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PETITIONER: WESTERN INDIA MATCH COMPANY LTD.

       Vs.

RESPONDENT: WORKMEN

DATE OF JUDGMENT20/08/1973

BENCH: DWIVEDI, S.N. BENCH: DWIVEDI, S.N. REDDY, P. JAGANMOHAN

CITATION:  1973 AIR 2650            1974 SCR  (1) 434  1974 SCC  (3) 330  CITATOR INFO :  R          1979 SC  65  (5)  R          1984 SC 505  (23)  R          1984 SC1064  (11,19)  R          1985 SC 504  (4)

ACT: Industrial  Dispute-Probation for a period longer than  that provided by the employer’s Standing Order-Validity. Industrial Employment (Standing Orders) Act, 1946-Object and policy U.P.  Industrial Disputes Act, s. 6B-Scope of-’May’ in  sub. s. (2) should be read as ’shall’. Labour Court-Power to modify Standing Orders-Power to  order reinstatement.

HEADNOTE: Under the Standing Order for the Watch and Ward staff of the appellant, a permanent workman’ is one ’who has completed  a probationary period of two months as such and is employed on a permanent post;’ and ’a probationer’ is a workman ’who  is provisionally  employed to fill a permanent vacancy and  has not completed two months service.’ A watchman was appointed by the appellant on probation for a period  of 6 months.  His period of probation was  extended, and   during   the  extended  period,  his   services   were terminated.   ’Mere  was  an  industrial  dispute  and   the questions,   (1)  whether  the  termination  was  legal   or justified. and (2) to what relief the workman was  entitled, were  referred to the Labour Court.  The Labour  Court  held that.  the order of discharge was neither mala fide  nor  an act  of victimisation; but set aside the order of  discharge and directed reinstatement of the employee on the view  that the  term  regarding 6 months probation  in  the  employee’s letter  of appointment was in contravention of the  Standing Order and was invalid. Dismissing the appeal to this Court. HELD  :  (1) The Labour Court has not travelled  beyond  the terms  of reference, because, the validity or invalidity  of the discharge depends on the validity of the term  regarding 6 months’ probation. [437D-E] (2)  Since, according to the Standing Order, a workman s all not be kept on probation for more than 2 months, the  letter

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of  appointment (or special agreement) is inconsistent  with the Standing Order to the extent of the additional 4 months’ probation. [437E-G] (3)  The  inconsistent part of the agreement is  ineffective and unenforceable. [439F] (a)  To uphold the special agreement Would mean giving a go- by  to  the principle of three party participation.  in  the settlement  of the terms of employment, incorporated in  the Industrial Employment (Standing Orders) Act, 1946.  The ’Act gives  effect to the new thinking that Society has  also  an interest  in  the settlement of the terms of  employment  of industrial labour.  While formerly there were two parties at the negotiating table-the employer and the workman it is now thought  that  there should also be present a  third  party, namely  the  State’, representing society.   The  Certifying Officer  tinder the Act, as the statutory representative  of society,  adjudges  on  the fairness  or  reasonableness  of Standing  Orders after considering and weighing  the  social interest in the 435 Claims of the employer and, the demands of the workmen.  The special  agreement,  in the instant case, in, so far  as  it provides  for additional 4 months of Probation,  contravenes the Standing Order. [439A-E] (b)  The terms of employment specified in the Standing Order would  prevail over the corresponding terms in the  contract of  service in existence on the enforcement of the  Standing Order.  If a prior agreement inconsistent with the  Standing Orders  will  not  survive, an agreement  posterior  to  and inconsistent  with  the  Standing  Order  should  also   not prevail. [437-G; 438-D]  Agra  Electric  Supply Co. Ltd. v. Shri Alladin,  [1970]  1 S.C.  R.  808,  Avery  India  Ltd.   V.  Second   Industrial Tribunal,  west  Bengal A.I.R. 1972 S.C. 1626.   The  United Provinces  Electric  Supply  Co. Ltd.   Allahabad  v.  Their Working,  [1972]  2 S.C.C. 54, and Salem  Erode  Electricity Distribution Co. Ltd v. Salem Erode Electricity Distribution Co.  Ltd.  Employees  Union,  [1966]  2  S.C.R.  498,   504, followed.  M/s J. K. Cotton Manufactures Ltd., Kanpur v. J. N.  Tewari A.I.R.  1959 All. 639 and Banaras Electric Light  and  Power Co. Ltd.  Behlupura v.   Government  of  Uttar  Pradesh  and Others, [1962] 1 L.L.J. 14, overruled. (c)  Section 6B(1) of the U.P. Industrial Disputes Act deals with  a  settlement  arrived at  by  agreement  between  the employer  and  workmen  otherwise  than  in  the  Course  of conciliation  proceeding.   Sub-section  (2)  provides  that after  the  settlement  is arrived at, the  parties  to  the settlement or any one of them may’ apply to the Conciliation Officer for registration of the settlement.  In the  context of  sub-s.  (3) the word ’may’ should be  read  is  ’shall’. Subsection (3) provides that while considering the  question of  the  registration  of  a  settlement,  the  conciliation officer shall examine whether it is inexpedient to do so  on public  ground  affecting  social  justice  or  whether  the settlement  has been brought about as result  of  collusion, fraud  or  misrepresentation.   In  the  present  case,  the Conciliation Officer having had no say in the making of  the special   agreement   the  consent  of   the   employee   is meaningless.[439F440A] (4)  It is true that a Labour Court may determine terms  and conditions  of employment which may be inconsistent  with  a Standing  Order; but in the present case, the reference  did not  give  any  such jurisdiction to  the  Labour  Court  to determine  the  terms and conditions of  employment  of  the

