour, service and security employees  in the  Calcutta  industrial area and so prima  facie  the  two demands  made  by the union would cover the  claims  of  the operatives  alone.  This Court also relied on the fact  that the  appellants  had  dealt  with  the  two  categories   of employees distinctly and separately.  According to Gajendra- gadkar,  J. (as he then was) who delivered the  judgment  of the Court:               "If   the  reference  does  not  include   the               clerical staff and their grievances, it  would               not  be  open to the members of  the  clerical               staff  to  bring their grievances  before  the               tribunal  by their individual applications  or               for  the  tribunal to widen the scope  of  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 14  

             enquiry  beyond  the  terms  of  reference  by               entertaining such individual applications."               Accordingly,  it was held that the  appellants               were right in contending that the tribunal had               no authority to include within its award  mem-               bers  of  the clerical staff employed  by  the               appellants.               In Express Newspapers v. Their Workmen & Staff               (2) the two items of dispute specified in  the               order of reference were :               (1) Whether the transfer of the publication of               Andhra    Prabha   and        Andhra    Prabha               Illustrated Weekly to               (1) [1961] 2 L.L.J. 124.               (2) [1962] 2 L.L.J. 227.               889               Andhra Prabha (Private) Ltd., in Vijayawada is               justified  and to what relief the workers  and               the working journalists are entitled ?               (2)   Whether  the strike of the  workers  and               working journalists from 27th April 1959,  and               the  consequent lockout by the  management  of               the  Express  Newspapers (Private)  Ltd.,  are               justified  and to what relief the workers  and               the working journalists are entitled? On  the same day as the Government of Madras made the  order of reference, it issued another order under s. 10(3) of  the Act prohibiting the continuance of the strike and the  lock- out  in the appellant concern.  Against this  latter  order, the appellant filed a writ petition in the Madras High Court and the workers also filed another writ petition against the order  by which the dispute was referred to  the  industrial tribunal   for  adjudication.   In  regard  to  the   second petition, the learned single Judge of the Madras High  Court held on the merits that what the appellant had done did  not amount  to a lock-out but a closure and so  the  substantial part of the dispute between the parties did not amount to an industrial  dispute at all.  In the result, he  allowed  the application of the company in part and directed the tribunal to  deal  only  with the second part of  the  two  questions framed   by   the  impugned  reference.   There   was   some modification in the order by a Division Bench of the  Madras High Court.  The matter then came up to this Court.  It  was held  by this Court that the High Court could entertain  the appellant’s  petition  even  at the initial  stage  of,  the proceedings before the industrial, tribunal and observed "If  the action taken by the appellant is not a lockout  but is  a closure, bona fide and genuine, the dispute which  the respondents may raise in respect of such a closure is not an industrial  dispute at all.  On the other hand, if, in  fact and in substance, it is a lock-out, but the said action  has adopted the disguise of a closure and a dispute is raised in respect of such an action, it would be an industrial dispute which  industrial adjudication is competent to deal with.  . There  is no doubt that in law the appellant is entitled  to move  the High Court even at the initial stage and  seek  to satisfy it that the dispute is not an industrial dispute and so  the  industrial tribunal has no jurisdiction  to  embark upon the proposed enquiry." It was further observed: "If the industrial tribunal proceeds to assume  jurisdiction over  a  non-industrial dispute, that  can  be  successfully challenged  before  the  High Court by  a  petition  for  an appropriate  writ, and the power of the High Court to  issue an  appropriate  writ in that behalf cannot  be  questioned.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 14  

