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PETITIONER: THE PRAKASH COTTON MILLS (PRIVATE) LTD.  AND OTHERS

       Vs.

RESPONDENT: THE STATE OF BOMBAY (NOW MAHARASHTRA)

DATE OF JUDGMENT: 16/02/1961

BENCH: WANCHOO, K.N. BENCH: WANCHOO, K.N. GAJENDRAGADKAR, P.B. SARKAR, A.K. SUBBARAO, K. MUDHOLKAR, J.R.

CITATION:  1961 AIR  977            1962 SCR  (1) 105  CITATOR INFO :  F          1967 SC1450  (5)

ACT: Bonus-Textile  Mills in local area-Agreement for bonus  with specified  mills-Award thereon-Extension of award  to  other mills  in  the  area-Notification  by   Government-Validity- Constitutional  validity  of  enactment   Bombay  Industrial Relations Act, 1946 (Bom.  11 of 1947), ss. 95A, 114(2).

HEADNOTE: The  disputes regarding bonus to be paid to the’ workmen  of the appellant mill and other cotton textile mills in Greater Bombay  for  the  year 1952 and 1953 were  referred  to  the Industrial   Court  under  the  provisions  of  the   Bombay Industrial  Relations  Act, 1946, and while  the  references were pending, an agreement was arrived at between the  Mill- owners’ Association, Bombay, and the Rashtriya Mills Mazdoor Sangh,  a  Representative  Union of workmen  in  the  cotton textile  industry with respect, to payment of bonus for  the years  1952  to 1957, providing inter alia  for  payment  of bonus even where a mill made actual loss, the minimum  bonus being  4.8 per cent., of the basic wages earned  during  the year,  subject  to such mill being entitled  to  adjust  the amount  thus  paid by it as the minimum  bonus  against  any available  surplus  in any subsequent year or  years.   This agreement  was  registered and was made  enforceable  as  an award (1)  L.L.R. [1948] Nag. 95o. (2) A.I.R. 1937 Mad. 763. 106 against  those  mills  which  were  parties  thereto.    The appellant;  however,  did not sign, the agreement,  and  its case  before  the    Industrial Court was that it  had  been continuously  making losses from 1950 to 1955.  On July  31, 1956,  the Government of Bombay issued a notification  under s.  114(2) Of the Act directing that the award made  by  the Industrial  Court aforesaid, for   payment of bonus for  the years  1952 and 1953 and also for the years 1954 to 1957  be enforced  against the appellant.  The  appellant  challenged

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the  validity of s. 114 on the grounds (1) that it  offended Art. 14 Of the Constitution inasmuch as it gave an  unguided and arbitrary power to the State Government to  discriminate between various sets of employers and employees and make  an order on any one set at its pleasure leaving out others, (2) that  it  offended Art. 19(i)(g) in that it  put  an  unrea- sonable  restriction  on  a  person’s  right  to  carry   on business,  and (3) that it prevented a party from having  an industrial dispute decided by an Industrial Court under  the Act.   In  any  event,  the  appellant  contended  that  the notification  was  bad,  because (a) it  was  made  while  a reference was pending in an Industrial Court and, therefore, took  away  the jurisdiction of, that Court  to  decide  the pending references and (b) the notification went beyond  the powers  conferred  on the State Government by s.  114  since under that section the Government was bound by the decisions of the Full Bench in view of s. 95A, but in the present case it ignored a decision of the Full Bench which provided  that no  bonus would be payable by an employer where it had  made no profits. Held  (Sarkar, j., dissenting), that the notification  dated July 31, 1956, was beyond the powers conferred on the  State Government   under  s.  114(2)  Of  the  Bombay   Industrial Relations Act, 1946, and must, therefore, be struck down, There  are  three  limitations on. the power  of  the  State Government  when  acting  under s. 114(2): (1)  that  it  is limited   by  the  subject-matter  of  the  agreements,   or settlement,  submission or award sought to be extended,  (2) that it has to be in conformity with the industrial law laid down by the Full Bench of the Industrial Court and also   by any  decision of the  Supreme Court, and (3) that the  State Government’s power to make a direction under that section is co-terminus-with  the power of an adjudicator and the  State cannot do ’what an ’adjudicator cannot do under the Act. Action  taken by the State Government under s. 114(2)  is  a proceeding under the Act within the meaning Of s. 95A of the Act. The  New  Maneckchowk  Spining Co. Ltd. and  others  v.  The Textile Labouy Association, [1961] 3 S.C.R. I, relied on. Per  Sarkar,  J.-(1) Section 114 of  the  Bombay  Industrial Relations  Act,  1946,  does  not  offend  Art.  14  Of  the Constitution.   The object of the Act is the  settlement  of industrial disputes and 107 attainment  of  industrial peace and the  section  does  not confer absolute and arbitrary power. (2)  The  restrictions imposed by s. 114(2)  are  reasonable and  have  been put in the interest of the  general  public. Consequently, the section does not contravene Art. 19(i)(g). Bijay  Cotton  Mills Ltd. v. The State of  Ajmer,  [1955]  1 S.C.R. 752, referred to. (3)  The provisions of the Act must be read together and  in cases  in which power under s. 114(2): has  been  exercised, the right to ask for an adjudication by an Industrial  Court must be considered either as taken away or unavailing. (4)  The  issue of a notification under s. 114(2) is  not  a proceeding  as  contemplated by s. 95A and,  therefore,  any question of complying with any Full Bench decision does  not arise. (5)  Section   114  directly  permits  and  contemplates   a notification which would produce a result in variance with a decision of the Supreme Court and, therefore, a notification duly  issued under that section cannot be said to have  been issued, mala fide. Muir  Mills  Co. Ltd. v. Suti Mills Mazdoor  Union,  Kanpur,

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[1955] 1 S.C.R. 991, referred to. (6)  The Act is not invalid and the notification of July 31, 1956, is unobjectionable and cannot be set aside.

