http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 16  

PETITIONER: NIEMLA TEXTILE FINISHING.  MILLS LTD.

       Vs.

RESPONDENT: THE 2ND PUNJAB INDUSTRIAL TRIBUNAL(with connected appeals an

DATE OF JUDGMENT: 10/01/1957

BENCH: BHAGWATI, NATWARLAL H. BENCH: BHAGWATI, NATWARLAL H. DAS, SUDHI RANJAN (CJ) AIYYAR, T.L. VENKATARAMA SINHA, BHUVNESHWAR P. DAS, S.K.

CITATION:  1957 AIR  329            1957 SCR  335

ACT: Industrial Disputes Act, 1947 (XIV Of 1947)-- Constitutional validity  -  Legislative  competency-Powers  of   Industrial Tribunals- Whether Legislative-The Government of India  Act, 1935 (25 & 26 Geo. 5, Ch. 42), Sch.  VII, List III,  Entries 27, 29-Constitution of India, Arts. 14, 19 (1) (f) and (g).

HEADNOTE: The  disputes between the appellants and their workmen  were referred to the Industrial Tribunal for adjudication by  the appropriate   Government,  under  the  provisions   of   the Industrial  Disputes  Act, 1947.  It was contended  for  the appellants  that  the  reference to  the  Tribunal  was  bad because  (1)  the  Act  was  ultra  vires  the  Constitution inasmuch as its provisions are ,Violative of the fundamental rights  enshrined in Art. 14 and Art. 19 (1) (f) and (g)  of the   Constitution,   (2)  the  Industrial   Tribunals   are legislating in the guise of adjudication,, and this  amounts to delegation of the powers of legislation which it was  not competent  to the Central Legislature to do so, and (3)  the definition of the term " industry’.. comprises industrial as well as non-industrial concerns and, therefore, the Act  was not  within  the  legislative  competence  of  the   Central Legislature  under  Entry  29 of List III  of  the  Seventh- Schedule to the Government of India Act, 1935. Held:     (1)  The  Industrial Disputes Act,  1947,  is  not unconstitutional  and  the  provisions of  the  Act  do  not contravene  Arts.  14  and  19  (1)  (f)  and  (g)  of   the Constitution. The  basic idea underlying all the provisions of the Act  is the  settlement of industrial disputes and the promotion  of industrial  peace so that production may not be  interrupted and  the  community  in general may be  benefited,  and  the appropriate  Government has, therefore, a discretion in  the matter  of  making  the reference to one  or  other  of  the Authorities under the Act and also in the matter of carrying out  the,  various  provisions of  the  Act,  including  the curtailment or extension of the period ’of 136

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 16  

preperation  of the award of the Tribunal, having regard  to the.  exigencies  of  the situation and the  objects  to  be achieved. (2)  Industrial   Tribunals   while   settling    particular industrial  disputes  referred  to them,  lay  down  certain general   principles  to  be  observed  in  regard  to   the determination  of  bonus,  reinstatement  of  dismissed   or discharged  employee,% and other allied topics  mainly  with the   object  of  promoting  industrial  peace,  but   these principles  or rules of conduct, though they are applied  as precedents  by the Industrial Tribunals  while  adjudicating upon other similar industrial disputes referred to them, are not rules of law and do not amount to legislation. (3)  The  Act  is not ultra vires the  legislature,  as  the matters  included  within  the  definition  of  the  term  " industry  "  are within the legislative  competence  of  the Central  Legislature under Entries 27 and 29 of List III  of the Seventh Schedule to the Government of India Act, 1935.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 333-335  of 1955 and Petitions Nos. 65, 182 and 203 of 1956. Appeals  by special leave from the judgment and order  dated April  15, 1955, of the Punjab High Court at  Chandigarh  in Civil Writs Nos. 131-133 of 1955 and Petitions under Article 32  of  the  Constitution of India for  the  enforcement  of fundamental rights. Veda   Vyasa,  Bhagirath  Das  and  M.  L.  Kapur  for   the appellants. Veda  Vyasa,  S.  K.  Kapur  and  N.  H.  Hingorani,  forthe petitioners in Petitions Nos. 65 and 182 of 195.5. Veda  Vyasa,  Bhagirath Das and B. P.  Maheshwari,  for  the petitioner in Petition No. 203 of 1956. S.   M. Sikri, Advocate-General of Punjab, Jindra Lal and T. M. Sen, for respondent No. 2 in the Appeals and  respondents Nos. 1 and 2 in the Petitions. Sadhan  Chandra Gupta, Bawa Shiv Charan Singh and  Janardhan Sharma, for respondent No. 3 in the appeals and in Petitions Nos. 182 and 203 of 1956. Porus  A. Mehta and T. M. Sen, for the Intervener in  Appeal No. 333 of 1955 (Attorney-General of India on behalf of  the Union of India).                             337 Veda  Vyasa,  S.  K.  Kapur and N.  H.  Hingorani,  for  the Interveners in the appeals (petitioners in Petitions Nos. 65 and 182 of 1956). 1957.  January 10.  The Judgment of the Court was  delivered by BHAGWATI J.-These three appeals with special leave from  the orders of the High Court of Punjab and three petitions under Art.  32  of  the Constitution challenge the  vires  of  the Industrial  Disputes  Act, 1947 (XIV of  1947),  hereinafter referred to as the Act. The  appellants  in  the three appeals are  engaged  in  the manufacture and production of textiles.  There were disputes between  them and their workmen, and, by  two  notifications each dated March 4, 1955, in regard to the first two of them and by a notification dated February 25, 1955, in respect of the  third, the State of Punjab, respondent No. 2,  referred the  said  disputes  for  adjudication  to  the  2nd  Punjab Industrial Tribunal, Amritsar, respondent No. 1, who entered upon   the  said  references  and  issued  notices  to   the appellants to file their written statements.  The appellants

