http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 8  

PETITIONER: WORKMEN EMPLOYED BY HINDUSTAN LEVER LTD.

       Vs.

RESPONDENT: HINDUSTAN LEVER LIMITED

DATE OF JUDGMENT28/08/1984

BENCH: DESAI, D.A. BENCH: DESAI, D.A. ERADI, V. BALAKRISHNA (J) KHALID, V. (J)

CITATION:  1984 AIR 1683            1985 SCR  (1) 641  1984 SCC  (4) 392        1984 SCALE  (2)265

ACT:      Industrial  Disputes  Act  1947,  sec.  2(k)-Industrial disputes-Demand by  workmen for confirmation in the promoted posts-Whether industrial dispute-Whether Industrial Tribunal has jurisdiction to entertain such a demand.      Promotions-Whether giving promotion and confirmation in the promoted posts is wholly a management function.

HEADNOTE:      Section 2(k)  of the Industrial Disputes Act, 1947 (the Act, for  short) defines an ’industrial dispute’ to mean any dispute or  difference between  employers and  employers, or between  employers   and  workmen  or  between  workmen  and workmen, which  is connected  with  the  employment  or  non employment or the terms of employment or with the conditions of labour,  of any  person. Section  7-A of the Act provides that the  appropriate Government  may by notification in the Official Gazette  constitute one or more Industrial Tribunal for the  adjudication of industrial disputes relating to any matter whether specified in the Second Schedule or the Third Schedule. Entry  at plecitum  7 in  the Third Schedule reads ’Classification by grades’.      Sec, 4  of the  Industrial Employment (Standing Orders) Act, 1946  (1946 Act,  for short) also requires the employer in an  industrial establishment  to make  provision  in  the standing orders  for every  matter set  out in  the Schedule which is  applicable to  the industrial  establishment.  The Schedule provides,  amongst others,  for making provision in the  standing  orders  for  classification  of  workmen  for example,   whether    permanent,   temporary    apprentices, probationers or badlis.      The  Government   of  Maharashtra   referred   to   the Industrial Tribunal a dispute between appellants-workmen and the respondent-employer as to whether "All the employees who are acting continuously in higher grades for more than three months  should   be  confirmed   in  the  respective  grades immediately and  all the  benefits should  be given  to  the concerned employees  with retrospective effect had they been confirmed immediately after three months of their continuous acting." The  respondent raised a preliminary objection that the dispute was not an industrial dispute within the meaning

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 2 of 8  

of the  expression in  the Act,  because if  the  demand  as raised is  conceded, it  would tantamount  to  allowing  the workmen to  decide the work force required in various grades which is a managerial function. The Industrial Tribunal up- 642 held the preliminary objection and rejected the Reference as incompetent holding that the demand shorn of verbiage is one for promotion which is the managerial function and therefore cannot be  the subject  matter of  industrial  adjudication. Hence this appeal by special leave.      Allowing the  appeal and  remitting the  matter to  the Tribunal for disposing of the Reference on merits, ^      HELD: (1)  It is  well settled  that certified Standing Orders under  the 1946  Act which  have a  statutory flavour prescribe the conditions of service and they shall be deemed to be  incorporated in  the contract  of employment  of each workman with  his  employer.  Since  there  is  a  statutory obligation on  the employer in an ’industrial establishment’ to classifi  workmen under  the 1946 Act, the classification would be permanent, temporary, apprentices, probationers and all other known categories, such as, acting, officiatingetc. In respect  of the classification, a dispute can conceivably arise between  the employer  and the workmen because failure of the  employer to carry out the statutory obligation would enable the  workman to  question his action which will bring into existence  a dispute.  It would  become  an  industrial dispute because  it would be connected with the condition of employment. It  becomes a  condition of  employment  because necessary  conditions   of  service  have  been  statutorily prescribed  one   such  being   classification  of  workmen. Therefore, without  anything more  where the  demand of  the workmen was  to confirm  employees  employed  in  an  acting capacity  in   a  grade,   it  would  unquestionably  be  an industrial dispute. [646C-G]      Sudhir Chandra  Sarkar v.  Tata Iron  & Steel Co. Ltd., [1984] 3 S.C.C. 269, referred to.      (2) Even  if one does not reach the conclusion that the dispute raised in question would be an industrial dispute by reference to  the Standing  Orders certified  under the 1946 Act, a  mere reference to Entry 7 of the Third Schedule read with Sec. 7-A would clinch the issue. Entry at plecitum 7 in the Third  Schedule reads  "Classification  by  grades".  If there is any dispute in respect of classification by grades, it will  necessarily be  an industrial  dispute. This  would flow indisputably  from the  language of  section 7-A  which provides  for   setting  up   of  Industrial   Tribunal  for adjudication of  industrial dispute  relating to  any matter specified, amongst  others, in  the Third  Schedule. In  the instant  case,   the  demand   of  the   workmen   was   for classification of  the workmen  officiating  in  the  higher grades either  as permanent or temporary and they should not be  continued  indefinitely  as  temporary  by  making  them permanent on  rendering of  continuous service in the higher grade for a period of three months. The demand involves both the classification of employees and classification by grade. Therefore, the  Industrial Tribunal  overlooked this obvious fact situation  by mis-interpreting the demand and reached a wholly  untenable   conclusion  that   the  demand  was  for promotion which  appeared to the Tribunal to be a managerial function and beyond the reach of adjudication. [647 C-E]      (3) Even  on the  footing of  the law  as it  stands at present in  this country  that  promotion  is  a  management function, the industrial dispute referred 643