M17Sup.CI/66-12 890 It  is  also true that even if the dispute is tried  by  the industrial   tribunal,   at  the  very   commencement,   the industrial  tribunal will have to examine as  a  preliminary issue the question as to whether the dispute referred to  it is  an industrial dispute or not, and the decision  of  this question  would  inevitably depend upon the view  which  the industrial tribunal may take as to whether the action  taken by  the appellant is a closure or a lock-out.   The  finding which the industrial tribunal may record on this preliminary issue  will decide whether it has jurisdiction to deal  with the merits of the dispute or not." The  Court then proceeded to consider the facts of the  case and the contentions raised before the tribunal.  It referred to  a settlement which had been reached between the  parties and  embodied in a memorandum drawn up on 6th November  1958 under  s. 12(3) of the Act.  This settlement was to  operate for  two  and half years.  The case of the  respondents  was that  during the negotiations between the appellant and  the union in the presence of the acting Labour Minister and  the Labour  Commissioner,  the appellant had tried to  insert  a clause in the agreement in respect of the decision that  the paper Andhra Prabha would not be shifted for publication  to Vijayawada during the period of the settlement and that  the workmen  would  be  continued to be employed  as  before  at Madras and this was objected to by the respondent  whereupon a  verbal  assurance  was given that  the  business  of  the appellant  would  be carried on at Madras for two  and  half years.   The respondents contended that the  said  assurance was  one of the terms of the conditions of the  respondents’ service   and  the  transfer  effected  by   the   appellant contravened  and materially modified the said  condition  of service.   In  regard to issue 2, the argument was  that  in effect the Government had determined this issue and  nothing was  left for the tribunal to consider.  The Court  observed that   the  wording  of  this  issue  was  in-artistic   and unfortunate and held:               "Even  so, when the question of this  kind  is               raised  before  the Courts,  the  Courts  must               attempt  to  construe the  reference  not  too               technically  or  in  a  pedantic  manner,  but               fairly  and reasonably.  Thus construed,  even               the inelegant phraseology in framing the issue               cannot conceal the fact, that in dealing  with               the  issue, the main point which the  tribunal               will have to consider is whether the strike of               the   respondents  on  27th  April  1959   was               justified  and  whether  the  action  of   the               appellant which followed the said strike is  a               lockout  or amounts to a  closure......  Thus,               having  regard to the content of  the  dispute               covered  by issue 2, it would not be right  to               suggest  that  the  reference  precludes   the               tribunal  from  entertaining  the  appellant’s               plea that what it did on 29th April is in fact               not a lock-out but a closure.               891               The  fact  that  the relevant  action  of  the               appellant  is called a lock-out does not  mean               that  the tribunal must hold it to be a  lock-               out." This decision has been referred to by the Tribunal as giving it jurisdiction to examine the question as to whether  there was  a  strike  at all.  Both sides have  referred  to  this

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 14  

decision   in  support  of  their  respective   contentions. According  to  the respondents, the fact that  the  Tribunal could  go into the question as to whether there was a  lock- out  or  a closure went to show that the  Tribunal’s  juris- diction  was  not  limited because of the use  of  the  word ’lock-out’  in  the second; issue so that the  Tribunal  was precluded  from examining the question as to  whether  there was  a lock-out at all while according to the appellants  it was because the Tribunal had always to consider whether  the issue  referred was an industrial dispute that the  Tribunal had  to scrutinise whether the cessation of business of  the company  was  due to a lock-out which it  was  competent  to adjudicate upon or whether it was due to a closure which was not an industrial dispute at all. In  our opinion, there was enough material on the record  in that case to show that the company had been trying for  some time past to transfer its business elsewhere and the  action of the appellant which followed the strike on April 27, 1959 was in fact a closure and not a lock-out.  The facts of that case  were very special and the decision must be limited  to those special facts. In  Syndicate  Bank v. Its Workmen(1) there  was  a  dispute between the appellant bank and its employees with respect to C.   rank  officers  which  was  referred  by  the   Central Government  to  an  Industrial  Tribunal  in  the  following terms:-               (1)   Whether   the  Canara   Industrial   and               Banking  Syndicate, Ltd., Udipi, is  justified               in  imposing the condition that only  such  of               those   workmen   would  be   considered   for               appointment  as officer-trainee and  promotion               to  probationary C rank officers who agree  to               be   governed  by  the  rules  of   the   bank               applicable to such officers in respect of  the               scale of pay and other conditions of  service?               If  not,  to  what  relief  are  such  workmen               entitled?               (2)   Whether   the  bank  is   justified   in               imposing   the  condition  of  twelve   months               training as officer-trainee before appointment               as C rank officer in addition to the probation               prescribed  after  the appointment as  C  rank               officer  ?   If not, to what  relief  are  the               workmen entitled? Before  the  tribunal  it was contended  on  behalf  of  the appellant that the first term of reference proceeded on  the assumption that (1)  [1966] 2L.L.J. 194. 892 C rank officers were officers of the bank while the  workmen urged that the question whether C rank officers were workmen was  implicit in the first term of reference.  The  Tribunal accepted  the  plea  of the  respondents  and  proceeded  to consider  that question.  It came to the conclusion  that  C rank  officers  were workmen.  On the question  whether  the imposition  of  the  condition that workmen  would  only  be promoted  as C rank officers if they accepted the  condition that  they  would be governed by the rules of the  bank,  it found  against  the  appellant.  Before this  Court  it  was argued  on  behalf  of  the  appellant  that  there  was  no reference  on the question of the status of C rank  officers and the tribunal went beyond the terms of reference when  it decided  that C rank officers were workmen.  It was held  by this Court’:               "that the first term of reference had implicit

