Full Judgment Text
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PETITIONER:
WORKMEN EMPLOYED BY HINDUSTAN LEVER LTD.
Vs.
RESPONDENT:
HINDUSTAN LEVER LIMITED
DATE OF JUDGMENT28/08/1984
BENCH:
DESAI, D.A.
BENCH:
DESAI, D.A.
ERADI, V. BALAKRISHNA (J)
KHALID, V. (J)
CITATION:
1984 AIR 1683 1985 SCR (1) 641
1984 SCC (4) 392 1984 SCALE (2)265
ACT:
Industrial Disputes Act 1947, sec. 2(k)-Industrial
disputes-Demand by workmen for confirmation in the promoted
posts-Whether industrial dispute-Whether Industrial Tribunal
has jurisdiction to entertain such a demand.
Promotions-Whether giving promotion and confirmation in
the promoted posts is wholly a management function.
HEADNOTE:
Section 2(k) of the Industrial Disputes Act, 1947 (the
Act, for short) defines an ’industrial dispute’ to mean any
dispute or difference between employers and employers, or
between employers and workmen or between workmen 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. Section 7-A of the Act provides
that the appropriate Government may by notification in the
Official Gazette constitute one or more Industrial Tribunal
for the adjudication of industrial disputes relating to any
matter whether specified in the Second Schedule or the Third
Schedule. Entry at plecitum 7 in the Third Schedule reads
’Classification by grades’.
Sec, 4 of the Industrial Employment (Standing Orders)
Act, 1946 (1946 Act, for short) also requires the employer
in an industrial establishment to make provision in the
standing orders for every matter set out in the Schedule
which is applicable to the industrial establishment. The
Schedule provides, amongst others, for making provision in
the standing orders for classification of workmen for
example, whether permanent, temporary apprentices,
probationers or badlis.
The Government of Maharashtra referred to the
Industrial Tribunal a dispute between appellants-workmen and
the respondent-employer as to whether "All the employees who
are acting continuously in higher grades for more than three
months should be confirmed in the respective grades
immediately and all the benefits should be given to the
concerned employees with retrospective effect had they been
confirmed immediately after three months of their continuous
acting." The respondent raised a preliminary objection that
the dispute was not an industrial dispute within the meaning
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of the expression in the Act, because if the demand as
raised is conceded, it would tantamount to allowing the
workmen to decide the work force required in various grades
which is a managerial function. The Industrial Tribunal up-
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held the preliminary objection and rejected the Reference as
incompetent holding that the demand shorn of verbiage is one
for promotion which is the managerial function and therefore
cannot be the subject matter of industrial adjudication.
Hence this appeal by special leave.
Allowing the appeal and remitting the matter to the
Tribunal for disposing of the Reference on merits,
^
HELD: (1) It is well settled that certified Standing
Orders under the 1946 Act which have a statutory flavour
prescribe the conditions of service and they shall be deemed
to be incorporated in the contract of employment of each
workman with his employer. Since there is a statutory
obligation on the employer in an ’industrial establishment’
to classifi workmen under the 1946 Act, the classification
would be permanent, temporary, apprentices, probationers and
all other known categories, such as, acting, officiatingetc.
In respect of the classification, a dispute can conceivably
arise between the employer and the workmen because failure
of the employer to carry out the statutory obligation would
enable the workman to question his action which will bring
into existence a dispute. It would become an industrial
dispute because it would be connected with the condition of
employment. It becomes a condition of employment because
necessary conditions of service have been statutorily
prescribed one such being classification of workmen.
Therefore, without anything more where the demand of the
workmen was to confirm employees employed in an acting
capacity in a grade, it would unquestionably be an
industrial dispute. [646C-G]
Sudhir Chandra Sarkar v. Tata Iron & Steel Co. Ltd.,
[1984] 3 S.C.C. 269, referred to.
