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PETITIONER: ROHTAS INDUSTRIES LTD.

       Vs.

RESPONDENT: BRIJNANDAN PANDEY.

DATE OF JUDGMENT: 11/10/1956

BENCH: DAS, S.K. BENCH: DAS, S.K. BHAGWATI, NATWARLAL H. AIYYAR, T.L. VENKATARAMA MENON, P. GOVINDA

CITATION:  1957 AIR    1            1956 SCR  800

ACT: Industrial Dispute-Temporary employees-Discharge of workmen- Application  before the Labour Appellate  Tribunal-Scope  of enquiry-Discretion   of  the  Tribunal-Industrial   Disputes (Appellate Tribunal) Act, 1950 (XLVIII of 1950), s. 22.

HEADNOTE: The  scope  of  an enquiry under s.  22  of  the  Industrial Disputes (Appellate Tribunal) Act, 1950, is whether there is a  prima facie case made out for the proposed  discharge  of the workman and the employer has not resorted to any  unfair practice or victimisation. Though an Industrial Tribunal can create new obligations  or modify contracts in the. interests of industrial peace or to prevent unfair practice or victimisation, its discretion has to   be  exercised  in  accordance  with   well   recognised principles  and  it  cannot ignore  altogether  an  existing agreement or existing obligations. The  Automobile  Products  of India  Ltd.  v.  Rukmaji  Bala ([1955] 1 S.C.R. 1241) and Atherton West & Co. Ltd. v.  Suti Mill Mazdoor Union, ([1953] S.C.R. 780), relied on. Where, as in the present case, the Labour Appellate Tribunal did  not direct its mind to the real question to be  decided on  an application under s. 22 of the Act for permission  to discharge  the  temporary  employees  and  without  deciding whether the workmen were temporary employees or not,  passed an  order  dismissing  the application on  the  basis  of  a finding  which  was not determinative of the real  point  or question at issue, held that the decision must be set  aside and the proper order passed.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 144 of 1955. Appeal  by special leave from the judgment and  order  dated September  25,  1953, of the Labour  Appellate  Tribunal  of India, Calcutta in Miscellaneous Case No. C-112 of 1953. C.   K. Daphtary, Solicitor-General of India, A.  B.      N. Sinha and B. P. Maheshwari, for the appellant.

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S.   P.  Sinha,  R.  Patnaik  and  A.  D.  Mathur,  for  the respondents. 801 1956.  October 11.  The Judgment of the Court was  delivered by S.   K.  DAS J.,-This is an appeal by special leave  from  a decision  of the Labour Appellate Tribunal, Calcutta,  dated the  25th September, 1953.  The relevant facts lie within  a narrow  compass.  On the 4th of May 1953 the appellant,  the Rohtas Industries Limited, Dalmianagar, made an  application to  the said Labour Appellate Tribunal under section  22  of the  Industrial  Disputes  (Appellate  Tribunal)  Act,  1950 (XLVIII  of 1950), hereinafter referred to as the  Act,  for permission  to discharge ninety six temporary  employees  in the  following circumstances.  The appellant company have  a number  of  factories  at  Dalmianagar  including  a  cement factory,  power  house, pulp mill, paper  factory,  chemical factory, factory for the manufacture of certain acids and an asbestos  cement  factory.   The company  had  a  number  of temporary   employees  who  were  engaged   temporarily   in connection with certain erection works for the extension and enlargement of those factories.  The terms of employment  of these  employees  were embodied in a  temporary  appointment form  which  was  signed by the employees  as  well  as  the management.   The said terms stated, inter alia,  that  "the company  could  discharge the employee at any  time  without notice, compensation and giving any reason therefor, whether on completion of the work on which the employee was  engaged or  earlier"; the terms also made it clear that whether  the employee was on the same job or some other job, in the  same department  or  some  other, either  on  temporary  work  or permanent  work, he would remain a temporary employee  until the  Works Manager issued a written letter expressly  making him a permanent employee.  As and when the various  erection works were completed, the temporary employees were first put on a list of spare men and then discharged.  Some time prior to  the  3rd  of July 1952, sixty nine  of  these  temporary employees  were spared for being discharged.  The  names  of these sixty nine employees were given in two lists, Appendix 802 A  and  Appendix B. It was alleged that on the 3rd  of  July 1952, a number of these employees headed by one Brij  Nandan Pandey entered the office of Shri L. C. Jain, Manager of the Cement  Factory,  and  Brij  Nandan  Pandey  assaulted   the Manager.   A serious situation resulted from that  ’incident and  the company stopped the sixty nine temporary  employees from coming to their factories or to their Labour Office and issued  a  notice  to them stating  that  the  company  were applying  to  the  Industrial  Tribunal  for  permission  to terminate  their  services.   At  that  time  an  industrial dispute  relating  to, among other things,  the  payment  of bonus to the employees was pending adjudication in the Court of the Industrial Tribunal, Bihar.  On the 5th of July 1952, the appellant company made an application to the said Tribu- nal  for permission to discharge the sixty  nine  employees. The application was made under section 33 of the  Industrial Disputes  Act, 1947.  On the 12th of July 1952,  forty  nine out  of the said sixty nine employees made  an  application, under  section 33-A of the Industrial Disputes Act,  to  the Chairman, Industrial Tribunal, Bihar, on the allegation that the appellant company had discharged sixty nine employees on the 5th July 1952 and had thereby contravened section 33  of the  Industrial Disputes Act, 1947.  On the 20th  of  August 1952,  thirty six more temporary employees were put  on  the spare  list  and an application was made to  the  Industrial