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 16  

in  Civil  Appeal  No.  335  of  1955  filed  their  written statement  on  March 31, 1955, without  prejudice  to  their contentions that respondent No. 2 was not competent to refer the  disputes for adjudication by respondent No. I and  that respondent  No.  I  had no  jurisdiction  to  entertain  the reference.  The appellants in Civil Appeals Nos. 333 and 334 of 1955 were called upon to file their written statements on or  before April 23, 1955, which they did raising  the  same objections as to the competency_ of respondent No. 2 and the jurisdiction of respondent No. 1.  On April 14, 1955, however, the appellants in all the three appeals  filed writ petitions. in the High Court under  Art. 226  of  the Constitution against, inter  alia,  respondents Nos.  I and 2 asking for writs in the nature of  prohibition restraining  respondent  No.  1  from  proceeding  with  the references,  writs  in the nature -of  certiorari  directing respondent No. 1 to transmit the records of the  proceedings for  being  quashed  and writs in  the  nature  of  mandamus directing respondent No. 2 43 338 to cancel the notifications under which the said  references had  been made.  The grounds which were urged in support  of these  applications  were that their mills  were  controlled industries  within the definition of the term  contained  in el.  (ee) of s. 2 of the Act as amended by s. 32 of Act  LXV of  1951,  that  they were engaged   in  the  production and manufacture  of  textile goods and were a  textile  industry within  the meaning of the word ’textiles" as  mentioned  in the First Schedule to Industry (Development and  Regulation) Act,  1951, and had been declared an industry of  which  the Union Government had taken control within the meaning of the said  Act,  that the disputes purporting to be  referred  by respondent  No.  2  to  respondent  No.  1  were  industrial disputes concerning a controlled industry specified in  this behalf  by the Central Government and that,  therefore,  the appropriate Government for the purposes of the Act so far as their mills were concerned was the Union Government and  not respondent   No.  2  and  that  respondent  No.  2  had   no jurisdiction   or  authority  to  refer  the   existing   or apprehended  disputes  between  them and  their  workmen  to respondent No. I and the references being invalid there  was no  jurisdiction in respondent No. 1 to entertain  the  said references.   These petitions came up for hearing  before  a Division  Bench of the High Court consisting of the  learned Chief  Justice and Mr. Justice Kapur who dismissed the  same in  limine  observing that they  were  premature,  obviously meaning that respondent No. I could determine the  objection in  regard to its jurisdiction to entertain  the  references and  unless and until it did so the appellants had no  cause of action to file the said petitions’ It appears that on or about April 12, 1955, a Division Bench of  the  said  High Court consisting of  the  learned  Chief Justice and Mr. Justice Falshaw had admitted a writ petition based  on  the very same grounds and had granted a  stay  of proceedings  before  respondent No. 1 therein.   It  further appears  that on April 18, 1955, the very same  Bench  which dismissed the petitions of the appellants in limine on April 15, 1955, admitted a writ petition filed by the Saraswati                             339 Sugar  Syndicate Ltd., inter alia, against respondent No.  2 wherein, besides the grounds urged in their writ  petitions, an additional ground questioning the constitutionality of s. 10  of the Act had also been urged and ordered the  stay  of proceedings before the Industrial Tribunal.  The  appellants

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 16  

filed on April 18, 1955, applications before the High  Court for  leave to appeal, to this Court and for stay of  further proceedings before respondent No. 1. Notices were issued  by the High Court to the respondents in those applications  but stay of further proceedings was refused. The  appellants having come to know of the order  passed  by the  Division Bench of the High Court on April 18, 1955,  on the  writ  petition of the Saraswati Sugar  Syndicate  Ltd., filed  petitions on April 19,1955, for review of the  orders dated  April  15, 1955, dismissing their writ  petitions  in limine.  In these petitions for review the appellants,  with a  view to bring their applications within the ratio of  the writ petition of the Saraswati Sugar Syndicate Ltd., alleged that  their  counsel had inadvertently failed to  raise  the contention  that  s.  10  of the Act  was  ultra  vires  the Constitution.  The High Court was prepared to issue  notices to the respondents but was not prepared to grant the stay of further  proceedings with the result that on the request  of the counsel for the appellants the said petitions for review were dismissed on April 20, 1955. On  April 25, 1955, the appellants filed petitions  in  this Court  for  special leave to appeal under Art.  136  of  the Constitution.   In these petitions for special  leave,  they contended  that s. 10 of the Act was void and infringed  the fundamental   right   guaranteed  under  Art.  14   of   the Constitution  "being discriminatory in its ambit".   Special leave was granted to all the three appellants by this  Court on  May  2, 1955, and an order for  consolidation  of  these appeals was made on June 1, 1955. This plea as to the unconstitutionality of s. 10 of the  Act was  elaborated  by  the  appellants in  para  12  of  their statement of the case filed before us:- "  That  section 10 of the Industrial Disputes Act  is  also ultra  vires of the Constitution of India,. as it  conflicts with the provisions of Art. 14 of the 340 Constitution.   The section is discriminatory in  ambit  and scope.  It confers on the appropriate Government unregulated and arbitrary powers inasmuch as no rules have been made  to justify  differentiation between parties similarly  situated and  circumstanced in every respect.  There is  no  rational basis  of classification providing different procedures  for dealing with the same or similar matters.  The reference  to a  Board  under section 10 (1) (c) of the Act  is  certainly more beneficial, speedy, inexpensive and less cumbersome." Not content with merely challenging the constitutionality of s. 10 of the Act, the appellants in Civil Appeal No: 333  of 1955  filed  in this Court on October 3,  1956,  a  petition under Art. 32 of the Constitution, being Petition No. 203 of 1956,  challenging  the vires of the whole  Act  on  various grounds which had not been urged in the proceedings taken by the appellants till then.  We shall not enumerate all  these grounds  but  refer at the appropriate place only  to  those contentions which were urged before us by the learned  coun- sel at the hearing. A  similar  petition under Art. 32 of the  Constitution  had been filed by the Atlas Cycle Industries Ltd., on  September 15,  1956,  being  Petition  No.  182  of  1956,  containing identical grounds of attack against the constitutionality of the Act.  A notification had been issued on April 27,  1956, by  the  State of Punjab referring the  industrial  disputes between  them and their workmen for adjudication by the  2nd Industrial Tribunal and they asked for a writ of  certiorari quashing  the  said reference and writs of  mandamus  and/or prohibition  directing the State of Punjab to  withdraw  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 16  

