The Associated Cement Company Ltd vs Shri P. D. Vyas And Others

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

Court: supreme-court

Case Number: Civil Appeal No. 22 of 1.958

Decision Date: 11 February, 1960

Coram: P.B. Gajendragadkar, K.C. Das Gupta

In the matter titled The Associated Cement Company Ltd. versus Shri P. D. Vyas and Others, the Supreme Court of India rendered its judgment on 11 February 1960. The opinion was authored by Justice P. B. Gajendragadkar, who sat on a bench together with Justice K. C. Das Gupta. The petition was filed by The Associated Cement Company Ltd., referred to as the petitioner, and the respondents were Shri P. D. Vyas and others. The judgment bears the citation 1960 AIR 665 and also appears in the Supreme Court Reports as 1960 SCR (2) 974. The case is indexed in later citations such as R 1966 SC 1471 (17), RF 1979 SC 65 (5), and concerns the Industrial Employment (Standing Orders) Act, 1946, specifically sections 3, 4, 5 and 15(2)(b) dealing with the submission of draft standing orders by an employer and the authority of the certifying officer to modify them.

The headnote of the judgment explains that the appellants had submitted draft standing orders to the certifying officer for certification under section 3(1) of the 1946 Act, and the officer altered those drafts on the ground that the changes were required to bring the orders into conformity with the model standing orders. Section 4 of the Act, before its amendment in 1956, expressly stated that neither the certifying officer nor the appellate authority could pass judgment on the fairness or reasonableness of any standing order provision. Conversely, section 3(2) required that a draft, as far as practicable, conform to the prescribed model standing orders. The central question before the Court was whether the certifying officer possessed jurisdiction to make the modifications in the case at hand.

The Court held that a distinction must be drawn between considerations of fairness or reasonableness and considerations of practicability. While the certifying officer may not alter a draft on the basis that its provisions are unfair or unreasonable, the officer is empowered and indeed required to modify the draft where conformity with the model standing orders is practicable under the circumstances. The Court disapproved the earlier decision in Electric Workers’ Union v. U. P. Electric Supply Co., A.I.R. 1949 All. 504, but approved the decisions in Jiwan Mal & Co. v. Secretary, Kanpur Loha Mills Karmachari Union & Ors., A.I.R. 1955 All. 581 and Mysore Kirloskar Employees’ Association v. Industrial Tribunal, Bangalore & Anr, [1959] 1 L.L.J. 531.

The judgment arose out of Civil Appeal No. 22 of 1958, an appeal from the Bombay High Court’s judgment dated 2 December 1954 in Appeal No. 122 of 1954, which itself was based on the High Court’s order dated 30 September 1954 in Civil Miscellaneous Application No. 267/X of 1954. Counsel appearing for the appellant included senior advocates, while the respondent No. 2 was represented by counsel as well. The judgment, delivered on 11 February 1960, was pronounced by Justice Gajendragadkar. The appellants, identified as The Associated Cement Companies Ltd., Dwarka Cement Works, Dwarka and The Associated Cement Companies Ltd., Sevalia Cement Works, Sevalia, were described as owners and managers of several cement works across India, including inter‑alia cement manufacturing factories.

The appellants owned and operated two cement manufacturing factories, namely the Dwarka Cement Works at Dwarka and the Sevalia Cement Works at Sevalia. In 1946 they presented to the Commissioner of Labour for Bombay, acting in his capacity as certifying officer, a draft of standing orders that they sought to have certified under section 3(1) of the Industrial Employment (Standing Orders) Act, 1946. The Commissioner thereafter introduced several alterations to the draft. Two of those alterations formed the subject of the present appeal and concerned items 8 and 16 of the draft. Under item 8 the original draft required that a notice of fourteen days be given when a shift was to be discontinued; the Commissioner amended this provision by extending the notice period to one month, following the prescription contained in the model standing order for that matter. Similarly, the draft’s item 16(2) provided that any work stoppage, whether carried out by a single worker or jointly with others, without a prior fourteen‑day notice would constitute misconduct, while item 16(3) stipulated that inciting any worker on the premises to strike would also be treated as misconduct. The Commissioner revised these provisions so that any illegal strike, whether undertaken singly or in concert with others, or any act of abetting, inciting, instigating or otherwise furthering an illegal strike, would be deemed misconduct. This alteration too was made in conformity with the relevant clause of the model standing order. Dissatisfied with the Commissioner’s modifications, the appellants appealed to the Industrial Court, designated here as respondent 1. The Industrial Court did not find merit in the appellants’ arguments, upheld the Commissioner’s changes, and dismissed the appeal. Consequently, the appellants instituted a writ petition, identified as Miscellaneous Application No. 267 of 1954, before the Bombay High Court, challenging the legality of the actions of both the Commissioner and the Industrial Court. Justice Coyajee, hearing the petition, accepted the appellants’ contention that the Commissioner and the Industrial Court had acted beyond the limits of their authority, set aside the contested modifications, and granted relief to the appellants. The Commissioner then filed an appeal, numbered Appeal No. 122 of 1954, before the Court of Appeal of the Bombay High Court. That appellate court overturned Justice Coyajee’s decision, holding that the Commissioner’s and the Industrial Court’s alterations were permissible under the provisions of the Act, and consequently dismissed the appellants’ petition. The appellants have now brought the present appeal, raising the concise question of whether, under the Act, the Commissioner and the Industrial Court possessed the competence to make the disputed modifications to the draft standing orders submitted for certification.