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 3 of 8  

to the  Tribunal was  not one  for claiming  promotion.  The Tribunal committed  a grave  error in so misinterpreting the dispute referred  to it.  The Tribunal  overlooked the  fact that the  demand was  in respect of workmen already promoted i.e. in  respect of  whom managerial  function of  selecting personnel for  promotion had  been  already  performed.  The demand was in respect of already promoted workmen, may be in an  officiating  capacity,  for  their  classification  from acting or temporary to confirmed, that is, permanent, in the higher grade to which they were promoted, after a reasonable period of service which according to the Union must be three months of  service. By  no canon of construction this demand could be said to be one for promotion. [550 B-D]      Management of  Brooke Bond  India (P)  Ltd. v.  Workmen [1966] 2 SCR 465 and The Hindustan Lever Ltd. v. The Workmen [1974] 3 SCC 510; held inapplicable.      In the  decisions of this Court in Management of Brooke Bond India  (P) Ltd.  v. Workmen  [1966] 2  SCR 465  and The Hindustan Lever  Ltd. v.  The Workmen [1974] 3 SCC 510 it is assumed without  controversy that  promotion is a managerial function. But  in view  of the decision of this court in All India S.M.  and A.S.M.’s  Association  v.  General  Manager, Central Railway  [1960] 2  SCR 311, it is time to reconsider this archaic  view of  the laissez faire days that promotion is  a   management  function.   The  expression  "terms  and conditions of  employment" would ordinarily include not only the contractual  terms and  conditions but those terms which are understood  and applied  by the  parties in  practice or habitually  or   by  common   consent  without   ever  being incorporated in the contract. [649 E-G]      British Broadcasting  Corporation v.  Hearn  &  Others, [1978] 2  All E.R. 111 and R. Industrial Disputes Tribunal & Anr. v.  Ex parte  Queen Mary  College University of London, [1957] 2 All E.R. 776, referred to.

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil  Appeal No. 179 of 1983.      Appeal by  special leave  from the Award dated the 13th June, 1979 of the Industrial Tribunal, Maharashtra at Bombay in Ref (IT) No. 453 of 1975.      Jitender Sharma for the Appellant.      Dr. Y.S.  Chitale, O.C. Mathur, S. Kumar and  Ms. Meera Mathur for the Respondent.      The Judgment of the Court was delivered by      DESAI,  J.  It  is  most  unfortunate  that  all  those unhealthy and 644 injudicious practices  resorted to  for unduly  delaying the culmination of  civil proceedings  have stealthily crept in, for reasons  not unknown,  in the adjudication of industrial dispute for  the resolution  of which  an informal forum and simple procedure  were devised  with the  avowed  object  of keeping them  free from  the  dilatory  practices  of  civil courts. Times  without number  this Court, to quote only two D.P. Maheswari v. Delhi Administration & Ors. and S.K. Verma v. Mahesh Chandra & Anr. disapproved the practice of raising frivolous preliminary  objections at  the  instance  of  the employer to  delay and  defeat by exhausting the workmen the outcome of  the dispute  yet we  have to  deal with the same situation in this appeal by special leave.      The Government of Maharastra by its order dated October 22, 1975  referred a  dispute between  Hindustan Lever  Ltd.