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workman. [44OB-C] (5)  (a)  The  appellant  did  not  plead  in  its   written statement before the Labour   Court  that  the work  of  the discharged   employee   was   unsatisfactory   during    the probationary  period, not did it lead any evidence in  proof of  the  unsatisfactory  work.  The argument  was  also  not raised  in  the  Special  leave  petition.   Therefore,  the appellant  could  not be permitted to raise  the  contention that   since   the   discharge   was   occasioned   by   the unsatisfactory work of the employee the Labour Court  should not have ordered reinstatement. [440E-F] (b)  The  Labour  Court  may  interfere  with  an  order  of discharge  not  only  when it was made mala fide  or  as  a. measure of victimisation, but also when it finds that it was arbitrary or capricious or so unreasonable as to lead to the inference  that it was not, made bona fide.  In the  present case  as there was no plea and no evidence to show that  the work  of the employee was unsatisfactory, the conclusion  is obvious that the order of discharge is arbitrary. [441A-B] Tata  Oil  Mills Company, Ltd. v. its  Workmen  and  another [1963]  2 L.L.J. 78 M/s Francis Elein and Co  Private  Ltd.v The   Workmen  and another, A I.R. 1971 S.C.  2414  and  Air India  Corporation, Bombay v. V. A. Robellow, and   another, [1972] 1 L.L.J. 501, referred to. The question whether a Standing Order is,law and. hence  the special  agreement,  in contravention of it, was  void,  not decided. [440C-D] 436

JUDGMENT: CIVIL  APPELLATE  JURISDICTION : Civil Appeal  No.  2375  of 1698. Appeal by special leave from the award dated April 19, 1968 of  the Labour Court II Lucknow in Adjudication Case, No.  3 of 1967 L.C. (1), Lucknow/Adjudication Case No. 184 of  1967 L.C.  (11) Lucknow published in Uttar Pradesh Gazette  dated August 10, 1968. C.   K.  Daphtary, P. C. Bharatri and O. S. Mathur, for  the appellant. S.   C. Aggarwal and V. J. Francis, for the respondents. The Judgment of the Court was delivered by DWIVEDI,   J.-The  Wesetrn  India  Match  Company   Limited, Bareilly (hereinafter called the Company) is governed by the Industrial   Employment   (Standing   Orders)   Act,    1946 (hereinafter  called  the Act).  It appears that  it  has  a separate  Standing  Order  for the  Watch  and  Ward  Staff. According  to the Standing Order, there are five  categories of workmen : (1) Permanent, (2) Probationer, (3) Substitute, (4)  Temporary and (5) Apprentice.  A permanent  workmen  is one " who has completed a probationary period of two  months as such and is employed on a permanent post." A  probationer is  a  workman  "who is provisionally  employed  to  fill  a permanent vacancy and has not completed two months service". (emphasis added) The  Company appointed one Prem Singh as a watchman on  Sep- tember  1, 1965.  The Letter of appointment states  that  he would be "on probation for a period of six months." We shall hereafter  refer to this contract of service as  a  "special agreement."  The  period of probation expired  on  March  1, 1966,  but he continued to serve on his post.  On April  13, 1966 the Company passed an order extending the period of his probation by two months with retrospective effect from March 1,  1966.   Nine days later on April 22, 1966,  the  Company

