Niemla Textile Finishing Mills Ltd vs The 2nd Punjab Industrial Tribunal

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

Court: Supreme Court of India

Case Number: Civil Appeals Nos. 333-335 of 1955; Petitions Nos. 65, 182, 203 of 1956

Decision Date: 10 January, 1957

Coram: Natwarlal H. Bhagwati, Bhuvneshwar P. Sinha, S.K. Das

The case titled Niemla Textile Finishing Mills Ltd versus the Second Punjab Industrial Tribunal was decided by the Supreme Court of India on 10 January 1957. The judgment was authored by Justice Natwarlal H. Bhagwati, and the bench also included Justices Bhuvneshwar P. Sinha and S. K. Das. The citation for the decision is reported as 1957 AIR 329 and 1957 SCR 335. The matter involved the Industrial Disputes Act of 1947 and raised questions about its constitutional validity, the legislative competence of the Central Legislature, and the powers of Industrial Tribunals. The petitioners, the appellant company, challenged the reference of disputes between its workmen and itself to the Industrial Tribunal. They argued that the reference was invalid for three reasons: first, that the Act was ultra vires the Constitution because its provisions infringed fundamental rights under Articles 14 and 19(1)(f) and (g); second, that the Industrial Tribunals were effectively exercising legislative power under the guise of adjudication, which the Central Legislature was not empowered to delegate; third, that the definition of “industry” in the Act covered both industrial and non-industrial entities, thereby exceeding the Central Legislature’s competence under Entry 29 of List III of the Seventh Schedule to the Government of India Act, 1935. The Court held that the Industrial Disputes Act, 1947, was not unconstitutional. It found that the provisions of the Act did not conflict with Articles 14 and 19(1)(f) and (g). The Court explained that the purpose of the Act was to settle industrial disputes and to promote industrial peace, which benefits the community by preventing interruptions in production. Accordingly, the appropriate Government possessed discretion to refer matters to either of the authorities created by the Act and to adjust procedural timelines, including shortening or extending the period for the Tribunal to prepare its award, in view of the circumstances and the objectives to be achieved. The Court further observed that while Industrial Tribunals resolve specific disputes referred to them, they may also lay down general principles concerning matters such as bonus calculation, reinstatement of dismissed employees, and related issues, with the aim of fostering industrial harmony. However, those principles, even when treated as precedents, were not legislative rules of law but guidelines applied in the adjudicatory process.

While the Industrial Tribunals adjudicated other industrial disputes that were referred to them, the Court observed that the principles they formulated in those cases were not to be regarded as rules of law and did not have the character of legislation. The Court further held that the Industrial Disputes Act, 1947 was not beyond the constitutional competence of the Parliament. It explained that the matters covered by the definition of “industry” fell within the legislative authority of the Central Legislature, because they are enumerated in Entries 27 and 29 of List III of the Seventh Schedule to the Government of India Act, 1935. The judgment then set out the civil appellate jurisdiction that was invoked. It concerned Civil Appeals numbered 333, 334 and 335 of 1955 together with Petitions 65, 182 and 203 of 1956. These appeals were taken by special leave from the order dated 15 April 1955 of the Punjab High Court at Chandigarh in Civil Writs 131-133 of 1955, and the petitions were filed under Article 32 of the Constitution for the enforcement of fundamental rights. Counsel for the appellants included Veda Vyasa, Bhagirath Das and M. L. Kapur. Counsel for the petitioners in Petitions 65 and 182 of 1955 were Veda Vyasa, S. K. Kapur and N. H. Hingorani, while the petitioner in Petition 203 of 1956 was represented by Veda Vyasa, Bhagirath Das and B. P. Maheshwari. The Advocate-General of Punjab, S. M. Sikri, together with Jindra Lal and T. M. Sen, appeared for respondent No. 2 in the appeals and for respondents 1 and 2 in the petitions. For respondent 3 in the appeals and in Petitions 182 and 203 of 1956, the representatives were Sadhan Chandra Gupta, Bawa Shiv Charan Singh and Janardhan Sharma. The Union of India, through the Attorney-General, was intervened in Appeal No. 333 of 1955 by Porus A. Mehta and T. M. Sen. Additional interveners in the appeals were Veda Vyasa, S. K. Kapur and N. H. Hingorani, who were petitioners in Petitions 65 and 182 of 1956.

