Management of Vishnu Sugar Mills Limited vs Their Workmen Represented By Chini Mill Mazdoor Union

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

Court: Supreme Court of India

Case Number: Civil Appeal No. 402 of 1958

Decision Date: 9 March 1960

Coram: K.N. Wanchoo, P.B. Gajendragadkar

In this case the Court recorded that the matter concerned a dispute involving a workman employed in a sugar mill located in Bihar. The dispute had been raised by the workers’ union and the State Government had made a reference to the Industrial Tribunal. The Court explained that under section 2(a)(1) of the Industrial Disputes Act, 1947 the term “appropriate Government” means, with respect to any industrial dispute concerning an industry carried on by or under the authority of the Central Government, or concerning any such controlled industry that may be specified by the Central Government, the Central Government itself. The issue that arose was whether the State Government possessed the competence to make the reference, given that sugar production was a controlled industry under the Industries (Development and Regulation) Act, 1951. The Court held that for the Central Government to be the appropriate Government under the said provision, the industry must be expressly specified by a Central Government notification. In the absence of such a notification, the State Government remained competent to refer the dispute. The Court supported this conclusion by following the reasoning in Bijoy Colton Mills Ltd. v. Their Workmen and Another, [1960] 2 S.C.R. 982. Consequently the reference made by the Bihar Government was deemed valid.

The factual background of the appeal was set out in detail. The appeal, taken by special leave, challenged an award dated 29 January 1957 issued by the Industrial Tribunal of Patna in reference number 7 of 1956. The appellant was identified as a sugar mill situated in the Saran district of Bihar. The record showed that a certain Ramkrishna Prasad had been appointed as a clerk in that mill in 1933 and, by October 1952, his monthly remuneration stood at Rs 140. Around that time the mill created a new position of store in‑charge because the workload in the Stores Department had increased. On 4 October 1952 Babulal Parekh was appointed to that newly created post on a consolidated salary of Rs 180 per month. He was issued a letter of appointment on the same day, which informed him that he would be on probation for one year and also directed him to assume charge immediately. He actually took charge on 7 October 1952. Subsequently, an order dated 28 November 1952 distributed the duties of the Stores Department among the clerks and declared that all staff would work subordinate to Babulal Parekh. Another order dated 2 December 1952 directed Ramkrishna Prasad to hand over the keys of the stores to the new in‑charge. After these orders Ramkrishna Prasad lodged a representation objecting to his being made subordinate to the store in‑charge; that representation was rejected. Thereafter the union raised a dispute and the Government of Bihar referred the matter on 9 May 1956, presenting three questions to the tribunal, the first of which concerned whether the status of workman and the nature of the job performed by Ramkrishna Prasad had been altered.

On the date of his appointment, a letter was issued to Babulal Parekh informing him that his employment would be subject to a one‑year probationary period. A second letter instructed him to assume his duties without delay, and consequently he formally took charge of his responsibilities on 7 October 1952.

Subsequently, on 28 November 1952, the mill issued an order that allocated the various duties among the clerical staff of the Stores Department. That order expressly declared that every employee of the Stores Department would henceforth work as a subordinate to Babulal Parekh. Four days later, on 2 December 1952, another order required the incumbent store‑keeper, Ramkrishna Prasad, to surrender the keys of the stores to Babulal Parekh.

Following the hand‑over of the store keys, Ramkrishna Prasad submitted a formal representation protesting his new subordinate status beneath the stores in‑charge. The mill rejected this representation, prompting the union to raise a dispute. The Government of Bihar then made a reference to the Industrial Tribunal on 9 May 1956, presenting three specific questions for determination: (1) whether the status and nature of the work performed by the store‑keeper, Sri Ramkrishna Prasad, had been altered to his detriment by the creation of a separate stores in‑charge; (2) whether, in view of his satisfactory performance as store‑keeper for the preceding twenty years, it was necessary to appoint a separate stores in‑charge with higher remuneration, and whether Sri Ramkrishna Prasad was entitled to be appointed to that post; and (3) whether the management had disregarded the workman’s claim for promotion to higher grades, and if so, what relief he should receive.

When the matter was heard before the tribunal, the mill contended that the determination of labour strength, both in qualitative and quantitative terms, was an exclusive function of management and that Ramkrishna Prasad’s position had not been prejudicially affected by the establishment of the new stores in‑charge post. The workmen, on the other hand, argued that Babulal Parekh had initially been appointed merely as a clerk under Ramkrishna Prasad and that only on 28 November 1952 had he been promoted above Ramkrishna Prasad as stores in‑charge, thereby superseding him. The mill disputed this narrative, maintaining that Babulal Parekh had been designated as stores in‑charge from the outset.

After considering the evidence, the tribunal concluded that Babulal Parekh was first appointed as an ordinary clerk in the Stores Department and was later elevated to the position of stores in‑charge. The tribunal held that this sequence of events caused reasonable heart‑burning to Ramkrishna Prasad. While the tribunal recognised the general principle that promotion to a higher post is a matter exclusively within management’s authority and should not normally be interfered with, it nevertheless determined that the present circumstances constituted a suitable case for interference.