(2) Even if one does not reach the conclusion that the
dispute raised in question would be an industrial dispute by
reference to the Standing Orders certified under the 1946
Act, a mere reference to Entry 7 of the Third Schedule read
with Sec. 7-A would clinch the issue. Entry at plecitum 7 in
the Third Schedule reads "Classification by grades". If
there is any dispute in respect of classification by grades,
it will necessarily be an industrial dispute. This would
flow indisputably from the language of section 7-A which
provides for setting up of Industrial Tribunal for
adjudication of industrial dispute relating to any matter
specified, amongst others, in the Third Schedule. In the
instant case, the demand of the workmen was for
classification of the workmen officiating in the higher
grades either as permanent or temporary and they should not
be continued indefinitely as temporary by making them
permanent on rendering of continuous service in the higher
grade for a period of three months. The demand involves both
the classification of employees and classification by grade.
Therefore, the Industrial Tribunal overlooked this obvious
fact situation by mis-interpreting the demand and reached a
wholly untenable conclusion that the demand was for
promotion which appeared to the Tribunal to be a managerial
function and beyond the reach of adjudication. [647 C-E]
(3) Even on the footing of the law as it stands at
present in this country that promotion is a management
function, the industrial dispute referred
643
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to the Tribunal was not one for claiming promotion. The
Tribunal committed a grave error in so misinterpreting the
dispute referred to it. The Tribunal overlooked the fact
that the demand was in respect of workmen already promoted
i.e. in respect of whom managerial function of selecting
personnel for promotion had been already performed. The
demand was in respect of already promoted workmen, may be in
an officiating capacity, for their classification from
acting or temporary to confirmed, that is, permanent, in the
higher grade to which they were promoted, after a reasonable
period of service which according to the Union must be three
months of service. By no canon of construction this demand
could be said to be one for promotion. [550 B-D]
Management of Brooke Bond India (P) Ltd. v. Workmen
[1966] 2 SCR 465 and The Hindustan Lever Ltd. v. The Workmen
[1974] 3 SCC 510; held inapplicable.
In the decisions of this Court in Management of Brooke
Bond India (P) Ltd. v. Workmen [1966] 2 SCR 465 and The
Hindustan Lever Ltd. v. The Workmen [1974] 3 SCC 510 it is
assumed without controversy that promotion is a managerial
function. But in view of the decision of this court in All
India S.M. and A.S.M.’s Association v. General Manager,
Central Railway [1960] 2 SCR 311, it is time to reconsider
this archaic view of the laissez faire days that promotion
is a management function. The expression "terms and
conditions of employment" would ordinarily include not only
the contractual terms and conditions but those terms which
are understood and applied by the parties in practice or
habitually or by common consent without ever being
incorporated in the contract. [649 E-G]
British Broadcasting Corporation v. Hearn & Others,
[1978] 2 All E.R. 111 and R. Industrial Disputes Tribunal &
Anr. v. Ex parte Queen Mary College University of London,
[1957] 2 All E.R. 776, referred to.
JUDGMENT:
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 179 of
1983.
Appeal by special leave from the Award dated the 13th
June, 1979 of the Industrial Tribunal, Maharashtra at Bombay
in Ref (IT) No. 453 of 1975.
Jitender Sharma for the Appellant.
Dr. Y.S. Chitale, O.C. Mathur, S. Kumar and Ms. Meera
Mathur for the Respondent.
The Judgment of the Court was delivered by
DESAI, J. It is most unfortunate that all those
unhealthy and
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injudicious practices resorted to for unduly delaying the
culmination of civil proceedings have stealthily crept in,
for reasons not unknown, in the adjudication of industrial
dispute for the resolution of which an informal forum and
simple procedure were devised with the avowed object of
keeping them free from the dilatory practices of civil
courts. Times without number this Court, to quote only two
D.P. Maheswari v. Delhi Administration & Ors. and S.K. Verma
v. Mahesh Chandra & Anr. disapproved the practice of raising
frivolous preliminary objections at the instance of the
employer to delay and defeat by exhausting the workmen the
outcome of the dispute yet we have to deal with the same
situation in this appeal by special leave.
The Government of Maharastra by its order dated October
22, 1975 referred a dispute between Hindustan Lever Ltd.