The judgment of the Court was delivered on 10 January 1957 by Justice Bhagwati. The Court explained that the three appeals, each granted special leave, together with the three petitions filed under Article 32, challenged the constitutional validity of the Industrial Disputes Act, 1947 (the “Act”). The appellants in all three appeals were manufacturers engaged in the production of textiles. Disputes had arisen between these textile mills and their workmen. In response to those disputes, the State of Punjab, identified as respondent No. 2, issued two separate notifications dated 4 March 1955 for the first two mills and a further notification dated 25 February 1955 for the third mill. Each notification referred the respective dispute to the Second Punjab Industrial Tribunal at Amritsar, designated as respondent No. 1. The Tribunal accepted the references, issued notices to the appellants and required them to file written statements. The appellant in Civil Appeal No. 335 of 1955 filed its written statement on 31 March 1955, expressly reserving its contention that the State of Punjab was not competent to refer the dispute to the Tribunal and that the Tribunal itself lacked jurisdiction to entertain the reference. The appellants in Civil Appeals Nos. 333 and 334 of 1955 were directed to file their written statements by 23 April 1955, and they did so, raising the same objections concerning the competence of respondent No. 2 and the jurisdiction of respondent No. 1. On 14 April 1955, all three appellants simultaneously instituted writ petitions in the High Court under Article 226 of the Constitution, seeking prohibition against the Tribunal proceeding with the references, certiorari directing the Tribunal to return the records for cancellation, and mandamus to set aside the notifications that had created the references.

The appellants filed their written statements on or before 23 April 1955, repeating the same objections concerning the competence of respondent No 2 and the jurisdiction of respondent No 1. Nevertheless, on 14 April 1955 the appellants in all three appeals lodged writ petitions in the High Court under Article 226 of the Constitution. In those petitions they sought writs of prohibition to prevent respondent No 1 from proceeding with the references, writs of certiorari directing respondent No 1 to forward the records of the proceedings for cancellation, and writs of mandamus to set aside the notifications that created the references.

The petitions were supported by several grounds. First, the appellants contended that their mills were “controlled industries” within the meaning of clause (ee) of section 2 of the Industrial Disputes Act, as amended by section 32 of Act LXV of 1951. Second, they argued that they were engaged in the production and manufacture of textile goods and thus qualified as a “textile industry” under the definition of “textiles” in the First Schedule to the Industry (Development and Regulation) Act, 1951, and that the Union Government had declared the industry to be under its control within the meaning of the Act. Third, they maintained that the disputes which respondent No 2 attempted to refer to respondent No 1 were industrial disputes concerning a controlled industry, a matter that the Central Government had designated, and that consequently the appropriate Government for purposes of the Act with respect to their mills was the Union Government, not respondent No 2. Finally, they asserted that respondent No 2 lacked jurisdiction or authority to refer either existing or prospective disputes between the appellants and their workmen to respondent No 1, and that, because the references were invalid, respondent No 1 possessed no jurisdiction to entertain them.

These writ petitions were heard before a Division Bench of the High Court comprising the Chief Justice and Justice Kapur. The Bench dismissed the petitions in limine, holding that the applications were premature. The Court explained that respondent No 1 had the power to determine the objection concerning its own jurisdiction to entertain the references, and that until such a determination was made the appellants had no cause of action to maintain the writ petitions. Subsequently, on or about 12 April 1955, another Division Bench of the same High Court, consisting of the Chief Justice and Justice Falshaw, admitted a writ petition that relied on the very same grounds and granted a stay of proceedings before respondent No 1. Later, on 18 April 1955, the same Bench that had dismissed the appellants’ petitions on 15 April 1955 admitted a writ petition filed by Saraswati Sugar Syndicate Ltd. against respondent No 2. In addition to the grounds previously raised, the Saraswati petition introduced an additional ground, which was not specified in the present excerpt.

In the course of the proceedings, the appellants raised a challenge to the constitutional validity of section 10 of the Industrial Disputes Act. On April 18, 1955, after the Division Bench of the High Court had stayed the proceedings before the Industrial Tribunal in the writ petition filed by the Saraswati Sugar Syndicate Ltd., the appellants submitted several applications to the High Court. These applications sought leave to appeal to this Court, a request for special leave under Article 136 of the Constitution, and a stay of any further proceedings before respondent No. 1. The High Court issued notices to the respondents in respect of those applications; however, it declined to grant a stay of further proceedings. Upon learning of the order dated April 18, 1955, which pertained to the Saraswati Sugar Syndicate Ltd. writ petition, the appellants promptly filed, on April 19, 1955, petitions for review of the earlier orders of April 15, 1955 that had dismissed their own writ petitions in limine. In those review petitions, the appellants argued that, in order to align their applications with the reasoning adopted in the Saraswati Sugar Syndicate Ltd. case, they needed to raise the contention that section 10 of the Act was ultra vires the Constitution—a point that their counsel had inadvertently omitted. Although the High Court was ready to serve notices on the respondents, it was unwilling to stay the further proceedings. Consequently, at the request of the appellants’ counsel, the review petitions were dismissed on April 20, 1955. Undeterred, the appellants filed, on April 25, 1955, petitions before this Court seeking special leave to appeal under Article 136. In those petitions they maintained that section 10 of the Act was void because it infringed the fundamental right to equality guaranteed by Article 14, describing the provision as discriminatory in its scope.