said reference from the Industrial Tribunal and  prohibiting the Industrial Tribunal from proceeding with the same. Petition No. 65 of 1956 had been filed on March 21, 1956, by five  workmen of. the Indian Sugar and  General  Engineering Corporation.   Ltd., carrying on an undertaking in the  name and   style   of  the  Saraswati   Engineering   Works.    A notification  had  been  issued  by  the  State  of   Punjab referring the disputes which had                             341 arisen between them and their workmen to the 2nd  Industrial Tribunal   and  one  of  the  matters  thus   referred   for adjudication was whether the workmen dismissed or discharged after July 15, 1955, should be reinstated.  The  petitioners were  temporary hands employed by the Saraswati  Engineering Works  in  place  of  the permanent  workmen  who  had  been dismissed  or discharged after July 15, 1955, and  they,  in the interests of themselves and 200 other employees who were in  the  same category, apprehended that if  the  Industrial Tribunal ordered the reinstatement of the permanent  workmen who  had been dismissed or discharged, they would be out  of employment.    They  had  apparently  the  support  of   the Saraswati Engineering Works who were keen to retain them  in their   employ  and  filed  the  petition  challenging   the constitutionality of the Act on identical grounds.   Besides thus  challenging the vires of the Act, they also  urged  in their  petition  that  the  undertaking  was  a   controlled industry and the appropriate Government which was  competent to  make the reference was the Union Government and not  the State of Punjab.  They also asked for the same reliefs as in Petition No. 182 of 1956. The  Attorney-General of India asked for and obtained  leave to intervene on behalf of the Union of India at the  hearing of the Civil Appeals Nos. 333 to 335 of 1955 and so did  the petitioners in both the Petitions Nos. 182 of 1956 and 65 of 1956.   These petitions along with Petition No. 203 of  1956 were set down for hearing and final disposal after the Civil Appeals  Nos. 333 to 335 of 1955 and all of them were  heard together.  This common judgment will govern the decision  in all. It  may be noted at the outset that the question as  to  the various  undertakings  being controlled-industries  and  the appropriate  Government  for making the  references  of  the industrial  disputes arising between them and their  workmen being the Union Government and not the State of Punjab which was  the very basis of the writ petitions filed in the  High Court  and  was also one of the grounds  oil  which  special leave. to 342 appeal  had  been obtained from this  Court  was  ultimately abandoned in the course of the hearing before us and nothing more  need be said about it.  The only contention which  has been  urged before us in these three special  leave  appeals and the three Art. 32 petitions is in regard to the vires of the Act. In  order  to appreciate the grounds of attack  against  the constitutionality  of  the Act it is  necessary  to  briefly survey  the,  provisions of the Act as it stood  before  the amendments  made by the Industrial Disputes  (Amendment  and Miscellaneous  Provisions) Act, 1956 (XXXVI of  1956).   The Act  was  passed, as the preamble shows,  with  the  express purpose  of  making  provision  for  the  investigation  and settlement  of  industrial disputes and  for  certain  other purposes therein appearing.  Section 2(j) defines " industry "  to mean any business, trade, undertaking, manufacture  or calling  of  employers and includes any  calling,  ,service,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 16  

employment, handicraft or industrial occupation or avocation of workmen.  Section 2(k) defines an " industrial dispute  " to  mean  any dispute or difference  between  employers  and employers,  or  between employers and  workmen,  or  between workmen and workmen, which is connected with the  employment or  nonemployment  or the terms of employment  or  with  the conditions of labour, of any person.  Chapter II of the  Act sets out the authorities under the Act and they are (1)  The Works Committee, (2) Conciliation Officers,(3)    Boards  of Conciliation, (4) Courts of Enquiry, and (5) Industrial Tribunals.   These are different authorities with  different powers and the purposes for which they are set up and  their functions  are prescribed in the Act.  The  Works  Committee consists of representatives of employers and workmen engaged in  a  particular establishment and is  constituted  in  the prescribed manner in order to promote measures for  securing and  -preserving  amity  and  good  relations  between   the employers  and  workmen  and to that  end  to  comment  upon matters of their common interest or concern and endeavour to compose  any  material difference of opinion in  respect  of such  matters.  The Conciliation Officers are  appointed  by notification by                             343 the   appropriate  Government  charged  with  the  duty   of mediating  in  and promoting the  settlement  of  industrial disputes.    Boards  of  Conciliation  are  constituted   by notification  by  the  appropriate  Government  as  occasion arises for promoting the settlement of industrial  disputes. Courts  of  Enquiry are constituted by notification  by  the appropriate Government as occasion arises for enquiring into any matter appearing to be connected with or relevant to  an industrial dispute.  Industrial Tribunals are constituted by the  appropriate Government for the adjudication  of  indus- trial disputes in accordance with the provisions of the Act. Chapter  III provides for reference of disputes  to  Boards, Courts  or  Tribunals  and the relevant  portion  of  s.  10 provides as under: "  10.  (1) Where the appropriate Government is  of  opinion that any industrial dispute exists or is apprehended, it may at any time, by order in writing (a) refer the dispute to a Board for promoting a  settlement thereof; or (b)refer  any  matter  appearing to  be  connected  with  or relevant to the dispute to a Court for enquiry ; or (c)refer the dispute or any matter appearing to be connected with,  or  relevant  to,  the dispute,  to  a  Tribunal  for adjudication: Provided that where the dispute relates to a. public utility service  and a notice under section 22 has been  given,  the appropriate  Government shall, unless it considers that  the notice  ha been frivolously or vexatiously given or that  it would  be inexpedient so to do, make a reference under  this sub-section notwithstanding that any other proceedings under this Act in respect of the dispute may have commenced." Chapter  IV prescribes the procedure, powers and  duties  of the  several  authorities.  The  Conciliation  Officers  are enjoined for the purpose of bringing about a settlement of a dispute,  without delay to investigate the dispute  and  all matters  affecting  the  merits  and  the  right  settlement thereof and are also empowered to do all such things as they think fit for the purpose of inducing the parties to come to an amicable settlement 344 of the dispute.  If a settlement of the dispute or of any of the  matters  in  dispute is arrived at  in  the  course  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 16  

