WESTERN INDIA MATCH COMPANY LTD. ve WORKMEN August 20, 1973 [P. JAGANMOHAN Reppy AND S, N. Dwivent, JJ.]
industrial _Dispute—Probation for a period longer than that- provided by the employer's Standing Order—Validity.
industrial Employment (Standing Orders) Act, 1946—Object and policy of.
U.P. Industrial Disputes Act, s. 6B—Scope of—‘May’ in sub. s. (2) should be read as ‘shall. :
Labour Court—Power to modify Standing Orders—Power to order reinstatement. :
Under the Standing Order for the Watch and Ward staff of the appellant. ‘a permanent workman’ is one ‘who has completed a probationary period of two months as such and is employed on a permanent post;’ and ‘a probationer’ is a workman ‘who is provisionally employed to fill a permanent vacancy and has not completed two months service’
A watchman was appointed by the appellant on probation for a period of 6 months. His period of probation was extended, and during the extended period, his services were terminated. There was an industrial dispute and the questions. (1) whether the termination was legal or justified, and (2) to what relief the workman was entitled, were referred to the Labour Court. The Labour Court held that the order of discharge was neither mala fide nor an act of victimisation; but set aside the order of discharge and directed reinstatement of the employee on the view that the term regarding 6 months’ probation in the employee’s letter of appointment was in contravention of the Standing Order and was invalid.
Dismissing the appeal to this Court,
HELD: (1) The Labour Court has not travelied beyond the terms of reference, because, the validity or invalidity of the discharge depends on the validity of the term regarding 6 months’ probation. [437D-E}].
(2) Since, according to the Standing Order, a workman shall not be kept On probation for more than 2 months, the letter of appointment (or special agreement) is inconsistent with the Standing Order to the extent of the additional 4 months’ probation. [437E-G]
(3) The inconsistent part of the agreement. is ineffective and wnenforceable. [439F] .
(a) To uphold the special agreement would mean giving a go-by to the principle of three party participation, in the settlement of the terms of employment, incorporated in the Industrial Employment (Standing Orders) Act, 1946. The Act gives effect to the new thinking that Society has also an interest in the settlement of the terms of employment of industrial Jabour. While formerly there were two parties at the negotiating table—the employer and the workman —it is now thought that there should also be present a third party, namely the State, representing society. The Certifying Officer under the Act, as the statutory representative of society, adjudges on the fairness or reasonableness of Standing Orders after considering and weighing the social interest in the
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‘% claims of the employer and ‘the demands °
WESTERN INDIA MATCH CO. vy, WORKMEN
(Dwivedi J.) ia
Fi : ri f the work . ment, in the instant case, in so far as i ; men. The special agree. probation, contravenes the Standing Ord hie give a advitional 4 mont ee (b) The terms of employment specified in the: Stang; over the gear ing terms in the contract of ene in ea ae oe ‘enforcement © Standing Order. If a prior agreement j istence on the the Standing Orders will not survive, an agi inconsistent with
: veemen j inert B with the Standing Order shouid aiso not prevail “37S ae and inconsistent
[437-G; 438-D]
Agra Electric Supply Co. Lid. y. Shri Alladin, [| India Lid. v. Second ladustrial Pihonal West Fai AER, 1972 S.C. 1626. The United Provinces Electric Supph ae _ Lad, Allahabad v. Their Workman, [1912] 2 S.C.C. 54, and Salem Erod Y ae , tricity Distribution Co. Lid v. Salem Erode Electricity Distribution Co ea
Employees Union, [1966] 2 3.C.R. 498, 504, followed. ce tie
J 1 S.C.R. 808,
& Mjs J. K. Cowon Manufacturers Ltd, Kanpur y, }
, ~ N. Tewari
A.I.R. 1959 Adl. 039 and Banaras Electric Light and Powe 5 . vy. Government of Uttar Pradesh and Others, 11962) i LL. -_ ae Beene a (c) Section 6B(1) of the U.P. Industrial Disputes Act deals wi ei
‘ment arrived at by agreement between the mated and ie Shelagh Ass than in the course of conciliation proceeding. Sub-section: (2) provides that after the settlement is arrived at, the parties to the setllement or any one