Special leave was granted to all three appellants on May 2, 1955, and the Court issued an order on June 1, 1955 directing the consolidation of the appeals. In their consolidated statements of case, the appellants elaborated on their claim that section 10 of the Industrial Disputes Act conflicted with Article 14 of the Constitution. They asserted that the provision was discriminatory because it conferred unregulated and arbitrary powers on the appropriate Government without any rule to justify differential treatment of parties who were similarly situated. The appellants argued that there was no rational basis for classifying matters differently, and that the reference to a Board under clause 10(1)(c) of the Act was, in fact, more beneficial, quicker, cheaper, and less cumbersome. Expanding their challenge beyond the constitutional question, the appellants in Civil Appeal No. 333 of 1955 filed, on October 3, 1956, a petition under Article 32 of the Constitution, designated as Petition No. 203 of 1956. In that petition they contested the validity of the entire Act on additional grounds that had not previously been raised in the earlier proceedings.

The Court noted the proceedings taken by the appellants till then and decided not to list every ground raised in those earlier actions. Instead, the Court indicated that it would refer, at the appropriate stage, only to those specific contentions that were actually presented before it by the learned counsel during the hearing. In a similar vein, a petition invoking Article 32 of the Constitution had been filed by Atlas Cycle Industries Ltd. on 15 September 1956, identified as Petition No. 182 of 1956, and it raised exactly the same arguments challenging the constitutionality of the Act.

On 27 April 1956, the State of Punjab issued a notification that referred the industrial disputes between the State and its workmen to the Second Industrial Tribunal for adjudication. The petitioners in that case sought a writ of certiorari to annul the reference and also requested writs of mandamus or prohibition directing the State to withdraw the reference and preventing the Tribunal from proceeding with the matter. Subsequently, Petition No. 65 of 1956 was filed on 21 March 1956 by five workmen of the Indian Sugar and General Engineering Corporation Ltd., which operated under the name Saraswati Engineering Works. The State of Punjab had likewise issued a notification referring the disputes arising between the corporation and its workmen to the Second Industrial Tribunal, and one of the issues referred for determination concerned whether workmen dismissed or discharged after 15 July 1955 should be reinstated. The petitioners were temporary labourers employed by Saraswati Engineering Works in place of the permanent employees who had been dismissed after 15 July 1955. They feared, on behalf of themselves and about two hundred other similarly situated workers, that an order reinstating the permanent workmen would deprive them of their jobs. They appeared to enjoy the support of the management of Saraswati Engineering Works, which wished to retain the temporary workers, and consequently they filed a petition challenging the constitutionality of the Act on identical grounds. In addition to contesting the validity of the Act, they argued that the undertaking constituted a controlled industry and that the appropriate authority to make the reference was the Union Government, not the State of Punjab. They also sought the same reliefs as those claimed in Petition No. 182 of 1956. The Attorney-General of India obtained leave to intervene on behalf of the Union of India during the hearing of Civil Appeals Nos. 333 to 335 of 1955, and the petitioners in both Petitions Nos. 182 of 1956 and 65 of 1956 also obtained leave to intervene. These petitions, together with Petition No. 203 of 1956, were scheduled for hearing and final disposal after the civil appeals, and all were heard together. The Court declared that the common judgment rendered would govern the decision in each of the matters. It was also noted at the outset that the question concerning whether the various undertakings were controlled industries and which level of government had jurisdiction to refer the disputes was a preliminary issue that would be addressed subsequently.

In this case, the Court observed that the question of whether the undertakings were controlled industries and whether the appropriate Government for referring industrial disputes between those undertakings and their workmen was the Union Government rather than the State of Punjab formed the foundation of the writ petitions filed in the High Court. That issue also formed one of the grounds on which special leave to appeal was sought from this Court, but the petition for special leave was ultimately abandoned during the hearing, and no further comment was required on that point. The sole issue that remained before the Court in the three special leave appeals and the three petitions under Article 32 concerned the constitutional validity of the Industrial Disputes Act. To understand the challenges raised against the Act, the Court set out a brief overview of the statutory provisions as they existed before the amendments introduced by the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 (Act XXXVI of 1956). The preamble of the Act declared that its purpose was to make provision for the investigation and settlement of industrial disputes and for other purposes listed therein. Section 2(j) defined the term “industry” to include any business, trade, undertaking, manufacture or calling of an employer and also any calling, service, employment, handicraft or industrial occupation or avocation of workmen. Section 2(k) defined an “industrial dispute” as any dispute or difference between employers and employers, between employers and workmen, or between workmen and workmen, which is connected with the employment, non-employment, terms of employment or conditions of labour of any person. Chapter II of the Act enumerated the authorities created under the statute. These authorities were: (1) the Works Committee, (2) Conciliation Officers, (3) Boards of Conciliation, (4) Courts of Enquiry, and (5) Industrial Tribunals. Each authority possessed distinct powers and was established for a specific purpose, as prescribed in the Act. The Works Committee was to be composed of representatives of employers and workmen in a particular establishment, constituted in the manner prescribed, with the object of promoting amity and good relations between the two parties, commenting on matters of common interest, and endeavouring to resolve any material difference of opinion that might arise. Conciliation Officers were appointed by notification of the appropriate Government and were charged with mediating and promoting the settlement of industrial disputes. Boards of Conciliation were also constituted by notification of the appropriate Government whenever it was necessary to promote settlement of disputes. Courts of Enquiry were set up by notification of the appropriate Government when a matter appeared to be connected with or relevant to an industrial dispute and required investigation. Industrial Tribunals were constituted by the appropriate Government for the adjudication of industrial disputes in accordance with the provisions of the Act. Chapter III dealt with the reference of disputes to the various authorities, beginning with the reference of disputes to Boards of Conciliation.