conciliation proceedings, they are to send a report  thereof to the appropriate Government together with a memorandum  of the settlement signed by the parties to the dispute.  If  no such  settlement  is arrived at, the  Conciliation  Officers have,  as  soon as practicable and after the  close  of  the investigation, to send to the appropriate Government a  full report setting forth the proceedings and steps taken by them for ascertaining the facts and circumstances relating to the dispute  land  for  bringing  about  a  settlement   thereof together   with   a  full  statement  of  such   facts   and circumstances,  their  findings  thereon,  the  reasons   on account  of which, in their opinion, a settlement could  not be   arrived   at   and  their   recommendations   for   the determination  of  the dispute.  If, on a  consideration  of such  report  the appropriate Government is  satisfied  that there  is a case for reference to a Board or  Tribunal.,  it may make such reference.  The Boards of Conciliation to whom a  dispute  may be referred under the Act  are  enjoined  to endeavour  to bring about a settlement of the same  and  for this purpose they are, in such manner as -they think fit and without  delay, to investigate the dispute and  all  matters affecting  the. merits and the right settlement thereof  and are  also empowered to do all such things as they think  fit for  the purpose of inducing the parties to come to  a  fair and amicable settlement of the dispute.  If a settlement  of the  dispute or of any of the matters is arrived at  in  the course  of the conciliation proceedings they are to  send  a report thereof to the appropriate Government together with a memorandum  of the settlement signed by the parties  to  the dispute.   If no such settlement is arrived at they are,  as soon as practicable after the close of the investigation, to send  to  the appropriate Government a full  report  setting forth   the  proceedings  and  steps  taken  by   them   for ascertaining  the  facts and circumstances relating  to  the dispute and for bringing about a settlement thereof together with a full statement of such facts and circumstances, their findings  thereon the reasons on account of which, in  their opinion, a’                             345 settlement could not be arrived at and their recommendations for the determination of the dispute.  The Courts of Enquiry are  enjoined to enquire into the matters referred  to  them and  report  thereon  to the  appropriate  Government.   The Industrial  Tribunals to whom an industrial dispute  may  be referred  for  adjudication are to  hold  their  proceedings expeditiously and, as soon as, practicable on the conclusion thereof, submit their award to - the appropriate Government. Section 19, sub-ss. (3), (4) and (6)prescribe the period  of operation of awards: " 19. (3) An award shall, subject to the provisions of  this section, remain in operation for a period of one year: Provided that the appropriate Government may reduce the said period and fix such period as it thinks fit: Provided further that-the appropriate Government may, before the  expiry  of  the  said  period,  extend  the  period  of operation by any period not exceeding one year at a time  as it  thinks  fit  so,  however,  that  the  total  period  of operation of any award does not exceed three years from  the date on which it came into operation. (4)  Where  the appropriate Government, whether of  its  own motion  or  on  the application of any party  bound  by  the award,  considers that since the award was made,  there  has been a material change in the circumstances on which it  was based,  the  appropriate Government may refer the  award  or part of it to a Tribunal for decision whether the period  of

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 8 of 16  

operation  should  not,  by  reason  of  such  change,   be, shortened  and   the  decision  if  the  Tribunal  on   such -reference  shall  subject to the provision for  appeal,  be final. (6)  Notwithstanding  the expiry of the period of  operation under  sub-section  (3),  the award  shall  continue  to  be binding  on  the parties until a period of  two  months  has elapsed from the date on which notice is given by any  party or parties intimating its intention to terminate the award." Chapter V contains provisions in regard to the proof strikes and outs and declares what are illegal strikes and lock-outs for- the purpose of the Act, 44 346 Chapter V-A was introduced by Act XLIII of 1953 and contains provisions  in  regard to the lay-off  and  retrenchment  of workmen.   The other provisions of the Act are not  relevant for the purpose of this enquiry and need not be referred to. It  follows from this survey of the relevant  provisions  of the Act that the different authorities which are constituted under the Act are set up with different ends in view and are invested   with   powers  and  duties  necessary   for   the achievement of the purposes for which they are set up.   The appropriate  Government  is invested with  a  discretion  to choose  one or the other of the authorities for the  purpose of  investigation and settlement of industrial disputes  and whether  it  sets  up one authority or  the  other  for  the achievement   of   the  desired  ends   depends   upon   its appraisement of the situation as it obtains in a  particular industry or establishment.  The Works Committees are set  up with  the  object of avoiding such a clash  of  interest  or material  differences of opinion as would otherwise lead  to industrial  disputes.  If the measures adopted by the  Works Committees  do  not achieve the end in view  and  industrial disputes  arise  or  are apprehended to  arise  between  the employers  and  the workmen, Conciliation  Officers  may  be appointed  by  the appropriate Government charged  with  the duty of mediating in and promoting settlement of  industrial disputes.  If the Conciliation Officers succeed in  bringing about  a settlement between the employers and  the  workmen, such  settlements  are to be signed by the  parties  to  the disputes  ;  but  if  in spite  of  the  endeavours  of  the Conciliation.  Officers properly directed in that behalf  no settlement   is   arrived  at  between  the   parties,   the Conciliation  Officers  are  to send a full  report  in  the manner  indicated above so that the  appropriate  Government may have before it complete materials in order to enable  it to  come  to  a  conclusion whether  there  is  a  case  for reference to a Board or Tribunal at the case may be.  If the appropriate Government is satisfied that there is a case for reference  to,  a Board of Conciliation, it  may  constitute such Board -for  promoting the settlement  of the industrial dispute consisting of a Chairman and 2 or 4 other members                             347 as  it thinks fit, charged with the duty of doing  all  such things  as  it thinks fit for the purpose  of  inducing  the parties  to  come to a fair and amicable settlement  of  the dispute.  If the Board succeeds in arriving at a settlement, a   report  thereof  together  with  a  memorandum  of   the settlement will be sent by it to the appropriate  Government but if no such settlement is arrived at the Board will, send to  the appropriate Government a full report in  the  manner indicated  above  including  its  recommendations  for   the determination  of  the  dispute.  It may  be  noted  that  a reference to the Board of Conciliation is but a  preliminary