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passed this order : "the above watchman has been  discharged with effect from 1-5-1966 for the reasons mentioned below : (1)  probation  period not approved, services are no  longer required by the Company." This order gave rise to an industrial dispute.  The  dispute was  referred  for adjudication by the Government  of  Uttar Pradesh  to the Labour Court (II), Lucknow.   The  referring order was made on April, 9, 1968.  The question referred  to the Labour Court is :               "Whether  the  employers have  terminated  the               services  of the workman Shri Prem Singh,  son               of  Shri  Bhartu, Watchman T.  No.  247,  with               effect    from   1-5-1966,   legally    and/or               justifiably  ? If not, to what relief  is  the               workman concerned entitled." Prem  Singh was represented before the Labour Court  by  the Matches Mazdoor Sangh, Bareilly.  The case of the Sangh  was that  the  employment  of Prem Singh on  probation  for  six months  was in contravention of the Standing Order.  It  was maintained that on the 437 expiry  of  two  months Prem Singh  automatically  became  a permanent workman.  It was also said that during the  entire period  of  his probation Prem Singh was never told  by  the Company that it was not satisfied with his work.   According to the Company, the term of six months’ probation was valid. It was said that as his work was not found satisfactory,  he was discharged. The  Labour Court has found that the discharge  was  neither mala  fide  nor  an act of  victimisation  for  trade  union activities.   However,  the Labour Court has set  aside  the order  of discharge and has directed his reinstatement  with continuity  of service and back wages.  This is so,  because it  has taken the view that the term regarding  six  months’ probation was in contravention of the Standing Order and was invalid.   It  has  held  that  on  completing  two  months’ probation  Prem  Singh  automatically  became  a   permanent employee. Shri Daphtary, counsel for, the Company, has submitted  that the Labour Court has gone beyond the terms of reference.  It is  pointed out that the Government Order of reference  does not expressly empower the Labour Court to decide whether the term  regarding six months’ probation was valid or  invalid. In  our view, the Labour Court has not travelled beyond  the terms  of reference.  It was called upon to  decide  whether the  order  of discharge was legal  and/or  justified.   The validity  or invalidity of the discharge obviously  depended on  the  validity or invalidity of the  term  regarding  six months’  probation.  If this term was invalid the  order  of discharge also would obviously be invalid. The  next  submission of Shri Daphtary is that  the  special agreement  is  not  inconsistent with  the  Standing  Order. According to the Standing Order, a workman shall not be kept on  probation  for more than two months.  If he  has  worked during  these  two  months  to  the-  satisfaction  of   the Company,’ he becomes permanent.  But as a result of  special agreement, even though he has worked during these two months to  the  satisfaction  of  the Company, he  will  not  be  a permanent workman.  While, the Standing Order says: "Confirm him on the expiry of two months", the special agreement says : "No, wait till the expiry of six months." There is thus  a conflict  between them.  They cannot coexist.  SO we are  of opinion that the special agreement is inconsistent with  the Standing Order to the extent of the additional four  months’ probation.