The Court explained that Section 10(1) of the Act authorises the appropriate Government, when it is of the opinion that an industrial dispute exists or is likely to arise, to issue a written order at any time for one of three purposes: first, to refer the dispute to a Board with a view to promoting its settlement; second, to refer any matter that appears to be connected with or relevant to the dispute to a Court for enquiry; or third, to refer the dispute or any related matter to a Tribunal for adjudication. The provision further stipulates that if the dispute concerns a public utility service and a notice under Section 22 has been issued, the Government must, unless it considers the notice to have been frivolously or vexatiously given or deems it inexpedient to act, still make a reference under this subsection even though other proceedings under the Act concerning the dispute may already have commenced. Chapter IV of the Act then sets out the procedure, powers and duties of the various authorities involved in industrial dispute resolution. The Court noted that Conciliation Officers are tasked, without delay, with investigating the dispute and all matters affecting its merits and the appropriate settlement, and they are empowered to take any steps they deem necessary to induce the parties to reach an amicable settlement. When a settlement is achieved during conciliation proceedings, the Officers must send a report to the appropriate Government together with a memorandum of settlement duly signed by the parties. In the event that no settlement is reached, the Officers are required, as soon as practicable after completing their investigation, to submit a comprehensive report to the Government. This report must detail the proceedings and steps taken to ascertain the facts and circumstances of the dispute, present a full statement of those facts, disclose their findings, explain the reasons why, in their opinion, a settlement could not be obtained, and provide recommendations for resolving the dispute. Upon reviewing such a report, if the Government is satisfied that there is a basis for referring the matter to a Board or Tribunal, it may do so. The Court further observed that Boards of Conciliation, to which a dispute may be referred under the Act, are mandated to endeavour to secure a settlement. To fulfil this mandate, the Boards must, without delay and in whatever manner they consider appropriate, investigate the dispute and all issues affecting its merits and the proper settlement, and they possess the authority to take any actions they deem fit to persuade the parties to achieve a fair and amicable resolution.

When a settlement of the dispute or any of its individual matters is reached during the conciliation process, the conciliators must forward a report of the settlement to the appropriate Government. This report must be accompanied by a memorandum of settlement that has been signed by all parties to the dispute. If the conciliators are unable to secure a settlement, they are required, as soon as practicable after concluding their investigation, to send a comprehensive report to the appropriate Government. This report must detail the proceedings undertaken, the steps taken to ascertain the facts and circumstances surrounding the dispute, and the efforts made to achieve a settlement. It must also contain a full statement of the facts and circumstances discovered, the conciliators’ findings on those facts, the reasons why, in their opinion, a settlement could not be attained, and their recommendations for how the dispute should be finally determined. In addition, the Courts of Enquiry are mandated to investigate the matters that are referred to them and to submit a report of their inquiries to the appropriate Government. Likewise, Industrial Tribunals that are assigned an industrial dispute for adjudication must conduct their proceedings with speed and, as soon as practicable after concluding the matter, must submit their award to the appropriate Government.

Section 19 of the Act, in sub-sections (3), (4) and (6), governs the period for which an award remains operative. Sub-section (3) provides that, subject to the provisions of the section, an award shall ordinarily remain in force for one year. The appropriate Government, however, may shorten this period and fix a shorter term as it deems appropriate. Furthermore, before the initial period expires, the appropriate Government may extend the award’s operation by successive periods not exceeding one year each, provided that the total duration of operation does not surpass three years from the date the award first came into effect. Sub-section (4) allows the appropriate Government, either on its own initiative or on an application by any party bound by the award, to consider whether a material change in circumstances has occurred since the award was made. If such a change is found, the Government may refer the award, or part of it, to a Tribunal to decide whether the period of operation should be shortened; the Tribunal’s decision, subject to the provisions for appeal, shall be final. Sub-section (6) states that, notwithstanding the expiry of the period prescribed in sub-section (3), the award continues to bind the parties until two months have elapsed after any party gives notice of its intention to terminate the award. Chapter V of the Act contains provisions concerning the definition of illegal strikes and lock-outs, while Chapter V-A, introduced by Act XLIII of 1953, deals with lay-off and retrenchment of workmen. The remaining provisions of the Act are not relevant to the present enquiry.

