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

PETITIONER: ROHTAK HISSAR DISTRICT ELECTRICITY SUPPLY CO. LTD.

       Vs.

RESPONDENT: STATE OF UTTAR PRADESH AND OTHERS

DATE OF JUDGMENT: 03/12/1965

BENCH: GAJENDRAGADKAR, P.B. (CJ) BENCH: GAJENDRAGADKAR, P.B. (CJ) WANCHOO, K.N. HIDAYATULLAH, M. RAMASWAMI, V. SATYANARAYANARAJU, P.

CITATION:  1966 AIR 1471            1966 SCR  (2) 863  CITATOR INFO :  APL        1969 SC 513  (16,25,26)  E          1970 SC 237  (13)  RF         1979 SC  65  (5)  R          1984 SC 505  (23)  R          1985 SC 504  (4)

ACT: Standing   Orders-Scope   of-Jurisdiction   of    Certifying Authorities,  character and extent of-Jurisdiction of  Court to  examine reasonableness--Industrial Employment  (Standing Orders)  Act,. 1946 (20 of 1946), U.P.  Industrial  Disputes Act, 1947 (28 of 1948).

HEADNOTE: In   accordance  with  the  provisions  of  the   Industrial Employment  (Standing  Orders)  Act,  1946,  the   appellant prepared  draft  standing orders in  consultation  with  its employees  and submitted the same to the Certifying  Officer for  certification.  Since the appellant’s workers  had  not formed any union, three. representatives of the workmen were elected to represent them at the certification  proceedings. These  representatives  took  no  objection  to  the   draft standing orders submitted by the appellant.  The  Certifying Officer  examined  the  reasonableness  of  the   provisions contained in the draft Standing Orders made several  changes in   the   draft  and  accordingly  certified   them.    The appellant’s appeal to the Appellate Authority was dismissed. In appeal by special leave, HELD : (i) The contention that the procedure adopted by  the certifying  authorities in dealing with the question of  the fairness or reason ableness of the draft Standing Orders  is invalid, must fail. Though,  originally  the  jurisdiction  of  the   certifying officer and the Appellate Authority was very limited., s.  4 as amended by Act 56 of 1956 has imposed upon the certifying officer  or the appellate authority the duty  to  adjudicate upon the fairness or the reasonableness of the provisions of any  Standing  Orders  and thus the  jurisdiction  of  these authorities and the scope of inquiry have become wider.  The

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

Act contemplates that the Standing Orders must cover matters initially included in the Schedule as well as matters  which may  be added to the Schedule by the appropriate  Government in  exercise of the authority conferred on it by s.15.  [867 H; 868 F] It cannot be said that since an elaborate machinery has been established  by the U.P. Industrial Disputes Act,  1948  any attempt  by  the certifying authorities to  devise  detailed provisions  in respect of matters covered by the  First  and Second  Schedules  to the U.P. Act would trespass  upon  the provisions of that Act.  The scope of the provisions of  the two  Acts and the fields covered by them are not  the  same. While  the  Industrial  Employment  (Standing  Orders)   Act purports  to  secure  to  industrial  employees  clear   and unambiguous  conditions of their employment, the  scheme  of the  U.P. Act is to deal with problems posed  by  Industrial Disputes which have actually arisen or are apprehended. [869 G-870 C] (ii)Consent of the employees, though relevant cannot have  a decisive  significance  in certification  proceedings.   The authority  has to deal with the matter according to its  own judgment  and  must decide in appropriate  cases,  like  the instant case where the employees are not organised or strong enough,  whether or not a particular standing order is  fair or reasonable. [871 A-C] 864 (iii)  The draft Standing Orders cannot ’relate  to  matters outside the Schedule to the Act.  By s. 3 (2) of the Act the employers have to frame draft Standing Orders and these must normally  cover the items in the schedule to the  Act.   If, however,  it  appears to the  appropriate  authorities  that having  regard  to the relevant facts and  circumstances  it would  be  unfair and unreasonable to make provision  for  a particular  item, it would be competent to  the  authorities not  to frame draft Standing Orders in that behalf, but  the employer  cannot  insist  upon adding  a  condition  to  the Standing  Order  which  relates to a  matter  which  is  not included in the Schedule. [871 F; 872 E] (iv)  The wording of s. 3 (2) of the Act indicates that  the appropriate  authority may permit departure from  the  Model Standing Orders if it is satisfied that insistence upon such conformity may be impracticable. [872 G] Associated Cement Co. Ltd. v. P. D. Vyas [1960] 2 S.C.R. 974 [1960] 1 L.L.J. 565, referred to. (v)The  object of the Act being to require the employers  to define   with   sufficient  precision  the   conditions   of employment  under  them,  it  is  open  to  the  appropriate Government  to  add to the Schedule if the  item  added  has relation  to conditions of employment.  The  enumeration  of particular matters by s. 15(2) will not control or limit the width  of the power conferred on the appropriate  Government by s. 15(1).  Whether or not an addition should be made is a matter  for such Government to decide in its discretion  and the  reasonableness of such addition cannot  be  questioned. So,  having regard to the development of industrial  law  in this country it cannot be said that gratuity, provident fund and the age of superannuation or retirement are not  matters relating to conditions of employment. [873 E-H] (vi)The  provision for pension which the certified  Standing Order  No. 54 purports to make must be regarded  as  invalid since  it  was neither extended by the employer  nor  agreed upon  between  the parties as required by item 11-C  of  the Schedule  to  the  Act.  As such, it will  not  be  fair  or reasonable to retain the other part of Standing Order No. 54 dealing  with  retirement age without the  provision  as  to