JUDGMENT: CIVIL APPELLATE JURISDICTION: Civil Appeal No. 759 of 1957. Appeal  from the judgment and Order dated June 26, 1957,  of the Bombay High Court in Appeal No, 92 of 1956. J.   C.  Bhatt,  S. N. Andley, J. B.  Dadachanji,  Rameshuar Nath and.P. L, Vohra, for the appellants. R.   Ganapathy Iyer and D. Gupta, for respondent. 1961.   February 16.  The Judgment of Gajendragadkar,  Subba Rao,  Wanchoo and Mudholkar, JJ., was delivered by  Wanchoo, J. Sarkar, J., delivered a separate Judgment. WANCHOO, J.-This appeal by  certificate granted by the  High Court  of Bombay raises the constitutionality, of s.  114(2) of  the  Bombay Industrial Relations Act, No.  XI  of  1947, hereinafter called the Act).  The brief facts necessary  for present purposes are these. 108 The  appellant is a cotton textile mill situate  in  Bombay. It  is said that the appellant had been continuously  making losses  from  1950 to 1955.  References  were  however  made under  s.  73-A of the Act by the  Rashtriya  Mill’  Mazdoor Sangh, Bombay, in respect of disputes relating to bonus  for the years 1952 and 1953, which are said to be pending before the  Industrial  Court, Bombay.  The ease of  the  appellant before  the Industrial Court was that as it had made  losses there was no question of its paying any bonus for the  years in dispute.  It seems that at the same time there were cases relating  to  bonus  of  other  mills  pending  before   the Industrial  Court  and the appellant applied that  its  case should be dealt with separately, and this prayer was acceded to.   It  seems that while the references were  pending,  an agreement   was.   arrived  at  between   the   Mill-owners’ Association,  Bombay and the Rashtriya Mill  Mazdoor  Sangh, Bombay, with respect to payment of bonus for the years  1952 to  1957  and  the agreement was to  come  into  force  with respect to each mill when it was signed by each member  mill of the Mill-owners’ Association.  Clause (6) of that  agree- ment  provided  for payment of bonus even where  the  profit made  by  a mill was not adequate to provide for  all  prior charges as per the Full Bench formula evolved by the  Labour Appellate  Tribunal in The Mill-owners’ Association,  Bombay v. The Rashtriya Mill Mazdoor Sangh (1) or even where a mill made actual loss, the minimum bonus being in either of these two  cases 4-8 per cent. of the basic wages.  earned  during the year, subject to such mill being entitled to adjust  the amount  thus  paid by it as the minimum  bonus  against  any available surplus in any subsequent year or years under  the provisions of the agreement.  This agreement was  registered and  was  made enforceable as an award against  those  mills which  were parties thereto.  The appellant however did  not sign  the agreement and therefore it was not enforced as  an award  by  the  Industrial  Court  against  the   appellant. Thereafter  the  Rashtriya Mill Mazdoor Sangh wrote  to  the Government of Bombay requesting that the (1)  [1930] 2 L.L.J. 1247. 109 said  award  should  be enforced against  the  appellant  in exercise of the powers vested in the Government by s.  114(2) of the Act.  After necessary action under s. 114(2),     the Government  of Bombay issued a notification dated  July  31,

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1956, directing that the award made by the Industrial  Court on  March 13, 1956, for payment of bonus for the years  1952 and  1953  and also for the years 1954 to 1957  be  enforced against the appellant. This was followed by a writ petition by the appellant in the High  Court challenging the constitutionality of  s.  114(2) and  also challenging the power of the State  Government  to issue  such  a  notification  under  that  provision.    The petition  was however dismissed on October 9,  1956.   There was then an appeal to a Division Bench of the High Court  in which also the appellant failed.  The appellant then applied for  a  certificate to enable it to file an appeal  to  this Court, which was granted and that is how the matter has come up before us. Two  main points have been urged on behalf of the  appellant before  us.  In the first place, it is urged that s.  114(2) is  unconstitutional as it violates the  fundamental  rights guaranteed under Art. 19(1)(f) and (g) of the  Constitution. In  the second place, it is urged that even if s. 114(2)  is constitutional, the notification has gone beyond the  powers conferred  on  the  State Government  by  that  section  and therefore the notification is bad. We  do  not think it necessary for purposes of  the  present appeal  to consider the constitutionality of s. 114(2),  for we have come to the conclusion that the notification is  bad because  it  goes beyond the powers conferred on  the  State Government  by that section.  This brings us immediately  to the  second point that has been urged before us and in  that connection we have to consider the ambit of the power of the State Government under s. 114(2).  Section. 114(2) reads  as follows.-               "In cases in which a Representative Union is a               party   to  a,  registered  agreement,  or   a               settlement,  submission  or award,  the  State               Government may,               110               after   giving   the   parties   affected   an               opportunity of being heard, by notification in               the   Official  Gazette,  direct   that   such               agreement,  settlement, submission  or.  award               shall be binding upon such other employers and               employees  in such industry or  occupation  in               that  local  area as may be specified  in  the               notification:               Provided that before giving a direction  under               this section the State Government may, in such               cases as it deems fit, make a reference to the               Industrial Court for its opinion." The  words  of s. 114(2) are very general and may  at  first blush  be  open to the interpretation  that  any  agreement, settlement,  submission or award may be extended  thereunder provided  it fulfills its terms.  But further  consideration shows that there are two obvious limitations on the power of the State.  Government in that behalf.  The first limitation arises  out of the subject-matter of the agreement etc.,  to be  extended.  Suppose the agreement etc. deal with (lot  us say)  the  wages of a certain type of workmen in  a  certain mill.  Suppose that the agreement etc., are extended to ano- ther  mill  where  that  type of  workmen  does  not  exist. Obviously   the  agreement  cannot  be  extended  in   these circumstances and the power of the State Government is  thus limited by the subject matter of the agreement etc. The  second limitation which again, is obvious  arises  from the provisions of law.  The proviso to s. 114(2) shows  that before  exercising  its  power under the  said  section  the

