Atherton West and Co. Ltd vs Suti Mill Mazdoor Union And Others

Rewritten Version Notice: This is a rewritten version of the original judgment.

Court: supreme-court

Case Number: Civil Appeal No. 8 of 1953

Decision Date: 16 March 1953

Coram: Natwarlal H. Bhagwati, Mehr Chand Mahajan

The case was titled Atherton West and Co. Ltd. versus Suti Mill Mazdoor Union and Others and was decided on 16 March 1953 by the Supreme Court of India. The judgment was authored by Justice Natwarlal H. Bhagwati, who was joined on the bench by Justice Mehr Chand Mahajan. The petitioner in the matter was Atherton West and Co. Ltd., and the respondents were the Suti Mill Mazdoor Union together with several individual workmen. The citation for the decision is reported in 1953 AIR 241 and 1953 SCR 789. Subsequent citations of the decision appear in several reports, including R 1955 SC 258, R 1957 SC 1, RF 1957 SC 82, RF 1957 SC 194, R 1957 SC 326, R 1958 SC 79, R 1958 SC 761, R 1959 SC 230, RF 1959 SC 389, R 1960 SC 160, RF 1963 SC 677, and RF 1978 SC 995. The statutory framework relevant to the dispute comprised sections 3 and 8 of the Uttar Pradesh Industrial Disputes Act, 1947, together with the Uttar Pradesh Government Notification No. 781 (L)/XVIII dated 10 March 1948, particularly clauses 4, 7 and 23 of that notification.

The headnote of the judgment set out two principal propositions. First, under clauses 4 and 7(3) of Notification 781(L)/XVIII, the absence of one member of the Regional Conciliation Board on the final day of a hearing, and his failure to participate in the preparation and signing of the award, did not render the award void or inoperative. Second, the dismissal of workmen and their continued non-employment did not cause the industrial dispute to cease merely because the Regional Conciliation Officer had granted the employer written permission to dismiss them under clause 23 of the same notification. That permission, the Court explained, did not validate the dismissal but merely removed the prohibition on the employer, his agent or manager from dismissing the workmen while the dispute was pending before the conciliation proceedings.

The judgment concerned a civil appeal filed under special leave, designated Civil Appeal No. 8 of 1953, which sought to overturn a decision dated 16 August 1951 of the Labour Appellate Tribunal of India, Calcutta, in Appeal No. 43 of 1951 (Calcutta). The appeal was brought by the petitioner, Atherton West and Co. Ltd., and was opposed by the respondents, the Suti Mill Mazdoor Union and the individual workmen. Counsel for the appellant consisted of the Solicitor-General for India, assisted by an additional counsel, while the respondent was represented by counsel appointed for that purpose.

The Court observed that the appeal arose from a decision of the Labour Appellate Tribunal confirming an award made by the Regional Conciliation Board (Textiles and Hosiery), Kanpur, in an industrial dispute between the appellant and the respondents. The respondents identified as respondents 2, 3 and 4 were employees of the appellant. Respondent 2 held a clerical position, whereas respondents 3 and 4 were employed respectively as a wrapping boy and a piecer. Their conditions of service were governed by the standing orders of the Employers’ Association of Northern India, Kanpur, of which the appellants were members. The Court proceeded to examine the procedural and substantive aspects of the award, the effect of the Regional Conciliation Officer’s permission under clause 23, and the validity of the award despite the absence of a board member at the concluding hearing.