D of them ‘may’ apply to the Conciliation Officer for registration of the settlement. In the context of sub-s. (3) the word ‘may’ should be read as ‘shall’. Subsection (3) provides that while considering the question of the registration af a settlement, the conciliation officer shall examine whether it is inexpedient to do so on public ground affecting social justice or whether the settlement has been brought about as a result of collusion, fraud or misrepresentation. In the present case, the Conciliation Officer having had no say in the making of the special agreement the consent of the employee is meaningless. 4$39F= E 440A) ‘
(4) It is true that a Labour Court may determine terms and conditions of employment which may be inconsistent with a Standing Order; but in the "present: case, the reference did not give any such jurisdiction to the Labour Court to determine the terms and conditions of employment of the reer
(5) (a) The appellant did not plead in its written statement before the
F Labour Court that the work of the discharged employee was unsatisfactory during the probationary period, nor did it fead any evidence in proof of the unsatisfactory work, The argument was also not raised in the Special eave petition, Therefore, the appellant could not be permitted to raise the Pipe 2 that since the discharge was occasioned by the unsatisfactory work ees I employee the Labour Court should not have ordered re-instatement. FY
: 3 . discharge not only b) ‘The Labour Court may interfere with an order of : when 4 was made ‘en fide a as a measure of acho iagt pag my a ee it finds that it was arbitrary or capricious or so unreasonable BS Ne wag inference that it was not made bona fide. In the Pool “ee was unsatisfacno plea and no evidence to show that the work of the emp oyt © "41 4 py tory, the conclusion is obvious that the order of discharge lis ‘ Tata Oil Milly Company Lid, v. Its Worknten anid another, ES wer] 78 Mf¥ Francis Elein and Co, Private Lid. v. Pca v, V. A, Robellow H ALR. 1971 S.C. 2414-and Air India Corporiiiom © and another, [1972] 1 L.L.3, $01, referred to. — g cial agree [The question whether a Standing Order Be and EDT tne sees ment. in contravention of it, was void, not decided.
a
436 SUPREME COURT REPORTS [1974] 1 s.cr.
Civit APPELLATE JURISDICTION : Civil Appeal No. 2375 of 1698.
Appeal by special leave from the award dated April 19, 1968 of the Labour Court II Lucknow in Adjudication Case No. 3 of 1967 L.c. (1), Lucknow/Adjudication Case No. 184 of 1967 L.C. (ITI) Lucknow published in Uttar Pradesh Gazette dated August 10, 1968.
C. K. Daphtary, P. C. Bharatri and O. S. Mathur, for the appellant. S. C. Aggarwal and V..J. Francis, for the respondents. The Judgment of the Court was delivered by
Dwriven1, J.—The Wesetrn India Match Company Limited, Bareilly (hereinafter called the Company) is governed by the Industrial Employment (Standing Orders) Act, 1946 (hereinafter called the Agt). It appears that it has a separate Standing Order for the Watch and Ward . Staff: According to the Standing Order, there are five categories of workmen: (1) Permanent, (2) Probationer, (3) Substitute, (4) Temporary, and (5) Apprentice. A permanent workman is one “who has completed a probationary period of two months as such and is employed on a permanent post.” A probationer is a workman “who is provisionally employed to fill a permanent vacancy and has not completed two months service”, (emphasis added)
The Company appointed one Prem Singh as a watchman cn September 1, 1965. The letter of appointment states that he would be “on probation for a period of six months.” We shall hereafter refer to this contract of service as a “special agreement.” The period of probation expired on March 1, 1966, but he continued to serve on his post. On April 13, 1966 the Company passed an order extending the period of his probation by two months with retrospective effect from March 1, 1966. Nine days later on April 22, 1966, the Company passed this order: “the above watchman has been discharged with effect from 1-5-1966 for the reasons mentioned below :
(1) probation period not approved, services are no longer required by the Company.”
This order gave rise to an industrial dispute. The dispute was referred for adjudication by the Government of Uttar Pradesh to the Labour Court (II), Lucknow. The referring order was made on April, 9, 1968.