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

payment of pension. [874 E-H] (vii)The  two  provisos  to Standing Order  47  as  well  as Standing   Orders  48(a)(1)  &  (2)  which  make   elaborate provisions  for  appeals and the finality  assigned  to  the decision of the Labour Commissioner under Standing Order  49 are  outside  the purview of the Act and therefore  must  be held  to  be bad in law.  Though the scheme of the  Act,  as modified  in  1956,  has widened the scope  of  the  enquiry before  the  appropriate  authorities,  the  Act  does   not authorise  the introduction of Standing Orders  which  would result  in  appeals  to outside authorities  either  by  the workmen or the employer and thereby extend the scope of  the provisions  which  can  legitimately  be  made  by  Standing Orders.   The Standing Orders are intended to  regulate  the conditions  of service of the employees and in  that  behalf may  legitimately make provisions concerning the rights  and liabilities  of  the  parties and their  enforcement  by  an internal arrangement between the employer and his employees. [878 H-879 B] (viii)In  an appeal under Art. 136 of the Constitution  this Court would not     be    justified   in    examining    the correctness of the conclusions reached by    the appropriate authorities in dealing with the ’reasonableness or  fairness of  the  Standing  Orders.  That is a  matter  left  to  the discretion of the authorities. [879 F]

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal Nos. 164 of  1965 and 1105 of 1964.  865 Appeals by special leave from the orders dated the June  29, 1963  and  August 31, 1963 of the Industrial  Tribunal  (II) Uttar  Pradesh  and Industrial Tribunal (H),  Uttar  Pradesh (Appellate  authority)  in Appeals Nos. 1 of 1963 and  4  of 1963 respectively. M.   C.  Setalvad,  B.  L. Khanna and K. K.  Jain,  for  the appellant (in C.A. No. 164/65). B.   L.  Khanna and K. K. Jain, for the appellant  (in  C.A. No. 1105/65). C. B. Agarwala and O. P. Rana, for respondents 1 and 2.      The Judgment of the Court was delivered by Gajendragadkar,  C.J. This appeal has been brought  to  this Court  by  special leave and it challenges the  validity  of certain   orders  passed  by the Certifying  Authorities  in respect  of the draft Standing Orders which  the  appellant, The  Rohtak  Hissar District Electric Supply Co.  Ltd.,  had submitted  to them for certification. Five respondents  have been impleaded to this appeal; they are the  State of  U.P., Certifying   Officer   for  Standing   Orders   and   Labour Commissioner, U.P., Kanpur, and three representatives of the employees  respectively.  At  the  hearing  before  us,  the employees’     representatives  have  not appeared  and  the appeal has been contested by respondent No. I alone. The  appellant is a Joint Stock Company  incorporated  under the  Companies  Act,  and it has its  registered  office  at Allahabad.The  principal object for which this  Company  has been incorporated is to carry on the business of  generation and distribution of electricity.  In  accordance  with   the provisions of the Industrial  Employment  (Standing  Orders) Act, 1946 (No. 20 of 1946)    (hereinafter    called    ’the Act’),  the  appellant  prepared draft  Standing  Orders  in consultation with its employees and submitted the same    to the  Certifying  Officer  on the 24th  December,  1950,  for

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

certification.  At  that time, the workmen employed  by  the appellant  had  not  formed any Union, and  so,  the  Labour Department  held proceedings for the election of  the  three representatives  from  the said workmen. Normally,  a  Union representing the workmen would   have  been  competent   and qualified  to  represent the workmen  in  the  certification proceedings; but since there was no Union in existence,  the Labour Department had to adopt, the expedient of asking  the workmen   to  elect  three  representatives.  That  is   how respondents 3 to 5 came to be elected as the representatives of   workmen.  In  the  certification   proceedings,   these representatives  took  no objection to  the  draft  Standing Orders submitted by the 866 appellant.   In  fact, the said draft Standing  Orders  were submitted  to the Certifying Officer on the basis that  they had been agreed to by the appellant and its workmen. The  Certifying Officer, however, examined the fairness  and reasonableness of the provisions contained in the said draft Standing Orders and made several changes in them.  The draft Standing  Orders  with the changes made  by  the  Certifying Officer  were  accordingly certified on the  21st  November, 1962. Against the said order passed by the Certifying Officer, the appellant  filed an appeal before the  Industrial  Tribunal, U.P.,  Allahabad,  which had been  appointed  the  Appellate Authority  under  the Act.  It was urged  by  the  appellant before  the Appellate Authority that the Certifying  Officer was  in error in making modifications in the draft  Standing Orders  submitted  to  him for his  certification,  but  the Appellate   Authority   did  not  accept   the   appellant’s contention and, in substance, confirmed the order passed  by the Certifying Officer.  In the result, the appeal preferred by the appellant was dismissed by the Appellate Authority on the  29th  June, 1963.  It is against this  appellate  order that the appellant has come to this Court by special leave. Along  with this appeal, Civil Appeal No. 1105 of  1964  has been placed before us for hearing and final disposal.   This appeal  arises  between the appellant  M/s  Amitabh  Textile Mills Ltd., and its workmen and it raises substantially  the same points as arise in ’Civil Appeal No. 164 of 1965.   Mr. K.  K. Jain, who appeared for the appellant in this  appeal, has  stated before us that the decision in this appeal  will follow  our decision in Civil Appeal No. 164 of 1965.   That is  why  we  do not propose to refer to the  facts  in  this appeal nor deal with it separately. The  first point which Mr. Setalvad has raised before us  in Civil Appeal No. 164 of 1965 is of a general character.   He contends  that  the Model Standing Orders  which  have  been followed  as a pattern by the certifying authorities in  the present certification proceedings, are themselves invalid in some  material particulars.  His argument is that the  Model Standing Orders permissible under the Act should be confined to  matters  which  do not fall within the  purview  of  the provisions  of the Industrial Disputes Act, 1947 (No. 14  of 1947) (hereinafter called ’the Central Act’) ,or of the U.P. Industrial Disputes Act, 1947 (No. 28 of 1947)  (hereinafter called ’the U.P. Act’). Before dealing with this point, it is necessary to  indicate the  broad features of the Act.  The Act was passed  on  the 23rd  867 April, 1946, and the Standing Orders framed by the U.P. Gov- ernment  under S. 15 of the Act were published on  the  14th May,  1947.   The  Central Act came into force  on  the  1st

