Full Judgment Text
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PETITIONER:
ROHTAS INDUSTRIES LTD. & ANR.
Vs.
RESPONDENT:
ROHTAS INDUSTRIES STAFF UNION AND ORS.
DATE OF JUDGMENT18/12/1975
BENCH:
KRISHNAIYER, V.R.
BENCH:
KRISHNAIYER, V.R.
CHANDRACHUD, Y.V.
GUPTA, A.C.
CITATION:
1976 AIR 425 1976 SCR (3) 12
1976 SCC (2) 82
CITATOR INFO :
R 1980 SC1896 (80)
R 1988 SC1340 (7)
D 1990 SC1426 (31)
ACT:
Constitution of India Article 226 and 226(1A)-Powers of
High Court to issue Writ against arbitrators under section
10A of Industrial Disputes Act- Arbitration Act-Error
apparent on the face of the record-Speaking award- Error of
Law. Industrial Disputes Act, 1947-Secs. 2(k) 10-A, 23, 24,
33C- Whether employers can be awarded compensation for loss
of profit due to illegal strike under Industrial Disputes
Act-Industrial Dispute-Enforcement of special rights created
by special statute whether confined to remedies provided by
the statute.
HEADNOTE:
During the year 1948, the respondent, workmen working
with both the appellants went on illegal strike on account
of Trade Union rivalry. The workmen were not paid wages for
the strike period and the appellants lost their profit
during the period. The employers and the workmen entered
into an agreement during the pendency of the conciliation
proceedings and referred the claims of workmen for salaries
during the strike period and the claims of the employers for
compensation for loss due to the strike to the joint
arbitration of two retired High Court Judges and one retired
Member of a Labour Appellate Tribunal under section 10-A of
the Industrial Disputes Act 1947.
The arbitrator delivered their award and held that the
workmen participating in the strike were not entitled to
wages for the strike period. The arbitrators however,
awarded huge compensation to the employers against the
workmen for the losses incurred by the employers during the
strike period. The workmen challenged the award as illegal
and void by filing two writ petitions in the High Court. The
High Court upheld that part of the award which directed that
the workmen participating in tho strike were not entitled to
wages. The High Court however, quashed the part of the award
which directed payment of compensation by the workers to the
management.
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In appeal by Special Leave under Article 136, the
appellants contended:-
1. The award under section 10-A of the Act savours of a
private arbitration and is not amenable to correction under
Article 226 of the Constitution.
2. The award of compensation by the arbitrators suffers
from no vice which can be regarded as recognised grounds for
the High Court interference.
^
HELD: (1) The expansive and extraordinary powers of the
High Court under Article 226, as wide as the amplitude of
the language used, indicates and so can affect "any person",
even a private individual and be available for "any other
purpose", even one for which another remedy may exist. The
insertion of Article 226(1A) reiterates that writ power can
be exercised against any person by reference to the
residence of such person. It is one thing to affirm the
jurisdiction and another to authorise free exercise. This
Court has spelt out wise and clear restraints on the use of
this extraordinary remedy and High Courts will not go beyond
those wholesome inhibitions except where the monstrosity of
the situation or other exceptional circumstances cry for
timely judicial interdict or mandate. [17C-E]
2. An arbitrator exercising powers under section 10A
can bind even those who are not parties to the reference or
agreement and the whole exercise under section 10A as well
as the source of the force of the award on publication
derive from the statute. It is legitimate to regard such an
arbitrator now as part of the methodology of the sovereign’s
dispensation of justice, thus falling within the rainbow of
statutory tribunals amenable to judicial review. The award
in the present case is not beyond the legal reach of Article
226. [18B-C]
13
3. The answer to the question whether the High Court
should have exercised its powers under Article 226 in the
present case will depend upon whether the arbitrator has
tied himself down to obviously unsound legal proposition in
reaching his verdict appearing from the face of the award.
The arbitrator may not state the law such, even- then such
cute silence confers no greater or subtler: immunity on the
award than plain speech. The need for speaking order, where
considerable numbers are affected in their substantial
rights, may well be a facet of natural justice or fair
procedure although in this case we do not have to go so far.
The law sets no premium on juggling with drafting the award
or hiding the legal error by balancing out. The inscrutable
face of the sphinx has no better title to invulnerability
than a speaking face which is a candid index of the mind.
[19D. 20F-H]
4. According to the arbitrators, the strike was illegal
being in violation of section 24 of the Act. the illegal
strike was animated by inter-union power struggle and that
it inflicted loss on the management by forced closure and
that the loss flowing from the strike was liable to be
recompensed by award of damages. In this chain of reasoning
the question of law whether an illegal strike causing loss
of profit justifies award of damages is necessarily
involved. The arbitrator held in the affirmative and
according to us it is an unhappy error of law. In the
present case the arbitrators have made a sufficiently
speaking award both on facts and on law. After coming to the
conclusion that the strike was illegal they held that
compensation necessarily follows based on the rule of
English common law. The English cases laying down the rule
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of common law were a response to the requirement of
Industrial civilization of the 19th Century England. Trade
and industry on the laissez faire doctrine flourished and
the law of torts was shaped to serve the economic interests
of the trading and industrial community. Whatever the merits
of the norms, violation of which constituted ’conspiracy’ in
English Law, it is a problem for creative Indian
Jurisprudence to consider how far a mere combination of men
working for furthering certain objective can be prohibited
as a tort according to the Indian value system. Our
constitution guarantees the right to form associations, not
for gregarious pleasure, but to fight effectively for the
redressal of grievances. Our constitution is sensitive to
workers rights. English history, political theory and life
style being different from Indian conditions where the
Father of the Nation organised boycotts and mass satyagrahas
we cannot incorporate English conditions without any
adaptation into Indian Law. [21B-C, 22A, B-C, D]
5. Even in England, till recently it could not be said
with any certainty that there was any such tort as
conspiracy. The tort is unusual because it emphasizes the
purpose of the defendants rather than the result of their
conduct. Even when, there are mixed motives liability will
depend on ascertaining which is the predominant object of
the true motive or the real purpose of the defendant. The
motive of an illegal strike may be to advance the workers’
interest or steal a march over a rival union but never or
rarely to destroy or damage the industry. However if some
individuals destroy the plant and machinery willfully to
cause loss to the employer such individuals will be liable
for the injury so caused. Sabotage is no weapon in workers’
legal armoury. It is absolutely plain that the tort of
conspiracy necessarily involves advertence to the object of
the combination being the infliction of damage on The
plaintiff. The strike may be illegal but if the object is to
bring the employer to terms with the employees or to bully
the rival trade union into submission there cannot be an
actionable combination in tort. In the present case, the
arbitrators did not investigate the object of the strike.