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 9 of 16  

step  for the settlement of the industrial dispute  and  the report  made by it in the event of a failure to bring  about such  settlement will furnish materials to  the  appropriate Government  to  make up its mind whether it will  refer  the dispute for adjudication to an Industrial Tribunal.  Before, however,  any  such  reference is made  by  the  appropriate Government it may set up a Court of Enquiry for the  purpose of enquiring into any matter appearing to be ’connected with or relevant to an industrial  dispute.  The Court of Enquiry will  enquire into those matters and report thereon  to  the appropriate   Government   within  six   months   from   the commencement  of  the  enquiry.  That  report  will  furnish materials   to  the  appropriate  Government   for   finally determining whether the industrial dispute shall be referred by  it for adjudication to the Industrial Tribunal.  It  may be  that  the  report  of the  Court  of  Enquiry  discloses circumstances   under  which  the   appropriate   Government considers  that it is not necessary to refer the  industrial dispute  for  adjudication to the Industrial  Tribunal.   In that  event the matter will end there and. the  appropriate, Government  may await further developments before  referring the  industrial dispute for adjudication to  the  Industrial Tribunal.  If,, on the other hand, the materials embodied in the  report of the Court of Enquiry  disclose  circumstances which  make it necessary for the appropriate  Government  to refer  the  industrial  dispute  for  adjudication  to   the Industrial   Tribunal,  the  appropriate   Government   will constitute an Industrial Tribunal for adjudication 348 of the industrial dispute-in accordance with the  provisions of  the Act.  The Industrial Tribunal would then  adjudicate upon  such dispute and submit its award to  the  appropriate Government. These  are  the steps which are contemplated in  the  manner indicated  in s. 10 of the Act for reference of disputes  to Boards,  Courts or Tribunals.  It is not necessary that  all these  steps should be taken seriatim one after  the  other. Whether  one or the other of the -steps-should be  taken  by the  appropriate Government must depend upon the  exigencies of  the  situation,  the  imminence  of  industrial   strife resulting   in  cessation  or  interruption  of   industrial production  and  breach  of  industrial  peace  end-angering public tranquility and law and order.  If the matter  brooks delay  the  appropriate Government  may  start  conciliation proceedings  culminating  in  a  reference  to  a  Board  of Conciliation and also Court of Enquiry, if need be, before a fulfledged. reference is made to. an Industrial Tribunal If, on  the  other  hand,  the  matter  brooks  no,  delay   the appropriate  Government may possibly refer the dispute to  a Board  of Conciliation before referring it for  adjudication to  an Industrial Tribunal or may straightaway refer it  for adjudication by the Industrial Tribunal. What  step would be taken by the appropriate Government  -in the  matter  of the industrial dispute must,  therefore,  be determined   by  the  surrounding  circumstances,  and   the discretion vested in the appropriate Government for  setting up  one or the other of the authorities for the  purpose  of investigation and settlement of industrial disputes must  be exercised  by  it  having regard to the  exigencies  of  the situation and the objects to be achieved.  No hard and  fast rule  can  be laid down as to the setting up of one  or  the other  of the authorities for the purpose of bringing  about the ,desired end which is the settlement of industrial  dis- putes  and promotion of industrial peace and, it  is  hardly legitimate  to say that such discretion as is vested in  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 10 of 16  