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

April, 1947, whereas the U.P. Act came into force on the 1st February, 1948.  It will thus be seen that the Act came into force  before  either the Central Act or the  U.P.  Act  was passed.   The  scheme of the Act originally was  to  require employers  in  industrial  establishments  to  define   with sufficient precision the conditions of employment under them and  to  make  the  said conditions  known  to  the  workmen employed  by  them.  The Legislature thought  that  in  many industrial establishments, the conditions of employment were not always uniform, and sometimes, were not even reduced  to writing,  and  that  led  to  considerable  confusion  which ultimately resulted in industrial disputes.  That is why the Legislature  passed  the Act making it  compulsory  for  the establishments to which the Act applied to reduce to writing conditions of employment and get them certified as  provided by  the Act.  The matters in respect of which conditions  of employment  had  to  be  certified  were  specified  in  the Schedule  appended  to the Act.  This Schedule  contains  11 matters in respect of which Standing Orders had to be, made. In fact, the words "Standing Orders" are defined by s.  2(g) as  meaning rules relating to matters set out in  the  Sche- dule.   The "Certifying Officer" appointed under the Act  is defined by S. 2(c), whereas "Appellate Authority" is defined by S. 2(a). Originally,  the jurisdiction of the Certifying Officer  and the.  Appellate Authority was very limited; they were called upon  to consider whether the Standing Orders submitted  for certification conformed to the Model Standing Orders or not. Section  3(2) provides that these Standing Orders shall  be, as  far  as  practicable,  in  conformity  with  such  Model Standing Orders.  Section 15 which deals with the powers  of the appropriate Government to make rules, authorises, by cl. (2)  (b),  the  appropriate  Government  to  set  out  Model Standing  Orders for the purposes of this Act.  That is  how the original jurisdiction of the certifying authorities  was limited  to examine the draft Standing Orders submitted  for certification  and  compare  them with  the  Model  Standing Orders. In  1956,  however,  a  radical  change  was  made  in   the provisions  of the Act.  Section 4 as amended by Act  36  of 1956  has  imposed  upon  the  Certifying  Officer  or   the Appellate Authority the duty to adjudicate upon the fairness or  the  reasonableness of the provisions  of  any  Standing Orders.   In  other words, after the amendment was  made  in 1956,  the  jurisdiction of the certifying  authorities  has become very much wider and the scope of the 868 enquiry  also has become correspondingly wider.  When  draft Standing Orders are submitted for certification, the enquiry now  has  to  be twofold; are the said  Standing  Orders  in conformity  with  Model  Standing  Orders;  and  are,   they reasonable  or fair ? In dealing with this latter  question, the Certifying Officer and the Appellate Authority have been given powers of a Civil Court by S. 11(1).  The decision  of the  Certifying Officer is made appealable to the  Appellate Authority  under  S.  6 at the  instance  of  either  party. Similarly, by an amendment made in 1956 in S. 10(2) both the employer  and  the workmen are permitted to  apply  for  the modification   of  the  said  Standing  Orders   after   the expiration  of 6 months from the date of their  coming  into operation.   It  will thus be seen that  when  certification proceedings are held before the certifying authorities,  the reasonableness  or the fairness of the provisions  contained in the draft Standing Orders falls to be examined.  That  is one  aspect of the matter which has to be borne in  mind  in