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 14  

             in  it  the question whether C  rank  officers               were  workmen  or not.  If that were  not  so,               there would be no sense in the reference,  for               if  C  rank officers were assumed to  be  non-               workmen,  the  bank  would  be  justified   in               prescribing conditions of service with respect               to   its  officers  and  there  would  be   no               reference  under  the  Act  with  respect   to               conditions imposed by the bank on its officers               who were not workmen." In  the  last mentioned case, the question  whether  C  rank officers  were workmen had to be examined by  the  tribunal, for, if they were not, there could be no reference under the Industrial Disputes Act.  In the case before us, there is no such  difficulty.   The  third  and  the  fourth  terms   of reference in the instant case are founded on the basis  that there  was a strike at the Delhi Cloth Mills and a sit  down strike  at the Swatantra Bharat Mills and that there  was  a lock-out declared by the management of the Delhi Cloth Mills on  24-2-1966.   On  the  order of  reference,  it  was  not competent to the workmen to contend before the Tribunal that there was no strike at all; equally, it was not open to  the management  to argue that there was no lock-out declared  by it.   The  parties  would be  allowed  by  their  respective statement  of cases to place before the Tribunal such  facts and  contentions  as would explain their  conduct  or  their stand, but they could not be allowed to argue that the order of  reference was wrongly worded and that the very basis  of the  order  of reference was open to challenge.   The  cases discussed go to show that it is open to the parties to  show that  the dispute referred was not an industrial dispute  at all and it is certainly open to them to bring out before the Tribunal the ramifications of the dispute.  But they  cannot be  allowed  to challenge the very basis of  the  issue  set forth in the order of reference. On  behalf of the respondents, Mr. Chari put before us  four propositions  which  according to him the  Tribunal  had  to consider  before coming to a decision on these  two  issues. They were: 893 (i)The fact that there was a recital of dispute in the order of reference did not show that the Government had come to  a decision  on the dispute; (ii) The order of  reference  only limited  the,  Tribunal’s jurisdiction in that  it  was  not competent to go beyond the heads or points of dispute; (iii) Not  every  recital  of  fact  mentioned  in  the  order  of Government  was irrebuttable; and (iv) In order to  fix  the ambit  of  the  dispute it was necessary  to  refer  to  the pleadings of the parties.  No exception can be taken to  the first two points.  The correctness of the third  proposition would depend on the language of the recital. So  far  as the fourth proposition is concerned,  Mr.  Chari argued that the Tribunal had to examine the pleadings of the parties  to see whether there was a strike at all.   In  our opinion,  the  Tribunal  must, in any  event,  look  to  the pleadings of the parties to find out the exact nature of the dispute, because in most cases the order of reference is  so cryptic  that  it is impossible to cull  out  therefrom  the various  points  about which the parties  were  at  variance leading  to  the  trouble.   In  this  case,  the  order  of reference  was  based  on the  report  of  the  Conciliation Officer and it was certainly open to the Management to  show that  the  dispute  which  had  been  referred  was  not  an industrial  dispute  at all so as  to  attract  jurisdiction under  the Industrial Disputes Act.  But the parties  cannot

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 14  

be  allowed  to  go a stage further  and  contend  that  the foundation  of  the  dispute  mentioned  in  the  order   of reference  was  non-existent and that the true  dispute  was something  else.   Under  s.  10(4) of the  Act  it  is  not competent to the Tribunal to entertain such a question. In  our  opinion,  therefore, the Tribunal  had  to  examine issues  3 and 4 on the basis that there was a strike at  the D.C.M. unit and a sit-down strike at Swatantra Bharat  Mills and  that there was a lock-out declared with regard  to  the former as stated in the third term of reference.  It was for the Tribunal to examine the evidence only on the question as to  whether the strikes were justified and legal.   It  then had  to come to its decision as to whether the workmen  were entitled to the wages for the period of the lock-out in  the Delhi Cloth Mills and for the period of the sit-down  strike at the Swatantra Bharat Miffs. With regard to the first issue, Mr. Setalvad contended  that there was a binding agreement between the parties which  had not  been  terminated or which had not come to  an  end  and consequently,  the Tribunal had to go into the question  and if  it came to the conclusion that there was such a  binding agreement,  it was precluded from examining the  matter  any further.  Mr. Chari for the respondents did not dispute this proposition,  but, according to him, there was no  agreement between the parties as contended for by the Management.   We have  therefore  to  refer to the  documents  to  which  our attention was drawn to see whether 894 there was such an agreement.  The first issue relates to the allocation of capital and reserves of the company to the two units,  viz., Delhi Cloth Mills and Swatantra Bharat  Mills, for  calculating  the bonus table for  the  accounting  year ending  30-6-1965.  According to Mr. Setalvad, such  alloca- tion  had  been accepted by the workers in  respect  of  the previous year and the settlement between the parties was not limited  to that year.  This was not accepted by Mr.  Chari. Mr.  Chari referred us to the statement of the case  of  the Management before the Tribunal dated April 9, 1966.  In sub- paragraph  (d)  of  paragraph  1,  it  was  stated  by   the Management:               "The  method and basis of allocation had  been               consistently  adopted every year for the  last               many years and has been accepted, expressly or               impliedly, by the workers every year.  It  has               been  expressly accepted in a settlement  made               in  respect  of the payment of bonus  for  the               year  1963-64 during Conciliation.  A copy  of               the settlement dated 13-12-1965 along with its               enclosure is annexed; (Annexure’B’)."               In sub-para (e) it was stated:               "The allocation has been uniformly made on the               same  method  and on the same  basis  for  the               purpose of determination of available  surplus               for  payment of bonus to the workers of  other               textile  units  of the company  (viz.,  Hissar               Textile  Mills, Hissar, & D.C.M.  Silk  Mills,               Delhi).   The  workers  of  these  units  have               accepted  this  allocation in respect  of  the               payment  of bonus for the year  1964-65  under               agreements entered into with respective unions               representing workmen of these units." The company has several units and the two units mentioned in subparagraph  (e)  above are different from the  units  with which  we  have  to deal in this  case.   Consequently,  any agreement  between  the  Management  and  the  workers  with