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Tribunal Bihar, for including these thirty six persons  also in  the  application which had been made for  permission  to discharge the temporary men; thus, all told, the application related to one hundred and five temporary men.  The case  of the  appellant  company  was  that  the  completion  of  the erection works for which these temporary men were originally employed  was  a gradual process and so far  as  the  Cement Factory erection work was concerned, it was completed by the end  of  March 1952 except for certain minor  additions  and alterations.   Therefore,  the appellant company  no  longer required  the services of the temporary employees  and  they were put on the spare list as and 803 when their services were no longer required. The  two applications which had been made to the  Industrial Tribunal, Bihar, the one under section 33 of the  Industrial Disputes  Act and the other under section 33-A of  the  said Act, remained pending with the Industrial Tribunal till  the 17th  of December 1952 on which date the  application  under section 33-A filed by forty nine of the sixty nine temporary employees,  was dismissed.  On the 3rd of January 1953,  the Chairman of the Industrial Tribunal, Bihar, intimated to the appellant company that the Tribunal was no longer  competent to  pass any orders on the application under section  33  of the  Industrial  Disputes  Act, 1947,  as  the  adjudication proceedings  on  the main reference had  already  concluded. Two appeals were taken to the Labour Appellate Tribunal, one from the award made on  the main adjudication and the  other from the order made on the application under section 33-A of the  Industrial Disputes Act, 1947.  On the 20th  May  1953, the appeal from the order under section 33-A was  dismissed. As we are not concerned with that appeal in any way, nothing further need be said about it in this judgment. The appeal from the main award was pending on the 4th of May 1953  on  which  date  the  appellant  company  made   their application  under  section  22 of the  Act  to  the  Labour Appellate Tribunal for permission to discharge ninety six of the temporary employees.  Though there were one hundred  and five temporary employees originally, with regard to whom  an application had been made to the Industrial Tribunal, Bihar, nine  out  of  them  voluntarily left  the  service  of  the company;  therefore,  the  number  of  temporary   employees regarding  whom the application under section 22 of the  Act was made was ninety. six only., The application was contested by forty two of the  temporary employees,  and in their affidavit they denied that  any  of the   sixty  nine  workmen  were  originally  recruited   as temporary  workmen  and they further denied that  they  were involved  in  the incident relating to the assault  on  Shri L.C. Jain on the 3rd of July 1952.  They said that in effect they were 804 permanent   employees  and  enjoyed  all  the  benefits   of permanent employees.  They further stated.: "The  erection work of the cement plants of the  petitioners was  completed towards the end of 1950 and it  is  therefore patently  false  to suggest that we became  redundant  as  a result  of  the  completion of the erection  of  the  cement plants.   It is significant to note that a large  number  of workmen  who  had worked on the job of erecting  the  cement plants  were discharged shortly after the completion of  the said work on the ground that they were surplus.  The  cement plants  started to Work in full swing from about  the  first quarter of 1951 and we were working in the said cement plant producing  cement from the very beginning. right up  to  5th