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

dealing with Mr. Setalvad’s contention. The  second aspect of the matter which is relevant  on  this point is that the Standing Orders have to cover the  matters specified in the Schedule attached to the Act.  Item 1 1  in the  said Schedule refers to any other matter which  may  be prescribed.   We have already mentioned the fact that s.  15 confers  power on the appropriate Government to make  rules. Section 15 (2) (a) provides that the appropriate  Government may,  by rules, prescribe additional matters to be  included in  the  Schedule,  and  the procedure  to  be  followed  in modifying  Standing  Orders  certified  under  this  Act  in accordance  with  any such addition.  Thus there can  be  no doubt  that  the Act contemplates that the  Standing  Orders must  cover  matters initially included in the  Schedule  as well  as matters which may be added to the Schedule  by  the appropriate   Government  in  exercise  of   the   authority conferred on it by s. 1 5. In fact, by virtue of this power, the  U.P.  Government has added several items  to  the  list contained  in  the Schedule; they are  8A-issue  of  service certificate;  9A--censure and warning notice; 11 A-issue  of wage  slips;  II B-introduction of welfare schemes  such  as provident    fund,   gratuity   etc.;   and   11C--age    of superannuation  or retirement, rate of pension or any  other facility  which the employers may like to extend, or may  be agreed  upon between the parties.  We will have occasion  to deal with item 11C later.  The position, therefore, is  that in the State of U.P. Standing Orders have to cover the items originally  included  in the Schedule as well as  the  items which have been subsequently added thereto. Mr. Setalvad’s argument is that in determining the scope  of the  Standing  Orders and the character and  extent  of  the jurisdic-  869 tion conferred on the certifying authorities under the  Act, we  should  not  overlook the fact that  when  the  Act  was passed,  the Central Act and the U.P. Act had not come  into operation; and as it was originally passed, the Act required certification  of Standing Orders which were  in  conformity with  the  Model  Standing Orders  without  examining  their reasonableness or fairness.  The position under the original Act,  according  to  Mr. Setalvad, therefore  was  that  the conditions  of  employment which had to be included  in  the Standing  Orders  were no better than,  or  different  from, similar conditions which would otherwise have been  included in  contracts  of service between the  employers  and  their employees.   After  the Central Act and the  U.P.  Act  were passed,  a  different situation has arisen.  The  U.P.  Act, following  the pattern of the Central Act, has provided  for the  settlement of industrial disputes and other  incidental matters  in accordance with its own scheme.   Sections  4(A) and  4(B)  of the U.P. Act deal with  the  establishment  of Labour  Courts  and Industrial Tribunals, and  S.  4K  gives power  to  the  State  Government  to  refer  disputes   for adjudication to Labour Courts or Industrial Tribunals.   The First  Schedule  to  the  U.P.  Act  sets  out  6  items  of industrial  disputes  which can be referred  to  the  Labour Courts,  whereas the Second Schedule refers to 11  items  of industrial  disputes which can be referred for  adjudication to  the Industrial Tribunals.  Thus, an elaborate  machinery has now been established by the U.P. Act for the purpose  of dealing  with  industrial disputes  concerning  the  matters specified in the First and the Second Schedules to the  U.P. Act.    That  is  why  any  attempt  which  the   certifying authorities  may  purport  to  make  in  devising  elaborate provisions in respect of matters covered by the First or the

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

Second  Schedule  of the U.P. Act, would trespass  upon  the provisions  of  the said Act, and in that  sense,  would  be invalid.   Let the operation of the Act be confined  to  its original  form  and no further; that, in substance,  is  the general point raised by Mr. Setalvad before us. We   are  not  inclined  to  accept  this  contention.    In substance,  the  argument proceeds on  the  assumption  that there is a conflict between the Act and the U.P. Act.  Since we are not satisfied that there is any such conflict, it  is not  necessary for us to consider what would have  been  the result  if  we had taken the view that there  was  any  such conflict between the said two Acts.  The schemes of the  two Acts  are  in  essence  different  in  character.   The  Act purports to secure to industrial employees clear and unambi- guous conditions of their employment.  The obvious object of the  Act  is  to avoid any confusion in  the  minds  of  the employers  or the employees in respect of their  rights  and obligations concerning the 870 terms  and  conditions  of  employment  and  thereby   avoid unnecessary industrial disputes.  The result of the Standing Orders which are certified under the Act is to make it clear to both the parties on what terms and conditions the workmen are offering to work and the employer is offering to  engage them.  The scheme of the U.P. Act, on the other hand, is  to deal  with  the problem posed by industrial  disputes  which have  actually arisen or are apprehended, and naturally  the nature  of the industrial disputes which may arise or  which may  be apprehended, relates to items larger in number  than the  items covered by the Act.  It is true that some of  the items are common to both the Acts, but as we have just indi- cated,  the scopes of the provisions of the  two  respective Acts and the fields covered by them from that point of  view are not the same. After the Act was amended in 1956, the Legislature has  pro- vided  a  speedy and cheap remedy  available  to  individual employees to have their conditions of employment  determined in  the  manner  prescribed by the  Act.   If  employees  or employers  desire  any  modification in  the  said  Standing Orders,  that remedy is also provided.  The decision of  the Certifying  Officer  is made subject to an appeal,  and  so, after  its amendment in 1956, the Act provides for  a  self- contained Code for the fixation of conditions of  employment in establishments to which the Act applies.  It is true that the original scope of the Act was rather narrow and limited; but even after the scope of the Act has been made wider,  we cannot  see  how  it  can  be  said  to  conflict  with  the provisions  of the U.P. Act or the Central Act.   Therefore, we  are  not impressed by the argument  that  the  procedure adopted by the certifying authorities in the present case in dealing with the question of the fairness or  reasonableness of the draft Standing Orders submitted for certification  is invalid,  and  for  that reason alone,  some  of  the  draft Standing Orders certified by them should be set aside. The  next contention which Mr. Setalvad has raised  is  that the  appropriate authorities under the Act were in error  in insisting  upon  conformity with the Model  Standing  Orders under  S.  3(4).   His argument is that  in  certifying  the Standing  Orders the appropriate authorities may, no  doubt, compare  them with the Model Standing Orders, but they  need not  insist  upon  strict compliance  with  them.   He  also suggested that it would be open to the employers to  include matters  in  the Standing Orders which may not  strictly  be included in the Schedule.  In this connection, he relied  on the fact that the draft Standing Orders which the  appellant