The appellants were members of the Association of Northern India, Kanpur. Between the night of 6 January and the morning of 7 January 1950 a theft took place in the canteen situated within the mill premises, and money that the appellants had deposited in the canteen account was taken from the safe. A report of the theft was lodged with the police, and both the police and the appellants carried out investigations, but no result was obtained. After the investigation the management of the appellants acted against J. P. Gurjar, who was in charge of the canteen, alleging that he was responsible for the loss of the money from the canteen account; following the completion of the enquiries, the management terminated his services. An industrial dispute subsequently arose concerning the non-employment of J. P. Gurjar, and that dispute was, at the material time, taken on appeal before the Industrial Court (Textiles & Hosiery), Kanpur. While those proceedings were pending, sometime in August 1950 respondent 4 made a confession that he had taken part in the theft and, in doing so, implicated respondents 2 and 3 as well. On 29 August 1950 the management of the appellants served charge-sheets on respondents 2, 3 and 4 relating to the theft and, on the following day, 30 August 1950, suspended them from their services. The appellants then filed an application on 2 September 1950 with the Additional Regional Conciliation Officer, Kanpur, seeking permission to dismiss respondents 2, 3 and 4. The Additional Regional Conciliation Officer instituted an enquiry, heard the three respondents, considered the evidence placed before him by both the appellants and the respondents, and on 12 October 1950 issued an order granting the appellants permission to dismiss the three respondents. Consequently, the appellants dismissed respondents 2, 3 and 4 with effect from 13 October 1950. This dismissal gave rise to an industrial dispute between the appellants and respondents 2, 3 and 4, and also involved respondent 1, a registered trade union of which respondents 2 and 3 were members. Respondent 1 moved the Regional Conciliation Board (Textiles and Hosiery), Kanpur, on 1 November 1950, challenging the propriety and bona fides of the appellants in terminating the services of respondents 2, 3 and 4. The appellants filed their written statement on 25 November 1950, contending, inter alia, that the dismissal was fully justified, regular and proper because it had been made in accordance with the permission accorded by the Additional Regional Conciliation Officer. The only issue before the Regional Conciliation Board was whether any or all of the three workmen named in the application dated 1 November 1950 had been wrongfully dismissed and, if so, what relief they were entitled to. The Board consisted of three members, Shri R. P. Maheshwari, Chairman, and Shri

In the proceeding before the Regional Conciliation Board, the members were Shri R. P. Maheshwari, Chairman, Shri B. B. Singh and Shri J. K. Bhagat. Shri J. K. Bhagat did not attend the final hearing, and consequently the award was signed on 20 April 1951 by only the Chairman and Shri B. B. Singh. The award concluded that the dismissals of respondents 2, 3 and 4 were wrongful and ordered that they be reinstated with full wages, including dearness allowance, from the date of their suspension until the date they returned to work.

The appellants challenged the award before the Labour Appellate Tribunal of India, Calcutta. The Tribunal heard the appeal on 16 August 1951 and dismissed the appellants’ case. The appellants then obtained special leave to appeal before this Court and filed the present petition. The counsel for the appellants raised two principal submissions. First, it was contended that the award was void and inoperative because it had been made by only two members of the Board, the third member, Shri J. K. Bhagat, having been absent at the last hearing and having not signed the award. Second, the counsel argued that the Additional Regional Conciliation Officer had already granted written permission for the dismissals of respondents 2, 3 and 4, and therefore no industrial dispute arose from their non-employment. Accordingly, the Regional Conciliation Board lacked jurisdiction to entertain the application filed by respondent 1 on behalf of respondents 2, 3 and 4, and the award ordering their reinstatement was without jurisdiction, void and inoperative. The Tribunal’s confirmation of the award was therefore erroneous.

To support the first submission, the counsel for the appellants relied on clause 4 and clause 7(3) of Government Notification No. 781(L)/XVIII dated 10 March 1948, issued by the United Provinces Government concerning the constitution of Regional Conciliation Boards and Industrial Courts. Clause 4 provided that “no business may be transacted at any meeting of any Board unless all the three members are present.” Clause 7(3) stated that where an amicable settlement could not be reached, the Board could record an award if all members agreed, or if they did not agree, the majority of the members agreeing, or if no two members agreed, the Chairman alone, could record the award and its reasons. The counsel argued that because Shri J. K. Bhagat was absent at the final meeting and did not sign the award, the Chairman and the other member could not lawfully fashion the award, rendering it void and inoperative. The respondent was represented by counsel who subsequently raised additional points.