In this case, the Court observed that the purpose of the inquiry at hand was not required to be referred to any other authority. From its examination of the relevant provisions of the Act, the Court noted that the various authorities created under the Act were established for distinct purposes and were given the powers and duties essential to accomplish the objectives for which they were constituted. The Court further explained that the appropriate Government possessed the discretion to select whichever authority it considered most suitable for investigating and settling an industrial dispute. The choice of one authority over another depended on the Government’s assessment of the particular circumstances that existed in a specific industry or establishment at the time.

The Court described the role of Works Committees as being to prevent clashes of interest or material differences of opinion that could otherwise give rise to industrial disputes. When the measures taken by Works Committees failed to achieve their intended purpose and a dispute either arose or was feared to arise between employers and workmen, the appropriate Government could appoint Conciliation Officers. These officers were tasked with mediating between the parties and promoting a settlement of the dispute. If the Conciliation Officers succeeded, the settlement had to be signed by the parties to the dispute. However, if despite the officers’ diligent efforts no settlement was reached, the officers were required to submit a full report in the prescribed manner so that the appropriate Government would have complete material on which to decide whether the matter should be referred to a Board of Conciliation or a Tribunal. Upon being satisfied that a reference to a Board of Conciliation was warranted, the Government could constitute such a Board, which would consist of a Chairman and either two or four additional members as it deemed appropriate. The Board’s duty was to do everything it considered necessary to induce the parties to arrive at a fair and amicable settlement. If the Board succeeded, it would forward a report together with a memorandum of settlement to the Government. If the Board failed to secure a settlement, it was obliged to send a comprehensive report, including its recommendations for resolving the dispute, to the Government. The Court emphasized that referring a matter to the Board of Conciliation was only a preliminary step; the Board’s report, especially when it indicated a failure to settle, would provide the Government with the information needed to decide whether to refer the dispute for adjudication to an Industrial Tribunal.

The Court explained that before a dispute could be referred for adjudication to an Industrial Tribunal, the appropriate Government might first establish a Court of Enquiry. That Court of Enquiry was empowered to investigate any matter that appeared to be connected with or relevant to the industrial dispute. The enquiry was required to be completed and its findings reported to the appropriate Government within six months from the commencement of the enquiry. The Government then used the material contained in the report to decide whether the dispute should be referred to an Industrial Tribunal for adjudication. In some cases the report disclosed circumstances indicating that the Government considered a referral to the Tribunal unnecessary; in such instances the matter terminated at that stage, and the Government could await further developments before making any later reference. Conversely, if the report revealed circumstances that made a referral essential, the Government would constitute an Industrial Tribunal in accordance with the provisions of the Act, the Tribunal would adjudicate the dispute and would forward its award back to the appropriate Government.

The Court further observed that the steps outlined in section 10 of the Act were not required to be followed sequentially, one after the other. The choice of which step to take depended on the urgency of the situation, the likelihood of industrial strife, the potential cessation or interruption of production, and the threat to public peace and law and order. When the dispute allowed delay, the Government could initiate conciliation proceedings, possibly refer the matter to a Board of Conciliation, and, if necessary, also set up a Court of Enquiry before finally referring the case to an Industrial Tribunal. When the dispute could not be delayed, the Government might either refer the dispute directly to an Industrial Tribunal or first refer it to a Board of Conciliation and then to the Tribunal. Accordingly, the appropriate Government had to determine the suitable step based on the surrounding circumstances, exercising its discretion with regard to the exigencies of the situation and the objectives of investigation and settlement. The Court emphasized that no rigid rule prescribed which authority must be established, as the government’s discretion must be exercised according to the facts of each case.

In this case the Court observed that the ultimate aim of the legislation is to achieve the settlement of industrial disputes and to promote industrial peace. Accordingly, it cannot be said that the discretion given to the appropriate Government may be exercised in an arbitrary or hostile manner. The petitioners argued that several provisions of the Act violate the fundamental rights guaranteed by Article 14 and Article 19(1)(f) and (g) of the Constitution. They claimed that the appropriate Government is free to treat similarly situated parties differently because no rule has been made to regulate this power, and that such freedom amounts to unregulated and arbitrary authority. The petitioners further contended that there is no rational basis for classifying parties so that they receive different treatment, and that the Government may, in one instance, refer a dispute to a Court of Enquiry and, in another, refer a similar dispute to an Industrial Tribunal. They pointed out that the procedural regimes of the two bodies differ, with the Court of Enquiry offering a less burdensome and less prejudicial process compared with the more stringent procedures before an Industrial Tribunal. The petitioners also highlighted that the reports issued by Courts of Enquiry are merely advisory, whereas the awards made by Industrial Tribunals are binding on the parties and are backed by enforceable sanctions. Moreover, they argued that the Government can, at its discretion, shorten the period of operation of a tribunal award to a negligible length, or extend it up to three years from the date the award takes effect. In their view, such wide-ranging discretion allows the Government to adopt different measures for different parties, thereby discriminating against those who are less fortunate. Finally, the petitioners maintained that because these discriminatory provisions are intertwined with the rest of the Act, and because the Central Legislature would not have enacted the remaining provisions without them, the whole Act is ultra vires the Constitution.

