Full Judgment Text
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PETITIONER:
BASTI SUGAR MILLS co. LTD.
Vs.
RESPONDENT:
STATE OF U.P. & ANR.
DATE OF JUDGMENT11/09/1978
BENCH:
KRISHNAIYER, V.R.
BENCH:
KRISHNAIYER, V.R.
DESAI, D.A.
CITATION:
1979 AIR 262 1979 SCR (1) 590
1979 SCC (2) 88
ACT:
Payment of Bonus Act 1965-Sec. 34-U.P. Industrial
Disputes Act, -1947 s. 3(b) 3(c) Trade Unions Act 1926 (S.
2h) Whether bonus can be paid under order passed under s. 3
of U.P. I.D. Act-Whether appointment. of a Tripartite
Committee amounts to agreement within meaning of s. 31 of
Bonus Act-Whether an association of employers can bind
individual employer.
HEADNOTE:
The appellant runs two Sugar Factories at two different
places. There are about 71 such factories in U.P. The
economy of U.P. in large measure , depends on the sugar
industry. Moreover, sugar is an essential commodity. Thus,
these factories and the army of workers employed therein
fall within the strategic sector of the State economy.
Section 3 of the U.P. Industrial Disputes Act, 1947 provides
that if in the opinion of the State Govt., it Iq necessary
or expedient so to do for securing the public safety or
convenience or the maintenance of public order or supplies
and services essential to the life of the community or for
maintaining employnnent it may by general or special order
make provision for prohibiting strikes lock-outs and for
appointing committees representative both of employers and
workmen for securing amity and good relations between the
employer and the workmen and for settling industrial
disputes by conciliation. The Payment of Bonus Act, 1965
lays down what bonus is payable to the workmen. Using the
power under S. 3(c) of the 1947 Act and based on the
suggestion of the State Labour Conference (Sugar), the State
Govt. appointed a tripartite committee in October 1968
consisting of 3 nominees of the Indian Sugar Mills
Association and their. u representatives of the workmen, the
Labour Commissioner being Chairman of the Committee. The
notification under s. 3 (b) who issued we have view to
consider and make recommendations to Government on The
question of grant of bonus for 1967-68 by the Vacuum Pan
Sugar Factories of the State on the basis of the Payment of
Bonus Act 1965, subject to such modifications as may be
mutually agreed upon. The Association is a Trade Union
registered under the Trade Unions Act, 1926. Its functions
are indicated in the definition of ’trade union’ in Section
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2(h) of that Act, and include regulation of relations
between the workmen and employers. Thus, the Association was
within its competence to nominate three representatives to
sit on the Committee to regulate the relations between the
Member-employees and the workmen employed. The appellant is
a Member of the said Association.
The Committee held several sitting and at some stages,
the appellant or his representative did participate directly
or indirectly in the deliberations. The workers’
representatives actually accepted the formula put forward by
the President of the Management’s Association. On receipt of
the recommendation under Section 3(c) the Govt. issued an
order under s. 3(b) implementing Those recommendations.
Although section 3(b) does not depend for Coming into play
upon any report under 5. 3(c), the Govt. constituted the
Committee under s. 3 (c) before taking any step under 5. 3
(b) as a measure to ensure the fairness to the concerned
parties. The appellant filed a writ petition in
591
the High Court. The learned single Judge dismissed the writ
petition taking a view that an agreement which is recognised
by s. 34 of the Bonus Act, existed in this case and,
therefore, the order which merely gave effect to that
agreement was not bad in law. On appeal the two Judges of
the Bench disagreed and the case went before the third
learned Judge of the High Court who upheld the order of the
learned single Judge on the ground that there was an
agreement under s. 34 of the Bonus Act.
The appellant contended:-
1. The State Govt. cannot act in the area of bonus
without breach of the embargo in s. 34 of the Bonus Act,
and, therefore, the impugned notification must fail for want
of power.
2. Since the Bonus Act is a complete Code covering
profit sharing bonus, no other law can be pressed into
service to force payment of Bonus by the Management.
3. Section 3(b) of the U.P. Act is independent of any
agreement between the affected parties and the notification
there under operates on its own and not by force of
consensus or contract between the workmen and the
management. It was, therefore, wrong for the High Court to
have salvaged the notification under s. 3(b) as embodying
the agreement to pay bonus.
4. As a matter of fact, there was no agreement between
the appellant and the workmen within the meaning of section
34 since the representatives or the Association had no power
to bind its members by any agreement on bonus having been
appointed solely to make certain recommendations. The
appellant had specifically informed the Association that it
did not agree to any variation from the approved balance-
sheet of the Company. E
Dismissing the appeal the Court.