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Government  can refer the matter to an Industrial Court  and there  can be no doubt that an Industrial Court  cannot  and will  not,  advise anything against the law.   Section  95-A makes the determination of any question of law in any order, decision,  award or declaration passed or made, by the  Full Bench  of  the Industrial Court under the  regulations  made under s. 92 binding in all proceedings under the Act.   What is  done under s. 114(2) is also a proceeding under the  Act after notice to the parties affected.  The State  Government is  thus  bound by any decision on a question of  law  while proceeding under a. 114(2).  The 111 policy  of the Act underlying s. 95-A therefore  lead,,;  to the  conclusion that the exercise of power conferred  by  s. 114(2) has to be in conformity with the industrial law  laid down  by the Full Bench of the Industrial Court and also  by any decision of this Court.  The State Government  therefore when  it  passes  an order under s. 114(2)  must  have  full regard to the law as laid down by the legislature and by the decisions  of this Court and cannot pass an order  under  s. 114(2) which is against such law.  Besides, s. 114(2) places a  registered agreement, a settlement, a submission  and  an award on the same footing and so if an award has to  conform to  s.  95-A as it must so must the  other  three  mentioned therein.  Therefore, when the State Government acts under s. 114(2) it can only do as between the parties before it  what a  labour court, an Industrial Court or a wage board can  in law  do  under  the Act.  We do not  think  that  s.  114(2) authorises  the State Government to act against the  law  as laid  down  by the legislature or by  this  Court.   Section 114(2)  therefore  appears to be speedy  remedy  (dispensing with all appeals provided under the Act) by which the  State Government  may  direct  that the terms  and  conditions  of employment  in the matter of wages, hours of work and so  on may be the same in a particular industry or occupation in  a particular   area  as  may  have  been  settled  between   a representative union and other employers in that area and as could if necessary be enforced through an award in a case to which the representative union was a party.  There can be no doubt  however that the State Government cannot do under  s. 114(2) what an adjudicator has ’no power to award under  the provisions  of the Act.  Therefore, as we read a, 114(2)  we cannot  escape  the conclusion that the  State  Government’s power to make a direction under that section is  co-terminus with  the power of an adjudicator (be it a labour court,  an Industrial  Court or a wage board under the Act) to make  an award  thereunder, and the State Government cannot under  s. 114(2) do what an adjudicator cannot do under the Act.  This being  the ambit of the State Government’s power in  respect of giving a direction under a. 114(2), 112 let us now proceed to see whether the impugned  notification is within the ambit of these powers. By this notification the State Government has directed  that the award dated March 13, 1956, made by the Industrial Court shall  be binding on the appellant and its employees in  the matter of payment of bonus for the years 1952 to 1957  (both inclusive).   It is not in dispute that the said  award  was based, on an agreement between the Mill-owners’ Association, Bombay  and the Rashtriya Mill Mazdoor Sangh,  Bombay.   The said  agreement provided that it would have to be signed  by each  member mill of the Mill-owners’ Association before  it would  be binding on it and again it is not in dispute  that the appellant-mill though it is a member of the Mill-owners’ Association  never  signed  it.  Farther,  cl.  (6)  of  the

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agreement  provided  for payment of minimum  bonus  even  in cases where there was no adequate profit to provide for  all prior  charges  as per the Full-Bench formula  and  also  in cases  where  a  mill had made actual  loss  on  the  year’s working, subject to a proviso as to adjustment.  Thus by the direction  given in the impugned notification the  appellant is subjected to payment of bonus even where it has not  made adequate  profit to provide for all prior charges or has  in fact made a loss.  The contention on behalf of the appellant is that it would not be open to an Industrial Court to grant bonus when profit was not adequate to meet all prior charges or  where  there was an actual loss and therefore  when  the impugned  notification made it possible for grant  of  bonus even in these cases (for prima facie the appellant had  made losses  upto  1955),  it directed something  which  even  an Industrial Court could not do.’ In consequence, it is  urged that the notification inasmuch as it makes this possible  is beyond the powers conferred on the State Government under s. 114(2) because it allows something to be done which even  an Industrial   Court  could  not  allow.   Reliance  in   this connection  is placed on the decision of this Court  in  The New Manekchowk Spinning.  Co. Ltd. and Others v. The Textile Labour  Association  (1).   In  that  case  this  Court  was considering (1)  [1961] 3 S.C.R. 113 a  similar agreement relating to Ahmedabad.  The  Industrial Court  had imposed that agreement after its expiry  for  one year on the mills inspite of their contention that they were not bound to pay any bonus for the years in dispute in  view of the law laid down by this Court in The- Associated Cement Companies, Limited v. The Workmen (1).  After examining  the terms  of the agreement then in dispute this Court  came  to the  conclusion  that in view of the law laid  down  in  The Associated Cement Companies’ case, the Industrial Court  had no  jurisdiction to impose that agreement on the mills.   It further  held  that  an agreement of that  kind  could  only continue by consent of parties. and could not be enforced by industrial  adjudication  against  the will of  any  of  the parties.   The agreement in the present case directed to  be enforced  by the impugned  notification is similar in  terms and  as  held  New Manekchowk’s case (2)  it  could  not  be enforced by industrial adjudication against the will of  any of the parties.  The power of the State Government under  s. 114(2)  being co-terminus with the power of  an  adjudicator under  the  Act,  such  an  agreement  cannot  therefore  be directed  to be enforced against the will of  the  appellant even  under  s.  114(2) inasmuch as by doing  so  the  State Government would be going beyond the powers conferred on  it by that section.The impugned notification therefore must  be held  to  be  bad  inasmuch as it  goes  beyond  the  powers conferred  on the State Government under s. 114(2) and  must therefore be struggle down. We  therefore allow the appeal with costs and setting  aside the order of the High Court hold that the notification dated July 31, 1956, is beyond the powers of the State  Government under s. 114(2) and direct that it will not be enforced. We  should however like to make it clear that this  decision will not prejudice the trial of any references with  respect to bonus which may be pending or which may hereafter be made between  the  appellant and its employees  with  respect  to years 1952 to 1957 (both (1)  [1959] S.C.R. 925. (2) [1961] 3 S.C.R. 1. 114