The arbitrators assumed that if the strike is illegal the
tort of conspiracy is made out. The counsel for the
appellants fairly conceded that the object of the strike was
inter-union rivalry. There is thus a clear lapse in the law
on the part of the arbitrators manifest on the face of the
award. [22F, 231B-C, E, H. & 24A-B]
6. It is common case that the demand for the wages
during the strike period constitutes an industrial Dispute
within section 2(k) of the Act. It is agreed by both the
sides that section 23 read with section 24 makes the strike
in question illegal. An illegal strike is the creation of
the statute and the remedy for the illegal strike and its
fall, out has to be sought within the statute and not de
hors
14
it. No other relief outside the Act can be claimed on
general principles of jurisprudence. The case of Premier
Automobiles followed. [25 B-C]
7. The enforcement of a right or obligation under the
Act must be by a remedy provided in the Statute. The right
of the management to claim compensation is not provided by
the Act, and, therefore, the arbitrators Committed an ex
facie legal error. The consent of the parties cannot create
arbitral jurisdiction under the Industrial Disputes Act. The
claim for compensation cannot be a lawful subject for
arbitration because it is not covered within the definition
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of Industrial Disputes in section 2(k). We are unable to
imagine a tort of liability or compensation based on loss of
business being regarded as an industrial dispute as defined
in the Act. Section 33 provides for speedy recovery of money
due to a workman from an employer under a settlement or
award. It does not provide for recovery of money by the
employer from the workman. Obviously because the workman
belongs to the weaker section. Claims by employers against
the workmen on grounds of tortious liability have not found
a place in the pharmacopeia of Indian Industrial Law. [26 D,
27A, C, D-E]
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeals Nos. 1721-
1728 of 1969.
Appeals by Special Leave from the Judgment and order
dated the 2nd May 1962 of the Patna High Court of Judicature
at Patna, in M.J.C. Nos. 475 and 498 of 1959.
A. B. N. Sinha, B. P. Maheshwari and Suresh Sethi for
the Appellants (in both the appeals).
B. C. Ghose, S. S. Jauhar, D. N. Pandey, A. Sinha and
D. P. Mukherjee for Respondent 1 (In C.A. 1727) and
Respondents 1-3 (In CA 1728).
D. P. Singh, S. C. Agarwal and V. J. Francis for
respondents 7 and 8 (In CA 1727 and Respondent 4 in
(1728/69).
The Judgment of the Court was delivered by
KRISHNA IYER, J.-We permit ourselves a few preliminary
observations disturbingly induced by the not altogether
untypical circumstances of these two appeals, before
proceeding to state the facts, set out the submissions and
decide the points.
Industrial law in India has not fully lived up to the
current challenges of industrial life, both in the
substantive norms or regulations binding the three parties-
the States, Management and Labour-and in the processual
system which has baulked, by dawdling dysfunction, early
finality and prompt remedy in a sensitive area where quick
solution is of the very essence of real justice. The
legislative and judicial processes have promises to keep if
positive industrial peace, in tune with distributive
economic justice and continuity of active production, were
to be accomplished. The architects of these processes will,
we hopefully expect, fabricate creative changes in the
system, normative and adjectival.
The two appeals before us, passported by special leave
under Art. 136, relate to an industrial dispute with its
roots in 1948, meandering along truce union rivalry and the
like, into strikes and settlements, the last of which led to
an arbitration award in 1959 which, in turn, prompted two
writ petitions before the High Court. After a spell of a few
years they ripened into a judgment. Appeals to this Court
followed and, after long gestation of six years for
preparation of papers and a
15
like period the cases are ready for final hearing or
parturition, in all 12 years after the grant of leave. By
this cumulative lapse of time the generation of workers who
struck work two decades ago have themselves all but retired,
the representative Union itself which sponsored the dispute
has, the other side faintly states, ceased to command
representative character, the Managements themselves have,
out of many motives, disclaimed the intention to recover the
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huge sums awarded to them by the arbitrators and the only
survival after death, as it were, is a die-hard litigation
tied up to a few near-academic, but important, legal points
for adjudication by the highest Bench! On this elegiac note
we will enter the relevant area of facts and law since we
must decide cases brought before us, however stale the lis.