appropriate  Government will be exercised "with an evil  eye and an unequal hand."  It  is contended in the first instance that the  provisions of the Act are violative of the fundamental                             349 rights  enshrined in Art. 14 and Art. 19(1) (f) and  (g)  of the  Constitution  ;  that it is  open  to  the  appropriate Government to differentiate -between the parties  ,similarly placed and circumstanced in every respect and in the absence of any rules made in this behalf the appropriate  Government has unregulated and arbitrary powers to discriminate between the   parties;   that  there  is  no   rational   basis   of classification  providing different treatment for  different parties  and it, is open to the appropriate  Government,  in one  case,  to refer the industrial dispute to  a  Court  of Enquiry,  and in another case to refer it to  an  Industrial Tribunal  and  that  the procedures  before  the  Courts  of Enquiry  and before the Industrial Tribunals are  different, the one before the Courts of Enquiry being less onerous  and less:  prejudicial  to  the parties  than  that  before  the Industrial  Tribunals.  It is submitted that the reports  of the Courts of Enquiry are quite innocuous whereas the awards of  the Industrial Tribunals are binding on the parties  and are.  backed up by sanctions behind them, and in  regard  to the,   periods  of  operation  also,  it  is  open  to   the appropriate  Government, in one case to reduce the -same  to an extent which will make them negligible in point, of  time whereas  in  another  case it is open to it  to  extend  the periods even. upto three years from the dates on. which  the awards  came into operation and the  appropriate  Government may,  in  the exercise of its  unfettered  and  uncontrolled discretion,   adopt  different  measures  in  the  case   of different  parties so as to discriminate between   them  and work  to the prejudice of those  less  fortunately,situated. It  is also contended that these  discriminatory  provisions being   inextricably  interwoven  with  the  rest   of   the provisions  of  the  Act  or being  such  that  the  Central Legislature   would  not  have  enacted  the  rest  of   the provisions  of the Act without including the  same  therein, the whole of the Act is ultra vires the Constitution. We are unable to accept these contentions.  Having regard to the  provisions of the Act hereinbefore set out it is  clear that  s.  10  is not discriminatory in  its  ambit  and  the appropriate Government is at liberty 350 as  and  when the occasion arises to  refer  the  industrial disputes  arising  or  threatening  to  arise  between   the employers  and  the  workmen  to one or  the  other  of  the authorities  according to the exigencies of  the  situation. No two cases are alike in nature and the industrial disputes which  arise  or  are apprehended  to  arise  in  particular establishments or undertakings require to be treated  having regard  to  the  situation prevailing in  the  same.   There cannot be any classification and the reference to one or the other   of  the  authorities  has  necessarily  got  to   be determined  in  the exercise of its best discretion  by  the appropriate   Government.    Such  discretion  is   not   an unfettered or an uncontrolled discretion nor an unguided one because the criteria for the exercise of such discretion are to be found within the terms of the Act itself.  The various authorities  are to be set up with particular ends  in  view and it is the achievement of the particular ends that guides the  discretion of the appropriate Government in the  matter of setting up one or the other of them.  The purpose  sought to  be  achieved  by the Act has been well  defined  in  the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 11 of 16  

preamble? to the Act.  The -scope of industrial disputes  is defined in s. 2(k) of the Act and there are also  provisions contained  in the other sections of the Act which relate  to strikes and lock-outs, lay-off and retrenchment as also  the conditions of service, etc., remaining unchanged during  the pendency  of proceedings.  These and  analogous  provision,s sufficiently  indicate the purpose and scope of the  Act  as also the various industrial disputes which may arise between the  employers  and  their  workmen which  may  have  to  be referred for settlement to the various authorities under the Act.  The achievement of one or the other of the objects  in view  by  such references to the Boards of  Conciliation  or Courts  of  Enquiry or Industrial Tribunals must  guide  and control  the exercise. of the discretion in that  behalf  by the appropriate Government and there is no scope, therefore, for the argument that the appropriate Government would be in a position to discriminate between one party and the other.                             351 Apart  from the references to be thus made to the Boards  of Conciliation, Courts of Enquiry or Industrial Tribunals, the appropriate Government is also given the powers to prescribe the  period of duration of the award made by the  Industrial Tribunal.  Normally the award is to be in operation for  one year from the date of its commencement.  The  circumstances, however, may have changed between the date of the  reference and  the date of the, award and power is thus given  to  the appropriate  Government  to reduce the said period  and  fix such  period as it thinks fit.  Power is also given  to  the appropriate  Government, if the circumstances  warrant  that decision,  to extend the period of operation by  any  period not exceeding one year at a time as it thinks fit before the expiry  of the normal period of one year-, provided  however that  the  total period of operation of any award  does  not exceed  three  years from the. date on which the  same  came into operation.  This power is to be exercised, -if, in  the opinion  of  the appropriate Government,  the  circumstances have  not  so  changed  as to warrant  the  parties  to  the industrial  dispute to ask for a change in the terms of  the award  and  in that event the award may continue  to  be  in operation  for  the maximum period of three years  from  the date of its commencement.  The case in which there has  been a  material change in the circumstances on which  the  award has been based is mentioned in s. 19(4) of the Act and there the appropriate Government, whether of its own motion or  on an  application of any of the parties bound by the award  is empowered to refer the award or a part thereof to a Tribunal if  it  is  satisfied  about such  material  change  in  the circumstances for a decision whether the period of operation should  not  by reason of such change be shortened  and  the decision  of the Tribunal on such reference, subject to  the provision for appeal, is declared to be final.  It  appears, therefore, that all the various possibilities are thought of by those who framed this legislation and wide discretion has been  given  to the appropriate Government  to  same  having regard to the case or 352 to  refer  the question of the reduction of  the  period  of operation to an Industrial Tribunal in case there has been a material change in the circumstances on which the award  was based.   Here  also  it cannot be urged  that  there  is  an unguided and unfettered discretion in the matter of changing the  period  of  operation of the  award.   The  appropriate Government  cannot  merely by its own  volition  change  the period  without  having  regard to the  circumstances  of  a particular  case.   There is no warrant for  the  suggestion