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 4 of 8  

(’employer’ for  short) and the workmen employed by them for adjudication under  Sec. 10  of the Industrial Disputes Act, 1947 to  the Industrial  Tribunal, Maharashtra. The schedule annexed to  the order  of reference specified the dispute as under:           "All the  employees who are acting continuously in      higher grades  (as per  annexure) for  more than  three      months should  be confirmed  in the  respective  grades      immediately and all the benefits should be given to the      concerned employees  with retrospective effect had they      been confirmed  immediately after three months or their      continuous acting."      After the  workmen governed  by the  reference filed  a statement of  claim, M/s Hindustan Lever Ltd., the employer, appeared and  contested the  reference on diverse grounds. A preliminary objection  was raised  that  the  reference  was incompetent because  the dispute  raised by  the workmen and referred by  the Government  to the  Industrial Tribunal for adjudication  was  not  an  industrial  dispute  within  the meaning of  the expression  in the  Industrial Dispute  Act, 1947. Elaborating  the contention, it was submitted that the dispute is  not an industrial disputes because if the demand as raised  is conceded,  it would tantamount to allowing the workmen to decide the strength of the work force required in various grades  and it  is well-settled that determining and deciding the strength of work force 645 required in  any industry  is a  managerial function.  There were other  contentions with  which we  are not concerned in this appeal at this stage.      The Industrial  Tribunal held  that whatever camouflage of the  language in which the demand is couched, the attempt is to  obtain promotion  which cannot be claimed as a matter of right,  it being  a managerial  function. The Tribunal in terms held  that promotion is the function of the management and  the   Industrial  Tribunal   will  have  no  power  and jurisdiction to take away the function of the management and direct that  such and  such workmen  should be promoted to a particular post.  In this  view of  the matter’ the Tribunal held that  the dispute  was not an industrial dispute within the meaning  of the expression and rejected the reference as incompetent. Hence this appeal by special leave.      Sec.10(1) confers  power on  the appropriate Government to refer  an existing  or  apprehended  industrial  dispute, amongst others, to the Industrial Tribunal for adjudication. The  dispute   therefore,  which   can   be   referred   for adjudication, of  necessity, has to be an industrial dispute which would  clothe the appropriate Government with power to make the reference and the Industrial Tribunal to adjudicate it.      The expression  ’Industrial dispute’ is defined in Sec. 2(k) to  mean ’any  dispute or  difference between employers and employers  or between  employers and workmen, or between workmen and  workmen, which is connected with the employment or non-employment  or the  terms of  employment or  with the conditions of  labour, of  any  person’.  The  question  is: whether a demand for confirmation in the promoted post after a lapse  of a  certain time  would be  a  dispute  which  is connected with  the terms  of employment or the condition of labour in  the facts  and circumstance  of this  case ?  The expression ’industrial  dispute’ has been the subject matter of numerous decisions of this Court and the High Courts. The one  feature  common  to  all  the  decisions  is  that  the expressions has  been so  widely defined  as  not  to  leave anything out  of its comprehension and purview involving the