At this stage we may mention our strong feeling that
where the superior courts, after hearing full arguments, are
clearly inclined to, affirm the judgment under appeal for
substantially similar reasons as have weighed with the lower
Court, there is no need to give lengthy reasons for
dismissing the appeal. Brevity, except in special cases, may
well fill the bill where the fate is dismissal. On this
score we are disposed to make short shrift of the appeals
with stating but the necessary facts and focusing on the
larger legal facets. Nevertheless, the significance and
plurality of the points pressed have defeated condensation.
D
The facts
Two connected managements of industries in the same
locality, who figure as appellants before us, had a running
industrial dispute with their workers, which has had a long
history moving in a zigzag course and sicklied over by
alleged internecine trade-union strife. There were two trade
unions which were perhaps of competitive strength and
enjoying recognition. One of them, the Rohtas Industries
Mazdoor Sangh (for short, the Mazdoor Sangh) was the
representative union during the relevant period while the
other, the Rohtas Industries Seva Sangh (for brevity, the
Seva Sangh) is not a party before this Court and so we are
not concerned with it except for the purpose of noticing its
presence in the settlement of the dispute which starts the
story so far as the litigation is concerned. There was a
strike in the Industry (for our purposes this expression
embraces both the appellants) which came to an end by virtue
of a memorandum of agreement dated October 2, 1957, to which
not merely the management but also the two registered unions
aforementioned and the two unregistered unions which had a
lesser following, were party. The terms of the said
agreement provided inter alia that :
"The employees’ claim for wages and salaries for
the period of strike and the company’s claim for
compensation for losses due to strike shall be
submitted for arbitration of Sri J. N. Majumdar and Sri
R. C. Mitter, ex-High Court Judges and Ex Members of
the Labour Appellate Tribunal of India as joint
arbitrators and their decisions on the two questions
shall be final and binding on all the parties."
(Clause 7 of agreement)
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This agreement was admittedly arrived at during conciliation
proceedings contemplated by the Industrial Disputes Act,
1947 (for short, the Act) and the reference to arbitration
spelt out in clause 7 directly and. admittedly fell under s.
10A of the Act.
It is apparent that the arbitrators were seized of two
questions: (a) the claim of the workers for wages for the
period of strike; and (b) the claim of the management for
compensation for its losses flowing from the strike. The
Board of arbitrators, two retired Judges of the Calcutta
High Court-held extensive hearings spread over a year and a
half, made a lengthy award marshalling the evidence,
adducing the reasons, discussing the law and recording its
decision on the two vital issues. At the end of the detailed
and reasoned record of conclusions, the award runs thus :
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"Our award accordingly is:-
(1) That the workmen participating in the strike
are not entitled to wages and salaries for the period
of the strike.
(2) That the company do recover from the workmen
participating in the strike, compensation assessed at
Rs. 80,000(rupees eighty thousand).
(3) That the workmen jointly and severally do pay
to the company one eighth of the total costs of the
arbitration. In default of payment the company will be
at liberty to recover the same in such manner as it
thinks fit. Subject to this the parties do bear their
respective costs."
The workmen were deprived of their wages during the
period of the. strike on the score that it was an illegal
strike. Both sides seem to have accepted this finding after
an unsuccessful challenge in the High Court and happily
industrial peace is said to be prevailing currently. What
did hurt the Mazdoor Sangh more and what the management did
try to have and to hold as a bonanza was the second finding
that the strikers, apart. from forfeiting wages, do pay
compensation in the huge sum of Rs. 6,90,000/- in one case
and Rs. 80,000/- in the other, for the loss of profits
suffered by the manufacturing business of the management, a
pronouncement unusual even according to counsel for the
appellant, although sustainable in law, according to him.
For the workers this unique direction of industrial law is
fraught with ominous consternation and dangerous detriment.
The Mazdoor Sangh challenged the award as illegal and void
by filing two writ petitions but the High Court quashed that
part of the award which directed payment of compensation by
the workers to the management and, as earlier pointed out,
both sides have chosen to abide by the award in relation to
the denial of wages during the strike period.
The Main Points Urged
The short but important issue, which has projected some
serious questions of law, is as to whether the impugned part
of the award has; been rightly voided by the High Court. We
may as well formulate
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them but highlight the only major submission that merits
close examination, dealing with the rest with terse
sufficiency. In logical order, counsel for the appellant
urged that (1) (a) an award under s. 10A of the Act savours
of a private arbitration and is not amenable to correction
under Art. 226 of the Constitution. (b) Even if there be
jurisdiction, a discretionary desistance from its exercise
is wise, proper and in consonance with the canons of
restraint this Court has set down. (2) The award of
compensation by the arbitrators suffers from no vice which
can be regarded as a recognised ground for the High Court’s
interference. (3) The view of law taken by the High Court on
(1) the supposed flaw in the award based on ’mixed motives’
for the offending strike; (ii) the exclusion of remedies
other than under s. 26 of the Act; and (iii) the implied
immunity from all legal proceedings against strikers
allegedly arising from s. 18 of the Trade Unions Act, 1926
is wrong. A few other incidental arguments have cropped up
but the core contentions are what we have itemised above.
(1)-(a) & (b)
The expansive and extraordinary power of the High
Courts under Art. 226 as wide as the amplitude of the
language used indicates and so can affect any person-even a
private individual-and be available for any (other) purpose-
even one for which another remedy may exist. f The amendment
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to Art. 226 in 1963 inserting Art. 226(1A) reiterates the
targets of the writ power as inclusive of any person by the
expressive reference to ’the residence of such person’. But
it is one thing to affirm the jurisdiction, another to
authorise its free exercise like a bull in a China shop.