The tribunal concluded that it would not set aside the arrangement made by the mill and instead awarded an increase of thirty rupees per month to Ramkrishna Prasad, effective from the date of its order, as a measure to meet the ends of justice. That order is now before this Court on challenge. The appellant has raised two separate arguments. First, it contends that the reference to the dispute was incompetent because sugar is a controlled industry and, under the law, only the Central Government, not the State Government, could have made such a reference. Second, it submits that the tribunal’s decision to grant the thirty‑rupee increment is patently perverse, asserting that the creation of the new post of store in‑charge and the appointment of Babulal Parekh to that post did not alter the status or emoluments of Ramkrishna Prasad in any way. Regarding the question of competence, this Court finds the plea unsubstantiated. A similar issue was addressed in The Bijoy Cotton Mills Ltd. v. Their Workmen and Another, (1960) 2 S.C.R. 982, where it was held, based on the wording of section 2(a)(1) of the Industrial Disputes Act, 1947, that the provision can apply to a controlled industry only after a specific notification by the Central Government for the purposes of that section. Section 2(a)(1) defines “appropriate Government” as, in relation to any industrial dispute concerning an industry carried on by or under the authority of the Central Government, a railway company, or any such controlled industry as may be specified in this behalf by the Central Government, and likewise for disputes involving banking, insurance, mining, oil‑fields, or major ports. The appellant argues that because sugar is listed as a controlled industry in the Schedule to the Industries (Development and Regulation) Act, No. 65 of 1951, the Central Government is the appropriate authority. While it is correct that sugar falls within the definition of a controlled industry under that Act, the Court observes that this fact alone does not settle the matter. For the Central Government to be deemed the appropriate Government under section 2(a)(1), the industry must first be expressly specified by the Central Government for the purposes of that provision, as the phrase “controlled industry as may be specified in this behalf by the Central Government” makes clear. Consequently, the contention that the reference was incompetent fails.

The Court explained that merely being a controlled industry does not automatically bring an industry within the scope of section 2(a)(1). In addition to the industry being classified as controlled, it must also be specifically designated for the purposes of section 2(a)(1) by the Central Government before the Central Government can be regarded as the appropriate government under that provision. In support of this interpretation the Court referred to the decision in Firebricks and Potteries Ltd., etc. v. Firebricks and Potteries Ltd. Workers Union Ltd. where the same view was adopted. The Court held that this interpretation accords with the meaning of the words in section 2(a)(1) as earlier affirmed in The Bijoy Cotton Mills Ltd. Consequently, the objection that the reference was not competent could not succeed. The Court then turned to the argument advanced on behalf of the mill that the creation of the new post and the appointment of Babulal Parekh had caused no prejudice to the status or emoluments of Ramkrishna Prasad, and that the tribunal was therefore not justified in granting an increment of Rs 30 per month to him. The tribunal’s principal reason for its order was its finding that Ramkrishna Prasad had been superseded by Babulal Parekh, who, according to the tribunal, was initially appointed as a clerk serving under Ramkrishna Prasad. The Court found this view to be patently erroneous. The appointment order dated 4 October 1952 plainly indicates that Babulal Parekh was appointed as store in‑charge from the outset with a salary of Rs 180 per month. The tribunal had relied on entries in the attendance register to conclude that Babulal Parekh had originally worked as a clerk. The register for October, November and December shows that Babulal Parekh was marked present from 7 October to 9 November. From 11 November to the end of December he signed the attendance register. According to the statement of the Labour Welfare Officer, Chaudhari, the mill’s practice was to mark officers as present in the register, while clerks were required to sign it themselves. The tribunal inferred from the fact that Babulal Parekh signed the register in November that he must have been a clerk at the start. However, the Court observed that the tribunal overlooked the period from 7 October to 9 November when Babulal Parekh was marked present, which would indicate that he was not a clerk. The Court also noted that the tribunal ignored the fact that from 28 November to the end of December, when Babulal Parekh was admittedly serving as store in‑charge and not as a clerk, he continued to sign the register, although he should have been marked present. Chaudhari could not explain this discrepancy, and the Court found that his explanation was insufficient. The Court concluded that the confusion over the attendance markings rendered the tribunal’s reliance on them of no significance.

The Court observed that any significance attached to whether Babulal Parekh’s name was entered as marked present in the attendance register or whether he personally signed the register was immaterial to the determination of his employment status. The decisive factor, the Court held, was the appointment order dated 4 October 1952, an order which the tribunal had accepted as correct. During the concluding phase of Chaudhari’s cross‑examination, the Court noted that counsel had asked him whether he had fabricated his statements on the night preceding the hearing; Chaudhari denied that allegation. The Court could not accept the respondents’ suggestion that the appointment order had been ante‑dated, because no such suggestion had been put to Chaudhari and the tribunal itself had found no basis for such a contention. Consequently, the finding of the tribunal that Babulal Parekh had originally been appointed as a clerk serving under Ramkrishna Prasad was characterised by the Court as patently perverse. The Court therefore held that, from the very beginning, Babulal Parekh had been employed as store‑in‑charge. With respect to Ramkrishna Prasad, the Court observed that his duties and remuneration remained unchanged after the appointment of Babulal Parekh. Even if a higher post had been created in the Stores Department because of an increase in workload, Ramkrishna Prasad could not claim promotion to that post merely on the ground that he had previously acted as a store‑keeper. The Court further stated that there was no question of supersession in the present case and, accordingly, no reasonable cause for any grievance or “heart‑burning.” Referring to the tribunal’s own observation that promotion to a higher post is the exclusive function of management, the Court affirmed that the creation of a new post and the appointment of a new individual, as occurred here, could not be said to have prejudicially affected Ramkrishna Prasad’s status. The Court also found it noteworthy that, after pronouncing in favour of Ramkrishna Prasad, the tribunal did not disturb the arrangement adopted by the mill, an arrangement that the tribunal’s order had not specified. As a result, there was no basis for granting an increment of Rs 30 per mensem to Ramkrishna Prasad, particularly because the workmen had not claimed any entitlement to such an increment arising from Babulal Parekh’s appointment. The Court concluded that the tribunal’s order was untenable and must be set aside. Accordingly, the appeal was allowed, the tribunal’s order was set aside, and no relief was awarded to Ramkrishna Prasad. No order as to costs was made, and the appeal was allowed.