The question referred to the Labour Court is :
“Whether the employers have terminated the services of the workman Shri Prem Singh, son of Shri Bhartu, Watchman T. No. 247, with effect from 1-5-1966, legally and/or justifiably ? If not, to what relief is the workman concerned entitled-”
Prem Singh was represented before the Labour Court by .thé Matches Mazdoor Sangh, Bareilly. The case of the Sangh was that the employment of Prem Singh on probation for six months was in contravention of the Standing Order. It was maintained that on the
WESTERN INDIA MATCH CO. ¥. WORKMEN (Dwivedi J.) 437 expity of two months Prem Singh automatically became a permanent workman, It was also said that during the entire period of his probation Prem Singh was never told by the Company that it was not Satisfied with his work. According to the Company, the term of six months’ probation was valid. It was said that as his work was not found satisfactory, he was discharged.
The Labour Court has found that the discharge was neither mala fide nor an act of victimisation for trade union activitics. However, the Labour Court has set aside the order of discharge and has directed his reinstatement with continuity of service and back wages. This is 80, because it has taken the view that the term regerding six monhs’ probation was in contravention of the Standing Order and was invalid. It has held that on completing two months’ probation Prem Singh automatically became a permanent employee.
Shri Daphtary, counsel for the Company, has submitted that the Labour Court has gone beyond the terms of reference. It is pointed out that the Government Order of reference does not expressly empower the Labour Court to decide whether the term regarding six months’ probation was valid or invalid. In our view, the Labour Court has not travelled beyond the terms of reference. It was called upon to decide whether the order of discharge was legal and/or justi-. fied. The validity or invalidity of the discharge obviously depended on the validity or invalidity of the term regarding six months’ proba-. tion: If this term was invalid the order of discharge also. would obviously be invalid.
The next submission of Shri Daphtary is that the special agreement is not inconsistent with the Standing Order. According to the Standing Order, a workman shall not be kept on probation for more than two months. If he has worked during these two months to the satisfaction of the Company, he becomes permanent. But as a result of special agreemen‘, even though he has worked during these two months to the. satisfaction of the Company, he will not be a permanent workman. While the Standing Order says: “Confirm him on the expiry of two months”, the special agreement says: “No, wait till the expiry of six months.” There is thus a conflict between them. They cannot coexist. So we are of opinion that the special agreement is inconsistent with the Standing Order to the extent of the additional four months’ probation.
The terms of employment-specified in the Standing Order would prevail over the corresponding terms in the contract of service in exi- ‘Stence on the enforcement of the Standing Order. It was in effect so held in the Agra Electric Supply Co. Ltd. v. Shri Alladin.(!) Avery India Ltd. v. Second Industrial Tribunal West Bengal.(?) and the United Provioes Electric Supply Co. Ltd. Allahabad v. Their Workmen. (8). While the Standing Orders are in force, it is not permissible to the employer to seek statutory modification of them so that there may be one set of Standing Orders for some employees and another
(1) [1970} 1.8. €. R. 808 (2) A. T. R. 1972 S. C. 1926 (3) [1972] 2S. C. C- 54
435 SUPREME COURT REPORTS [1974] 1 s.c.r.
Set ior the rest of the employees. In Salem Erode Electricity Distribution Company Lid. v. Salem Erode Electricity Distribution Co. Ltd. Employees Union(*), Cajendragadkar C, J. said:
“(T)here is no scope for having two separate Standing Orders in respect to any one of them. Take the case of classification of workmen. It is inconceivable that there can be two separate Standing Orders in respect of this matter. What we have said about classification is equally true about each one of the other said clauses; and so, the conclusion appears to be uresistible that the object of the Act is to certify Standing Orders in respect of the matters covered by he Schedule; and having regard to these matters, Standing Orders so certified would be uniform and would apply to all workmen alike who are employed in any industrial establishment-”
if a prior agreement, inconsistent with the Standing Orders will not survive, an agreement posterior to and inconsistent with the Standing Order should also not prevail. Again, as the employer cannot enforce two sets of Standing Orders governing the classification of workmen, it is also not open to him to enforce ‘simultaneously the Standing Order regulating the: classification of workmen and a special “agreement between him an and individual workman settling his categorisation.