The Court could not accept the foregoing contentions. After examining the relevant sections of the Act, the Court found that Section 10 does not possess a discriminatory scope. The provision merely enables the appropriate Government, whenever the situation calls for it, to refer an industrial dispute—whether actual or anticipated—between employers and workmen to either a Court of Enquiry or an Industrial Tribunal, depending on the exigencies of the particular case. The Court emphasized that each industrial dispute is unique, and the circumstances surrounding disputes that arise or are likely to arise in specific establishments require a tailored approach. Consequently, the discretion exercised by the appropriate Government is not unfettered, uncontrolled, or unguided; rather, it must be exercised in accordance with the criteria set out in the Act itself, which are intended to achieve the specific objectives of the legislation as articulated in its preamble. The Court therefore concluded that the provisions challenged by the petitioners are constitutionally valid and that the appropriate Government’s power to choose the appropriate adjudicatory authority is a lawful exercise of discretion, not a source of arbitrary discrimination.

In each case the appropriate Government must take into account the situation prevailing in the specific establishment and may not create any classification; consequently the decision to refer a dispute to either the Board of Conciliation, the Court of Enquiry or the Industrial Tribunal has to be made through the Government’s best discretionary judgment. This discretion is not unlimited, unfettered or unguided because the criteria for exercising it are expressly contained within the provisions of the Act itself. The various authorities established under the Act are intended to achieve particular objectives, and those objectives expressly guide the Government’s choice of which authority to constitute for a given dispute.

The purpose of the legislation is clearly expressed in the preamble to the Act, while the definition of “industrial dispute” is set out in section 2(k). Moreover, other sections of the Act deal with matters such as strikes, lock-outs, lay-offs, retrenchment and conditions of service, and these provisions remain unchanged while proceedings are pending. Taken together, these and analogous provisions delineate the purpose and scope of the legislation and identify the types of industrial disputes that may arise between employers and workmen and that may consequently be referred for settlement to the appropriate authority. The achievement of the objects for which the Boards of Conciliation, Courts of Enquiry or Industrial Tribunals are consulted must therefore direct and control the Government’s exercise of discretion, leaving no room for the argument that the Government could arbitrarily discriminate between the parties.

In addition to directing disputes to the appropriate authority, the Act empowers the Government to prescribe the period for which an award made by an Industrial Tribunal remains in force. Ordinarily, the award operates for one year from the date of its commencement. If circumstances change between the date of reference and the date the award is made, the Government may reduce the prescribed period and fix a new period it deems appropriate. The Government may also, where circumstances warrant, extend the award’s period of operation by any period not exceeding one year at a time, provided that the total duration of any award does not exceed three years from the date it first came into operation. This power may be exercised only when, in the Government’s opinion, the circumstances have not altered so significantly as to justify the parties to the industrial dispute seeking a change in the terms of the award.

The Court observed that when the circumstances that gave rise to an industrial award have not materially altered, the award may remain in force for a maximum period of three years from the date it commenced. Section 19(4) of the Act provides that, if a material change in the circumstances on which the award was based occurs, the appropriate Government—either on its own motion or on an application by any party bound by the award—may refer the entire award or any part of it to an Industrial Tribunal. The Government is empowered to make such a reference when it is satisfied that the change warrants a determination as to whether the period of operation should be shortened. The decision of the Tribunal on that reference, subject to the right of appeal, is declared to be final. In this way, the legislature envisioned a range of possibilities and conferred wide, yet structured, discretion upon the appropriate Government to refer questions concerning the reduction of an award’s period of operation to a Tribunal whenever a material change is established.

The Court further held that the discretion granted to the Government is not unfettered or without guidance. The Government may not arbitrarily alter the period of operation; any change must be made after considering the specific facts and circumstances of the case at hand. There is no basis for suggesting that the Government would exercise this power capriciously or in a manner that would prejudice any of the parties involved. The fundamental purpose underlying all provisions of the Act is to settle industrial disputes, promote industrial peace, prevent interruption of production, and benefit the community at large. Accordingly, the Government must keep this overarching goal in mind when exercising its discretion both in referring matters to the appropriate authorities under the Act and in implementing provisions that curtail or extend the period of operation of an Industrial Tribunal award. The Court concluded that the contention that the relevant provisions of the Act—particularly Section 10—are unconstitutional and violative of Articles 14 and 19(1)(f) and (g) of the Constitution lacks any substantive merit. Since these provisions are held to be intra vires, there was no need to consider the additional argument that they are inseparably interwoven with other provisions of the Act or that the Legislature could not have enacted them without such incorporation.