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(’employer’ for short) and the workmen employed by them for
adjudication under Sec. 10 of the Industrial Disputes Act,
1947 to the Industrial Tribunal, Maharashtra. The schedule
annexed to the order of reference specified the dispute as
under:
"All the employees who are acting continuously in
higher grades (as per annexure) for more than three
months should be confirmed in the respective grades
immediately and all the benefits should be given to the
concerned employees with retrospective effect had they
been confirmed immediately after three months or their
continuous acting."
After the workmen governed by the reference filed a
statement of claim, M/s Hindustan Lever Ltd., the employer,
appeared and contested the reference on diverse grounds. A
preliminary objection was raised that the reference was
incompetent because the dispute raised by the workmen and
referred by the Government to the Industrial Tribunal for
adjudication was not an industrial dispute within the
meaning of the expression in the Industrial Dispute Act,
1947. Elaborating the contention, it was submitted that the
dispute is not an industrial disputes because if the demand
as raised is conceded, it would tantamount to allowing the
workmen to decide the strength of the work force required in
various grades and it is well-settled that determining and
deciding the strength of work force
645
required in any industry is a managerial function. There
were other contentions with which we are not concerned in
this appeal at this stage.
The Industrial Tribunal held that whatever camouflage
of the language in which the demand is couched, the attempt
is to obtain promotion which cannot be claimed as a matter
of right, it being a managerial function. The Tribunal in
terms held that promotion is the function of the management
and the Industrial Tribunal will have no power and
jurisdiction to take away the function of the management and
direct that such and such workmen should be promoted to a
particular post. In this view of the matter’ the Tribunal
held that the dispute was not an industrial dispute within
the meaning of the expression and rejected the reference as
incompetent. Hence this appeal by special leave.
Sec.10(1) confers power on the appropriate Government
to refer an existing or apprehended industrial dispute,
amongst others, to the Industrial Tribunal for adjudication.
The dispute therefore, which can be referred for
adjudication, of necessity, has to be an industrial dispute
which would clothe the appropriate Government with power to
make the reference and the Industrial Tribunal to adjudicate
it.
The expression ’Industrial dispute’ is defined in Sec.
2(k) to mean ’any dispute or difference between employers
and employers or between employers and workmen, or between
workmen 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’. The question is:
whether a demand for confirmation in the promoted post after
a lapse of a certain time would be a dispute which is
connected with the terms of employment or the condition of
labour in the facts and circumstance of this case ? The
expression ’industrial dispute’ has been the subject matter
of numerous decisions of this Court and the High Courts. The
one feature common to all the decisions is that the
expressions has been so widely defined as not to leave
anything out of its comprehension and purview involving the
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area of conflict that may develop between the employer and
the workmen and in respect of which a compulsory
adjudication may not be available. This is recognised to be
the width and comprehension of the expression. Keeping in
view this extensive definition, let us approach the
contention in this appeal.
It cannot be gain said that the dispute is between the
employer
646
and their workmen. The question is whether the dispute is
connected (leaving aside the words not necessary) with the
terms of employment of the workmen ?
Since the introduction of the Industrial Employment
(Standing Orders) Act, 1946 (1946 Act for short), it has
been made obligatory for the employer in an industrial
establishment to prepare a draft of standing orders and get
them certified under the Act. Sec. 4 of the 1946 Act
requires the employer to make provision in the standing
orders for every matter set out in the Schedule which is
applicable to the industrial establishment. The Schedule
provides amongst others for making provision in the standing
orders for classification of workmen for example, whether
permanent, temporary, apprentices, probationers or badlis.