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

had submitted for certification, had been assented to by the  871 employees.  In our opinion, this contention is  misconceived and, must be rejected.  The consent of the employees is,  no doubt,  a relevant factor which the  certifying  authorities may  bear  in mind in dealing with the question  as  to  the fairness or reasonableness of the said Orders.  If both  the parties  agree  that certain Standing Orders  submitted  for certification are fair and reasonable, that, no doubt, is  a consideration which the appropriate authority must take into account;  but clearly, the appropriate authority  cannot  be denied the jurisdiction to deal with the matter according to its  own judgment.  It is for the appropriate  authority  to decide  whether  a  particular Standing  Order  is  fair  or reasonable,  or  not.  Sometimes, the employees may  not  be organised  enough to resist the pressure of the employer  or may  not  be  articulate; and where the  employees  are  not organised  or  strong enough to put forward their  point  of view  vigorously, the fact that the employer  has  persuaded his  employees to agree to the draft Standing  Orders,  will not preclude the appropriate authority from discharging  its obligation by considering the fairness or reasonableness  of the  draft.  The present case itself is an  illustration  in point.   When  the  Standing  Orders  were  drafted  by  the appellant and submitted for certification, it was found that the  employees of the appellant had no Union of  their  own; and so, three representatives were elected by the  employees at the instance of the Labour Department.  The fact that the employees’  representatives  have not appeared  before  this Court also shows that they are either not organised  enough, or  have not the financial capacity to take steps to  engage lawyers  to appear before this Court.  Therefore, we do  not think that the consent of the employees can have a  decisive significance in certification proceedings. Then  in regard to the matters which may be covered  by  the Standing  Orders, it is not possible to accept the  argument that the draft Standing Orders can relate to matters outside the  Schedule.  Take, for instance, the case of some of  the draft   Standing  Orders  which  the  appellant  wanted   to introduce;  these  had  reference to the  liability  of  the employees  for transfer from one branch to another and  from one  job  to another at the discretion  of  the  management. These two Standing Orders were included in the draft of  the appellant  as Nos.  IO and II.  These two provisions do  not appear  to fall under any of the items in the Schedule;  and so,  the certifying authorities were quite justified in  not including them in the certified Standing Orders. In  this  connection, we may incidentally add  that  if  the appropriate  Government  adds to the list of  items  in  the Schedule, it may, 3Sup.CI/66-9 872 in some cases, be permissible to the certifying  authorities to  say  that  having regard to  the  relevant  factors,  no provision  need  be made for some of the items  thus  added. The  U.P.  Government  has, by adding clause  II  B  to  the Schedule,  referred  to  items of welfare  schemes  such  as provident  fund,  gratuities, etc.  It would, we  think,  be unreasonable   to   hold  that  the  Standing   Order   must necessarily refer both to provident fund and gratuities, and other   welfare  schemes.   It  is  well  known   that   the introduction of these amenities in industrial establishments involves  financial liabilities for the employers,  and  the decision as to whether these amenities should be  introduced or  not,  depends upon a consideration of  several  relevant

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

factors; and so, if the additional items are included in the Schedule,  and they appear to overlap or cover the  same  or similar  ground, the appropriate authorities may,  for  good reasons,  take the view that the provision need not be  made for  each  one of those items.  This position has  not  been seriously  disputed before us by Mr. Agarwal for  respondent No.  1. He has fairly conceded that it is not obligatory  on the employer to have a scheme ,for provident fund as well as gratuity in every case.  Thus, the true position appears  to be  that  under s. 3 (2) of the Act the  employers  have  to frame draft Standing Orders and they must normally cover the items  in the Schedule to the Act.  If, however, it  appears to  the appropriate authorities that having regard  to  ’the relevant  facts  and circumstances, it would be  unfair  and unreasonable  to make a provision for a particular item,  it would  be  competent  for them to do so;  but  the  employer cannot insist upon adding a condition to the Standing  Order which  relates  to  a matter which is not  included  in  the Schedule. Then  in  regard to the conformity with the  Model  Standing Orders,  the  position is clear.  Section 3 (2) of  the  Act specifically requires that the Standing Orders shall be,  as far  as  practicable, in conformity with the  model.   These words  indicate  that the appropriate authority  may  permit departure from the Model Standing Orders if it is  satisfied that  insistence upon such conformity may be  impracticable. This  fact also shows that in a given case, the  appropriate authority  may  permit  departure from  the  Model  Standing Orders and may come to the conclusion that one or the  other of the conditions included in the Model Standing Orders  may not, for the time being, be included in the Standing  Orders of  any  particular  establishment  vide  Associated  Cement Company Ltd.v. P. D. Vyas, and Others(1). (1) [1960] 2 S.C.R. 974. [1960) 1 L.L.J. 563.  873 The next point raised by Mr. Setalvad is in relation to  the addition  of two items to the Schedule by respondent No.  1. We have already mentioned these items.  Mr. Setalvad objects to the addition of item II B which has reference to  welfare schemes,  such as provident fund, gratuities, etc., as  well as item 11C which has reference to the age of superannuation or  retirement, rate of pension or any other facility  which the  employers  may  like to extend or may  be  agreed  upon between the parties.  We do not think that this argument  is well-founded.  We have already emphasised the fact that  the Act, even in its original form, was intended to require  the employers to define with sufficient precision the conditions of employment under them.  In pursuance of the said  object, the  Schedule  enumerated  10  items  in  respect  of  which Standing  Orders  had  to be drafted by  the  employers  and submitted  for  certification.   Item 1 1  in  the  Schedule refers  to any other matter which may be  prescribed.   When the  appropriate Government adds any item to  the  Schedule, the  relevant question to ask would be whether it refers  to the  conditions of employment or not.  If it does, it  would be  within the competence of the appropriate  Government  to add such an item.  Section 15(1) confers wide powers on  the appropriate  Government  to  make rules  to  carry  out  the purposes  of  the Act; and s. 15(2) specifies  some  of  the matters  enumerated  by clauses (a) to (e),  in  respect  of which  rules  may be framed.  It is  well-settled  that  the enumeration of the particular matters by sub-s. (2) will not control  or  limit the width of the power conferred  on  the appropriate Government by sub-s. (1) of s. 15; and so, if it appears  that the item added by the  appropriate  Government