Counsel for the respondent pointed out that Government Order No 388(11)/XVIII/37 (LL)-/50 dated 2 March 1951 altered clauses 4 and 7(3) of the earlier regulation. The amendment to clause 4 states that the Chairman must give advance notice of every meeting, and if one or both of the other members are absent, the Chairman may still conduct the business of the Board and the proceedings will not be invalid merely because those members are missing. The amendment to clause 7(3) provides that when an amicable settlement cannot be reached on any issue, the award may be recorded by all members present if they agree; if they do not agree, the majority of the members present may record the award; and if no two members present can agree or only the Chairman is present, the Chairman alone may record the award along with the reasons for it. The Court considered these amendments sufficient to reject Shri C. K. Daphtary’s contention that the absence of Shri J. K. Bhagat from the last meeting and his failure to sign the award rendered the award void and inoperative. Under the amended provisions the Board was expressly empowered to act without Shri J. K. Bhagat, and consequently the award signed by the remaining members, Shri R. P. Maheshwari and Shri B. B. Singh, was lawful and binding on the parties. In support of his second contention, Shri C. K. Daphtary relied on clauses 23 and 24 of the Government Notification dated 10 March 1948. Clause 23 prohibits any employer, his agent or manager from discharging or dismissing any workman during the continuance of an enquiry or appeal without the written permission of the Regional Conciliation Officer, regardless of whether an enquiry is pending before a Regional Conciliation Board or an appeal before the Industrial Court, until the State Government issues orders on the court’s findings. Clause 24 declares that, except as specifically provided, every order or direction issued under the Notification shall be final and conclusive and shall not be questioned by any party in any proceeding. Shri C. K. Daphtary argued that the order issued by the Additional Regional Conciliation Officer on 12 October 1950, which gave the appellants permission to dismiss respondents 2, 3 and 4, was final and conclusive regarding the appellants’ right to dismiss, and therefore the dismissal could not give rise to an industrial dispute that the Regional Conciliation Board could entertain; consequently, he claimed the Board lacked jurisdiction, making its award void, inoperative and incapable of confirmation by the Labour Appellate Tribunal.

In this case, the argument was advanced that the order issued under clause 24 was final and conclusive as to the appellants’ authority to dismiss the employees, and consequently that the dismissals could not give rise to any industrial dispute that might be referred to the Regional Conciliation Board on the application of respondent 1. The argument further claimed that, because no industrial dispute could arise, the Regional Conciliation Board lacked jurisdiction to entertain the matter, that the award made by the Board was therefore void, inoperative and beyond jurisdiction, and that the award could not be confirmed by the Labour Appellate Tribunal. The Court rejected this contention. The Government Notification dated 10 March 1948 had been issued by the Governor of the United Provinces in exercise of the powers conferred by clauses (b), (c), (d) and (g) of section 3 and section 8 of the United Provinces Industrial Disputes Act, 1947. The Notification provided that the Provincial Government could constitute as many Conciliation Boards as it deemed necessary for the settlement of industrial disputes, each Board consisting of three members: the Conciliation Officer for the area, a representative of the employers and a representative of the workmen, the Conciliation Officer acting as Chairman of the Board. The order also prescribed the manner in which industrial disputes could be referred to a Board for inquiry and the procedure by which such inquiries were to be conducted. In addition, the order authorised the Provincial Government to constitute Industrial Courts, each Court to consist of a President assisted by an equal number of assessors as the President might determine, the assessors representing employers and employees respectively. The order made provision for appeals from the awards of the Conciliation Boards to such Industrial Courts and for the hearing of those appeals. After setting out further procedural rules for the Boards and the Industrial Courts, clause 23 of the order imposed a ban on the discharge or dismissal of any workman by an employer, his agent or his manager while an enquiry before the Regional Conciliation Board or the Provincial Conciliation Board, or an appeal before an Industrial Court, was pending, unless the employer obtained written permission from the Regional Conciliation Officer or the Assistant Regional Conciliation Officer concerned. Clause 24 then declared that every order or direction issued under the provisions of the Government Order was final and conclusive, except as expressly provided otherwise. It is therefore clear that clause 23 created a prohibition on dismissing any workman during the pendency of an enquiry before a Board or an appeal before an Industrial Court, and that an employer could dismiss a workman only after obtaining the required written permission from the Regional Conciliation Officer or the Assistant Regional Conciliation Officer. Even if such written permission was forthcoming, the employer, his agent or manager might or might not proceed with the dismissal.