^
HELD: The effect of s. 34 is that anything inconsistent
with the Bonus Act in any other law will bow. and bend
before it. If concluded agreement could be read into the
recommendations of tripartite committee relating to bonus it
would be valid despite s. 34. The two Courts have
accordingly found that there was an agreement. This Court is
rarely disposed to reverse a factual affirmation
concurrently reached by the High Court at two tiers. [601 A,
B, D]
The contention that the authority of the tripartite
committee was limited to making recommendations on the
grant of bonus subject to such modifications as mutually
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agreed upon is formally correct but why could the committee
which had representatives of both the wings of the industry
not mutually agree upon bonus formula ? There was nothing in
the notification prohibiting it. There was everything in the
notification promoting it. The whole process was geared to
mutually agreed solutions. Once the representatives of
management and labour reached an agreement, substantially on
the basis of the Bonus Act, they would proceed to recommend
to Govt. the acceptance of that agreement. The first
notification did not shut out, but, on the other hand,
welcomed mutual agreement. As between the two wings, an
agreement materialised. Then it became Government’s
responsibility effectively to resolve the crisis and behoved
it to rut teeth into the agreement by making it a binding
order under s. 3(b). The Association is a Trade Union. It
can bind its members. The notifi-
4-549SCI/78
592
cation under s. 3(c) itself authorised the Committee
consider the grant of bonus on terms mutually agreed upon.
The authority to reach agreement on behalf of the appellant
is implicit under the notification under s. 3(b). Throughout
the several meetings and investigations of the tripartite
Committee, the appellant supplied all the facts and details
sought concerning the formulation and the data for arriving
at an acceptable solution. The formula of the Committee was
based largely on the Bonus Act. What the employees’
representatives did was merely to accept the proposal of the
President of the Association of employers. There was a
written agreement dt. 5th June, 1969 to which the
representatives of both sides were signatories. To dismiss
the whole consensual adventure and the culminating written
agreement as nothing but an exercise in recommendatory or
advisory futility is to bid farewell to raw realities.
Social justice is made of rugged stuff. Industrial
jurisprudence does not brook nice nuances and torturesome
technicalities to stand in the way of just solutions reached
in a rough and ready manner. Broad consensus between the two
parties does exist here, as is emphatically underlined by
the circumstances that, all the mill owners except the
appellant have stood by it and all the workers. There is no
substance in the submission of the appellant that there was
no agreement for payment of bonus within the meaning of s.
34. [601 E-H, 602 F, G, 603 A-C, F]
Section 3 of the U.P. Act is not inconsistent with the
Bonus Act. The Bonus Act is a long range remedy to produce
peace. The U.P. Act provides a distress solution to produce
truce. The Bonus Act adjudicates rights of parties, The U.P.
provision meets an emergency situation on an administrative
basis. [604 B-C]
These social projections and operational limitations of
the two statutory provisions must be grasped to resolve the
legal conundrum. A broad national policy on bonus, however
admirable, needs negotiation, consultation, inter-state co-
ordination and diplomacy and causes delay. Hungry families
of restive workman in militant moods urgently ask for bonus
for onam in Kerala, Puja in Bengal, Dewali in Gujarat, or
other festivals elsewhere for a short spell of cheer in a
long span of sombre life. The State Govt. with economic
justice and welfare of workers brooding order its head is
hard pressed for public order and maintenance of essential
supplies. [604 D-607 G, H]
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JUDGMENT:
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 2148 of
1977.
Appeal by Special Leave from the Judgment and order
dated 19-10-76 of the Allahabad High Court in Special Appeal
No. 412 of 1971. .
Y. S. Chitale, S. Swarup and Sri Narain for the
Appellants.
G. N. Dikshit, M. V. Goswami and o. P. Rana for
Respondent No.
Yogeshwar Prasad, Miss Meera Bali and Rani Chhabra for
Respondent No. 2.
The Judgment of the Court was delivered by
KRISHNA IYER, J. Undaunted by a direction of the State
Government under the Uttar Pradesh Industrial Disputes Act,
1947 (the U.P.
593
Act, for short), unsuccessfully attacked before a learned
Single Judge and in appeal from his judgment, the
appellant-owner of two sugar factories in Uttar Pradesh-has
secured special leave to reach this Court and press before
us few jurisdictional points which, it’ valid, are
deprivatory us a few impugned notification under s. 3(b) of
the Act. Before we open the discussion, and, indeed, as
paving the way for it, we may remind ourselves of a jural
fundamental articulated elegantly ill a different context
by Mr. Justice Cardozo(1):
"More and more we lawyers are awaking to a perception
of the truth that what divides and distracts us in the
solution of a Legal problem is not so much uncertainty about
the law as uncertainty About the facts-the facts which
generate the law. Let the facts be known as they are, and
the law will sprout from the need and turn its branches
toward the light."
Social realities mould social justice and the
compulsions of social justice, in the context of given
societal conditions" constitute the basic facts from which
blossom law which produces order.
The search for the social facts behind s. 3 of the
U.K.. Act takes us to the Objects and Reasons Act set out
therein:
"Following the lapse of Rule 81-A of the Defence of
India Rules, the Government of India enacted the Industrial
Disputes Act, 1947 but this Act was found inadequate to deal
with the spate of strikes, lock-outs and industrial disputes
occurring in the province. Government were, therefore,
compelled to promulgate the United Provinces Industrial
Disputes ordinance, 1947, as an emergency measure till more
comprehensive Legislation on the subject was enacted.
Although more than two years have passed since the
termination of the war, normal life is still far from sight.
There is a shortage of foodgrains and all other essential
commodities and necessities of life. Maximum production is
required to relieve the common want and misery. Prices
continue to be rising and life has become very difficult for
the common man. The loss of every working hour adds to the
suffering of the community. In these circumstances, it is
essential that Government should have powers for maintaining
industrial peace and production and for the speedy and
amicable settlement of industrial disputes. The bill, which
is similar to the ordinance already in force, provides for
such powers."