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 14  

respect  to those two units cannot be binding so far as  the dispute in this case is concerned.  We then have to consider the nature of the settlement mentioned in sub-para (d).  The first document in this connection is dated October 27,  1964 executed  on behalf of the Delhi Cloth Mills  and  Swatantra Bharat  Mills on the one hand and Kapra Mazdoor  Ekta  Union and  Textile  Mazdoor Sangh, Delhi, two of  the  respondents before us, on the other.  The relevant portion of the  first clause of the terms of settlement reads:               "According  to the Bonus Commission’s  Formula               as  accepted  and modified by  the  Government               vide  Resolution No....... dated 2-9-1964  the               rate  of bonus payable to the workmen  of  the               two textile units of the Company viz.,               895               Delhi  Cloth Mills and Swatantra Bharat  Mills               works out to 7.33% of the total earnings viz.,               basic wage plus Dearness Allowance,  including               High Cost Allowance."               According to the second clause:               "The  company has however agreed to pay  bonus               for  the year ending 30-6-1964 at the rate  of               8-1/3%  of the total average wage earnings  as               defined above, as a gesture of goodwill and to               promote cordial relations in consideration  of               the  unions  having  agreed  to  withdraw  all               pending bonus disputes unconditionally."               Clause 3 runs as follows:               "The  company agrees that in case any  further               alteration    or   modification    in    Bonus               Commission’s Formula is made by the Government               hereafter, the application of which results in               any  addition  to  the  total  amount  to   be               distributed as bonus for the year ending 30-6-               64  only,  the  workers will  be  entitled  to               receive  benefit  of the same.  It  is  agreed               that the audited figures of the balance-sheet,               profit  and loss account and the basis of  any               allocation including capital and reserves etc.               for the year 1963-64 will not be challenged by               the unions."               According to cl. 4:               "The  Unions agree to withdraw their  disputes               regarding payment of additional bonus for  the               years    1960-61,    1961-62    and    1962-63               unconditionally.  Any further modification  or               change  in the Bonus Commission  Formula  will               not affect these years."               Clauses 5, 6 and 7 are not relevant. It  is  clear  from the above  that  the  agreement  related entirely to the years 1960-61, 1961-62 and 1962-63 and 1963- 64.  There is no statement anywhere about the workers  being bound to accept any figure of allocation with regard to  the year 1964-65. The  only  other document to which our attention  was  drawn bears the date 13-12-1965 and this also was executed by  and between the same parties.  The document is divided into  two portions,  the first being a short recital of the  case  and the second being the terms of settlement divided into  eight paragraphs.   The recitals of the case show that  the  bonus for the year ending 30-6-1964 was paid to the workmen of the two Textile Mills in accordance with the agreement dated 27- 10-1964  between the Management and the Kapra  Mazdoor  Ekta Union representing the workmen and that the payment was made according  to the Bonus Commission Formula as  accepted  and