In the matter before the Court, the central issue was whether respondents 2 and 1 possessed the authority under the Act to make the challenged alterations to the draft standing orders that the appellants had submitted for certification. The Court explained that the Act had been enacted on the premise that it was advisable to require employers in industrial establishments to articulate, with sufficient precision, the conditions of employment applicable to their workers and to ensure that those conditions were communicated to the workmen employed. Section 2(g) of the Act defined “standing orders” as rules concerning the matters enumerated in the Schedule, and the Schedule itself listed eleven separate subjects for which employers were obligated to formulate standing orders. Representing the appellants, counsel Mr. Kolah argued that the fundamental purpose of the legislation was to compel employers to provide conditions of service covering every matter contained in the Schedule, and that, at that time, the jurisdiction of respondent 2 under the Act was limited solely to verifying that standing orders were prepared for each of the items specified in the Schedule. In support of this position, Mr. Kolah relied heavily on the provision of section 4 as it existed then, which expressly stated that “it shall not be the function of the certifying officer or the appellate authority to adjudicate upon the fairness or reasonableness of the provisions of any standing order.” According to that argument, the Act prohibited respondents 2 or 1 from examining whether any clause in the draft standing orders was fair or reasonable, and it was contended that, by making the disputed modifications, respondent 2 had effectively undertaken an enquiry into the reasonableness or fairness of the conditions contained in the draft. The Court recognized that this line of reasoning was attractive, but noted that other provisions of the Act undermined the reliance on section 4. Consequently, the Court deemed it necessary to examine those additional, material provisions. Before proceeding, the Court additionally pointed out that a subsequent amendment enacted in 1956 had revised section 4 to provide that “it shall be the function of the certifying officer or the appellate authority to adjudicate upon the fairness or reasonableness of the provisions of any standing orders.” In effect, the amendment transformed what had previously been excluded from the authority of the certifying officer and appellate authority into a mandatory duty, rendering any argument based on the pre‑1956 wording of section 4 purely academic. The Court then turned to section 3, which required the employer to submit draft standing orders. Section 3(2) stipulated that the draft must contain a provision for every matter listed in the Schedule that was applicable to the industrial establishment, and, where model standing orders had been prescribed, the draft should conform to such model to the extent practicable. Both parties agreed that model standing orders had indeed been prescribed in the present case, and therefore, under section 3(2), the appellants’ draft was required to conform to the model standing orders unless it could be shown that such conformity was impracticable.

In the case before the Court, it was observed that the draft standing orders submitted by the appellants were required, under section 3, sub‑section (2) of the Act, to conform to the model standing orders to the extent that such conformity was practicable. In other words, the effect of section 3, sub‑section (2) was that the appellants’ draft had to follow the model unless it could be shown that doing so was impracticable, and this requirement was not contested. The next relevant provision was section 4, which stipulated that standing orders could be certified only if (a) a provision was made for every matter listed in the Schedule that applied to the industrial establishment, and (b) the standing orders were otherwise in conformity with the provisions of the Act. The remainder of section 4 had already been cited and considered by the Court. Having thus set out the tests that must be satisfied before an employer’s draft can be treated as certifiable, section 5 dealt with the procedure before the certifying officer. Section 5(2) required that, after notice to the parties concerned, the certifying officer decide whether any modification or addition to the employer’s draft was necessary to render the draft standing orders certifiable under the Act, and to record the decision in writing. Sub‑section (3) of section 5 then provided for the certification of the draft after any such modifications were made under sub‑section (2). A further provision, section 15(2)(b), allowed the appropriate government to make rules that set out model standing orders for the purposes of the Act. Collectively, these provisions meant that the certifying officer had to be satisfied that the draft standing orders addressed every matter set out in the Schedule and were otherwise in conformity with the Act. This latter requirement necessarily incorporated the consideration laid down in section 3, sub‑section (2), namely that the draft standing order must be in conformity with the model standing order prescribed under section 15(2)(b), unless it could be shown that such conformity was impracticable. While the requirement did not demand an identical wording of the draft to the model, it did require that, in substance, the draft conform to the model prescribed by the appropriate government. The Court then posed the question whether respondent 2 was entitled to consider that the draft submitted by the appellants need not conform to the model standing order on the topics raised in the present appeal.