(emphasis added)
(1) Benjamin Nathan Cardozo "what Medicine can do for
Law" address before the New York Academy of Medicine,
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Nov. 1. 1928-Readings in law and Psychiatry.
594
The immediate concern of the court in this case is with
s. 3 which, in its opening part, luminously projects the
State control obligated by community well-being. Even here,
we may read the relevant part of s. 3.
3. Power to prevent strikes, lock-outs, etc.-If, ill
the opinion of the State Government it is necessary or
expedient so to do for securing the public other or
convenience or the maintenance of public order or supplies
and services essential to the life of the community, or for
maintaining employment, it may, by general or special order,
make provision-
(emphasis. added)
(a) for prohibiting, subject to the provisions of
the order, strikes or lock-outs generally, or
a strike or lock-out in connection with any
industrial dispute;
(b) for requiring employers, workman or both to
observe for such period, as may be specified
in the order, I) such terms and conditions of
employment as may he determined in accordance
with the order;
(c) for appointing committees, representative
both of the. employer and workmen for
securing amity and good relations between the
employer and workmen and for settling
industrial disputes by conciliation; for
consultation and advice on matters relating
to production, organisation, welfare and
efficiency:
(d) for constitution and functioning of
Conciliation Board for settlement of
industrial disputes in the manner specified
in the order;
Provided that no order made under clause (b)-
(i) shall require an employer to observe
terms and conditions of employment less
favourable to the workmen than those
which were applicable to them at any
time within three months preceding the
date of the order;
The testimony from these texts, which are part of the
legislative package, is the critical factor underlying
governmental order in our constitutional system. An insight
into it is worth while as a tool of interpretation of s. 3
of the U.P. Act and its harmonisation with s. 34
595
of the Payment of Bonus Act, 1965 (the Bonus Act, for
brief). A A synthesis of these two statutes is the key to
the problems posed by Shri Chitale before us, arguing the
case for the appellant.
When crisis conditions grip the community the first
imperative of good government, ’order’, takes precedence;
and the Executive transfixed between ’govern’ or ’get out’
and guided by value judgments resorts to firm action.
Exigent solution of problems affecting the well-being of the
have-nots, in a social justice setting, desiderates
provisional directives to the haves to disgorge payments,
not as final pronouncements on rights but as immediate
palliatives to preserve the peace, This is police power at
its sensitive finest when State and society are con- fronted
by the dilemma of ’do or die’. And, in a broader
perspective, Governments of the Third World must hear the
voice which moved the objective Resolution in the
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Constituent Assembly, while seeking light to keep loving
peace:
‘’The service of India means the service of the
millions who suffer. It means the ending of poverty
and ignorance and disease and inequality of
opportunity. The ambition of the greatest man of our
generation has been to wipe every tear from every eye.
That may be beyond us, but as long as there are tears
and sufferings, so long our work will not be over.(l) E
The problems of law are, at bottom, projections of
life.
"Law is a form of order and good law must
necessarily mean good order."(2)
We touch these chords because the roots of jurisprudence lie
ill the soil of society’s urges, and its bloom in the
nourishment from the humanity it serves. To petrify
statutory construction by pedantic impediments and to forget
the law of all laws, viz. the welfare of the people is to
bid farewell to the grammar of our constitutional order. Its
practical application arises in the present case. Before
going further we sketch the facts of the present case and
then on to the larger principles, an understanding of which
will unlock the crucial questions arising in the case.
The appellant, as stated earlier, runs two sugar
factories . It two different places. There are around 71
such factories in Uttar Pradesh whose economy, in large
measure, depends on the sugar industry.
(1) The Indian Constitution-Cornerstone of a Nation by
Granville Austin,
(2) Politica. Book VII Chapter 4 Section 5.
596
Moreover, sugar is an essential commodity. Thus, these
factories and the any of workers employed therein fall
within the strategic sector of the State economy. It is but
natural that Governments is highly sensitive in the matter
of maintenance of sugar supplies and the smooth working of
the sugar factories., Any explosive situation in the shape
of an industrial dispute and any disruptive factor throwing
out of gear the employment in factories is sure to throw
into disarray public safety, public order, public production
and distribution system and public employment, using these
expressions in their social connotation. Roscoe Pounds’
words are jurisprudentially apt : (1)
"Law is; more than a set of abstract norms or
legal order. It is a process of balancing conflicting
interests and securing the satisfaction of the maximum
wants with tile minimum friction."
And, Paton has set the tone for Part IV of our
Constitution to be used as background music, if we may say
so:
"the law itself cannot be impartial...for its
very raison d’etre is to prefer one social interest of
another."(2)
As was the wont, presumably, there was apparently a
clamour in 1968 for workers’ bonus which hotted up,
threatening community
tranquillity, smooth supplies essential to the life of the
community and maintenance of employment and public safety.