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inclusive).  If such references are pending or are hereafter made they will be decided in accordance with the decision of this Court in The Associated Cement Companies’ Case SARKAR, J.-This appeal arises but of an application made  by the appellants to the High Court at Bombay under Art. 226 of the  Constitution for a writ directing the  respondent,  the State’ of Bombay, to forbear from acting upon or enforcing a certain  notification  issued by it under a. 114(2)  of  the Bombay  Industrial  Relations Act, 1946.   This  order  was; sought on two grounds.  The first ground was that s.  ll4(2) was  ultra vires, illegal and void.  The second  ground  was that  if it was not so, the notification had been issued  in improper exercise of the powers conferred by that provision. The appellants are a cotton textile mill in Greater  Bombay, a   local  area  under  the  Act,  and  its  directors   and shareholders.   Their application was dismissed by the  High Court and hence the present appeal. It  appears that certain references were pending since  1953 and  1954  under  the Act in the  Industrial  Court  between various  cotton  textile mills in Greater Bombay  and  their employees,  in respect of disputes concerning bonus for  the years 1952 and 1953.  In these references the employees were represented   by  the  Rashtriya  Mill  Mazdoor   Sangh,   a Representative  Union  of  workmen  in  the  cotton  textile industry as defined in the Act and a union registered  under it.  The appellant mill was a party to these references.  On March  1,  1956, while these references  were  pending,  the Rashtriya Mill Mazdoor Singh entered into an agreement  with the  Mill  Owners Association, Bombay, of  which  fortyseven cotton  textile  mills including the  appellant  mill,  were members, regarding the bonus to be paid to the employees  of these mills for the years 1952 to 1957.  This agreement  was subsequently accepted individually by about fortytwo of  the mills who were members of the Association and parties to the references,  and  became  binding  on  these  mills.    This agreement  was later registered under the Act and  filed  in the pending references and an award was (1)  [1959] S.C.R. 925. 115 made by the Industrial Court on March 13, 1956, in terms  of it,  as between the mills who had individually accepted  the agreement  and their employees.  The appellant mill did  not accept the agreement and no award was made in the references concerning it and so far as it was concerned, the references remained pending. On  July  31, 1956, the respondent made the order  which  is challenged  in these proceedings.  That order was  in  these terms:                "Whereas the...Rashtriya Mill Mazdoor  Sangh,               Bombay.....is  a party to an award  dated  the               13th March 1956               And  whereas  the Government of  Bombay,  con-               siders  that the award should be made  binding               upon  the employers specified in column  1  of               the   schedule   hereto  annexed   and   their               employees               And  whereas the said employers and the  Rash-               triya Mill Mazdoor Sangh, Bombay, representing               the said employees being the parties  affected               were heard               Now,  therefore,  in exercise  of  the  powers               conferred by sub-section (2) of section 114 of               the said Act, the Government of Bombay  hereby               directs  that the said award shall be  binding               on the employers specified in column 1 of  the

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             schedule hereto annexed and their employees in               the  matter of payment of bonus for the  years               specified against the employers in column 2 of               the said schedule." The  appellant mill was one of the employers men. tioned  in the  schedule to the notification and the  schedule  further provided  that the award would be binding on  the  appellant mill  and  its employees for the years 1952  to  1957,  both inclusive.   As a result of this notification the  appellant mill  became liable to pay bonus to its employees  for  the. years  mentioned,  in  terms  of  the  award  based  on  the agreement,  to  neither  of  which  it  was  a  party.   The appellants contend that the appellant mill is not liable  to pay bonus in law as laid down by this Courtin Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union (1) and by the Full Bench (1)  [1955] 1 S.C.R. 99r. 116 of   the   Labour  Appellate  Tribunal,  in   Mill   Owners’ Association, Bombay v. Rashtreeya Mills Mazdoor Sangh (1) as it  has not made any profit for the period  commencing  from June 30, 1950, and ending on June 30,1955. The  agreement  on  which the award  was  based,  adopted  a formula  for  ascertaining  the  available  surplus  of  the profits  of an employer and provided for payment of  certain bonus out of it.  This bonus, I gather, would have been of a smaller amount than that payable under the formula laid down in  the  cases mentioned earlier.  The  appellants  have  no complaint   against   this  Part  of  the   agreement   for, presumably,  under it, they would not be liable to  pay  any bonus  at  all.   What  they object to  is  el.  6  of  the’ agreement.   This clause in substance provided that when  no avai. lable surplus was found to exist according to the for- mula  or even when a mill had incurred loss in a  particular year,  it would have to pay its employees "a  minimum  bonus equivalent to 4.8 per cent of the basic wages earned by them during the year", with a right to recoup the bonus so  paid, out  of the bonus that would be payable under the  agreement in  subsequent years and out of the residue of  the  surplus profits then remaining, it would have to pay bonus in  terms of  the agreement.  The substance of the  appellants’  grie- vance  against  the  notification  is  that  under  it   the appellant  mill  has to pay bonus in terms of cl. 6  of  the agreement even though it has been working at a loss. The  first  question  is whether s. 114(2)  is  invalid  and illegal.   That  section so far as is material is  in  these terms:                "S.  114  (1).  A registered agreement  or  a               settlement,  submission  or  award  shall   be               binding  upon  all per. sons who  are  parties               thereto:                (2) In cases in which a Representative  Union               is  a  party to a registered agreement,  or  a               settlement,  submission  or award,  the  State               Government  may,  after  giving  the   parties               affected an opportunity of                (1)  [1950] 2 L.L.J. 1247.               117               being  heard, by notification in the  Official               Gazette,    direct   that   such    agreement,               settlement,  submission  or  award  shall   be               binding  on such other employers or  employees               in  such industry or occupation in that  local               area as may be specified in the notification." The appellants first challenge the validity of the  .section on  the ground that it offends Art. 14 of the  Constitution.