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 12 of 16  

that  such discretion will be exercised by  the  appropriate Government arbitrarily or capriciously or so as to prejudice the  interest  of any of the parties concerned.   The  basic idea  underlying  all  the provisions of  the  Act  is  the, settlement  of  industrial  disputes and  the  promotion  of industrial  peace so that production may not be  interrupted and the community in general may be benefited.  This is  the end  which  has got to be kept in’ view by  the  appropriate Government when exercising the discretion which is vested in it in the matter of making the reference to one or the other of  the authorities under the Act and also in the matter  of carrying  out the various provisions contained in the  other sections  of the Act including the curtailment or  extension of  the period of operation of the award of  the  Industrial Tribunal.  We are, of opinion that there is no substance  in the contention urged before us that the relevant  provisions of   the   Act  and  in  particular  a.   10   thereof   are unconstitutional  and  void as  infringing  the  fundamental rights guaranteed under Art. 14 and Art. 19 (1) (f) and  (g) of  the Constitution.  If these provisions are  -thus  intra vires  there  is no need to consider  the  further  argument advanced before us that these provisions are so inextricably interwoven with the other provisions of the Act or are  such that the Legislature would not haven acted the other  provi- sions of the Act without, :incorporating the same therein. It  is next contended that the Industrial Tribunals to  whom industrial  disputes  are referred for adjudication  by  the appropriate  Government  are legislating in  the   guise  of adjudication and this amounts to delegation                             353 of  the powers of legislation which it was not competent  to the  Central  Legislature to do.  The argument is  that  the Industrial Courts ’are not bound to follow the provisions of the  ordinary  law  of the land as  enacted  in  the  Indian Contract  Act,  the  Payment of  Wages  Act,  the  Workmen’s Compensation  Act, the Indian Limitation Act and  the  like, but are authorised by the terms of the Act to lay down their own  code of conduct in regard to industrial  relations  and their  own policy in regard to the promotion  of  industrial peace.   This,  it  is  submitted  is  legislation  and  the Legislature hat in effect abdicated its powers in favour  of the   Industrial  Courts.   The  provisions  in  regard   to reinstatement  of  dismissed or  discharged  employees,  the provisions  in  regard to lay-off and retrenchment  and  the provisions  in  regard  to strikes  and  lock-outs,  amongst others,  are pointed out as introducing provisions  contrary to the positive law of the land and as laying down a code of conduct or policy, and reference is made in this behalf to a decision  of the Federal Court in Western  India  Automobile Association  v. Industrial Tribunal, Bombay, and Others  (1) and  two  decisions  of the Madras  High  Court,  viz.,  The Electro Mechanical Industries Ltd., Madras v. The Industrial Tribunal  No.  2 for Engineering Firms and  Type  Foundries, Fort St.  George, Madras, and Another(1) and Shree Meenakshi Mills Ltd. v. State of Madras (3).  It has to be remembered, however,  that ’the functions of the  Industrial  Tribunals, while adjudicating upon the industrial disputes referred  to them  for  adjudication, are quite different from  those  of arbitration  tribunals in commercial matters.  As  has  been observed by Ludwig Teller in ’Labour Disputes and Collective Bargaining’, Vol. 1, p. 536: " Then too, industrial arbitration may involve the extension of an existing agreement, or the making of a new one, or  in general the creation of new obligations or modifications  of old  ones, while commercial arbitration  generally  concerns

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 13 of 16  

itself with interpretation of (1)[1949] F.C.R. 321. (3)[1951] IT M.L.J. 382. (2) [1950] II M.L.J.479. 354 existing  obligations  and  disputes  relating  to  existing agreements." It  was  also  observed  by  the  Privy  Council  in  Labour Relations  Board  of Saskatchewan v. John East  Iron  Works, Ltd.(1),  while referring to a claim for reinstatement by  a dismissed employee as one of the typical matters in  dispute between employers and employees: "   The   jurisdiction  of  the  Board   (Labour   Relations Board)............  is not invoked by the employee  for  the enforcement of his contractual rights: those, whatever  they may  be,  he can assert elsewhere.  But  his  reinstatement, which  the terms of his contract of employment might not  by themselves  justify, is the means by which labour  practices regarded  as  unfair  are  frustrated  and  the  policy   of collective  bargaining  as  a road to  industrial  peace  is secured.   It  is  in the fight of this  new  conception  of industrial  relations that the question to be determined  by the Board must be viewed." After  quoting  these  observations of  the  Privy  Council, Rajamannar, C. J., pointed out in Shree Meenakshi Mills Ltd. v. State of Madras (2) at p. 388: " The essential object of all recent labour legislation  has been not so much to lay down categorically the mutual rights and  liabilities  of employer and employees  as  to  provide recourse to a given form of procedure for the settlement  of disputes  in  the interests of the maintenance  of  peaceful relations  between parties, without apparent conflicts  such as  are  likely  to interrupt production  and  entail  other dangers.   It is with this object that in the United  States there  has been legislation arranging for the adjustment  of conflicting  interests by collective bargaining.   In  Great Britain there have been Acts like the Industrial Courts Act, 1919,  which provides for Industrial Courts to enquire  into and  decide  trade disputes.  There is  also  provision  for Conciliation  Boards under the Conciliation Act,  1896.   In fact,  our Industrial Disputes Act is modelled on these  two British Acts." (1)  [1949] A.C. 134. (2) [1951] II M.L.J. 382. 355 This  being  the object of the enactment of the Act  by  the Central  Legislature,  the powers vested in  the  Industrial Tribunals  in  the matter of the  settlement  of  industrial disputes referred to them for adjudication, wide though they may be but guided as they are by considerations of policy as indicated above, can hardly be characterised as  legislative powers.   No doubt they lay down certain general  principles to  be  observed in regard to the  determination  of  bonus, reinstatement of dismissed or discharged employees and other allied topics but they are enunciated mainly with the object of  promoting  industrial peace  while  settling  particular industrial  disputes referred to them.  These principles  or rules  of conduct, though they are applied as precedents  by the  Industrial  Tribunals  while  adjudicating  upon  other similar industrial disputes referred to them, are not  rules of  law strictly so called and do not amount to  legislation by  the  Industrial Tribunals.  Even if the analogy  of  the Court,%  of Law be applied to the Industrial Tribunals,  the Industrial  Tribunals at best lay down or declare  what  the principles  or the rules of conduct governing the  relations