Every industrial dispute has a potential for large
scale breach of the peace when the factories and workmen
affected are numerous. But the general unrest induced by
industrial demands and resistance may, on critical
occasions, blow up unless quia timet action to de-fuse are
taken. This measure has necessarily to be at the
administrative level, since the judicial process is prone to
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suffer from slow motion. The U.P. Legislature, with
comprehensive vision, provided for long-range adjudicative
resolution of industrial disputes and short-run executive
remedies to pre-empt and contain outbreaks which may get out
of control once ignited, and may even cost human lives in
the. ’firefighting’ police actions:
"A government ought to contain in itself every
power requisite to the full accomplishment of the
objects committed to its care, and to the complete
execution of the trusts for
(1) Interpretation of Legal History, p. 165, quoted in
"Criminal law - Principles of Liability by T. S.
Batra, p. 612‘.
(2) A Text Book of Jurisprudence p.31, quoted in ’
Criminal Law Principles of Liability by T. S.
Batra, p. 612.
597
which it is responsible, free from every other
control but a regard to the public good and to the
sense of the people.(’)
From this angle, s. 3 has been designed as an emergency
provision to be exercised in an excited phase of industrial
collision.
Using the power under s. 3(c) of the Act and based on
the suggestion of the state Labour Conference (Sugar) the
state Government appointed a tripartite committee in
October, 1968 consisting of three nominees of the Indian
Sugar Mills Association and three representatives of the
workmen, the Labour Commissioner being the Chairman of the
Committee. The notification under s. 3(c) Was issued with a
view to-
"consider and make its recommendations to
Government on the question of grant of bonus for 1967-
68 to workmen by the Vacuum pall Sugar factories of the
State on the basis of the Payment of Bonus Act 1965,
subject to such modifications as may be mutually agreed
upon."(2)
No one, at any stage, has assailed the presence of the
statutory preconditions of social urgency. We proceed on the
footing that a flare-up was in the offing and the state
acted to pre-empt a break-down.
It is pertinent to note that the Association is a trade
union registered under the Trade Unions Act, 1926. Its
functions are indicated in the definition of "trade union"
in s. 2(h) of that Act and include regulating The relations
"between workmen and employers". Thus, the Association was
functionally within its competence to nominate three
representatives to sit on the Committee to regulate the
relations between the member-employers and the workmen
employed. The appellant is a member of the said Association.
It is significant to remember that the State Government
constituted the tripartite committee under s, 3(c) as an
emergency measure before taking steps under s. 3(b) of the
Act so that it may inform itself in a responsible way
through the recommendations made by the Committee which
represents both the wings of the industry. Although s. 3(b)
does not depend, for coming into play, upon any report under
s. 3(c) this was a measure to ensure fairness to the
concerned elements. The Committee held several sittings and,
at some stages, the appellant or his representative did
participate directly or indirectly in the deliberations.
Equally relevant is the circumstance that the worker’s
representatives
(1) The Administration of Justice-Melvin P. Sikes,
Chapter 7, Pawns of Politics and of power, P. 120
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(2) Notification dated 17.10. 1968 of the U.P. Govt.
Labour (C) Dept.
598
actually accepted the formula put forward by the President
of the Managements’ Association. We mention these
circumstances to indicate that the scales, if at all, were
tilted in favour of the mill owners and Government, on
receipt of the recommendations and anxious to freeze the
situation, issued an order under s. 3(b) incorporating and
implementing those recommendations. That notification which
was impugned before the High Court and is challenged before
us reads:
"WHEREAS on the recommendations of the state
Labour Tripartite Conference (Sugar) held on June 16,
1968, a Committee was constituted under Labour (C)
Department, notification No. 7548(HI)XXXVI-C-109(HI)/
68, dated October 17, 1968, to consider the question of
grant of bonus for the season 1967-68 to their workmen
by the vacuum pan sugar factories of the state on the
basis of the Payment of Bonus Act, 1965 subject to such
modifications as may be mutually agreed upon and to
make its recommendations.
AND WHEREAS, the said Committee has considered
this question in various meetings the last meeting
having been held on June 5? 1969, and has submitted its
recommendations to the state Government:
AND WHEREAS, the said Committee has succeeded
in bringing about an agreement in regard to the payment
of bonus for the season 1967-68 between the
representatives of employers and employees on the basis
of Payment of Bonus Act, 1965, with certain
modifications and adjustments and has made
recommendations on the subject accordingly which have
been accepted by the state Government:
AND WHEREAS, in the opinion of the state
Government it is necessary to enforce the
recommendation of the said Committee for securing the
public convenience and the maintenance of public order
and supplies and services essential to the life of the
community and for maintaining employment;
NOW, THEREFORE, in exercise of the powers under
clause (b) of section 3 of the U.P. Industrial Disputes
Act, 1947 (U.P. Act No. XXVIII of 1947), the Governor
of Uttar Pradesh is pleased to make the following order
and to direct with reference to section 19 of the said
Act that the notice of this be given by publication in
the office Gazette;
599
ORDER
xx xx xx
2. (a) All the Vacuum Pan Sugar Factories in
the state whose names have been mentioned in the
Annexure ’A’ except the Kisan Co-operative Sugar
Factory, Majhola (Pilibhit), shall pay bonus for the
year 1967-68 to all their employees, permanent seasonal
or temporary including contract labour who have worked
for not less than 30 working days in the accounting
year 1967-68;
xx xx xx
The High Court repelled the challenge and upheld the
notification, taking the view that an agreement as
recognised in S. 34 of the Bonus Act existed in this case
and so the order which merely gave effect to that agreement
was not bad in law.