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The  terms  of employment specified in  the  Standing  Order would  prevail over the corresponding terms in the  contract of  service in existence on the enforcement of the  Standing Order.  It was in effect so held in the Agra Electric Supply Co.  Ltd.  v. Shri Alladin. (1) Avery India Ltd.  v.  Second Industrial Tribunal West Bengal.(2) and the United  Provides Electric  Supply Co. Ltd.  Allahabad v. Their Workmen.  (3). While   the  Standing  Orders  are  in  force,  it  is   not permissible  to the employer to seek statutory  modification of them so that there may be one set of Standing Orders  for some employees and another (1)  [1970] 1 S. C. R. 808 (3) [1972] 2 S. C. C 54 (2) A. I. R. 1972 S. C, 1926 438 set   for  the  rest  of  the  employees.  In  Salem   Erode Electricity   Distribution  Company  Ltd.  v.  Salem   Erode Electricity Distribution Co. Ltd.  Employees       Union(1), Gajendragadkar C. J. said:               " (T) here is no scope for having two separate               Standing Orders in respect to any one of them.               Take  the case of classification  of  workmen.               It  is  inconceivable that there  can  be  two               separate  Standing Orders in respect  of  this               matter.     What    we   have    said    about               classification is equally true about each  one               of  the  other  said  clauses;  and  so,   the               conclusion appears to be irresistible that the               object  of  the  Act is  to  certify  Standing               Orders in respect of the matters covered by he               Schedule; and having regard to these  matters,               Standing Orders so certified would be  uniform               and  would apply to all workmen alike who  are               employed in any industrial establishment." If a prior agreement, inconsistent with the Standing  Orders will not survive, an agreement posterior to and inconsistent with the Standing Order should also not prevail.  Again,  as the  employer  cannot enforce two sets  of  Standing  Orders governing the classification of workmen, it is also not open to   him  to  enforce  simultaneously  the  Standing   Order regulating  the  classification  of workmen  and  a  special agreement between him an and individual workman settling his categorisation. In  view of the decisions of this Court cited  earlier,  the decisions in M/s.J. K. Cotton Manufacturers Ltd.  Kanpur  v. J.  N. Tewari 2 ) and the Banaras Electric Light  and  Power Co.  Ltd.   Berhlupura v. Government of  Uttar  Pradesh  and others(3) no longer lay, down good law.  They take the  view that  notwithstanding the Standing Orders it is open to  the employer to conclude an agreement with an individual workman which  may be inconsistent with the Standing Orders.   These decisions are overruled. In  the  sunny  days of the  market  economy  theory  people sincerely  believed  that  the economic law  of  demand  and supply  in  the  labour  market  would  settle  a   mutually beneficial  bargain  between the employer and  the  workman. Such a bargain, they took it for granted, would secure  fair terms and conditions of employment to the workman.  This law they venerated as natural law.  They had an abiding faith in the  verity of this law.  But the experience of the  working of  this  law  over a long period has  belied  their  faith. Later  generations  discovered  that  the  workman  did  not possess  adequate bargaining strength to secure  fair  terms and conditions of service.  When the workmen also made  this discovery,  they  organised themselves in trade  unions  and

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insisted  on collective bargaining with the  employer.   The advent of trade. union and collective bargaining created new problems of maintaining industrial peace and production  for the  society.  It was therefore considered that the  society has  also  an  interest in the settlement of  the  terms  of employment of industrial labour.  While formerly there  were two  parties at the negotiating table the employer  and  the workman, it is now (1) [1966] 2 S. C. R. 498 at p. 504.       (2) A. 1. R. 1959 All. 639 (3)  [1962] 1 L. L. J. 14. 439 thought that there should also be present a third-party  the State as representing, the interest of the society.  The Act gives  effect  to this new thinking.  By.  s.4  the  Officer certifying the Standing Order is directed to adjudicate upon "the  fairness or reasonableness" of the provisions  of  the Standing  Order.   The Certifying Officer is  the  statutory representative  of the society.  It seems to us  that  while adjudging  the  fairness or reasonableness of  any  Standing Order, the Certifying Officer should consider and weigh  the social interest in the claims of the employer and the social interest in the demands of the workmen.  Section 10 provides the  mode of modifying the Standing Orders- The employer  or die  workman  may  apply to the Certifying  Officer  in  the prescribed  manner  for  the modification  of  the  Standing Orders.   Section 13(2) provides that an employer  who  does any  act  in contravention of the Standing  Order  shall  be punishable with fine which may extend to one hundred rupees. it  also provides for: the imposition of a further  fine  in the  case of a continuing offence.  The fine may  extend  to twenty  five  rupees for every day after  the  first  during which the offence continues. The  special  agreement,  in  so  far  as  it  provides  for additional   four  months  of  probation,  is  an   act   in contravention  of the Standing Order.  We have already  held that.  It plainly follows from sections 4, 10 and 13(2) that the  inconsistent part of the special agreement cannot  pre- vail over the Standing Order.  As long as the Standing Order is  in  force, it is binding on the Company as well  as  the workmen.  To uphold the special agreement would mean  giving a  go by to the Acts principle of three party  participation in  the  settlement of terms of employment.  So  we  are  of opinion that the inconsistent part of the special  agreement is ineffective and unenforceable. It is pointed out on behalf of the Company that s.18 of  the Industrial Disputes Act provides that any settlement between the employer and the workman is binding on them.  It is said that  accordingly the special agreement in the present  case would  be  binding on Prem Singh.  It is  not  necessary  to construe  s.18  in this case because it is governed  by  the provisions  of  the Uttar Pradesh Industrial  Disputes  Act. Section 6B(1) of this Act deals with a settlement arrived at by agreement between the employer and workmen otherwise than in  the course of conciliation proceedings  Sub-section  (2) thereof  provides that after the settlement is  arrived  at, the parties to the settlement or any one of them ’may’ apply to  the Conciliation Officer of the area concerned  for  the registration   of   the  settlement-  Sub-section   (3)   is important.  It provides that while considering the  question of  the  registration  of  a  settlement,  the  Conciliation Officer shall examine whether it is inexpedient to do so  on public  ground  affecting  social  justice  or  whether  the settlement has been brought about as a result of colbersion, fraud or misrepresentation.  We think that the word ’may’ in