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July  1952, when we were informed that we were surplus.   In fact  the real reason for the proposed retrenchment  is  the petitioner’s desire to increase the rate of exploitation  of its workmen by increasing the workload". With  regard to the terms embodied in the appointment  form, it was alleged that on or about the 3rd of December 1948 the employees  of  the appellant company were forced  to  go  on strike on account of an industrial dispute; towards the  end of the strike the workmen became exhausted and drifted  back to  work.   The  strike was ultimately called  off  and  the appellant  company  taking full advantage of  their  victory compelled  a section of the workmen, who did not  return  to work  until  the  strike was called off,  to  sign  the  ap- pointment   form  with  the  purpose  of   humiliating   and terrorising them. The Labour Appellate Tribunal gave its decision on the  25th September  1953  which  is the decision  under  appeal.   It dismissed  the  application of the appellant. company  on  a finding which the Tribunal expressed in the following words: "It is thus clear that these 96 workmen had been working  in the production departments from as far back as the beginning of the year 1951 and so the completion of the erection  work cannot be put forward as the ground for their retrenchment". 805 Referring  to the Directors’ Report dated the 10th  of  July 1951, the Tribunal came to the conclusion that the workmen’s version  that the erection works had been completed  by  the end  of  1950 was supported by the said  report.   In  other words,  the  decision of the Labour Appellate  Tribunal  was primarily based on the finding that the erection works  were completed  by  the end of 1950 and therefore  there  was  no ground for discharging the ninety six temporary men. Learned  counsel for the appellant has contended  before  us that (1) the Appellate Tribunal did not correctly appreciate the true scope and effect of section 22 of the Act; (2)  the Appellate Tribunal gave attention to only one point, namely, the  completion of erection works, and did not consider  the other  circumstances put forward on behalf of the  appellant in support of their application; (3) instead of  considering the   real  point  which  arose  for  determination  on   an application  under  section  22 of the  Act,  the  Appellate Tribunal  confined  its attention to a point which  was  not decisive of the question before it; and (4) by reason of its failure  to consider the real point for  determination,  the order  of  the Appellate Tribunal has resulted  in  manifest injustice.   In our opinion, these contentions  are  correct and should be upheld. It was pointed out in The Automobile Products of India  Ltd. v. Rukmaji Bala(1) that section 22 of the Act confers on the Appellate  Tribunal a special jurisdiction which is  in  the nature  of original jurisdiction and the Tribunal  being  an authority  of limited jurisdiction must be confined  to  the exercise  of  such  functions and  powers  as  are  actually conferred on it.  With regard to the scope of section 22  of the Act, it was observed: "The  object  of  section 22 of the 1950 Act  like  that  of section  33  of the 1947 Act as amended is  to  protect  the workmen concerned in disputes which form the  subject-matter of pending proceedings against victimisation by the employer on  account  of their having raised industrial  disputes  or their continuing the (1)  [1955] 1 S.C.R. 1241. 105 105 806 pending  proceedings.  It is further the object of  the  two