The main ground of attack before us is that the state
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Government cannot act in the area of bonus without breach of
the embargo in s. 34 of the Bonus Act and so the impugned
notification must fail for want of power. Although this is
the thrust of the submission, Shri Chitale has trichotomised
it, as it were. First, the Bonus Act being a complete Code
covering profit-sharing bonus, no other law can be pressed
into service to force payment of bonus by the managements.
Secondly, s.3(b) of the U.P. Act is independent of any
agreement between the affected parties and the notification
thereunder operates on its own and not by force of consensus
or contract between the workmen and the managements. In this
view, it was wrong for the High Court to have salvaged the
notification under s. 3(b? as embodying an agreement to pay
bonus. The third submission of counsel was that ac a fact
there was no agreement between the appellant and his workmen
within the scope of s. 34 of the Bonus Act since the
representatives of the Association had no power to bind its
members by any agreement on bonus, having been appointed
solely to make certain recommendations. Moreover, the
appellant had specifically informed the representatives of
the Association that it did not agree to any variation from
the approved balance-sheet of the company and had withdrawn
its consent to the formula which found favour with the
Committee, Finally, though feebly, it was argued that if an
agreement could be spelt out under s. 34 of the Bonus Act
enforcement should be left to s. 21 of that Act and not to
the punitive recovery provisions of the U.P. Act.
600
The Single Judge of the High Court dismissed the writ
petition reading an agreement into the Committee’s
recommendations and the eventual order under s. 3(b) of the
Act. This agreement was valid under s. 3(b) of the Bonus
Act. On appeal, the Two Judges on the Bench disagreed and
the case went before a third Judge, who in an elaborate
judgment, agreed with the learned Single Judge and upheld
the order of the Government as an agreement under s. 34 of
the Bonus ACT. We now proceed to discuss the merits of
counsel’s contentions.
We focus our attention on two principal facets of the
question. They are (a) whether s. 3(b) is inconsistent with
the Bonus Act; and (b) whether an agreement within the
meaning of S. 34(1) (as the law then stood) could be spelt
out of the facts of the present case.
There is no challenge to the competence of the state
Legislature to enact s. 3 of the Act. Indeed, more than one
item in Lists II and III will embrace legislation of the
pattern of s. 3. Even so the short point sharply raised by
Shri Chitale is that Parliaments having enacted the Bonus
Act in 1965, occupied that part of industrial law, and s. 34
in terms contains a non-obstante clause. That section reads:
Effect of laws and agreements inconsistent with the
Act.
34. (1) Save as otherwise provided in this
section, the provisions of this Act shall have effect
notwithstanding anything inconsistent therewith
contained in any other law for the time being in force
or in the terms of any award, agreement, settlement or
contract of service made before the 29th May, 1965.
34. (2)........................................
......................................................
......................................................
......................................................
34. ( 3 ) Nothing contained in this Act shall
be constructed to preclude employees employed in any
establishment or class of establishments from entering
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into agreement with their employer for granting them an
amount of bonus under a formula which is different from
that under this Act:
Provided that any such agreement whereby the employees
relinquish their right to receive the minimum bonus
601
under section 10 shall be null and void ill so far as
it purports to deprive them of such right."
The effect of this provision is that anything
inconsistent with the Bonus Act contained in any other law
will bow and bend before it. Secondly, agreements made after
29th May 1965 will be valid regarding bonus even if they be
inconsistent with the formulae in the bonus Act.
Shri Chitale did not dispute the proposition that if a
concluded agreement could be read into the recommendations
of the tripartite Committee relating to Bonus, it would be
valid despites. 34; but he urged before us that it was
impossible to weave out of mere recommendations the web of a
concluded contract on bonus. He canvassed before us,
further, that if an agreement on bonus was necessarily
inferable from the proceedings of the tripartite committee,
the enforcement thereof could be only under s. 21 of the
Bonus Act and not by reliance on the more drastic processes
of the U.P. Act.
A torrent of objective circumstances has emerged in
this case to wash out these submissions. This Court is
rarely disposed to reverse a factual affirmation
concurrently reached by the High Court at two tiers. Even
so, we may rush past the more potent circumstances which
have a compulsive force in arriving at the conclusion
aforesaid.
Shri Chitale stressed that the Committee itself had a
functional limitation writ on the face of the order under s.
3(c) . Its authority was limited to making recommendations
on the grant of bonus for 1967-68 on the basis of the Bonus
Act, subject to such modifications as mutually agreed upon.
Formally, this is correct. But why could the Committee which
had representative of both the wings of the industry not
mutually agree upon a bonus formula ? There was nothing in
the notification prohibiting it. There was everything in the
notification promoting it. The whole process was geared to
mutually agreed solutions. Of course, once the
representatives of managements and labour reached an
agreement, substantially on the basis of the Bonus Act, they
would proceed to recommend to Government the acceptance of
that agreement. The notification under s. 3(c) contemplated
mutual agreement upon bonus as the first step and the
recommendation of the formula so reached as the second step.