In this case, the Court observed that the petitioners argued that certain other provisions of the Industrial Disputes Act were introduced without being incorporated into the Act itself. They further contended that the Industrial Tribunals, to which the appropriate Government refers industrial disputes for adjudication, were in fact legislating under the guise of adjudication. According to the petitioners, such legislation amounted to a delegation of legislative power that the Central Legislature was not competent to delegate. The petitioners maintained that the Industrial Courts were not required to follow the ordinary statutes of the land, such as the Indian Contract Act, the Payment of Wages Act, the Workmen’s Compensation Act, the Indian Limitation Act and similar statutes. Instead, they argued, the Act authorised the Tribunals to create their own code of conduct concerning industrial relations and to formulate their own policy for promoting industrial peace. The petitioners characterised this authority as legislation and claimed that the Legislature had, in effect, abdicated its legislative powers in favour of the Industrial Courts. They pointed to specific provisions dealing with the reinstatement of dismissed or discharged employees, provisions concerning lay-off and retrenchment, and provisions relating to strikes and lock-outs, asserting that these provisions introduced rules that were contrary to the positive law of the land and that they amounted to a self-made code of conduct or policy. To support this view, the petitioners referred to a decision of the Federal Court in Western India Automobile Association v. Industrial Tribunal, Bombay and Others (1949) F.C.R. 321, as well as two decisions of the Madras High Court: The Electro-Mechanical Industries Ltd., Madras v. The Industrial Tribunal No. 2 for Engineering Firms and Type Foundries, Fort St. George, Madras (1950) II M.L.J. 479, and Shree Meenakshi Mills Ltd. v. State of Madras (1951) IT M.L.J. 382. The Court, however, noted that the functions of the Industrial Tribunals while adjudicating industrial disputes differed fundamentally from those of arbitration tribunals in commercial matters. It cited Ludwig Teller’s observation in Labour Disputes and Collective Bargaining, Vol. 1, p. 536, that industrial arbitration may involve extending an existing agreement, creating a new agreement, or in general creating new obligations or modifying old ones, whereas commercial arbitration generally concerns the interpretation of existing obligations. The Court also referred to a Privy Council observation in Labour Relations Board of Saskatchewan v. John East Iron Works, Ltd., which described a claim for reinstatement by a dismissed employee as a typical matter in dispute between employer and employee. The Privy Council held that the jurisdiction of the Labour Relations Board was not invoked by the employee for enforcement of his contractual rights, which could be asserted elsewhere; instead, reinstatement, even if not mandated by the employment contract, served as a means to frustrate labour practices regarded as unfair and to further the policy that collective bargaining is a road to industrial peace.

In the discussion, the Court observed that securing collective bargaining serves as a path to industrial peace and that the issues to be resolved by the Board must be examined in light of this new conception of industrial relations. After referring to the observations of the Privy Council, the Court cited the remarks of Chief Justice Rajamannar in Shree Meenakshi Mills Ltd. v. State of Madras at page 388. The cited passage explained that the principal purpose of recent labour legislation is not to categorically define the mutual rights and liabilities of employers and employees, but rather to provide a procedural mechanism for settling disputes so as to preserve peaceful relations between the parties and to avoid conflicts that could disrupt production or cause other hazards. The passage further noted that, in the United States, legislation has been enacted to enable the adjustment of conflicting interests through collective bargaining, while in Great Britain Acts such as the Industrial Courts Act of 1919 establish Industrial Courts to inquire into and decide trade disputes, and the Conciliation Act of 1896 creates Conciliation Boards. It was then pointed out that India’s Industrial Disputes Act was modeled on those two British statutes.

Given that the central legislature enacted the Act with the aim of promoting industrial harmony, the Court held that the powers conferred on Industrial Tribunals for the settlement of industrial disputes, although broad, are guided by policy considerations and cannot be described as legislative powers. The Court acknowledged that the Tribunals do lay down certain general principles concerning matters such as the calculation of bonus, the reinstatement of dismissed or discharged employees, and other related issues. However, these principles are formulated primarily to foster industrial peace while addressing the specific disputes that are referred to the Tribunals. The Court emphasized that such principles or rules of conduct, even when applied as precedents in subsequent cases, are not strict rules of law and do not amount to legislation enacted by the Tribunals.

Even if one were to draw an analogy between the Tribunals and a court of law, the Court clarified that at most the Tribunals can declare the principles or rules of conduct that should govern employer-employee relations. Such declarations differ fundamentally from legislation, which would have binding effect on all parties. Moreover, the Act contains no provision granting the Industrial Tribunals the authority to create rules with statutory effect or to legislate on matters that arise between employers and employees. In the absence of any such statutory empowerment, the mere fact that the Tribunals, while issuing awards in the various cases, articulate certain principles does not constitute the exercise of legislative power.