In this matter the Court observed that the answer to the earlier question must necessarily be affirmative. It held that not only was respondent 2 authorised to investigate the draft standing orders, but it also bore a clear duty to do so before declaring the draft certifiable under section 4. Such an investigation required the authority to consider whether it was practicable to demand that the draft conform to the model standing order on the points that were contested. The Court explained that if respondent 2 was satisfied that conformity was practicable, the officer could lawfully make the appropriate modifications to the draft. Conversely, if the officer concluded that conformity could not be required, the draft could be treated as certifiable despite any disparity between the model and the draft. In the present case, both respondent 2 and respondent 1 found that conformity was practicable concerning the disputed matters and consequently effected the necessary modifications. The Court found it difficult to accept the contention that, by making those modifications, the respondents had exceeded their jurisdiction. It stressed that considerations of fairness or reasonableness lie outside the scope of the enquiry conducted by respondent 2 and respondent 1, whereas questions of practicability are expressly imported into that enquiry. Although the boundary between fairness and practicability may be thin, the Court affirmed that it is a definite line recognised by the statutory provisions of the Act. Accordingly, respondent 2 may not alter the draft on the ground that its provisions are unfair or unreasonable, but he may and must modify the draft where the model standing order applies, provided he is satisfied that such conformity is practicable in the circumstances.

The Court further held that the High Court was correct in concluding that the authorities under the Act acted within their jurisdiction when they made the impugned modifications. It then referred to the authorities cited by counsel. In the decision of Guest, Keen Williams (Private) Ltd v. Sterling (P. J.) & Ors. (1) the Supreme Court examined a provision of section 4 as it existed before its amendment in 1956, but the point raised in the present appeal was not addressed therein. In Electric Workers’ Union v. The U.P. Electric Supply Co. (2) Justice Wanchoo, acting as the appellate authority under the Act, appears to have held that section 3(2) did not empower the certifying officer to substitute the model for the draft. According to the learned judge, that provision was intended merely to guide employers in framing their draft standing orders. This decision has been cited to support the argument that a certifying officer cannot alter clear draft provisions on the basis that they are unreasonable or unfair and replace them with model provisions. The Court noted, however, that if those observations were intended to preclude the officer from enquiring whether conformity with the model is practicable, such a view would be inconsistent with the true effect of the relevant statutory provisions. The Court also observed that Justice Wanchoo’s observations have not been approved by the Allahabad High Court.

In this case, the Court noted that the learned judge observed that the provision in question was meant solely to assist and guide employers in preparing their draft standing orders. The Court indicated that this decision appeared to support the argument cited in (1) (1960) 1 S.C.R. 348 and (2) A.I.R. 1949 All. 504, namely that a certifying officer lacks authority to alter any provisions of the draft when those provisions are clear, on the ground that they are unreasonable or unfair, and that the officer also cannot replace such clear provisions with other provisions that may be found in the model standing orders. The Court further considered that, if the observations were intended to hold that, before certifying the draft standing orders submitted by an employer, the certifying officer must not inquire into or decide whether it would be practicable to make the draft’s provisions conform to the model standing orders, then, with respect, the Court would find that such a view is inconsistent with the true effect of the relevant provisions of the Act. The Court added incidentally that the observations made by Justice Wanchoo in that earlier case have not been approved by the Allahabad High Court in Jiwan Mal & Co. v. Secretary, Kanpur Loha Mills Karamchari Union & Ors. (1). The Court also referred to the decision in Mysore Kirloskar Employees Association v. Industrial Tribunal, Bangalore & Anr. (2), where the Mysore High Court examined the same question and appeared to agree more with the view expressed by the Bombay High Court, which is the subject‑matter of the present appeal, than with the observations of Justice Wanchoo. The Court then turned to another point raised by counsel for the petitioner, who argued before the Court that even if the authorities under the Act possessed jurisdiction to consider whether it was practicable to insist upon conformity with the model standing orders, the modifications made by those authorities on the merits were themselves impracticable. The Court declined to allow this contention to be advanced, because it had not been raised by the appellants in their petition for a writ before the Bombay High Court, and it would not be permissible for them to introduce it for the first time at this stage. Moreover, the Court explained that in a petition for a writ of certiorari it is generally not open to the appellants to challenge the merits of the findings made by the authorities under the Act. Consequently, the Court concluded that the appeal must fail, dismissed it with costs, and entered an order of dismissal, referencing (1) A.I.R. 1955 All. 581 and (2) (1959) 1 L.L.J. 531.