The good offices of the Labour Commissioner was also
available. In short, the first notification did not shut
out, but, on the other hand, welcomed mutual agreement. As
between the two wings, an agreement materialised. Then it
became Government’s responsibility effectively to resolve
the crisis and behoved it to put teeth into the agreement by
making it a binding order under s. 3(b). Thereafter, the arm
of the law, as provided in the U.P. Act.
602
went into action if there was violation. The object of the
Government being to keep the peace and to interdict
disruption it did not rest content with an agreement within
the meaning of s. 34 and resort to the leisurely processes
of s. 21. Exigent situations demand urgent enforcement; and
therefore government went a step further than the agreement
and embodied it in an order under s. 3(b). This
incorporation in a notification under s. 3(b) did not negate
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the anterior agreement between the parties. The order of
Government under s. 3(b) makes the dual stages perfectly
plain. For instance, there is the following tell-tale
recital "Whereas the said Committee has succeeded in
bringing about an agreement in regard to the payment of
bonus for the season 1967-68 between the representatives of
the employers and employees on the basis of Payment of Bonus
Act, 1965, with certain modifications and adjustments". In
unmincing language, the notification states that an
agreement on the payment of bonus has been successfully
brought about substantially on the lines of the Bonus Act.
In the same notification, Government proceeds to state that
the said agreement has been forwarded to it in the shape of
recommendations which have been accepted and enforced in
exercise of the powers conferred by clause (b) of s. 3 of
the Act. The anatomy of the order under s. 3(b) being what
we have explained above, the inference is inevitable that
there is a clear agreement in regard to the payment of bonus
for the relevant season between the employers and employees
and ingenious argument cannot erode that effect.
The next limb of the argument of Shri Chitale is that
in fact there is no evidence of his. client having authorise
the representatives of the Association to act on its behalf
in agreeing to the bonus formula. On the contrary, he had
withdrawn the authority originally conferred. We cannot
agree with this specious, though plausible, submission. lt
admits of no doubt that the Association is a trade union
registered under the Trade Unions Act and the functional
competence of a trade union definitionally extends to
regulating the relations between workmen and employers. S.
2(h) to negotiate an agreement on. payment of bonus surely
falls within the scope of regulation of the relations
between the workmen and the employers. Secondly, the
notification under s. 3(c) itself authorises the Committee
to consider the grant of bonus on terms mutually agreed
upon. Authority to reach agreement on behalf of the
managements is thus implicit in the notification under s.
3(c). Moreover, the Association, having the capacity to
represent all the members within the area of its authority,
sat on the committee though its representatives and became
effective proxies of the appellant was present in the
tripartite Conference at Naini Tal on June 16, 1968 and it
was at that Conference the decision to set up
603
the Committee was made and a resolution to that effect
passed, leading to the notification of October 17, 1968.
Moreover, throughout the several meetings and investigations
of the tripartite Committee. the appellant supplied all the
facts and details sought concerning the formulation and the
data for arriving at an acceptable solution. The formula of
the Committee was based largely on the Bonus Act itself with
some variation regarding the valuation of the closing stock.
Importantly, what the employees‘ representatives did was
merely to accept the proposal of the President of the
Association of employers. There was a written agreement
dated June 5, 1969 to which the representative of both sides
were signatories. To dismiss the whole consensual adventure
and the culminating written agreement as nothing but an
exercise in recommendatory or advisory futility is to bid
farewell to raw realities. Industrial jurisprudence does not
brook nice nuances and torturesome technicalities to stand
in the way of just solutions reached in a rough and ready
manner. Grim and grimy life situations have no time for the
finer manners of elegant jurisprudence. Social justice is
made of rugged stuff. Broad consensus between the two
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parties does exist here, as is emphatically underline by
circumstance that ’all the mill owners except the appellant
have stood by it-and all the workers’. Where social justice
is the touch- stone, where industrial peace is the goal,
where the weak and the strong negotiate to reach workable
formulae unruffled by the rigidities and formalisms of the
law of contracts, it is impermissible to Frown down the fair
bonus agreement reached by the representatives of both camps
and accepted by the employees in entirety and the whole
block of employers minus the appellant, on a narrow
construction of the notification under s. 3 (b) of the U.P.
Industrial Disputes Act, 1947 or s. 34’. Of the Bonus Act or
s. 2(c) of the Contract Act. Labour law is rough hewn and
social justice sings a different tune. We reject, without
hesitation, the appellant’s submission that there was no
agreement for payment of bonus within the meaning of s. 34
of the Bonus Act and affirm the concurrent finding of the
High Court on that issue.
The second seminal problem of power that falls for
consideration here has deeper jurisprudential import and
wider political constitutional portent, so much so
decisional elucidation becomes necessitous. We have stated
earlier that s. 34 of the Bonus Act has a monopolistic
tendency of excluding other laws vis-a-vis profit-sharing
bonus. The basic condition for nullification of s.3(b) of
the U.P. Act is that. when it enters the area of bonus, it
is inconsistent with the provisions of the Bonus Act.