This Court has spelt out wise and clear restraints on the
use of this extra-ordinary remedy and High Courts will not
go beyond those wholesome inhibitions except where the
monstrosity of the situation or other exceptional
circumstances cry for timely judicial interdict or mandate.
The mentor of law is justice and a potent drug should be
judiciously administered. Speaking in critical retrospect
and portentous prospect, the writ power has, by and large,
been the people’s sentinel on the qui vive and to cut back
on or liquidate that power may cast a peril to human rights.
We hold that the award here is not beyond the legal reach of
Art. 226, although this power must be kept in severely
judicious leash.
Many rulings of the High Courts, pro and con, were
cited before us to show that an award under s. 10A of the
Act is insulated from interference under Art. 226 but we
respectfully agree with the observations of Gajendragadkar
J., (as he then was) in Engineering Mazdoor Sabha v. Hind
Cycles Ltd(1) which nail the argument against the existence
of jurisdiction. The learned Judge clarified at p. 640:
"Article 226 under which a writ of certiorari can
be issued in an appropriate case, is, in a sense, wider
than Art. 136, because the power conferred on the High
Courts to issue certain writs is not conditioned or
limited by the requirement that the said writs can be
issued only against the orders of Courts or Tribunals.
Under Art. 226(1), an appropriate writ can
(1) [1963] Supp. I S.C.R. 625.
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be issued to any person or authority, including in
appropriate cases any Government, within the
territories prescribed. Therefore even if the
arbitrator appointed under section 10A is not a
Tribunal under Art. 136 in a proper cases, a writ may
lie against his award under Art. 226". (p. 640)
We agree that the position of an arbitrator under s.
10A of the Act (as it then stood) vis a vis Art. 227 might
have been different. Today, however, such an arbitrator has
power to bind even those who are not parties to the
reference or agreement and the whole exercise under s. 10A
as well as the source of the force of the award on
publication derive from the statute. It is legitimate to
regard such an arbitrator now as part of the methodology of
the sovereign’s dispensation of justice, thus falling within
the rainbow of statutory tribunals amenable to judicial
review. i This observation made en passant by us is induced
by the discussion at the bar and turns on the amendments to
s. 10A and cognate provisions like s. 23, by Act XXXVI of
1964.
Should the Court invoke this high prerogative under
Art. 226 in the present case ? That depends. We will examine
the grounds on which the High Court has, in the present
case, excised a portion of the award as illegal, keeping in
mind the settled rules governing judicial review of private
arbitrator’s awards. Suffice it to say, an award under s.
10A is not only not invulnerable but more sensitively
susceptible to the writ lancet being a quasi-statutory
body’s decision. Admittedly, such an award can be upset if
an apparent error of law stains its face. The distinction,
in this area, between a private award and one under s. 10A
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is fine, but real. However it makes slight practical
difference in the present case; in other cases it may. The
further grounds for invalidating an award need not be
considered as enough unto the day is the evil thereof.
(2) Thus, we arrive at a consideration of the
appellants second submission, perhaps the most significant
in the case, that the High Court had no legitimate
justification to jettison the compensation portion of the
award. Even here, we may state that counsel for the
appellants, right at the outset, mollified possible judicial
apprehensions springing from striking workers being held
liable for loss of management’s profits during the strike
period by the assurance that his clients were inclined to
abandon realisation of the entire compensation, even if this
Court up held that part of the award in reversal of the
judgment of the High Court a generous realism. He fought a
battle for principle, not pecunia. We record this welcome
fact and proceed on that footing.
The relevant law which is beyond controversy now has
been clearly stated in Halsbury’s Laws of England thus :
"Error of law on the face of award: An
arbitrator’s award may be set aside for error of law
appearing on the face of it, though the jurisdiction is
not lightly to be exercised. . . The jurisdiction is
one that exists at common law independently of statute.
In order to be a ground for setting aside the award, an
error in law on the face of the award must be such that
there can be found in the award, or in a document
actually
19
incorporated with it, some legal proposition which is
the basis of the award and which is erroneous.
....where the question referred for arbitration is a
question of construction, which is, generally speaking,
a question of law, the arbitrator’s decision cannot be
set aside only be cause the court would itself have
come to a different conclusion; but if it appears on
the face of the award that the arbitrator has proceeded
illegally, as for instance, by deciding on evidence
which was not admissible, or on principles of
construction which the law do s not countenance, there
is error in law which may be ground for setting aside
the award.
(para 623, p. 334, Vol. 2, Fourth Edn)
We adopt this as sound statement of the law. Not that
English law binds us but that the jurisprudence of judicial
review in this branch is substantially common for Indian and
Anglo-American systems and so Halsbury has considerable
persuasive value. The wider emergence of common canons of
judicial review is a welcome trend towards a one world
public law. Indeed, this Court has relied on the leading
English decisions in several cases. We may content ourselves
with adverting to Bungo Steel Furniture(1) and to the
unreported decision Babu Ram(2). In simple terms, the Court
has to ask itself whether the arbitrator has not tied
himself down to an obviously unsound legal proposition in
reaching his verdict as appears from the face of the award.
Bhargava J., speaking for the majority, in Bungo Steel(1)
stated the law:
"It is now a well-settled principle that if an
arbitrator, in deciding a dispute before him, does not
record his reasons and does not indicate the principles
of law on which he has proceeded, the award is not on
that account vitiated. It is only when the arbitrator
proceeds to give his reasons or to lay down principles
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on which he has arrived at his decisions that the Court
is competent to examine whether he has proceeded
contrary to law and is entitled to interfere if such
error in law is apparent on the face of the award
itself."