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 5 of 8  

area of  conflict that  may develop between the employer and the  workmen   and  in   respect  of   which  a   compulsory adjudication may  not be available. This is recognised to be the width  and comprehension  of the  expression. Keeping in view  this   extensive  definition,   let  us  approach  the contention in this appeal.      It cannot  be gain said that the dispute is between the employer 646 and their  workmen. The  question is  whether the dispute is connected (leaving  aside the  words not necessary) with the terms of employment of the workmen ?      Since the  introduction of  the  Industrial  Employment (Standing Orders)  Act, 1946  (1946 Act  for short),  it has been made  obligatory for  the  employer  in  an  industrial establishment to  prepare a draft of standing orders and get them certified  under the  Act.  Sec.  4  of  the  1946  Act requires the  employer to  make provision  in  the  standing orders for  every matter  set out  in the  Schedule which is applicable to  the industrial  establishment.  The  Schedule provides amongst others for making provision in the standing orders for  classification of  workmen for  example, whether permanent, temporary,  apprentices, probationers  or badlis. This classification  of workmen by the employer is thus made obligatory and  has to  be  provided  for  in  the  standing orders. It  is also  well-settled  that  certified  standing orders  which   have  a   statutory  flavour  prescribe  the conditions of  service  and  they  shall  be  deemed  to  be incorporated in  the contract  of employment of each workman with his employee-Sudhir Chandra Sarkar v. Tata Iron & Steel Co. Ltd.  It would  therefore follow as a corollary that the employer will  have to  classify the  workmen and failure to classify would be violative of the 1946 Act. Now if there is a statutory  obligation to  classify workmen  under the 1946 Act,  the  classification  would  be  permanent,  temporary, apprentices, probationers  and all  other  known  categories such  as   acting,  officiating   etc.  In  respect  of  the classification, a  dispute can conceivably arise between the employer and  the workman because failure of the employer to carry out  the statutory obligation would enable the workman to question  his action  which will  bring into  existence a dispute. It  would become  an industrial  dispute because it would be  connected with  the conditions  of employment.  It becomes  a   condition  of   employment  because   necessary conditions of service have to be statutorily prescribed, one such being  classification of  workmen.  Therefore,  without anything more where the demand of the workmen was to confirm employees employed  in an  acting capacity  in a  grade,  it would  unquestionably   be  an   industrial  dispute.   This conclusion gets reinforced by a slightly different approach.      Sec. 7-A  of the Industrial Disputes Act, 1947 provides that 647 the  appropriate  Government  may  by  notification  in  the official Gazette  constitute one or more Industrial Tribunal for the  adjudication of  industrial dispute relating to any matter whether specified in the Second Schedule or the Third Schedule. Entry  at plecitum  7 in  the Third Schedule reads ’Classification by  Grades’. If  there  is  any  dispute  in respect of  classification by grades, it will necessarily be an industrial  dispute. This was not only not questioned but would flow indisputably from the language of Sec. 7-A, which provides  for   setting  up   of  Industrial   Tribunal  for adjudication of  industrial dispute  relating to  any matter specified amongst  others, in the Third Schedule. Therefore,

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 6 of 8  

even if  one does  not reach the conclusion that the dispute raised  in  question  would  be  an  industrial  dispute  by reference to  the standing  orders certified  under the 1946 Act, a  mere reference to Entry 7 of the Third Schedule read with Sec.  7-A would  clinch the  issue. Let  it be recalled that the  demand of  the workmen  was  for  confirmation  of employees promoted  to the  higher grade  and acting  in the higher grade  for more  than 3  months. In  other words, the demand was  for classification of the workmen officiating in the higher  grades either as permanent or temporary and they should not  be continued indefinitely as temporary by making them permanent  on rendering  of continuous  service in  the higher grade  for a  period  of  three  months.  The  demand involves  both   the   classification   of   employees   and classification  by   grade.  Unfortunately,  the  Industrial Tribunal overlooked  this obvious  fact  situation  by  mis- interpreting the  demand  and  reached  a  wholly  untenable conclusion that  the demand was for promotion which appeared to the  Tribunal to  be a managerial function and beyond the reach of adjudication.      It appears  to have  been contended before the Tribunal and vigorously  re-canvassed before  us  that  removing  the camouflage of  language, the demand in terms seeks promotion to higher  grade and  promotion being a managerial function, the Industrial Tribunal had no jurisdiction to entertain the same. The  Tribunal after  referring to the decision of this Court in Management of Brooke Bond India (P) Ltd. v. Workmen held that  the demand shorn of verbiage is one for promotion which is the managerial function and therefore cannot be the subject matter  of industrial  adjudication. To  recall  the words of the Tribunal, ’to seek confirmation of a workman in 648 a particular  higher grade  would  mean  a  promotion  as  a confirmed workman  who is  entitled to  some of the benefits such as  not being  removed from  service without  following certain procedure or promotion to higher post which benefits may not  be available  to a  temporary hand,’  and  this  is nothing short  of demanding  promotion which is a managerial function.  We   are  unable   to  appreciate  this  approach unwarranted in  the facts  and circumstances  of this  case, because the  decision in  the Brooke  Bond Case  has  to  be understood in the context of the demand that was referred to the Industrial  Tribunal for adjudication. The demand was as under:           "All things being equal, seniority shall count for      promotion. If  the senior person has been overlooked in      the question  of promotion, he is at liberty to ask the      concern for  the reason  why he has been overlooked, in      which case  the concern  shall give  him  the  reasons,      provided that  it does  not expose  the concern  or the      officer  giving  reasons,  to  any  civil  or  criminal      proceedings."      The  Tribunal   in  that   case  after  accepting  that promotion was  a management  function and  had to be left to the discretion  of the  management which  had to make choice from amongst  the employees  for promotion proceeded to hold that the action of management in the facts and circumstances of the  case was  malafide. In  appeal against this award of the Tribunal, a Constitution Bench of this Court observed as under:           "Generally speaking,  promotion  is  a  management      function; but  it may  be recognised  that there may be      occasions when  a tribunal  may have  to interfere with      promotions made by the management where it is felt that      persons superseded  have been  so superseded on account