’ In view of the decisions of this Court cited earlier, the decisions in M/s J. K. Cotton Manufacturers Ltd. Kanpur v. J. N. Tewari(?) and the Banaras Electric Light and Power Co. Lid, Berhlupura v. Govern ment of Uttar Pradesh and others(*) no longer lay down good law. ‘They take the view that notwithstanding the Standing Orders it is ‘open to the employer to conclude an agreement with an individual workman which may be inconsistent with the Standing Orders. These decisions are overruled. .
‘In the sunny days of the market economy theory people sincerely believed that the economic law of demand and supply in the la ‘market would settle a mutually beneficial bargain between the employer and the workman. Such a bargain, they took it for granted, would sécure fair terms and conditions of employment to the workman. This Jaw they venerated as natural law. They had an abiding faith in’ the verity of this law. But the experience of the working of this law over a long period has belied their faith. Later generations discovered that the workman did not possess adequate bargaining strength to secure fair terms and conditions of service. When the workmen also made this discovery, they organised themselves in trade unions and insisted on collective bargaining with the employer. The advent of trade union and collective bargaining created new problems of maintaining indusrial peace and production for the society. It was therefore considered that the society has also an interest in the settlement of the terms of employment of industrial labour. While formerly there were two parties at the negotiating table the employer and the workman, it is now
(1) [1966} 2S. C..R. 498 at p. 504. (2) A.¥, R. 1959 All. 639 (3) [1962] 1 L. LJ, 14.
As.
Ce
___, WESTERN INDIA MATCH CO. ¥,-WORKMEN (Dwivedi J.) 439.
thought that there should also be present a third-party the State as representing a ove of ae society. The Act gives effect to this: new. thinking By. 3.4 the cer cértifying the Standing Order is directed to adjudicate upon “the fairness or reasonableness” of the. Provisions of the Standing Order. The Certifying Officer is the statutory,
Tepresentative of the society. It seems to us that while adjudging the | fairness or reasonableness of any “Standing Order, the Certifying Officer.should consider and weigh the social interest in the claims of the employer and the social interest in the demands of the workmen.
- Section 10 provides the mode of modifying.the Standing Orders: The:
‘employer or the. workman. may apply to the Certifying Officer in the. prescribed manner for the modification of the Standing Orders. Section. ‘13(2) provides that an employer who does any act in contravention of. the Standing Order shall be punishable with fine which may extend to’ one hundred rupees. It also provides for the imposition of a further. fine in the case of a continuing offence. The fine may extend to twenty-; five rupees for every day after the first during whith the offence’
_ ‘continues.
D:
“i The special agreement, in so far as it provides for additional four months of probation, is an act in contravention of the Standing Order. We have already held that.’ It plainly follows from sections 4, 10 and
“43(2) that the inconsistent part of the special agreement cannot pre-
‘vail over the Standing Order. As long as the Standing Order is in force, it is binding on the Company as well as the workmen, To uphold the special agreement would mean. giving a go by to the Acts principle
- of thiee-party participation in the settlement of terms of employment.
Gi
H:
So we are of opinion that the inconsistent part of the special agreement, is‘ effective and unenforceable. - _ se ‘
‘,+ "It is. pointed out on behalf of the Company that s.18 of the Industrial Disputes Act provides that any settlement between the employer. aad the workman is binding on them, It is said that accordingly the special agreement in the present case would be binding on Prem, Singh.’ It.is not necessary to construe 3.18 in this case because it is governed’ by the provisions of the Uttar Pradesh Industrial Disputes Act. Section.