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It is said that it gives an unguided and arbitrary power  to the State Government to discriminate between various sets of employers and employees and make an order on any one set  at its  pleasure leaving out others.  It seems to me that  this contention  is  not well-founded.  The power  given  by  the provision  is not, in my view, uncontrolled.  The object  of the Act clearly is the settlement of industrial disputes and attainment  of  industrial peace.   Furthermore,  under  the section the order can be made on employerS and employees  in a local area which again is a limitation of the power. Now,  a  local  area is an area notified  as  such  for  the purposes of the Act:- see s. 2(23).  The object of this pro- vision as to local areas is to divide the State into several areas  for  better maintenance of industrial  peace  and  to group together for that purpose, the industries in a region. If conditions of labour in any area where a large number  of workmen is collected, are uniform, then there is less likely to be disaffection among them whereas if such conditions are not the same, the workmen are likely to become restive.   It is  well-known  that  regional  considerations  are  closely connected with industrial disputes and are of importance for their settlement. The  local area contemplated by s. 114(2) is  obviously  the area in respect of which the Representative Union  mentioned in it has been registered.  No reference can be found in the section  to  any  other  local  area.   Under  s.  2(33)   a Representative Union means a union registered as such  under the Act and under s. 13(1) a Representative Union is a union which has a membership of not less than fifteen per cent. of the  employees  in  any  industry  in  any  local  area  and registered for that industry in the area. 118 The agreement, settlement, submission or award mentioned  in the section has to be one to which a Representative Union is a  party.  It follows from this that a substantial  body  of workmen in an area has come to a decision or become bound by an  award  as  to a question or  questions  affecting  them. Therefore, the power under the section can be exercised only for  achieving  industrial peace in that area.   It  is  not unlikely  when a substantial section of workmen  congregated in  an  area  have secured certain  rights  that  the  other employees in that area may claim similar rights and this may disturb  industrial  peace in that area.  The power  can  be exercised only for meeting such disturbance and only in  the local area where it occurs. There  are  therefore two guiding  principles.   First,  the power can be exercised only to prevent breach of  industrial peace.   Secondly, it can be exercised only in  a  specified area  if  there is a threat to industrial peace  there.   An exercise  of  the power outside the area  and  for  purposes other than maintenance of industrial peace, would be  beyond the scope of the section.  Again, once there is occasion for legitimate  exercise  of the power and it is  exercised,  it must be exercised in all units of the industry in that local area  in  which  units the threat to  the  industrial  peace exists if that would restore the peace.  It would be open to the  Courts to correct a discriminatory use of the power  or its use outside the scope of the section.  Therefore it does not  seem  to  me  that the  section  confers  unguided  and arbitrary power. It.  is of some interest to state that in the  present  case there  has been no such discriminatory use of the  power  or any  use outside the section.  The respondent has  made  the award  binding  on  all  the remaining  mills  who  had  not accepted the agreement and there is evidence that there was:

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threat of breach of industrial peace in these mills. Then  also, I find that the section has conferred the  power on  the  highest authority, namely, the  Government  itself. That  would  be  some  guarantee  that  it  would  be   duly exercised.  This is a further reason for 119 holding  that  the  section does  not  confer  absolute  and arbitrary Power. The  next objection to the section is that it  offends  Art. 19(1)(g)  in that it puts an unreasonable restriction  on  a person’s  right to carry on business.  This contention  also is  unacceptable to me.  There is no doubt that the  section puts  certain restrictions on a person’s right to carry  (in an occupation or business.  The real question is whether the restrictions  have been put in the interest of  the  general public and are reasonable.  That the restrictions have  been put in the interest of the general public seems to me to  be unquestionable.   The reason why the restrictions have  been put is that otherwise, industrial peace would be  disturbed. The   entire  country  is  interested  in  industries   and, therefore,  in  industrial peace.  This  point  requires  no elaboration., Then, are the restrictions put, reasonable?  It seems to  me that  they  are.  The restrictions are  that  an  agreement; settlement, award or submission-all of ,Which of course must be concerning industrial disputes to which a person is not a party  is  made  binding on him.   By  an  "agreement",  the parties  to an industrial dispute settle it  themselves.   A "settlement"  means  a settlement of an  industrial  dispute arrived  at  with  the assistance of a  conciliator  in  the course  of conciliation proceedings under the provisions  of the  Act.   A "submission" is a reference of  an  industrial dispute to arbitration.  An "award" is an adjudication on an industrial dispute by the court constituted under the Act. An agreement, a settlement or a submission is the result  of the free consent of the parties to the dispute.  As  earlier stated, the section only applies to an agreement, settlement or  submission to which a Representative Union, which  is  a union  representing  a substantial number of workmen,  is  a party.   Therefore, the section can apply to  an  agreement, settlement  or  submission  which a  substantial  number  of workmen and an employer has, of their free choice, accepted. It  would  follow  that such  an  agreement,  settlement  or submission has been considered reasonable by parties 120 interested  and  in  the case of a settlement  by  the  con- ciliator  appointed  under the Act also.   The  restrictions imposed  by any of these must therefore be  reasonable.   An award, on the other hand, is a decision of a court and  can, therefore, always be expected to be reasonable. If  certain restrictions are reasonable for an employer  and his  employees,  I  suppose  it  would  follow  that   those restrictions would be equally reasonable for other employers and  employees  and more so, when they are all in  the  same neighborhood  where the conditions are likely to be more  or less  the  same.   Therefore,  it  seems  to  me  that   the restrictions  imposed  by  s. 114(2) cannot be  said  to  be unreasonable. I  have  earlier  summarised  the  offending  part  of   the agreement.    I  do  not  think  that  there   is   anything unreasonable there.  The employer pays only 4.8 per cent  of the  basic wage in the year when he makes no profit  with  a right to recoup it in a subsequent and more prosperous year. The maximum that he has to pay as bonus in the best year is, I  gather,  less than what he would have to pay  under.  the