The Court explained that the written permission mentioned in the statutory scheme merely lifted the prohibition on dismissing a workman while an enquiry before the Regional Conciliation Board or an appeal before the Industrial Court was pending. Once the permission was obtained, the employer, his agent or manager could lawfully dismiss the workman, but the permission itself did not itself validate the dismissal. The Regional Conciliation Officer or the Assistant Regional Conciliation Officer who granted the permission was required to conduct an enquiry to determine whether a prima facie case existed for the dismissal and whether the employer, his agent or manager acted without improper motives, unfair practice or victimisation. However, that officer was not tasked with deciding whether the dismissal, even after permission, fell within the employer’s legal right; that determination was reserved for the Board or the Industrial Court. The enquiry undertaken by the Regional Conciliation Officer or the Assistant Regional Conciliation Officer was therefore not an enquiry into an industrial dispute concerning the non-employment of the workman. Such a dispute would only arise after the employer dismissed the workman pursuant to the written permission. Consequently, the scope of the officer’s enquiry was limited to ascertaining the existence of a prima facie case and the absence of improper motive, and the effect of the written permission was solely to remove the ban on dismissal during the pending proceedings. Once granted, the order or direction of the officer became final and conclusive, and no party could challenge it in any subsequent proceeding. Clause 24(1) served only to prevent either party from contesting the officer’s decision, and the permission could not be the subject of any appeal. Both parties were bound by the officer’s order, whether it granted or refused permission to the employer, his agent or manager regarding the proposed dismissal. This limitation represented the entire purpose of clauses 23 and 24(1). After the permission was issued and the ban lifted, the employer could exercise discretion to dismiss the workman, and at that point an industrial dispute, as defined in section 2(k) of the Industrial Disputes Act, 1947, would arise, bringing the dismissed workmen within the ambit of the dispute resolution mechanisms provided by the Act.

In this case, any worker who was dismissed would be entitled to have the resulting industrial dispute referred to the Regional Conciliation Board for inquiry. The Court stressed that the worker’s right to raise such an industrial dispute could not be removed in the way suggested by Shri C K Daphtary, who proposed relying on the provisions of clauses twenty-three and twenty-four(1). The Court explained that this right was granted to the workman by the Industrial Disputes Act, 1947 and by the Uttar Pradesh Industrial Disputes Act, twenty-eighth of 1947, and that it would continue to remain unaffected by any of the previously mentioned provisions. Accordingly, the Court held that Shri C K Daphtary’s contention also failed. Before concluding, the Court noted a further circumstance: although the Labour Appellate Tribunal correctly limited its jurisdiction to the determination of substantial questions of law involved in the appeal, it nonetheless observed that, based on the facts, the conclusions of the Board were fully justified and that there was no merit in the appeal. The Court observed that the appellants had not been heard on the merits at all, and it was therefore scarcely legitimate for the Labour Appellate Tribunal to consider the merits of the appeal on its own initiative and to reach a finding on that basis. The Court further stated that, if the Tribunal had any jurisdiction to address the merits, it was obliged to hear the appellants on those issues before forming a conclusion. Consequently, the Court concluded that the appeal must fail and should be dismissed with costs, and the appeal was accordingly dismissed.