This classification of workmen by the employer is thus made
obligatory and has to be provided for in the standing
orders. It is also well-settled that certified standing
orders which have a statutory flavour prescribe the
conditions of service and they shall be deemed to be
incorporated in the contract of employment of each workman
with his employee-Sudhir Chandra Sarkar v. Tata Iron & Steel
Co. Ltd. It would therefore follow as a corollary that the
employer will have to classify the workmen and failure to
classify would be violative of the 1946 Act. Now if there is
a statutory obligation to classify workmen under the 1946
Act, the classification would be permanent, temporary,
apprentices, probationers and all other known categories
such as acting, officiating etc. In respect of the
classification, a dispute can conceivably arise between the
employer and the workman because failure of the employer to
carry out the statutory obligation would enable the workman
to question his action which will bring into existence a
dispute. It would become an industrial dispute because it
would be connected with the conditions of employment. It
becomes a condition of employment because necessary
conditions of service have to be statutorily prescribed, one
such being classification of workmen. Therefore, without
anything more where the demand of the workmen was to confirm
employees employed in an acting capacity in a grade, it
would unquestionably be an industrial dispute. This
conclusion gets reinforced by a slightly different approach.
Sec. 7-A of the Industrial Disputes Act, 1947 provides
that
647
the appropriate Government may by notification in the
official Gazette constitute one or more Industrial Tribunal
for the adjudication of industrial dispute relating to any
matter whether specified in the Second Schedule or the Third
Schedule. Entry at plecitum 7 in the Third Schedule reads
’Classification by Grades’. If there is any dispute in
respect of classification by grades, it will necessarily be
an industrial dispute. This was not only not questioned but
would flow indisputably from the language of Sec. 7-A, which
provides for setting up of Industrial Tribunal for
adjudication of industrial dispute relating to any matter
specified amongst others, in the Third Schedule. Therefore,
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even if one does not reach the conclusion that the dispute
raised in question would be an industrial dispute by
reference to the standing orders certified under the 1946
Act, a mere reference to Entry 7 of the Third Schedule read
with Sec. 7-A would clinch the issue. Let it be recalled
that the demand of the workmen was for confirmation of
employees promoted to the higher grade and acting in the
higher grade for more than 3 months. In other words, the
demand was for classification of the workmen officiating in
the higher grades either as permanent or temporary and they
should not be continued indefinitely as temporary by making
them permanent on rendering of continuous service in the
higher grade for a period of three months. The demand
involves both the classification of employees and
classification by grade. Unfortunately, the Industrial
Tribunal overlooked this obvious fact situation by mis-
interpreting the demand and reached a wholly untenable
conclusion that the demand was for promotion which appeared
to the Tribunal to be a managerial function and beyond the
reach of adjudication.
It appears to have been contended before the Tribunal
and vigorously re-canvassed before us that removing the
camouflage of language, the demand in terms seeks promotion
to higher grade and promotion being a managerial function,
the Industrial Tribunal had no jurisdiction to entertain the
same. The Tribunal after referring to the decision of this
Court in Management of Brooke Bond India (P) Ltd. v. Workmen
held that the demand shorn of verbiage is one for promotion
which is the managerial function and therefore cannot be the
subject matter of industrial adjudication. To recall the
words of the Tribunal, ’to seek confirmation of a workman in
648
a particular higher grade would mean a promotion as a
confirmed workman who is entitled to some of the benefits
such as not being removed from service without following
certain procedure or promotion to higher post which benefits
may not be available to a temporary hand,’ and this is
nothing short of demanding promotion which is a managerial
function. We are unable to appreciate this approach
unwarranted in the facts and circumstances of this case,
because the decision in the Brooke Bond Case has to be
understood in the context of the demand that was referred to
the Industrial Tribunal for adjudication. The demand was as
under:
"All things being equal, seniority shall count for
promotion. If the senior person has been overlooked in
the question of promotion, he is at liberty to ask the
concern for the reason why he has been overlooked, in
which case the concern shall give him the reasons,
provided that it does not expose the concern or the
officer giving reasons, to any civil or criminal
proceedings."
The Tribunal in that case after accepting that
promotion was a management function and had to be left to
the discretion of the management which had to make choice
from amongst the employees for promotion proceeded to hold
that the action of management in the facts and circumstances
of the case was malafide. In appeal against this award of
the Tribunal, a Constitution Bench of this Court observed as
under:
"Generally speaking, promotion is a management
function; but it may be recognised that there may be
occasions when a tribunal may have to interfere with
promotions made by the management where it is felt that
persons superseded have been so superseded on account
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of mala fides or victimisation."