(p. 640-641)
In Bharat Barrel & Drum Manufacturing Co. (8) dealing with a
private award and the conditions necessary for exercise of
writ jurisdiction to correct an error of law apparent on the
record, did not lay down the law differently from what we
have delineated.
In one of the leading English cases Champsey Bhara &
Co. (4) followed in India, Lord Dunedin defined ’error of
law on the face of the award’ as ’where the question of law
necessarily arises on the face of the award or upon some
paper accompanying and forming part of the award’ and said
that then only the error of law therein would warrant
judicial correction. The Law Lord expressed himself lucently
when he stated:
"An error in law on the face of the award means,
in their Lordships’ view, that you can find in the
award . . . some legal
(1) [1967] 1 S.C.R.633. (2) C.A.107 of 1966 decided on
5-12-68.
(3) A.I.R 1967 S.C. 361. (4) 50 I.A. 324.
20
proposition which is the basis of the award and which
you can, then say is erroneous."
Williams J., in the case of Hodkinson v. Verne(1) hit the
nail on the head by using the telling test as firmly
established, viz., ’where the question of law necessarily
arises on the face of the award’. In this view the enquiry
by the Court before venturing to interfere is to ascertain
whether an erroneous legal proposition is the basis of the
award. Nay, still less. Does a question of law (not even a
proposition of law) necessarily arise on the award followed
by a flawsome finding explicit or visibly implicit? Then the
Court can correct.
Tucker J., in James Clark (2) formulates the law to
mean that if the award were founded on a finding which
admits of only one proposition of law as its foundation and
that law is erroneous on its face, the Court has the power
and, therefore, the duty to set right. While the Judge
cannot explore, by changing subterranean routes or ferret
out by delving deep what lies buried in the unspoken
cerebration of the arbitrator and ‘ interfere with the award
on the discovery of an error of law by such adventure, it is
within his purview to look closely at the face of the award
to discern the law on which the arbitrator has acted if it
is transparent, even translucent but lingering between the
lines or merely wearing a verbal veil. If by such an
intelligent inspection of the mien of the award-which is an
index of the mind of the author-an error of law forming the
basis of the verdict is directly disclosed, the decision is
liable to judicial demolition. In James Clark (2), the issue
was posed with considerable clarity and nicety. If, at its
face value, the award appears to be based on an erroneous
finding of law alone, it must fail. The clincher is that the
factual conclusion involving a legal question must
necessarily be wrong in point of law. Even though the award
contains no statement of the legal proposition, if the facts
found raise ’a clear point of law which is erroneous on the
face of it’, the Court may rightly hold that an error of law
on the face of the award exists and invalidates.
Let us put the proposition more expressively and
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explicitly. What is important is a question of law arising
on the face of the facts found and ’F its resolution ex
facie of sub silentio. The arbitrator may not state the law
as such. Even then such cute silence confers no greater or
subtler immunity on the award than plain speech. The need
for a speaking order, where considerable numbers are
affected in their substantial r t rights, may well be a
facet of natural justice or fair procedure, although, in
this case, we do not have to go so far. If, as here, you
find an erroneous law as the necessary buckle between the
facts found and the conclusions recorded, the award bears
its condemnation on its bosom. Not a reference in a
narrative but a clear legal nexus between the facts and the
finding. The law sets no premium on juggling with drafting
the award or hiding the legal error by blanking out. The
inscrutable face of the sphinx has no better title to
invulnerability than a speaking face which is a candid index
of the mind. We may, by way aside, express hopefully the
view that a minimal judicialisation by statement, laconic or
lengthy, of the essential law that guides the decision, is
not only reasonable and desirable but has, over the ages,
been observed by arbitrators and quasi-judicial tribunals as
a norm of processual justice. We
(1) [1857] 3 C.B. (N.S.) 189, (2) [1944]1 K.B.
566.
21
do not dilate on this part of the argument as we are
satisfied that be the test the deeply embedded rules to
issue certiorari or the traditional grounds to set aside an
arbitration award ’thin partition do their bounds divide’ on
the facts and circumstances of the present case.
The decisive question now comes to the fore. Did the
arbitrators commit an error of law on the face of the award
in the expanded sense we have explained ? The basic facts
found by the arbitrators are beyond dispute and admit of a
brief statement. We summarise the fact situation succinctly
and fairly when we state that according to the arbitrators,
the strike in question was in violation of s. 24 of the Act
and therefore illegal. This illegal strike animated by
inter-union power struggle, inflicted losses on the
management by forced closure. The loss flowing from the
strike was liable to be recompensed by award of damages. In
this 2chain of reasoning is necessarily involved the
question of law as to whether an illegal strike causing loss
of profit is a delict justifying award of damages. The
arbitrators held, yes. We hold this to be an unhappy error
of law-loudly obtrusive on the face of the award. We may as
well set out, for the sake of assurance, the simple steps in
the logic of the arbitrators best expressed in their own
words which we excerpt:
"(a) It is argued that strike is a legitimate
weapon in the hands of workmen for redressal of their
grievances and if they are made liable for loss on
account of strike then the basic idea of strike as a
means for having the grievances redressed will be taken
away. The fallacy in this argument is that it
presupposes the strike not to be illegal and
unjustified. In the pre sent case we found the strike
to be otherwise. The workmen have got no right of
getting their grievances redressed by resorting to
illegal means which is an offence.