"Inconsistent", according to black’s Legal Dictionary, means
’mutually repugnant or contradictory; contrary, the one to
the other so that both cannot stand, but the acceptance or
establish
604
ment of the one implies the abrogation or abandonment of the
other’. So we have to see whether mutual co-existence
between s. 34 of the Bonus Act and s. 3(b) of the U.P. Act
is impossible. If they relate to the same subject-matter, to
the same situation, and both substantially overlap and are
co-extensive and at the same time so contrary and repugnant
in their terms and impact that one must perish wholly if the
other were to prevail at all-then, only then, are they
inconsistent. In this sense, we have to examine the two
provisions. Our conclusion, based on the reasoning which we
will presently indicate, is that ’inconsistency’ between the
two provisions is the produce of ingenuity and consistency
between the two laws flows from imaginative under standing
informed by administrative realism. The Bonus Act is a long-
range remedy to produce peace; the U.P. Act provides a
distress solution to produce truce. The Bonus Act adjudicate
rights of parties; The U.P. provision meets on emergency
situation on an administrative basis. These social
projections and operational limitations of the two statutory
provisions must be grasped to resolve the legal conundrum.
When ’the sequestered vale of life’ is in imminent peril of
disruption immediate tranquillisers are the desideratum. The
escalating danger to law and order, to public safety, to
maintenance of supplies essential to the life of the
community, the break-down of production and employment-these
anti-social consequence of ’the madding crowds’ ’ignoble
strife’ are sought to be controlled by a quick shot in the
arm by use of s. 3(2). It is a balm for the time, not a cure
which endures. Indeed, it is an administrative action, not a
quasi-Judicial determination. We may easily visualise other
explosive occasions which traumatise society and so attract
s. 3(b).
The specific fact-situation which confronted the State
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must be seen in perspective. Labour and capital are partners
in production. When one of the partners numerous but needy,
demands a share in the profits, beyond wages, to better its
lot, industrial legislation chalks out rights and limits,
prescribes formulae, creates adjudicatory machinery, awards
are made, reviewed and enforced and parties seek social
justice through the judicial process. The Bonus Act, read
with the Industrial Disputes Act, codifies this branch of
rights and remedies. But it is a notorious infirmity of the
noble judicative methodology that adherence to certain basic
processual norms makes procrastinatory delay a besetting sin
and an inevitable evil. The end product is good were it
delivered promptly but the operation tantalises and
sometimes self-defeats.
The working class though a weaker class, when
organised, is militant. Their privations are too desperate
to stand delay Policy formu-
605
lation by Government takes time, involves consultation;
adjudication involves long hearing and appeal upon appeal.
The discussion of legal prophylaxis as part of the
dynamics of Jurisprudence becomes relevant at this stage.
Necessity is the mother of tension; tension frays temper and
maddened men turn violent. When both sides are psyched up
into frenzy, public safety, maintenance of essential
supplies, people’s employment and societal order become..
casualties. A wise administration anticipates and acts
before the flams spread. Once the industrial war is sparked
off, the use of force become unobviale. And police force
pitted against mob fury may mean blood and tears. And Indian
lives in Free India, even though of workers, are more
precious than the profits of the corporate sector,
Confronted by escalating disorder, the wise ruler cannot
afford wait for lethargic legal justice to deliver its
verdict but armed with crisis pouters and anxious to arrest
a blow-up, adopts administrative nostrums which give quick
relief but do not frustrate ultimate justice. Prophylatic
processes are not the enemy of normative law.
Sociallyoriented prompt action tranquillises where- drift,
vacillation and inaction may traumatize. Section 3 serves
this limited purpose of legalising administrative
intervention to prevent disorder without prejudice to
judicial justice which will eventually be allowed to take
its course. An order under Sec. 3(b) is administrative; a
proceeding under the Bonus Act is judicial. The former
manages a crisis, the latter determines rights. Even when a
direction under. the exigency power involve payments towards
bonus or other claim it never can possess finality and is
subject to judicial decision-except, of course, where
parties agree to settle their claims, and then the agreement
gives it vitality.
The jural scheme of Sec. 3 is duel, each operating in
its own stage and without contradicting the power of the
other. The first say, in crisis management, belongs to the
administrator; the last word in settlement of substantive
rights belongs to the tribunal. The pragmatic dichotomy of
the law is flexible enough not to put all its peacekeeping
eggs in the judicial basket. Government acts when the
trouble brews and when the storm has blown over, judicial
technology takes over. There are no rigid
compartmentalisations. Sometimes, the judicial process
itself has quick-acting procedures. Likewise, sometimes the
executive prefers to consult before going into action. Under
our constitutional order, guidelines are given by the status
to ensure reasonableness in administrative orders. And in a
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Government with social justice as the watchword, value
judgments are essential to exclude arbitrariness. So it is
that the executive power under Sec. 3
606
has the leading strings writ right at the top. The power
shall be used only for ’public safety or convenience or the
maintenance of public order or supplies and services’
essential to the life of the community or for maintaining
employment. It prevails for the nonce, produces (hopefully)
tentative truce, and then the judicial process decides
decisively. It is like an executive magistrate passing a
prohibitory order regarding disputed possession or unruly
assembly to prevent breach of the peace and making over to a
judicial magistrate to hear and decide who is in actual
possession or whether the restriction on movement was right.