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sections  to  ensure  that proceedings  in  connection  with industrial  disputes already pending should be brought to  a termination  in a peaceful atmosphere and that  no  employer should  during  the pendency of those proceedings  take  any action of the kind mentioned in the sections which may  give rise  to  fresh disputes likely to  further  exacerbate  the already  strained  relation  between the  employer  and  the workmen.  To achieve this object a ban has been imposed upon the ordinary right which the employer has under the ordinary law  governing a contract of employment.  Section 22 of  the 1950 Act and section 33 of the 1947 Act which impose the ban also provide for the removal of that ban by the granting  of express  permission in writing in appropriate cases  by  the authority  mentioned  therein.   The purpose  of  these  two sections  being to determine whether the ban should  be  re- moved  or  not,  all  that  is  required  of  the  authority exercising jurisdiction under these sections is to accord or withhold permission". The  earlier decision of this Court in Atherton West  &  Co. Ltd.  v. Suti Mill Mazdoor Union(1) dealt with clause 23  of the U. P. Government Notification dated the 10th March  1948 made in exercise of the powers conferred by sections 3 and 8 of the U. P. Industrial Disputes Act, 1947, and it was there observed  that  the scope of the enquiry was to  come  to  a conclusion whether there was a prima facie case made out for the discharge or dismissal of the workman and the  employer, his  agent  or  manager was not  actuated  by  any  improper motives  or  did  not  resort  to  any  unfair  practice  or victimisation  in  the matter of the proposed  discharge  or dismissal  of  the  workman.  That being the  scope  of  the enquiry on an application under section 22 of the Act,  what the  Labour Appellate Tribunal had to decide in the  present case was whether the appellant company had made out a  Prima facie,case for the proposed discharge and whether they  were resorting  to  any unfair practice or victimisation  in  the matter of the proposed discharge. (1)  [1953] S.C.R. 780. 807 Instead  of  doing  that,  the  Labour  Appellate   Tribunal dismissed  the application of the appellant company  on  the only  ground  that  the  version of  the  workmen  that  the erection  works  had been completed by the end of  1950  was supported by the Report of the Directors dated the 10th July 1951.  Learned counsel for the appellant has rightly pointed out that even in respect of the completion of erection works the  conclusion of the Appellate Tribunal is a complete  non sequitur.  First of all, the Directors’ Report was dated the 10th July 1951 though the balance-sheet of the company  with which the report was dealing related to the period ending on the 31st October 1950 The report naturally referred to  such works as were completed on or before the 10th of July  1951. It  should be obvious that the completion of erection  works must  be a gradual process, and while some of  the  erection works  might have been completed by the end of 1950 or  July 1951,  some were still in the process of completion.   Under their  terms  of employment, temporary  employees  could  be moved from one work to the other and the mere  circumstance, that they were employed in a production department for  some time,  even if true, did not make them permanent  employees; nor  did  the  circumstance that they enjoyed  some  of  the benefits of permanent employees make them permanent.   These are circumstances which have been completely ignored by  the Labour Appellate Tribunal. It  is  worthy of note that in their application  dated  the 12th of July 1952, the forty nine workmen admitted:

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"though  most of us were originally recruited  for  erection work  in  the  Cement  Factory, many of  us  were  later  on transferred   as  permanent  workers  to  sugar  and   paper factories and some of us were absorbed as permanent  workers in  the  maintenance section of the Cement  Factory".  (Vide paragraph 3 of the application). In  the joint affidavit filed on the 12th August,  1953,  in reply to the appellant’s application under section 22 of the Act, the said workmen denied however that 808 they were at any time engaged temporarily for temporary work vide  paragraphs 3 and 6 of the affidavit.  Obviously,  they were  shifting from the position which they  had  originally taken  up.   No  evidence was given that the  men  who  were employed  temporarily were afterwards made permanent.   They filed  a  schedule, marked ’A’, to their  affidavit  wherein they  showed  their period of service and the  name  of  the factory or plant from where their duties stopped.  On an ex- amination  of  the schedule (Annexure A) it appears  that  a number of them were put on the spare list when the  erection work  was  completed  some  time  in  1952.   ’Annexure  ’A’ therefore  supports the case of the appellant  company  that the completion of the erection works was a gradual  process, some were completed in 1950, some in 1951 and some in  1952. The  first  batch of sixty-nine employees with whom  we  are concerned were put on the spare list between March and  July 1952  and  the second batch were put on the  spare  list  in August 1952 when the relevant erection works were completed. The finding of the Labour Appellate Tribunal with regard  to the  completion of erection works was vitiated by reason  of the  failure  to take into consideration  the  circumstances stated above. With  regard  to  the terms of employment  embodied  in  the temporary  appointment form, the respondents’ case was  that the appointment forms were signed as a result of the  strike in 1948; it was never suggested that these forms were  never signed  at  all and the comment of learned counsel  for  the respondents that the appellant company have not produced the appointment  forms has very little force.   The  respondents gave  no  evidence  in support of the  allegation  that  the appointment  forms were taken from them for the  purpose  of humiliating  or  terrorising  them, nor  did  the  Appellate Tribunal  come to any such finding.  None of the  affidavits filed  on  behalf of the respondents suggested,  even  in  a remote way, that the appellant company were resorting to any unfair  practice or victimisation in the matter of the  pro- posed discharge. 809  Learned counsel for the respondents has contended before us that  the  finding  of the Labour Appellate  Tribunal  is  a finding   on  a  question  of  fact,  namely,  whether   the respondents  were temporary or permanent employees.  He  has argued that this Court should not interfere even though  the finding is based on reasons which may not appear  convincing to  us.   We  have, however, pointed  out  that  the  Labour Appellate  Tribunal gave no finding on the question  whether the  respondents were temporary employees or not.  The  only finding  which  the  Tribunal gave related  to  a  different matter, namely, the completion of erection works.  Secondly, learned counsel for the respondents has contended that under section  22  of  the  Act  the  Appellate  Tribunal  had   a discretion either to lift the ban or not to lift it and in a matter of discretion this Court should not interfere.  It is true  that  this Court does not sit upon  the  decisions  of Industrial  Tribunals like an ordinary Court of appeal,  and