(b) It has been argued that the claim for
compensation is not an industrial dispute as defined in
the Industrial Disputes Act. Considering the issue of
compensation in a water-tight compartment the argument
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might appear to be attractive. But, in our opinion, in
this case the claim for compensation by the company is
a consequence flowing from an admitted industrial J
dispute, which in this case is whether the strike was
illegal and/or unjustified and as against the condition
of service as laid down in the certified standing order
on which point our finding has been against the
workmen. ."
The award of the Tribunal, in its totality, is quite
prolix the reasons stated in arguing out its conclusions
many and thus it is just to state that in the present case
the arbitrators-two retired Judges of the Calcutta High
Court-have made a sufficiently speaking award both t on
facts and on law. They have referred to the strike being
illegal with specific reference to the provisions of the
Act, but faulted them selves in law by upholding a case for
compensation as axiomatic, necessarily based on a rule of
common law i.e., English common law. The rule of common law
thus necessarily arising on the face of the award is a clear
question of law.
22
What is this rule of common law? Counsel for the
appellants inevitably relied on the tort of ’conspiracy’ and
referred us to Moghul Steamship Co.(1); Allen v. Floor(2);
Quinn v. Leathem(3) and Sorrel v. Smith (4). These decisions
of the English Courts are a response to the societal
requirements of the industrial civilisation of the 19th
Century England. Trade and Industry on the laissez faire
doctrine flourished and the law of torts was shaped to sene
the economic interests of the trading and industrial
community. Political philosophy and economic necessity of
the dominant class animate legal theory. Naturally, the
British law in this area protected business from the
operations of a combination of men, including workers, in
certain circumstances. Whatever the merits of the norms,
violation of which constituted ’conspiracy’ in English law,
it is a problem for creative Indian jurisprudence to
consider, detached from anglo-phonic inclination, how far a
mere combination of men working for furthering certain
objectives can be prohibited as a tort, according to the
Indian value system. Our Constitution guarantees the right
to form associations, not for gregarious pleasure, but to
fight effectively for the redressal of grievances. Our
Constitution is sensitive to workers’ rights. Our story of
freedom and social emancipation led by the Father of the
Nation has employed, from the highest of motives, combined
action to resist evil and to right wrong even if it meant
loss of business profits for the Liquor vendor, the brothel
keeper and the foreign-cloth dealer. Without expatiating on
these seminal factors, we may observe that English history,
political theory and life-style being different from Indian
conditions replete with organised boycotts and mass
satyagrahas, we cannot incorporate English torts without any
adaptation into Indian law. A tort transplant into a social
organism is as complex and careful an operation as a heart-
transplant into an individual organism, law being life’s
instrumentality and rejection of exotics being a natural
tendency. Here, judges are sociological surgeons.
Let us examine ’conspiracy’ in the English Law of Torts
to see if even there it is possible to hold that an illegal
strike per se spells the wrong. We may state that till
recently it could not be said with any certainty that there
was any such tort as ’conspiracy’. Salmond thought that
there was not (See Salmond-Law of Torts-p. 505, 15 s Ed.).
It is interesting that in Edition of Salmond, Mogul is
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linked up by the learned author with a capitalist economy.
Be that as it may, the common law of England today is more
or less clear, some rumblings notwithstanding.
"A combination wilfully to do an act causing
damage to a man in his trade or other interests is
unlawful and if damage in fact is caused is actionable
as a conspiracy. To this there is an exception where
the defendants’ real and predominant purpose is to
advance their own lawful interests in a matter in which
they honestly believe that those interests would
directly suffer if the action against the plaintiff was
not taken. In truth, the Crofter case has made section
1 1,
(1) [1892] A.C. 25. (2) [1898] A.C. 1.
(3) [1901] A.C. 495. (4) [1925] A.C. 700.
23
of the Trade Disputes Act, 1906, largely unnecessary,
for there will now be few conspiracies arising out of
trade disputes which are not protected at common law."
(pp. 508-509, 15th Edn., Sweet & Maxwell)
(emphasis, ours)
The essence of actionable conspiracy is best brought out by
Salmond:
"The tort is unusual because it emphasises the
purpose of the defendants rather than the results of
their conduct."
(p.513, 15th Edn., Sweet & Maxwell)
(emphasis, ours)
Even when there are mixed motives, ’liability will
depend on ascertaining which is the predominant object or
the true motive or the real purpose of the defendant. Mere
combination or action, even if it be by illegal strike, may
be far away from a ’conspiracy’ in the - sense of the law
because in all such cases, except in conceivably exceptional
instances, the object or motive is to advance the workers’
interests or to steal a march over a rival union but never
or rarely to destroy or damage the industry. It is difficult
to fancy workers who live by working in the industry
combining to kill the goose that lays the golden eggs. The
inevitable by-product of combination for cessation of work
may be loss to the management but the obvious intendment of
such a collective bargaining strategy is to force the
employer to accept the demand of the workers for betterment
of their lot or redressal of injustice, not to inflict
damage on the boss. In short, it is far too recondite for an
employer to urge that a strike, albeit illegal, was
motivated by destruction of the industry. A scorched earth
policy may, in critical times of a war, be reluctantly
adopted by a people, but such an imputed motive is largely
imaginary in strike situations. However, we are clear in our
minds that if some individuals destroy the plant or damage
the machinery wilfully to cause loss to the employer, such
individuals will be liable for the injury so caused.
Sabotage is no weapon in workers’ legal armoury.