http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 7 of 8  

    of mala fides or victimisation."      This view  was also  reiterated  in  the  case  of  the present employer  in The Hindustan Lever Ltd, v. The Workmen wherein the  Court observed  that it was not disputed before them that ordinarily promotion is a management function. 649      In the heyday of laissez faire and market economy, wage determination,  hours   of   work,   disciplinary   measures including quantum  of punishment,  in short  prescribing all enveloping  conditions  of  service  were  the  preserve  of management, styled  as managerial  functions. This  relic of the past  is slowly withering away since the introduction of the  Constitution   ushering  in   socioeconomic  revolution through law. Most of the managerial functions in relation to work force  have been  swept away  by legislative  enacments enacted to  give effect  to Arts.  38,  39  and  41  of  the Constitution yet the Tribunal dug out from the bebris of the past, the  concept of managerial function and by a distorted construction of  the language  of the reference comprehended it in  the concept  of managerial  function  and  denied  to itself the jurisdiction to adjudicate it. In the process the Tribunal failed to take note of the development of law since the decision in Brooke Bond Case.      Since the  decision of  the Constitution  Bench of this Court in  All India         S.M. and A.S.M.’s Association v. General Manager,  Central Railway  it is  well-settled  that equality of  opportunity in  the matter of public employment guaranteed by Art. 16 (1) not only ensures it at the time of entry in public employment but ensures it even in the matter of promotion.  If equality  in the  matter of  promotion  is constitutionally guaranteed  as the fundamental right, it is time to  reconsider this  archaic view  of the laissez faire days that  promotion is  a management  function.  The  whole gamut  of  labour  legislation  is  to  check,  control  and circumscribe uncontrolled  managerial exercise of power with a view  to eschew the inherent arbitrariness in the exercise of such  functions. In  the decisions  of this  Court it  is assumed without  controversy that  promotion is a managerial function. It  may have  to be  re-examined in an appropriate case. But  it is not necessary to go so far in this case and we  would   proceed  on  the  assumption  that  the  passing observation made  by the  Constitution Bench  in Brooke Bond case settled  the law  as far  as this  country is concerned that promotion is a management function though we would like to point  out that  the expression  ’terms of  conditions of employment’  would   ordinarily   include   not   only   the contractual terms  and conditions  but those terms which are understood  and  applied  by  the  parties  in  practice  or habitually  or   by  common   consent  without   ever  being incorporated in  the contract. In England, it is settled law that promotion is comprehended in the 650 expression’  terms  of  employment  of  the  employees.’  In British Broadcasting Corporation v. Hearn & others and in R. Industrial Disputes  Tribunal &  Anr. Ex  parte  Queen  Mary College, University  of London  it was  held that  claim for promotion is  connected with  terms of the employment of the employees.      Even on the footing of the law, as it stands at present in this  country, that  promotion is  a management function, the industrial  dispute referred to the Tribunal was not one for claiming promotion. The Tribunal committed a grave error in so  mis-interpreting the  dispute  referred  to  it.  The Tribunal overlooked  the fact that the demand was in respect of  workmen   already  promoted  i.e.  in  respect  of  whom

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

managerial function  of selecting personal for promotion had been already performed. The demand was in respect of already promoted workmen,  may be  in an  officiating capacity,  for their classification  from acting  or temporary to confirmed that is  permanent, in  the higher  grade to which they were promoted,  after   a  reasonable  period  of  service  which according to  the Union  be three  months of  service. By no cannon of  construction, this demand could be said to be one for promotion.  Therefore, the  decision in Brooke Bond case and followed  in the  case of  this  very  employer  had  no application to  the facts  of this  case  and  the  Tribunal misdirected itself in rejecting the reference on this narrow ground.      Accordingly, this  appeal succeeds  and is  allowed and the award  of the  Industrial Tribunal  on  the  preliminary issue is quashed and set aside and the matter is remitted to the Tribunal  for disposing  of the  reference on merits. As the matter  is an  old one  and we  were told  that  persons continuously officiating  in the  higher grade for more than five years  are not  confirmed, the  Tribunal is directed to give top  priority to  the reference  and dispose  it of  as early as  possible and not later than six months from today. The  respondent   shall  pay  the  costs  of  the  appellant quantified at Rs. 2,000. M.L.A.    Appeal allowed. 651