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

has  relation  to  conditions of  employment,  its  addition cannot  be challenged as being invalid in law.   Whether  or not  such  addition  should be made, is, a  matter  for  the appropriate  Government to, decide in its  discretion.   The reasonableness  of  such  addition  cannot  be   questioned, because  the power to decide which additions should be  made has  been  left  by  the  Legislature  to  the   appropriate Government.  Having regard to the development of  industrial law  in this country during recent years, it cannot be  said that gratuity or provident fund is not a term of  conditions of  employment in industrial establishments.  Similarly,  it would  be difficult to sustain the argument that the age  of superannuation or retirement is not a matter relating to the conditions of employment.  Therefore, we are satisfied  that the  contention raised by Mr. Setalvad that the addition  of items 11B and 11C to the Schedule is invalid, must fail. That  takes us to the points raised by Mr. Setalvad  on  the merits  of  the  Standing Orders.  Lot  us  begin  with  the Standing 874 Order  in  relation  to  the  age  of  superannuation.   The appellant   had   made  a  provision  about   the   age   of superannuation  in  its  draft Standing Orders  and  it  was numbered  as  59.  The Certifying Officer had  dropped  this draft Standing Order, because the appellant did not agree to provide  for any retirement benefits.  On  appeal,  however, the appellate authority has made substantial alterations  in the  said draft provisions and has numbered it  as  Standing Order  54.  Under Standing Order NO. 54 as certified, it  is provided  that " a workman shall retire from  service  after attaining the age of 55 years, or after putting in 30  years service  whichever is earlier.  If he has put in  more  than seven  years’  service, he shall get a pension at  the  rate specified by the said Standing Order." Mr. Setalvad contends that even if the addition of item 11C is valid, the relevant certified  Standing Order is not justified by item 11C.   In our opinion, this argument is sound and must be upheld.   We have already noticed that item 11C provides for the fixation of  the  age of superannuation or retirement,  and  in  that connection, it incidentally refers to the rate of pension or any other facility which the employer may like to extend  or may be agreed upon between the parties.  This item  consists of two parts; the first relates to the age of superannuation or retirement; and the second refers to the rate of  pension or  any  other facility.  In regard to this latter  part  of item  11C,  the  important provision is that  this  rate  of pension or any other facility should be such as the employer may  like  to extend, or as may be agreed upon  between  the parties.   It is plain that the provision for pension  which the certified Standing Order 54 purports to make was neither extended  by  the  employer, nor  agreed  upon  between  the parties.   On this narrow ground alone, the said  provision. in certifying S.O. No. 54 must be regarded as invalid. That  raises the question as to whether it would be fair  or reasonable  to  retain the other part of certified  S.O.  54 without the provision as to payment of pension.  It  appears to us that it would not be fair or reasonable to introduce a term  of  retirement in the conditions  of  service  without making  any  provision for a suitable retiral  benefit;  but such a provision cannot be made suo Moto by the  appropriate authority  under item 11C; it has to be made either  at  the initiative  of the employer, or by consent of parties.   Mr. Setalvad  did  not  dispute the position that  it  would  be equitable  to  make  some  suitable  provision  for  retiral benefit   to  the  employees,  particularly   the   existing

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

employees,  if  an age of superannuation  or  retirement  is going to be fixed for the first time in this  establishment. He was, therefore, prepared that the whole of certified S.O. No. 54 should be deleted and the matter of retire-  875 ment of the employees should be left to be determined  under the  existing practice.  It is common ground that under  the existing  practice,  there is no age  of  superannuation  or retirement. The  next certified Standing Orders which are challenged  by Mr.  Setalvad are in regard to the payment  of  compensation for  "lay-off"; they are Nos. 29 and 30.  Clause (a) of  the certified S.O. 29 reads thus:-               "The employer may at any time or times, in the               event  of a fire, catastrophe,  break-down  of               machinery   or  stoppage  of   power   supply,               epidemic,  civil  commotion or  other  causes,               whether  of a like nature or not,  beyond  the               control  of the employer, stop any machine  or               machines or department or departments,  wholly               or partly for any period or periods, by giving               two  days’ notice, if possible.  If two  days’               notice  of  closure has not  been  given,  the               employer  shall  pay  wages in  lieu  of  such               notice, i.e., two days’ wages.               Provided  that  no  compensation  in  lieu  of               notice  in  excess  of wages  for  the  actual               period  of closure shall be payable  when  the               period of closure is less than two days". Mr. Setalvad argues that it is wholly unreasonable to expect that where work is stopped for any of the reasons  mentioned in  this  clause, it would be possible for the  employer  to give two days’ notice before such stoppage of work.  All the causes  mentioned in this clause are causes over  which  the employer  has  no  control  and  which  would  overtake  the establishment   suddenly  and  unexpectedly.   We  have   no difficulty in accepting this argument.  We would, therefore, modify the last sentence in the first paragraph of certified S.O. No. 29(a) by providing that if in cases where it  would have been possible to give two days’ notice of closure,  but the employer has not given such a notice. he shall pay wages in  lieu  of such notice, i.e., two  days’  wages.   Plainly stated,. having regard to the nature of the causes mentioned in this clause, such a case can rarely arise. Then  as regards Standing Order No. 30, Mr. Setalvad’s  con- tention is that this Standing Order conflicts with s. 6K  of the U.P. Act.  This section deals with the right of  workmen laid-off for compensation.  It is not necessary to refer  in detail to the provisions of this section for the purpose  of dealing with Mr. Setalvad’s argument.  It would be enough to state  that  this section refers to cases in  which  workmen laid off are entitled to compen- 876 sation,  and  it  provides for the  scales  at  which  ’such compensation should be computed.  Mr. Setalvad suggests that the  matter  of payment of compensation for  Jay-off  having thus  been covered by s. 6K, it would not be legitimate  for the  Standing  Orders to make a separate provision  in  that behalf.   The  field in question is covered  by  a  specific provision of the U.P. Act and matters relating to that field must be dealt with by s. 6K and no other provision. in this connection, Mr. Setalvad referred us to s. 6K of the U.P. Act.  Section 6-R(1) provides that the provisions  from section  6-J  to  6-Q  shall  have  effect   notwithstanding anything  inconsistent therewith contained in any other  law