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there must be special circumstances to justify the  exercise of our special power under article 136 of the  Constitution. In  our  opinion, such special circumstances  exist  in  the present  case  where the Labour Appellate Tribunal  has  not directed  its mind to the real question to be decided on  an application  under section 22 of the Act and has  passed  an order  on the basis of a somewhat irrelevant  finding  which has resulted in manifest injustice. The  discretion  which an Industrial Tribunal  has  must  be exercised  in  accordance with well  recognised  principles. There  is undoubtedly a distinction between  commercial  and industrial  arbitration.  As has been pointed out by  Ludwig Teller  (Labour Disputes and Collective Bargaining) Vol.  1, page 536: "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 itself  with  interpretation  of  existing  obligations  and disputes relating to existing agreements". 810 A Court of law proceeds on the footing that no power  exists in the courts to make contracts for people; and the  parties must make their own contracts.  The courts reach their limit of power when they enforce contracts which the parties  have made.   An  Industrial Tribunal is not so fettered  and  may create new obligations or modify contracts in the  interests of  industrial  peace,  to protect  legitimate  trade  union activities and to prevent unfair practice or  victimisation. We  cannot, however, accept the extreme  position  canvassed before us that an Industrial Tribunal can ignore  altogether an  existing agreement or existing obligations for no  rhyme or reason whatsoever. It  has  been  necessary for us to go  into  the  facts  and circumstances  of this case in greater detail than is  usual with  this Court, because the Labour Appellate Tribunal  did not  do  so.   The Act under which  the  Appellate  Tribunal purported  to  pass its order has now been repealed  by  the Industrial Disputes (Amendment and Miscellaneous Provisions) Act,  1956.   A question of some nicety as  to  the  correct interpretation  of  section 33 of  the  Industrial  Disputes (Amendment  and  Miscellaneous Provisions) Act,  1956  might have  arisen if we had thought fit to remand this case.   We do  not,  however, think it necessary to pass  an  order  of remand  in this case and therefore abstain  from  expressing any  opinion  as  to  the  correct  position  in  law  under subsection (2) of section 33 of that Act.  No new facts need investigation in this case.  Learned counsel for the parties have taken us through all the affidavits filed and the facts necessary for an enquiry under section 22 of the Act clearly emerge from those affidavits.  We are satisfied Prima  facie that  the respondents were temporary employees and were  put on  the  spare  list as and when  the  erection  works  were gradually completed.  The appellant company have made out  a prima  facie case for the permission which they  have  asked for  and there is no suggestion even of any unfair  practice or victimisation. In these circumstances, we would allow the appeal, set aside the decision of the Labour Appellate Tribunal dated the 25th September 1953 and pass the order 811  Which  that  Tribunal  should have  passed  in  this  case, namely,  that  permission  be granted to  the  appellant  to discharge   ninety   six   temporary   workmen.    In    the circumstances  of this case, we think that the parties  must

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bear their own costs throughout. Appeal allowed.