This view was also reiterated in the case of the
present employer in The Hindustan Lever Ltd, v. The Workmen
wherein the Court observed that it was not disputed before
them that ordinarily promotion is a management function.
649
In the heyday of laissez faire and market economy, wage
determination, hours of work, disciplinary measures
including quantum of punishment, in short prescribing all
enveloping conditions of service were the preserve of
management, styled as managerial functions. This relic of
the past is slowly withering away since the introduction of
the Constitution ushering in socioeconomic revolution
through law. Most of the managerial functions in relation to
work force have been swept away by legislative enacments
enacted to give effect to Arts. 38, 39 and 41 of the
Constitution yet the Tribunal dug out from the bebris of the
past, the concept of managerial function and by a distorted
construction of the language of the reference comprehended
it in the concept of managerial function and denied to
itself the jurisdiction to adjudicate it. In the process the
Tribunal failed to take note of the development of law since
the decision in Brooke Bond Case.
Since the decision of the Constitution Bench of this
Court in All India S.M. and A.S.M.’s Association v.
General Manager, Central Railway it is well-settled that
equality of opportunity in the matter of public employment
guaranteed by Art. 16 (1) not only ensures it at the time of
entry in public employment but ensures it even in the matter
of promotion. If equality in the matter of promotion is
constitutionally guaranteed as the fundamental right, it is
time to reconsider this archaic view of the laissez faire
days that promotion is a management function. The whole
gamut of labour legislation is to check, control and
circumscribe uncontrolled managerial exercise of power with
a view to eschew the inherent arbitrariness in the exercise
of such functions. In the decisions of this Court it is
assumed without controversy that promotion is a managerial
function. It may have to be re-examined in an appropriate
case. But it is not necessary to go so far in this case and
we would proceed on the assumption that the passing
observation made by the Constitution Bench in Brooke Bond
case settled the law as far as this country is concerned
that promotion is a management function though we would like
to point out that the expression ’terms of conditions of
employment’ would ordinarily include not only the
contractual terms and conditions but those terms which are
understood and applied by the parties in practice or
habitually or by common consent without ever being
incorporated in the contract. In England, it is settled law
that promotion is comprehended in the
650
expression’ terms of employment of the employees.’ In
British Broadcasting Corporation v. Hearn & others and in R.
Industrial Disputes Tribunal & Anr. Ex parte Queen Mary
College, University of London it was held that claim for
promotion is connected with terms of the employment of the
employees.
Even on the footing of the law, as it stands at present
in this country, that promotion is a management function,
the industrial dispute referred to the Tribunal was not one
for claiming promotion. The Tribunal committed a grave error
in so mis-interpreting the dispute referred to it. The
Tribunal overlooked the fact that the demand was in respect
of workmen already promoted i.e. in respect of whom
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managerial function of selecting personal for promotion had
been already performed. The demand was in respect of already
promoted workmen, may be in an officiating capacity, for
their classification from acting or temporary to confirmed
that is permanent, in the higher grade to which they were
promoted, after a reasonable period of service which
according to the Union be three months of service. By no
cannon of construction, this demand could be said to be one
for promotion. Therefore, the decision in Brooke Bond case
and followed in the case of this very employer had no
application to the facts of this case and the Tribunal
misdirected itself in rejecting the reference on this narrow
ground.
Accordingly, this appeal succeeds and is allowed and
the award of the Industrial Tribunal on the preliminary
issue is quashed and set aside and the matter is remitted to
the Tribunal for disposing of the reference on merits. As
the matter is an old one and we were told that persons
continuously officiating in the higher grade for more than
five years are not confirmed, the Tribunal is directed to
give top priority to the reference and dispose it of as
early as possible and not later than six months from today.
The respondent shall pay the costs of the appellant
quantified at Rs. 2,000.
M.L.A. Appeal allowed.
651