6B(1) of this Act deals with a settlement arrived at by agreement between the employer and workmen otherwise than in the course of conciliation proceeding. Sub-section (2) thereof provides that after the” settlement is arrived at, the parties to the settlement or any one of* them ‘may’ apply to the Conciliation Officer of the area concerned for the’ registration of the settlement: Sub-section (3) is important. It pro-
. “ides that while considering the question of the registration of a settle-' .
ment, the Conciliation Officer shall examine whether it is inexpedient todo’ so on public ground affecting social justice or whether the settle-' © ment has been brought about as a result of colbersion, fraud or misrepre sentation. We think that the word ‘may’ in sub-section (2) should be read as ‘shall in the context of sub-section (3). If social justice is to be ensured and if collusion, fraud or misrepresentation is to be eliminated, it is necessary that every privately negotiated settlement should be submitted for registration to the Conciliation Officer. It may be observed that the U. P. Act also insists on the three. party
_ 4407 "SUPREME COURT REPORTS _ (1974) 1 SR, paiticipation in the serilement of terms of eaplesment, In the ‘re sult, the Company cannot enforce the special agreement on the’ pretext that Prem Singh had voluntarily agreed to.it. The conciliation officer having had no say in the making of this aETeerCny the. consent of - Prem Singh is meaningless. :
_ It is then said that the Standing Order can Be. noainea ina suitable Case by the Labour Court, In this connection reliance is placed on the
Management of Bangalore Woollen, Cotton ‘and Silk Mills Co. Ltd. v..
The Workmen(*). It is true that the Labour Court may determine. terms and conditions of employment which may-be inconsistent with the Standing Order. But in the present case the referene did not give - jurisdiction to the Labour Court to determine terms -and conditions of employment of Prem Singh. The reference directed the Labour Court: to decide whether the discharge of Peco Singh from Service as legal , justifiable.
Shri Agarwala has argued that the Standing Order is a law and accordingly the special agreement in contravention of it is void In
_ Support of his argument he has relied on a number of decisions of this ©
Court. Shri Daphtary has argued to the conttary.and has relied on some other decisions. In the view that we have taken earlier, it is not the authorities cited before us.
necessary to consider. this question. Accordingly, we do not refer to
Another contention of Shri Daphtary i is that in ‘the circumstances of this case the Labour Court should not have made an order for reinstatement of Prem Singh, Stress is laid on the assertion in the order _ of discharge that his work during the entire paterouaey period was not satisfactory. In support of his argument Shri Daphtary has relied on the Hindustan Steel Ltd. Rourkela v. Roy (A.K. and others) (?). This decision does not assist him, for in the case before us the Company did not plead in its written statement filed before the Labour Court that the work of Prem Singh was unsatisfactory during the probationary period, nor did it lead any evidence in proof of his unsatisfactory work. -
The argument does not appear to have been raised in the Special Leave Petition also. Accordingly, it is not possible to permit this argu- ment to be raised. now.-(See Binny Lid. v. Their Workmen,(#) and | the Management of Panitole Tea Estate v. The Workmen(4).
‘In the end, Shri Daphtary ‘has urged that as the Labour Court has found that the discharge of Prem Singh from service was neither mala fide nor a measure of victimisation, he should not have been reinstated to service. Reliance is placed on the Tata Oit Mills Company.-Lid.. v. Its Workmen and another(*), M/s Francis Elein and Co. Private Lid. v. The Workmen and another (®) and ihe Air-India Corporation, Bombay
.
v. V. A. Rebellow and another(*). Tt is settled law now that the
[1968] 4 S.C. R. 581 ~ * .Q2) [1970} IL. L, 3. 228 (3) [1972] 1 L. L. J. 478 - ; 8 A) [I9TI3S.C.RS 774 (5) [1963] 2 L. L. ¥. 78 ¢ : HAT R. pu S. Cc. 2414
- 97) AL. L. J. 501.
WESTERN INDIA MATCH CO. ¥. WORKMEN (Dwivedi J.) 44k
Labour Court may interfere with the order of discharge where it is satisfied that it was made mala fide or was a measure of victimisation or unfair labour practice. It has also been held by this Court that the Labour Court may interfere with the order of discharge if it finds that the order is arbitrary or capricious or so unreasonable as to lead to the inference that it is not made bona fide. As there was no plea and no evidence to show that the work of Prem Singh was unsatisfactory, the conclusion is obvious that the order of discharge is arbitrary. Accordingly, the Labour Court could interfere and make an order of reinstatement.
There is no force in this appeal and accordingly it is dismissed with costs.
V.PS. Appeal dismissed.