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 14 of 16  

between   employers   and  the  employees  should   be.    A declaration of the principles or rules of conduct  governing the  relations  between  the parties  appearing  before  the Industrial  Tribunals  is quite different  from  legislation which would be binding on all parties and indeed there is no provision  in  the  Act  which  confers  on  the  Industrial Tribunals  either the power to make rules which  would  have statutory  effect  or the power to legislate  in  regard  to certain   matters  which  crop  up  between  employers   and employees.   In the absence of any such provision, the  mere fact that the Industrial Tribunals, while pronouncing awards in  the  several  industrial  disputes  referred  for  their adjudication by the appropriate Government, lay down certain principles or rules of conduct for the guidance of employers and   employees,  does  not  amount  to  exercise   of   any legislative  power and no question of their  being  invested with. any legislative powers can arise. So  far  as  delegated legislation  is  concerned,  abstract definitions of the difference between the judicial and 356 the  legislative  functions  have  been  offered  (See   the distinction  drawn by Mr. Justice Field in  the  SinkingFund case  (1)),  but they are of little use when  applied  to  a situation of complicated facts.  The function of a Court  is to  decide cases and leading jurists recognize that  in  the decision  of  many cases a Court must  fill  interstices  in legislation.  A legislator cannot anticipate every  possible legal problem; neither can he do justice in cases after they had  arisen.   This inherent limitation in  the  legislative process   makes  it  essential  that  there  must  be   some elasticity  in  the  judicial process.   Even  the  ordinary courts  of law apply the principles of justice,  equity  and good  conscience  in many cases; e. g., cages  in  tort  and other  cases  where the law is not codified or does  not  in terms cover the problem under consideration.  The Industrial Courts  are to adjudicate on the disputes between  employers and   their  workmen  etc.,  and  in  the  course  of   such adjudication  they must determine the "rights" and  "wrongs" of  the claim,% made, and in so doing they  are  undoubtedly free  to  apply the principles of justice, equity  and  good conscience, keeping in view the further principle that their jurisdiction  is  invoked not for the  enforcement  of  mere contractual  rights  but  for  preventing  labour  practices regarded as unfair and for restoring industrial peace on the basis of collective bargaining.  The process does not  cease to be judicial by reason of that elasticity or by reason  of the  application  of the principles of justice,  equity  and good conscience. It  is not necessary to discuss the various  authorities  to which  we have been referred on the nature and scope of  the legislative  process.   Suffice  it to  say  that  there  is neither legislation nor delegated legislation in the  awards which  are  pronounced  by the  Industrial  Tribunals  while adjudicating  upon the industrial disputes referred to  them for adjudication and this contention is devoid of any force. It  is  lastly  contended that the Act was  not  within  the legislative  competence of the Central Legislature  inasmuch as the definition of the term " industry " in (1)  (1879) 99 U. S. 700, 761 ; 25 L. Ed. 496, 5i6.                             357 s.   2(j)  of the Act comprises industrial as well  as  non. industrial concerns and the Act which was expressly  enacted with   the  object  of  investigation  and   settlement   of industrial  disputes is not covered by Entry 29 of List  III of  the  Seventh Schedule to the Government  of  India  Act,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 15 of 16  

1935.  That Entry relates to ",Trade unions; industrial  and labour  disputes" and it is urged that  industrial  disputes being  the subject of legislation, there was no warrant  for defining  the  term  ,industry " so as  to  include  therein labour  disputes and those too in  non-industrial  concerns. The  definition of industry contained in s. 2(j) of the  Act being  comprehensive  enough to include labour  disputes  in non-industrial concerns, it is not possible to separate  the ultra  vires  part of that definition from the  intra  vires part of it with the result that the whole of the  definition must be held to be ultra vires and in so far as it permeated the whole of the Act, the Act as a whole should be  declared void.   This argument is sought to be supported  by  drawing our  attention  to  certain  decisions  of  the   Industrial Tribunals   which  have  included   hospitals,   educational institutions And even the business of Chartered  Accountants within  the definition of " industry " contained in the  Act and  it  is urged that if such non-industrial  concerns  are also  included in the definition of the term  industry.   ", the Act is certainly ultra vires Entry 29. We  need not pause to consider whether the decisions of  the Industrial  Tribunals above referred to are  correct.   That will  have to be done when the question is  raised  directly before  us for adjudication.  The fact that  the  Industrial Tribunals  have put an extended construction on the  term  " industry  "  is no reason for holding  that  the  definition itself  is  bad or ultra vires. what we have got to  see  is whether  the definition of the term " industry "  is  within the legislative competence of the Central Legislature and on a prima facie reading of the same we are not prepared to say that the same is- unwarranted or not covered by Entry 29.  A wrong  application of the definition to cases which are  not strictly  covered  by it cannot vitiate  the  definition  if otherwise it is not open to challenge.  It 46 358 should be noted that, according to the preamble, the Act was enacted  not only for settlement of industrial disputes  but for other purposes also.  It is open to the respondents also to  justify  the  definition of the term  "  industry  "  as contained in s. 2(j) of the Act by having resort to Entry 27 of  the  same  List  which refers  to  ,Welfare  of  labour; conditions of labour ; provident funds; employers’ liability and  workmen’s  compensation;  health  insurance,  including invalidity pensions; old age pensions The definition of  the term " industry " including as it does any calling, service, employment,   handicraft,   or  industrial   occupation   or avocation  of workmen, would, therefore, be justified  under this Entry even if the same is not covered by Entry 29 above referred  to.  The Entries in the Legislative  Lists  should not  be  given a narrow construction,  they  include  within their   scope  and  ambit  all  ancillary   matters   which, legitimately  come within the topics mentioned therein.   In the   matters   before  us,  moreover,   the   concerns   or undertakings  are all industrial concerns and fall  squarely within the definition of the term " industry " strictly  so- called and it is not open to the pursuers, situated as  they are,  to  challenge the same.  This contention also  has  no substance and must be rejected. It,  therefore,  follows  that the Act is  intra  Vires  the Constitution and Civil Appeals Nos. 333,334 and 335 of  1955 as  also  Petitions  Nos. 203, 182 and 65 of  1956  must  be dismissed.  There will, however, be one set of costs payable by  the appellants in Civil Appeals Nos. 333 to 335 of  1955 to  the respondents therein So far as Petitions Nos. 203  of 1956,  182 of 1956 and 65 of 1956 are concerned, each  party

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 16 of 16  

will bear and Pay its respective costs thereof. Appeals and Petitions dismissed.                             359