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formula  regarding  bonus  laid down  by  this  Court.   The agreement  extends  over  6  years  and  it  would  not   be unreasonable  to  suppose that during_ these  years  profits might  be made to wipe off the minimum bonus paid in a  lean year.   The restrictions put by the present  agreement  are, therefore,, in my view quite reasonable. It may be that in individual cases, which are not likely  to be many, the restrictions may work hardship.  But that would not  justify  a  conclusion that s.  114(2)  itself  imposes unreasonable  restrictions on a man’s right to carry on  his business  or occupation.  This view was taken by this  Court in Bijay Cotton Mills v. The, State, of Ajmer (1), where  it was said in respect of the Minimum Wages Act, 1948;               "Individual employers might find it  difficult               to  carry on the business on the basis of  the               minimum  wages  fixed under the Act  but  this               must   be   due  entirely  to   the   economic               conditions  of  these  particular   employers.               That cannot be a reason for the striking  down               the law itself as unreasonable."               (1)...[1955] 1 S.C.R. 752, 755-6.               121 Another  ground  on which the validity of  the  section  was challenged  was  that it prevented a party  from  having  an industrial dispute decided by an Industrial Court under  the Act.  But I do not see that there is an inherent right in  a party  to  an industrial dispute to have it  decided  by  an Industrial,  Court under the Act.  The right to ask  for  an adjudication by an Industrial Court is itself created by the Act.   What  the Act has given, it can clearly  restrict  or take  away in any manner it thinks fit.  The  provisions  of the  Act must be read together and in cases in  which  power under s. 114(2) has. been exercised, the right to ask for an adjudication  by  an  Industrial Court  must  be  considered either as taken away or unavailing. I  thus  come  to the conclusion that  the  section  is  not invalid  for any of the reasons mentioned.  I also  feel  no doubt  that  the section was quite  within  the  legislative competence  of the legislature which passed it.  I  did  not understand the learned counsel for the appellants to contend to   the  contrary.   I  have  mentioned   the   legislative competence only to dispose of another argument which also, I think,  was  aimed at the validity of the section.   It  was said that there is no power anywhere to provide for  payment of bonus where in law such bonus is not payable.  This argu- ment  is founded on the decision of this Court in  the  Muir Mills  case  (1)  where it had been said that  no  bonus  is payable where no profit has been made.  Therefore it is said that  the section authorises payment of bonus where none  is payable   in  law.   This  argument  seems  to  me   to   be misconceived.  If the section is legislatively competent and otherwise valid, as I think it is, then it cannot be invalid for  the  simple  reason that it directs  payment  of  bonus where,  as held by this Court, as a matter of  adjudication, none  would  be payable in law.  The law laid down  by  this Court is only for application when the question comes up for adjudication  by  a  court bound by that  law.   It  has  no relevance,   in  deciding  the  validity  of  an   otherwise competent  law.  The law laid down by any Court cannot  take away legislative competence.  The (1)  [1955] 1 S.C.R. 991 122 enactment  in  question has left the law laid down  by  this Court  quite  unaffected; it will still apply in  all  cases where it is applicable.