The leading case of Sorrel v. Smith (supra) emphasizes
that a combination of two or more persons for the purpose of
injuring a man in his trade is unlawful and, if it results
in damage to him, is actionable. The real purpose of the
combination is the crucial test between innocence and
injury. It may well be that even where there is an offending
object, it may be difficult for a court to hold that there
is a tort if one may read into the facts an equal anxiety
for the defendants to promote their success which produces
the plaintiff’s extinction. There is a penumbral region, as
Lord Sumner pointed out in Sorrel (Supra): ‘
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"How any definite line is to be drawn between acts
whose real purpose is to advance the defendant’s
interests, and acts, whose real purpose is to injure
the plaintiff in his trade, is a thing which I feel at
present beyond my power."
It is absolutely plain that the tort of conspiracy
necessarily involves advertence to and affirmation of the
object of the combination being the infliction of damage or
distraction on the plaintiff. The strike
3-L390SCI/76
24
may be illegal but if the object is to bring the employer to
terms with the employees or to bully the rival trade union
into submission, there cannot be an actionable combination
in tort. In the present case, it is unfortunate that the
arbitrators simply did not investigate or pass upon the
object of the strike. If the strike is illegal, the tort of
conspiracy is made out, appears to be the proposition of law
writ tersely into the award. On the other hand, it is freely
conceded by counsel for the appellant that the object was
inter-union rivalry. There is thus a clear lapse in the law
on the part of the arbitrators manifest. , on the face of
the award.
We have earlier referred to the need for a fresh look
at conspiracy F as a tort when we bodily borrow the elements
of English law and apply them to Indian law. It is as well
that we notice that even in England considerable criticism
is mounting on the confused state of 1 the law of
conspiracy. J.T. Cameron has argued (in 1965 Vol. 28 Modern
Law Review p. 448) that:
"experience has already shown that conspiracy is a
hydra perfectly capable of growing two heads to replace
an amputated one, and the authorities contain material
which could be used to impose liability in very wide
and varied circumstances. It is time, therefore, to
consider what form legislation should take, and to urge
that the proper answer is to remove the tort of
conspiracy from the law altogether, and with it the
Rookes v. Barnard version of intimidation, and to put
in its place a different basis of liability.
(CONSPIRACY AND INTIMIDATION: An Anti-Meta-physical
Approach)
The author complains that the fundamental basis is
unsatisfactory and uncertain and demands that a complete re-
writing of the principles on which the tort of conspiracy
and intimidation is necessary.
We may as well suggest that, to silence possible
mischief flowing from the confused state of the law and
remembering how dangerous J it would be if long, protracted,
but technically illegal strikes were to be followed by
claims by managements for compensation for loss of profits,
a legislative reform and re-statement of the law were under
taken at a time when the State is anxious for industrial
harmony consistent with workers’ welfare, This rather
longish discussion has become necessary because the problem
is serious and sensitive and the law is somewhat slippery
even in England. We are convinced that the award is bad
because the error of law is patent.
The High Court has touched upon another fatal frailty
in the ten ability of the award of compensation for the loss
of profits flowing from the illegal strike. We express our
concurrence with the High Court that the sole and whole
foundation of the award of compensation by the arbitrators,
ignoring the casual reference to an ulterior , motive of
inter-union rivalry, is squarely the illegality of the
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strike, The workers went on strike claiming payment of bonus
as crystalized
25
by the earlier settlement (d/2-10-1957). There thus arose an
industrial dispute within s. 2(k) of the Act. Since
conciliation proceedings were pending the strike was ipso
jure illegal (ss. 23 and 24,. The consequence, near or
remote, of this combined cessation of work caused loss to
the management. Therefore the strikers were liable in damage
to make good the loss. Such is the logic of the award.
It is common case that the demands covered by the
strike and the wages during the period of the strike
constitute an industrial dispute within the sense of s.
2(k), of the Act. Section 23, read with s. 24, it is agreed
by both sides, make the strike in question illegal. An
’illegal strike’ is a creation of the Act. As we have
pointed out earlier, the compensation claimed and awarded is
a direct reparation for the loss of profits of the employer
caused by the illegal strike. If so, it is contended by the
respondents, the remedy for the illegal strike and its fall-
out has to be sought within the statute and not de hors it.
If this stand of the workers is right, the remedy indicated
in s. 26 of the Act, viz., prosecution for starting and
continuing an illegal strike, is the designated statutory
remedy. No other relief outside the Act can be claimed on
general principles of jurisprudence. The result is that the
relief of compensation by proceedings in arbitration is
contrary to law and bad.
The Premier Automobiles Case(1) settles the legal issue
involved in the above argument. The industrial Disputes Act
is a comprehensive and self-contained Code so far as it
speaks and the enforcement of rights created thereby can
only be through the procedure laid down therein. Neither the
civil court nor any other Tribunal or body can award relief.
Untwalia J., speaking for an unanimous court, has, n Premier
Automobiles (Supra) observed:
"The object of the Act, as its preamble indicates, is
to make provision for the investigation and settlement
of industrial disputes, which means adjudication of
such disputes also. The Act envisages collective
bargaining, contracts between Union representing the
workmen and the management, a matter which is outside
the realm of the common law or the Indian law of
Contract."
After sketching the scheme of the Act, the learned Judge
stated the law thus.
". . . the Civil Court will have no jurisdiction
to try and adjudicate upon an industrial dispute if it
concerned enforcement of certain right or liability
created only under the Act."