Or, maybe, it is like a magistrate quickly passing orders
regarding a possessory dispute leaving it to the civil court
to adjudicate on valid title. No one can argue that
preventive magisterial power, admittedly provisionally and
reasonably. is inconsistent with the civil judicial
machinery which speaks finally.
Dealing with the identical provisions in an identical
situation where dn appeal reached this Court and the parties
were identical, Mudholker, J., speaking for the Court,
explained the scheme or the same Section(1) 3 and its scope
which fits into the pattern we have explained. The learned
judge observed(2):-
"The opening words of s. 3 themselves indicate
that the provisions thereof are to be availed of in an
emergency. It is true that even reference to an
arbitrator or a conciliator could he made only if there
is an emergency. But then an emergency may be acute.
Such an emergency may necessitate the exercise of
powers under cl. (b) and a mere resort to those under
cl. (d) may be inadequate to meet this situation.
Whether to resort to one provision or other must depend
upon the subjective satisfaction of the State
Government upon which powers to act under s. 3 have
been conferred by the legislature. Dealing with the
canons of statutory construction the learned judge
observed: No doubt this result is arrived at by placing
a particular construction on the provisions of that
section but we think where justified in doing so. As
Mr. Pathak himself suggested in the course of his
arguments, we must try and construe a statue ill such a
way, where it is possible to so construe it, as to
obviate a conflict between its various provisions and
also so as to render the statute or any of its
provisions constitutional. By limiting the operation of
the provisions of cl. (b) to an
(1) An amendment to Sec 3 (e) has since been made.
(2) [1961] 2 SCR 330 at 342-343, State of U.P. & Ors.
v. Basti Sugar Mills Co. Ltd.
607
emergency we do not think that we are doing violence
assuming that the width of the language could not be
limited by construction it can be said that after the
coming into force of the Constitution the provisions
can, by virtue of Art. 13, have only a limited effect
as stated above and to the extent that they are
inconsistent with the Constitution, they have been
rendered void.
In the strain, the court rebuffed the unreasonable
argument based on ’reasonableness’ in Art. 19(6): In
our view, therefore, the provisions of cl. (b) of s. 3
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are not in any sense alternative to those of cl. (d)
and that the former could be availed of by the State
Government only in an emergency and as a temporary
measure. The right of the employer or the employee to
require the dispute to be referred for conciliation or
adjudication would still be there and could be
exercised by them by taking appropriate steps. Upon the
construction we place on the provisions of cl. (b) of
S. 3 it is clear that no question of discrimination at
all arises. Similarly the fact that action was taken by
the Government in all emergency in the public interest
would be a complete answer to the argument that action
is violative of the provisions of Art. 19(1) (g). The
restriction placed upon the employer by such an order
is only a temporary one and having been placed in the
public interest would fall under cl. (6) of Art. 19 of
the Constitution".
(emphasis added)
In a practical sense, this dichotomous reconciliation
has humanistic value in administration. Let us take the case
of bonus. A broad national policy on bonus, however
admirable, needs negotiation, consultation inter-state co-
ordination, diplomacy and causes delay. Likewise, an
industrial adjudication on bonus, with all the trappings of
natural justice, appeal and writ proceedings, consumes
considerable time. Hungry families of restive workers in
militant moods urgently ask for bonus for Onam in Kerala,
Pooja in Bengal, Dewali in Gujarat or other festival
elsewhere, for a short spell of cheer in a long span of
sombre life. The State Government, with economic justice and
welfare of workers brooding over its head, is here-pressed
for public order and maintenance of essential supplies.
Immediate action may take trigger-happy policing, shape or
emergency direction to make ad hoc payments, worked out in
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608
administrative fairness. This latter course may often be
favoured, given the correct orientation. But even here some
governments may prefer to confer, persuade parties to concur
and make binding order. This requires legislative backing.
So Sec. 3. But such an improvised solution may leave one or
the other or even both dissatisfied with regard to ultimate
rights. While enforcing the ad interim directive by the
authority of law, the door is left ajar for judicial take-
over of the industrial dispute. If workers have got more,
the excess will have to be adjusted; if less the employers
will pay over. This will be taken care of by Section 3(e)
(before amendment) and by the Bonus Act now. A crisis is
best solved by this procedure at the State level on a fair
administrative basis. But lasting policy solutions are best
produced at the Central level and final rights crystallised
at the tribunal level. The lengthy judicial process may, as
here, be obviated if, by a tripartite arrangement an
agreement within the scope of s. 34 of the Bonus Act is
reached.
The ruling of this court in State of U.P. & Anr. v.
Basti Sugar Mills Co. Ltd. (Supra) supports the synthesis we
have evolved. The only difference is that there is now Mo
reference of a bonus dispute under S. 3 (e) of the U.P. Act.
Instead, the same dispute will-where no agreement or
settlement stands in the way, as it does here-on
application, be referred for adjudication under the Bonus
Act read with the Industrial Disputes Act, 1947.
The analysis shows the absence of basic inconsistency
and presence f intelligent method in the U.P. and the
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Central provisions.
We hold. after this long tour, that the goal of social
justice and public peace, essential to good Government is
best reached by reading together and not apart. The High
Court’s order is upheld and the appeal dismissed, of course,
with costs.
P.H.P. Appeal dismissed.
609