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

(including  Standing  Orders)  made  under  the   Industrial Employment (Standing Orders) Act, 1946.  There is a  proviso to  this sub-section which is also relevant.  It  says  that nothing contained in this Act shall have effect to  derogate from  any right which a workmen has under the Minimum  Wages Act, 1948, or any notification or order issued thereunder or any  award for the time being in operation or  any  contract with  the  employer.  It is clear that  the  proviso  cannot cover  the  cases  of Standing Orders  which  are  expressly included in s. 6-R(1).  It is true that the Standing Orders, when certified, in substance embody statutory conditions  of employment, but they cannot be treated as a contract  within the meaning of the proviso.  The context obviously negatives such  a  construction; and so, if the point  raised  by  Mr. Setalvad  had  to  be decided solely  by  reference  to  the provisions  of  s.  6-K  and  6-R,  there  would  have  been considerable  force in his argument.  But the difficulty  in accepting   Mr.  Setalvad’s  argument  is  created  by   the provisions  of  s. 25-J of the Central  Act.   Section  25-J corresponds to s. 6-R of the U.P. Act, except this that  the proviso  to s. 25-J(1) and sub-s. (2) of s. 25-J which  have been  recently added by Act 36 of 1964, make  a  substantial departure  from  the pre-existing position of the  law  even under  the Central Act.  Section 25-J(2) is  more  important for our purpose.  It reads thus :-                "For  the  removal of doubts,  it  is  hereby               declared   that  nothing  contained  in   this               Chapter   shall  be  deemed  to   affect   the               provisions of any other law for the time being               in  force in any State in so far as  that  law               provides  for  the  settlement  of  industrial               disputes,  but the rights and  liabilities  of               employers and workmen in so far as they relate               to   Jay-off   and   retrenchment   shall   be               determined  in accordance with the  provisions               of this Chapter".  877 It  is  thus  clear  that  the  last  part  of  S.   25-J(2) categorically  provides that the rights and  liabilities  of the  employers and workmen in relation to lay-off  shall  be determined in accordance with the provisions of Chapter  V-A of  the Central Act.  This clearly means that in  regard  to the  question about the payment of compensation for  lay-off and retrenchment, the relevant provisions of the Central Act will  apply  and not those of the U.P. Act.   This  position cannot be, and is not, disputed by Mr. Setalvad. Once we reach this stage, we have to go to the proviso to S. 25.J(1),  because it is one of the provisions  contained  in Chapter  V-A  which is made applicable by s. 25-J  (2);  and this  proviso  clearly and unambiguously  lays  down,  inter alia,  that  where under any Standing Orders, a  workman  is entitled  to  benefits in respect of any matter  covered  by Chapter  V-A which are more favourable to him than those  to which he would be entitled under this Act, he shall continue to be entitled to the more favourable benefits in respect of that  matter, notwithstanding that he receives  benefits  in respect  of  other matters under this  Act.   The  position, therefore,  is  that  s. 25-J(2) makes Chapter  V-A  of  the Central   Act   applicable  to  disputes  in   relation   to compensation for lay-off, notwithstanding S. 6-K and 6-R  of the   U.P.  Act;  and  amongst  the  provisions  thus   made applicable by S. 25-J(2) is the proviso to s. 25-J(1)  under which  the  Standing  Orders  which  give  more   favourable benefits  to  the employees in respect of  compensation  for lay-off,  will  prevail over the provisions of  the  Central