*
"In Deo v. Bridges (1831 1B and Ad, 847 (2)-
(1898)) A.C. 387 at p. 859 are the famous and of quoted
words of Lord Tenterden, C.J., saying:
"where an Act creates an obligation and enforces
the performance in a specified manner, we take it to be
a general rule that performance cannot be enforced in
any other."
(1) [1976] 1 S.C.R. 427.
26
Barraclough v. Brown & Ors(1), decided by the House of Lords
is telling, particularly Lord Watson’s statement of the law
at p. 622:
"The right and the remedy are given uno flatu and
one cannot be dissociated from the other."
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In short, the enforcement of a right or obligation under the
Act, must be by a remedy provided uno flatu in the statute.
To sum up, in the language of the Premier Automobiles Ltd.
(Supra):
"If the industrial dispute relates to the
enforcement of a right or an obligation created under
the Act, then the only , remedy available to the suitor
is to get an adjudication under the Act."
Since the Act which creates rights and remedies has to
be considered as one homogeneous whole, it has to be
regarded uno flatu, in one breath, as it were. On this
doctrinal basis, the remedy for the illegal strike (a
concept which is the creature not of the common law but of
s. 24 of the Act) has to be sought exclusively in s. 26 of
the Act. The claim for compensation and the award thereof in
arbitral proceedings is invalid on its face’on its face’ we
say because this jurisdictional point has been considered by
the arbitrators and decided by committing an ex-facie legal
error.
It was argued, and with force in our view, that the
question of compensation by workers to the management was
wholly extraneous to the Act and therefore, outside the
jurisdiction of a voluntary reference of industrial dispute
under s. 10 A. While we are not called upon to pronounce
conclusively on the contention, since we have ex pressed our
concurrence with the High Court on other grounds, we rest
content with briefly sketching the reasoning and its
apparent tenability. The scheme of the Act, if we may
silhouette it, is to codify the law bearing on industrial
dispute. The jurisdictional essence of proceedings under the
Act is the presence of an ’industrial dispute’. Strikes and
lock-outs stem from such disputes. l he machinery for
settlement of such disputes at various stages is provided
for by the act. The statutory imprimatur is given to
settlement and awards, and norms of discipline during the
pendency of proceedings are set down in the Act. The
proscriptions stipulated, as for example the prohibition of
a strike, are followed by penalties, if breached. Summary
procedures for adjudication as to whether conditions of
service etc., of employees have been changed during the s
pendency of proceedings, special provision for recovery of
money due to workers from employers and other related
regulations, are also written into the Act. Against this
backdrop, we have to see whether a claim by an employer from
his workmen of compensation . consequent on any conduct of
theirs, comes within the purview of the Act. Suffice it to
say that a reference to arbitration under s. 10 A is
restricted to existing or apprehended industrial disputes.
Be it noted that we are not concerned with a private
arbitration but a statutory one governed by the Industrial
Disputes Act, deriving its validity, enforceability and
protective mantle during the pendency of the proceedings,
from 10 A. No industrial dispute, no valid arbitral
(1) [1897] A.C. 615.
27
reference. Once we grasp this truth, the rest of the logic
is simple. What is the industrial dispute in the present
case? Everything that overflows such disputes spills into
areas where the arbitrator deriving authority under s. 10 A
has no jurisdiction. The consent of the parties cannot
create arbitral jurisdiction under the Act. In this
perspective, the claim for compensation can be a lawful
subject for arbitration only if it can be accommodated by
the definition of ’industrial dispute’ in s.2 (k) .
Undoubtedly this expression must receive a wide coll-
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notation, calculated as it is to produce industrial peace.
Indeed, the legislation substitutes for free bargaining
between the parties a binding award; but what disputes or
differences fall within the scope of the Act? This matter
fell for the consideration of the Federal Court in Western
India Automobile Association(1). Without launching on a long
discussion, we may state that compensation for loss of
business is not a dispute or difference between employers
and workmen ’which is connected with the employment or non-
employment or the terms of employment or with the conditions
of labour, of any person’. We are unable to imagine a tort
liability or compensation claim based on loss of business
being regarded as an industrial dispute as defined in the
Act, having regard to the language used, the setting and
purpose of the statute and the industrial flavour of the
dispute as one between the management and workmen.
In this context, we are strengthened in our conclusion
by the provisions of s. 33C which provides for speedy
recovery of money due to a workman from an employer under a
settlement or an award, but not for the converse case of
money due to an employer from workmen. There is no provision
in the Act which contemplates a claim for money by an
employer from the workmen.- And indeed, it may be a little
startling to find such a provision, having regard to workmen
being the weaker section and Part IV of the Constitution
being loaded in their favour. The new light shed by the
benign clauses of Part IV must illumine even pre-
Independence statutes in the interpretative process. As yet,
and hopefully, claims by employers against workmen on ground
of tortious liability have not found a place in the
pharmacopoeia of Indian Industrial Law. However, as earlier
stated, we do not pronounce finally as it is not necessary.
There was argument at the bar that the High Court was
in error in relying on s. 18 of the Trade Unions Act, 1926
to rebuff the claim for compensation. We have listened to
the arguments of Shri B.C. Ghosh in support of the view of
the High Court, understood on a wider basis. Nevertheless,
we do not wish to rest our judgment on that ground. Counsel
for the appellants cited some decisions to show that an
award falling outside the orbit of the Indian Arbitration
Act can be enforced by action in court. We do not think the
problem so posed arises in the instant case.
We dismiss the appeal but, in the circumstances, there
will be no order as to costs.
P.H.P. Appeal dismissed.
(1) [1949] I L. L. J. 245.
28