In this case the Court observed that when industrial disputes are referred to the appropriate Government for adjudication, the tribunals may prescribe certain principles or rules of conduct to guide employers and employees, but such activity does not constitute an exercise of legislative power and therefore no question of the tribunals being vested with legislative authority arises. The Court further held that, with respect to delegated legislation, abstract definitions that distinguish judicial functions from legislative functions—such as the distinction drawn by Mr. Justice Field in the Sinking-Fund case—have little practical value when applied to complex factual situations. The Court explained that the primary function of a Court is to decide individual cases, and respected jurists recognise that in many decisions a Court must fill gaps or interstices in existing legislation. Because a legislature cannot foresee every possible legal problem, and because it cannot dispense justice for disputes that arise after the law is made, the legislative process inherently lacks complete coverage. Consequently, the Court said, the judicial process must possess a degree of flexibility or elasticity. Even ordinary courts of law routinely apply the principles of justice, equity and good conscience, for example in tort cases and other matters where the law is not fully codified or does not expressly address the issue before the Court.

The Court then turned to the role of the Industrial Courts, stating that they are constituted to adjudicate disputes between employers and their workmen. In the course of such adjudication the Industrial Courts must determine the rights and wrongs of the claims presented, and in doing so they are unquestionably free to apply the principles of justice, equity and good conscience. The Court emphasised that this jurisdiction is not exercised merely to enforce contractual rights; rather, it is invoked to prevent labour practices that are deemed unfair and to restore industrial peace through the mechanism of collective bargaining. The Court further clarified that the application of these equitable principles does not transform the process into a legislative act; the process remains judicial despite its flexibility and the use of justice, equity and good conscience.

Finally, the Court noted that it was unnecessary to enumerate the authorities cited regarding the nature and scope of the legislative process. It was sufficient to state that the awards issued by the Industrial Tribunals in the course of adjudicating industrial disputes do not contain legislation nor delegated legislation, and that the contention that they do is without merit. The Court also addressed the final argument that the Act was beyond the legislative competence of the Central Legislature because the definition of “industry” in section 2(j) includes both industrial and non-industrial concerns, and that the Act, being enacted for the investigation and settlement of industrial disputes, does not fall within Entry 29 of List III of the Seventh Schedule to the Government of India Act, 1935, which deals with trade unions, industrial and labour disputes. The Court observed that this line of reasoning was unnecessary to pursue further in the present judgment.

It was argued that there was no justification for defining the word “industry” in a way that would bring labour disputes arising in non-industrial settings within the scope of the statute. The definition of “industry” that appears in section 2(j) of the Act was described as so wide-reaching that it already encompassed labour disputes in non-industrial matters, and consequently it was said that one could not separate any portion of that definition that might be within the legislative power from any portion that might be beyond it. Because of this, the argument concluded that the entire definition should be considered beyond the legislative competence and, since the definition permeated the whole Act, the whole Act ought to be declared void. To support this contention, reference was made to several decisions of Industrial Tribunals that had interpreted “industry” to include hospitals, educational institutions and even the business of chartered accountants. It was submitted that the inclusion of such non-industrial concerns within the definition meant that the Act was clearly beyond the scope of Entry 29. The Court observed that it did not need to examine at this stage whether those Tribunal decisions were correct; that question would be addressed only if it were directly before the Court for determination. The Court further noted that the fact that Tribunals had taken an expansive view of the term “industry” did not, by itself, render the definition defective or ultra-vires. What required assessment was whether the definition fell within the legislative authority of the Central Legislature. On an initial reading, the Court was not persuaded that the definition was unwarranted or outside Entry 29. It was held that an erroneous application of the definition to matters not strictly covered by it could not invalidate the definition so long as the definition itself was not open to challenge. The Court also pointed out that, according to the preamble, the Act was enacted not only for the settlement of industrial disputes but also for other purposes. The respondents were therefore permitted to justify the definition in section 2(j) by invoking Entry 27 of the same List, which deals with the welfare of labour, conditions of labour, provident funds, employers’ liability, workmen’s compensation, health insurance, invalidity pensions and old-age pensions. Because the definition of “industry” includes any calling, service, employment, handicraft or industrial occupation or avocation of workmen, it could be justified under Entry 27 even if it were not covered by Entry 29. The Court emphasized that the entries in the Legislative Lists should not be interpreted narrowly; they should be given a wide meaning that embraces all ancillary matters that legitimately fall within the topics mentioned. In the present case, all of the concerns and undertakings involved were industrial in nature and therefore fell squarely within the definition of “industry.”

The Court observed that the provision in question was strictly so-called and that the pursuers, in their present position, were not entitled to contest it. The Court further noted that the argument raised by the pursuers lacked any merit and therefore had to be rejected. Consequently, the Court concluded that the Act was intra vires of the Constitution. In light of this conclusion, the Court ordered that Civil Appeals numbered 333, 334 and 335 of 1955, together with Petitions numbered 203, 182 and 65 of 1956, be dismissed. The Court added that a single set of costs would be payable by the appellants in Civil Appeals 333 to 335 of 1955 to the respondents in those appeals. Regarding Petitions 203 of 1956, 182 of 1956 and 65 of 1956, the Court directed that each party should bear and pay its own costs. In summary, all the appeals and petitions were dismissed.