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Now I proceed to consider the validity of the  notification. As  I understood the learned counsel for the appellants,  he put  his  case  on  two grounds.  He  first  said  that  the notification  was invalid as it was made while  a  reference was  pending in an Industrial Court.  The reasoning is  that it  is  invalid as it takes away the  jurisdiction  of  that Court to decide the pending reference.  I think what I  have earlier said is a sufficient answer to this contention.  The right to have the pending reference proceeded with was given by  the  Act.  There is nothing to prevent that Act  or  any other,  from providing that the pending reference  shall  be discontinued or become infructuous.  If a notification could be  made under the section, as the present argument  assumes it  could  be,  then  as to when it  could  be  made,  would certainly  depend  on  the terms of  the  statute.   I  find nothing in the Act to show that a notification could not  be made  while a reference was pending and so as to  render  it ’abortive.  Therefore I think that no exception can be taken to the notification in the present case for the reason  that it was issued while the reference was pending. The  other challenge to the notification does not appear  to have been raised in the High Court.  It was based on s.  95A of the Act which is in these terms:               S.....95A.  The determination of any  question               of  law  in  any  order,  decision,  award  or               declaration passed or made, by the Full  Bench               of the Industrial Court, constituted under the               regulations   made  under  s.  92,  shall   be               recognised  as binding and shall be  followed.               in all proceedings under this Act. It  is  said that the Government in issuing  a  notification under  s.  114(2)  was,  in view of s.  95A,  bound  by  the decisions  of  the  Full Bench but in  issuing  the  present notification, it ignored a decision of the Full Bench  which provided that no bonus would be payable by an employer where he had made no profits.  Therefore it is contended that  the notification is invalid. I am unable to accept this argument.  I will assume 123 that there is Full Bench decision of the kind mentioned.  It is also true that the effect of the notification is to  make the appellant mill pay bonus for a year when it had made  no profit.   All this, however, to my mind makes no  difference for,  though in issuing a notification under s.  114(2)  the respondent has to give the parties sought to be affected  by it a hearing, there is really no proceeding held within  the meaning of s.  95  A  in connection with the  issue  of  the notification. All  that s. 95A does is to make "the determination  of  any question  of  law"  by the Full  Bench  binding  in  certain proceedings.  In order that  determination of a question  of law  may be binding in another proceeding,  that  proceeding must  raise  the same question for, a determination  of  one question of law cannot be binding on another question.   Now what  is the question when a notification is intended to  be issued under is. 114(2)?  The only question is whether it is necessary for preserving industrial peace in a locality that a certain agreement, settlement, submission or award  should be made binding on persons who are not parties to it.   Such a  question would not be a question of law at all; it  would not  be a question which could ever have arisen  before  the Full Bench.  It would follow that no occasion of being bound by  a determination of a question of law by the  Full  Bench can ever arise when the Government is considering whether  a notification under s. 114(2) should be issued.

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It  may be that the result of a notification made  under  s. 114(2) is to create a liability, for example, to pay  bonus. The  question  of law as to the liability to pay  bonus  may have been decided by the Full Bench. That  however  cannot  make the question  arising  under  s. 114(2)  a  question whether in law bonus  is  payable.   The questions remain essentially different.  Therefore, it seems to  me, that s. 114(2) does not contemplate a proceeding  of the nature conceived by s. 95A. Then  I find that s. 95A occurs in Chapter XIII of  the  Act which is concerned with Industrial Courts.  It appears  from the provisions of this chapter that the Industrial Court  is the highest Court contemplated by 124 the Act.  Under s. 92 it has power to provide by regulations made  by it that it will sit in Benches consisting  of  more than  one  person.   Obviously it is intended  that  when  a question of importance and difficulty arises, the Court will sit  in a larger Bench.  Section 95A appears, therefore,  to have  been enacted for the purpose that other courts  acting under the Act should follow the decisions of the Full  Bench so  that  there  might be uniformity of  law.   It  was  not intended  to  have  any  application  to  the  issue  of   a notification under is. 114(2). It also seems to me that if in issuing a notification  under s.  114(2) the Government were to be bound by the  decisions of  the  Full  Bench, then that section  would  be  rendered almost completely infructuous.  The question whether in view of  s.  95A, in issuing a notification under s.  114(2)  the Government  is  bound to follow the decisions  of  the  Full Bench can arise only if s. 114(2) is valid.  If s. 114(2) is valid,  an  interpretation  of  a.  95A  which  renders   it infructuous  cannot be correct.  The sections of  a  statute must be so interpreted as not to affect the operation of one another. Let  me  take  the case of  an  agreement  concerning  bonus between employer A and his employees.  Now there is  nothing in law to prevent an employer and his employees from  making any  agreement they like as to bonus.  They may  agree  that bonus would he paid at a certain rate even when the employer has  not made any profit.  That would be a  perfectly  valid agreement.  The agreement that was made in this case was  of that kind.  It has not been suggested that the agreement was invalid.  Indeed, the fact that it was filed in the  pending references and an award was made in terms of it would put it beyond doubt that it was unexceptionable for, the award  was made in terms of the agreement as required by s. 115A and it could not have been so made unless the agreement was in  all respects valid.  The Act therefore contemplates an agreement of this kind. If the argument of the learned counsel for the appellants is right, this agreement cannot be made 125 binding between B and his employees.  Now, first, s.  114(2) does  not  say that the agreement contemplated  by  it  must comply  with  all decisions of the Full Bench.   I  find  no justification  for  adding  to the word  "agreement"  in  s. 114(2)  the  words  "provided  it  is  in  compliance   with decisions  of the Full Bench".  Secondly, common  experience would  show  that  when; disputants  settle  their  disputes themselves  by an agreement, they rarely, if ever, make  the agreement strictly in terms of their legal ’rights; they, as it  is said, give and take and adjust matters in  their  own way.   So  cases would be rare where the parties  make’  the agreement  strictly  in terms of the law laid down’  by  the