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

Act.   We  ought  to add in fairness that as  soon  as  this aspect  of  the  matter was brought out  in  the  course  of arguments, Mr. Setalvad conceded that his contention against the validity of certified Standing Order 30(a) could not  be pressed.  A somewhat similar question was raised before this Court and has been considered in Workers of Dewan Tea Estate and Others v. Their Management(1). There   is  one  more  point  which  still  remains  to   be considered.   In  this connection, the  controversy  centres round  certified  Standing  Orders 47,  48  and  49.   These Standing  Orders purport to have been made under item 10  of the  Schedule  to the Act.  Item 10 refers to the  means  of redress  for  workmen against unfair treatment  or  wrongful exactions  by  the  employer  or  his  agents  or  servants. Standing  Order  47 deals with the procedure  for  enquiring into  complaints.   The substantive part  of  this  Standing Order is not in dispute; what is challenged is the  validity of  the  two provisos to the said Standing  Order,  and  the whole of Standing Orders 48 (1)  [1964] 1 L.L.J. 358. 878 and  49.  The first proviso to S.O. 47 gives a right to  the complainant workman to appeal to the Labour Commissioner  or to a Conciliation Officer of the U.P. Government, or to  the machinery provided by collective agreements, if any, against the  decision of the investigating officer or the  employer, without  prejudice to any right of the workmen aggrieved  by the decision of the investigating officer or the employer to resort to proceedings in a court of law.  The second proviso authorises a workman or a registered Union of which he is  a member  to submit a complaint of dismissal for the  decision to  the  Labour  Commissioner or  to  a  State  Conciliation Officer  direct  without first referring it  to  the  Labour Officer of the industrial establishment or if there is none, any  other officer appointed by the employer in this  behalf or  the employer.  Standing Order 48(a) purports to  provide that the decision of the employer upon any question  arising out  of, in connection with, or incidental to, these  orders shall be final, subject to the appeals indicated by  clauses (1)  and  (2) thereto.  Standing Order 48 (b) seems  to  lay down that as soon as a workman or an employer sends a notice through a legal practitioner or resorts to any legal process whatsoever,  or indicates in any other manner his  intention of  having  recourse to legal process, no  appeal  shall  be heard  by  the  Labour  Commissioner.   Standing  Order   49 empowers the employer at its discretion to refer any  matter for decision to the Labour Commissioner, without giving  any prior  decision  of  his own; and  it  prescribes  that  the decision of the Labour Commissioner in such matters shall be final  and binding on the workmen and the employer,  subject to the provisions of the Act or the Rules. Mr.  Setalvad  argues  that  this  elaborate  provision  for appeals contemplated by certified Standing Order 48 (a) (  1 ) & (2) as well as the finality assigned to the decision  of the Labour Commissioner under S.O. 49, are entirely  outside the purview of the Act, and as such invalid.  Similarly,  he argues that the two provisos to S.O. 47 are invalid, because appeals of the kind contemplated by the said provisos do not fall within the scope of the Act. We  are  inclined  to uphold this  contention.   Though  the scheme  of  the Act, as modified in 1956,  has  widened  the scope of the enquiry before the appropriate authorities,  we do  not  think that the Act authorises the  introduction  of Standing  Orders  which would result in appeals  to  outside authorities  either  by the workmen or  the  employer.   The

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

Standing  Orders which fall within the contemplation of  the Act, are intended to regulate the conditions  879 of  service  of the employees, and in that behalf  they  may legitimately  make  provisions  concerning  the  rights  and liabilities  of  the  parties and their  enforcement  by  an internal  arrangement  which can be regarded as  a  domestic arrangement  between the employer and his employees.  It  is not  permissible  under  the Act  to  introduce  appeals  to outside  authorities,  and thereby extend the scope  of  the provisions  which can legitimately be made by  the  Standing Orders. Besides, on the merits, Standing Order 48(a) (2) seems to be unfair inasmuch as it does not give a right of appeal to the employer  in  regard  to  decisions  reached  by  the  Joint Disciplinary  Committee under S.O. 48 (a) ( 1 ) even  though the  employer  may feel aggrieved by  them.   Likewise,  the finality assigned to the decision of the Labour Commissioner by S.O. 49 would plainly be inconsistent with the provisions of  the U.P. Act inasmuch as disputes arising  from  matters covered  by  the  decision of the  Labour  Commissioner  are completely  taken out of the purview of s. 4-K of  the  said Act;  and prima facie, that does not seem to be  permissible under  the impugned provision of finality.  But quite  apart from these considerations, we have no hesitation in  holding that  the eleborate provisions made by the two  provisos  to S.O.  47, as well as Standing Orders 48 and 49  are  outside the  purview of the Act, and therefore, must be held  to  be bad in law. Mr.  Setalvad  attempted to argue that some  other  Standing Orders  certified by the appropriate authorities should  not have  been  so  certified; but we have not  allowed  him  to proceed with this part of his case, because we do not  think that  in an appeal brought to this Court under Art.  136  of the  Constitution,  we would be justified in  examining  the correctness  of  the conclusion reached by  the  appropriate authorities  in dealing with the reasonableness or  fairness of the Standing Orders in question.  That is a matter  which is  left to the discretion of the Certifying Officer in  the first instance, and the Appellate Authority when the  matter goes  in appeal before it.  These are not matters which  can be legitimately raised before this Court under Art. 136. The result is, certified Standing Order 29(a) is modified as indicated  in this judgment; Standing Order 54  which  deals with  the age of superannuation or retirement  and  provides for  consequential  payment of pension, as well as  the  two provisos to Standing Order 47, and Standing Orders 48 and 49 are  struck  down  and deleted from the  list  of  certified Standing Orders.  The rest of the 880 order passed by the Appellants Authority is confirmed.   The certified Standing Orders will now have to be renumbered. As  we have already indicated, this order will  govern  also Civil  Appeal  No. 1105 of 1964, with the  result  that  the Standing  ,Orders  in this appeal which  correspond  to  the Standing Orders in C.A. No. 164 of 1965, will be modified or struck  down in accordance with this judgment.  There  would be no order as to costs in both the appeals. Appeal allowed in part. 881