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sub-section (2) should be read as ’shall’ in the context  of sub-section  (3). if social justice is to be ensured and  if collusion,  fraud or misrepresentation is to be  eliminated, it  is necessary that every privately negotiated  settlement should  be  submitted for registration to  the  Conciliation Office.  It may be observed that the U. p. Act also  insists on the three party 440 participation in the settlement of terms of employment.   In the result the Company cannot enforce the special  agreement on the pretext that Prem Singh had voluntarily agreed to it. The conciliation officer ’having had no say in the making of this agreement, the consent of Prem Singh is meaningless. It is then said that the Standing Order can be modified in a suitable  case  by  the Labour Court.   In  this  connection reliance  is placed on the Management of Bangalore  Woollen, Cotton  and  Silk Mills Co. Ltd. v. The Workmen(1).   It  is true   that  the  Labour  Court  may  determine  terms   and conditions of employment which may be inconsistent with  the Standing  Order.  But in the present case the reference  did not give jurisdiction to the Labour Court to determine terms and  conditions of employment of Prem Singh.  The  reference directed the Labour Court to decide whether the discharge of Prem Singh from service as legal justifiable. Shri  Agarwala has argued that the Standing Order is  a  law and accordingly the special agreement in contravention of it is void In support of his argument he has relied on a number of decisions of this Court.  Shri Daphtary has argued to the contrary  and  has relied on some other decisions.   In  the view  that  we have taken earlier, it is  not  necessary  to consider this question.  Accordingly, we do not refer to the authorities cited before us. Another   contention  of  Shri  Daphtary  is  that  in   the circumstances of this case the Labour Court should not  have made  an order for reinstatement of Prem Singh.   Stress  is laid  on  the assertion in the order of discharge  that  his work   during  the  entire  probationary  period   was   not satisfactory.  In support of his argument Shri Daphtary  has relied  on the Hindustan Steel Ltd.  Rourkela v.  Roy  (A.K. and others) (2).  This decision does not assist him, for  in the case before us the Company did not plead in its  written statement  filed  before the Labour Court that the  work  of Prem  Singh  was  unsatisfactory  during  the   probationary period,  nor  did  it  lead any evidence  in  proof  of  his unsatisfactory  work.  The argument does not appear to  have been   raised   in   the  Special   Leave   Petition   also. Accordingly,  it is not possible to permit this argument  to be raised now. (See Binny Ltd. v. Their Workmen, (3) and the Management of Panitole Tea Estate v. The Workmen(4). In the end, Shri Daphtary has urged that as the Labour Court has found that the discharge of Prem Singh from service  was neither mala fide nor a measure of victimisation, he  should not have been reinstated to service.  Reliance is placed  on the  Tata  Oil  Mills  Company  Ltd.  v.  Its  Workmen   and another(5),  M/s Francis Elein and Co. Private Ltd.  v.  The Workmen and another(6) and the Air-India Corporation, Bombay  v.  V.  A. Rebellow and another(7).  It is settled law  now that the      (1) [1968] 1 S. C. R. 581     [1970] 1 L. L. J. 228      (3) [1972] 1 L. L. J. 478(4) [1971] 3 S. C. R. 7 74      (5) [1963] 2 L. L. J. 78 (6) A. I. R. 1971 S.C. 2414      (7) [1972] 1 L. L. J.    501. 441 Labour Court may interfere with the order of discharge where it is satisfied that it was made mala fide or was a  measure

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of  victimisation  or unfair labour practice.  It  has  also been held by this Court that the Labour Court may  interfere with  the order of discharge if it finds that the  order  is arbitrary or capricious or so unreasonable as to lead to the inference  that it is not made bona fide.  As there  was  no plea  and no. evidence to show that the work of  Prem  Singh was unsatisfactory, the conclusion is obvious that the order of  discharge is arbitrary.  Accordingly, the  Labour  Court could interfere and make an order of reinstatement. There  is  no  force in this appeal and  accordingly  it  is dismissed with costs. V.P.S. Appeal dismissed.. 442