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 14  

modified by the Government.  Under the 896 aforesaid agreement, it was agreed that in case any  further alteration or modification in the Bonus Formula were made by the  Government,  the workers would be entitled  to  receive benefit  of the same.  The workers had accordingly raised  a demand  for  additional  bonus in terms of  para  3  of  the Agreement  dated 27-10-1964.  The Kapra Mazdoor  Ekta  Union and  the Textile Mazdoor Sangh representing an  overwhelming majority  of the workmen of Delhi Cloth Mills and  Swatantra Bharat   Mills  had  moved  the  Conciliation  Officer   for settlement  of  this  demand for  additional  bonus.   After mutual  negotiations  with the help and  assistance  of  the Conciliation  Officer, the parties had agreed to settle  the matter  on the following terms and conditions.  Then  follow the  terms of settlement.  The first is to the  effect  that the workers reiterate and re-affirm the agreement dated  27- 10-1964.   The  second  clause is to  the  effect  that  the parties agree to calculate the quantum of bonus payable  for the  year ending 30-6-1964 on the basis of the Formula  laid down  under  sections 6 and 7 of the Payment of  Bonus  Act, 1965,  taking  together the pooled profits  of  Delhi  Cloth Mills  and Swatantra Bharat Mills calculated on that  basis. According to this, the total amount of bonus payable  worked out  to Rs. 30-25 lacs and the rate of bonus payable  worked out to 10.43 % of the total earnings which was not based  on any  base year.  According to cl. 3, the company  agreed  to pay  the  additional  balance amount of  bonus  due  to  the workmen  at the rate of 3.10% of the total earnings for  the year ending 30-6-1964 within a period of three days.  Cl.  4 is not material.  According to cl. 5, as regards the  amount of  Rs. 2  90 lacs paid by the company in  consideration  of withdrawal  of disputes for the years 1960-61,  1961-62  and 1962-63, it was agreed that the company would be entitled to adjust that amount of Rs. 2.90 lacs against the total amount of  bonus payable to the workers for the year, in which  the actual  disbursement of such arrears, if any, might have  to be made, subsequent to the year 1964-65, as a result of  any award of the Court.  Clause 6 runs as follows:-               "It  is, further, agreed between  the  parties               that the calculation of rate of bonus -payable               for the year 1964-65 will be made on the basis               of formula laid down under sections 6 and 7 of               the  Payment of Bonus Act.  This will  however               be done soon after the General Meeting of  the               shareholders  of  the  Company  in  which  the               accounts for the aforesaid year will be passed               by the shareholders.  The actual  disbursement               of the bonus for this year will commence after               15  days of the holding of the Annual  General               Meeting.   In case a settlement in  regard  to               rate of bonus is arrived at, the  negotiations               for it will start immediately." It will be noticed from the above that the entire settlement was with regard to the additional bonus for the year  ending June 897 30,  1964  and  only cl. 6 had some relation  to  the  bonus payable  for  the year 1964-65.  With regard to  that  there really  was  no agreement excepting that the rate  of  bonus would be on the basis of the Formula laid down in ss. 6  and 7 of the Payment of Bonus Act.  S. 6 of the Payment of Bonus Act  shows  what  sums are to be  deducted  from  the  gross profits  as  prior  charges  for  the  computation  of   the available  surplus  under s. 5 of the Act.  S. 7  lays  down

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 14  

that  for  the  purpose of cl. (c) of S. 6  any  direct  tax payable  by  the  employer for any  accounting  year  shall, subject  to the provisions mentioned, be calculated  at  the rates  applicable  to the income of the  employer  for  that year.   Cl.  6 therefore only prescribes  that  the  parties could proceed on the basis of the formula laid down in ss. 6 and 7 of the Payment of Bonus Act.  The last portion of  cl. 6  shows  that the parties contemplated that they  would  be able  to arrive at a settlement with regard to the  rate  of bonus  for  which negotiations were  to  start  immediately. From  this,  it  is impossible to spell  out  any  agreement between  the parties with respect to the bonus for the  year 1964-65  or  the allocation of capital and reserves  of  the company to the two units in calculating the bonus statement. In  our view, therefore, the parties were not bound  by  any agreement  with regard to issue No. 1 and the Tribunal  will have to take evidence to come to a finding on that issue. In  the result, the preliminary objection of the  Management with  regard  to issues 3 and 4 succeeds while it  fails  on issue No. 1. Appeals Nos. 2101 and 2102 of 1966 which are from the orders of  the  High Court are dismissed without any  order  as  to costs.   So  far as Appeal No. 2100/1966 is  concerned,  the matter  will  go back to the Tribunal for  decision  in  the light  of  the  observations made above.   In  view  of  the divided success in this Court, there will be no order as  to costs of this appeal. V.P.S.                            Appeal No. 2100/66 remanded                             Other Appeals dismissed. 898