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Full  Bench.   Thus if the contention of the  appellants  is right,  there would practically be no agreement to which  s. 114(2) would apply. Now, what is the law that can be laid down by the Full Bench regarding right to bonus?  It can Only be general principles as  to  when  it is to be payable and if  payable,  how  the amount  of it is to be calculated.  This is what this  Court did  in  the Muir Mills Case (1) and  the  subsequent  cases regarding  bonus.   The actual award of bonus  by  the  Full Bench  on the facts of the case before it, would  of  course not  be a determination of a question of law.   Suppose  now that  the  agreement  between A and  his  employees  was  in compliance  with  the Full Bench decision.   That  agreement must  therefore only provide that bonus of a certain  amount would  be paid in certain years.  I do not find it  possible to conceive of an agreement concerning bonus made after  the Full  Bench decision, which does not provide for the  amount of the bonus to be paid but ,only lays down the formula  for calculating  what is to be paid, for, the formula is in  the Full  Bench  decision and does not require to be  laid  down afresh.  That agreement would be an agreement in  compliance with  the-Full  Bench decision.  Suppose such  an  agreement provides for payment of a month’s wage,% as bonus.  Now this agreement is to be made binding on B and his employees.   If the  argument  that it can be made so binding only if  as  a result, B is not made to pay (1)..[1955] 1 S.C.R. 991. 126 anything  more than what he would have to pay under he  Full Bench  decision itself, is right then, it seems to  be  that the only case in which the agreement can be made so  binding will  be that in which the figures for example,  of  income, expenses, rehabilitation and a host of other things on which according  to  the Full Bench decision the bonus  is  to  be calculated,  are in the case of B absolutely identical  with those  in  the  case  of  A. If  the  figures  were  not  so identical, then in the case of B, a month’s wages may be too large  a bonus according to the Full Bench decision,  though it La just right in the case of A. I do not think that  such identity  would ever exist.  I think it right to  point  out here that under S. 114(2) only the agreement as made can  be extended  to  become binding on others.  There is  no  power under it to alter the agreement in any way and then make  it binding.   What  I have said so  far  concerning  agreements would apply equally to settlements.  Therefore, again almost all  agreements  made in terms of the  Full  Bench  decision would also be taken out of the operation of s. 114(2). Then I take the case of an award.  An award is a decision of a  court adjudicating upon an industrial dispute  under  the Act.   I do not consider now an award based on an  agreement for  such  an award would in substance be an  agreement  and with  agreements, I have already dealt.  I will,  therefore, take an award passed as a matter of adjudication.  I  should suppose  that such an award would be in accordance with  the law  as  decided by the Full Bench for the decision  of  the Full  Bench would be binding on the court passing the  award in view of a. 95A.  As stated in connection with  agreements such an award would only decide how much bonus, assuming the dispute  to be concerning bonus, would have to be  paid;  it would   not  be  laying  down  any  general  principle   for calculating  bonus for, ex hypothesis those principles  have already been laid down by the Full Bench.  Here again, as in the  case  of  agreements and for the same  reason,  if  the argument for the appellants is right, the award can be  made binding  on  employers  not  parties to  it  only  when  the

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relevant figures in the case if both the employers, 127 namely,  the  one who is a party to the award and  also  the other  on whom the award is sought to be made  binding,  are identical.  I conceive, such identity would never exist. As regards submissions, I am unable to see how s. 95A    can have any application at all.  Submissions are     defined in s.  66 of the Act which, so far as material, provides,  that "Any  employer and a Representative Union may, by a  written agreement, agree to submit any present or future  industrial dispute  to  ......... arbitration Such agreement  shall  be called  a  submission."  It  does not appear  to  me  to  be conceivable  that  the Full Bench could  ever  have  decided whether such a submission shall be made or not.  The  making of a submission involves no question of law.  It can be made only  in respect of industrial disputes.  Section  66  gives the parties concerned the right to make it.  Clearly, when a submission  by  A  and his employees is sought  to  be  made binding on B and his employees, there can be no question  of compliance with any Full Bench decision. It  would,  therefore, appear that s.  114(2)  would  become almost  wholly infructuous if a notification under it  could be  issued  only where the effect of that would  not  be  to produce a result which is not in compliance with Full  Bench decisions.   It  also  strikes me that  if  in  issuing  the notification,  the Government had to follow the  Full  Bench decisions, then the issue of that notification would  really become  an adjudication, the Government taking the place  of the  Industrial Court.  The very same questions  would  then arise  as would have arisen if the matter had to be  decided by an Industrial Court.  I am unable to hold that the inten- tion was to make the Government itself an Industrial  Court. If  an  adjudication  by  a court  was  necessary  then  the Industrial Court was already there and there was no need  to put the duty of adjudication on the Government. For  all  these  reasons I do not think that  in  issuing  a notification under s. 114(2) any question of complying  with any Full Bench decision arises.  In my view, 128 the  issue  of  the  notification is  not  a  proceeding  as contemplated by s. 95A. Lastly,  it  was contended that the notification  under  the section had been issued mala fide.  The only reason for this contention  was  that the object of such issue  was  to  get round the decision of this Court in Muir Mills case (1).  It is  true  that  one of the reasons why  the  Rashtriya  Mill Mazdoor Sangh wanted the notification to be issued was  that it  wanted to find a "way out of the situation arising as  a result  of the decision of the Supreme Court in  Muir  Mills case  (1)".   But  I am not able to agree  that   makes  the notification mala fide.  Apart from the fact that the  Sangh felt  that the decision had not helped the industry  or  the workmen,  which  feeling  I  have no  reason  to  doubt  was perfectly  honest, I am unable to see bow, if it is  legally permissible  under the statute to do a thing the  result  of which  would be to get round a decision of this  Court,  the doing  of it can be said to be mala fide.  The Act  directly permits and contemplates a notification which would  produce a  result in variance with a decision of this Court.   There has  been  no misuse of the Act at all.  As I  have  earlier stated,  in the case of bonus the effect of  a  notification under  s. 114(2) would almost always be to permit  something which is not permitted under the rule laid down in the  Muir Mills  case (1).  That being so, a notification duly  issued under  the section cannot be said to have been  issued  mala

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fide. For  all these reasons, in my view, the Act is  not  invalid and  the notification of July 31, 1956,  is  unobjectionable and  cannot be set aside.  I would, therefore,  dismiss  the appeal with costs. By  COURT:  In accordance with the  majority  judgment,  the order  of  the  High Court is set aside and  the  appeal  is allowed with costs. Appeal allowed. (1) [1955] 1 S.C.R. 991. 129