WESTERN INDIA MATCH COMPANY LTD. versus WORKMEN

WESTERN INDIA MATCH COMPANY LTD.

v. WORKMEN August 20, 1973

[P. JAGANMOHAN REDDY AND S, N. OWIVEDI, JJ.]

Industrial Dispute-Probation 'for period longer tlw.n tfrat· provided by the' employrr's Standing Order-Validity.

lllllustrial Employmellt (Standing Orders) Act, 1946-0bject ar.d polic.y

U.P. lndusfrial Disputes Act, s. 68-Scope of-'May' in sub. s. (2) .~lwuld be read as 'shall'.

Ltrbour Court-Power to modify Standin~; On/ers-rower to order re-instatement.

Under the Standing Order for the Watch and Ward staff of the appelh.>nt. 'a permanent workman· is one 'who has completed probationary period of two months as such and is employed on permanent post;' and 'a probationer' is workman 'who is provisionally employed to fill permanent vacancy and hfls not completed two momlrs service.'

watchman was appointed by the appellant on probation for period of 6 months. His period of probation was extended, and during the extended period. his services were terminated. There was an -industrial dispute and the questions. (1) wh~ther the termjnation was legal or justified. and (2) to what relief the workman was entitled, were refer!ed to the Labour Court. The Labour Court held that the order of discharge was neither mala fide nor an act of Yictimisation; but set a~ide the order of discharge and directed reinstate~ ment of the employee on the view that the term regarding 6 months' probation in the employee's letter of appointment was in contravention of the Standing Order and was invalid.

Di>missing the appeal to this Court.

HELD: (1) The Labour Court has not travet:ed beyond the terms of reference. because, the validity or invalidity of the discharge depends on the validitv of the term regarding 6 months' probation. [4370-E] . (::!) Since, according to the Standing Order, workman shall not be kept on probation for more than 2 months, the letter of appointment (or special agreement) is inconsistent with the Standing Order to t:b_e extent of the addi-tional 4 months' probation. [437E-GT

(3) The inconsistent part of the agreement. is ineffective and unenforce-able. [439EJ

(a) To uphold the special agreement would mean giving go-by to the principle of three party participation. in the settlement of the terms of employ-ment, incorporated in the Industrial Employment (Standing Orders) Act, 1946. The Act gives effect to the new thinking that Society' has also an interest in the settlement of the terms of employme!lt of industriaJ.labour, While formerly there were two parties at the negotiating table-the employer and the workman -it is now thought that there should also be present third party, namely the State, representing society. The Certifying Officer under the Act. as the statutory representative of society, adjudges on the fairness or reasonable~ess of Standing Orders after considering and weighing the ~ocial interest in the

·. ~::c~(:;_~------ - ---- ... --····~----= -:::-.--WESTERN INDIA MATCH CO. v. WORKM"N (D '" wivedi J.) 435 · claims _of the _employer an~ the demands of the w . ,. JI)COt, m the tliStant case, 1n so far as it rovid orkmen ... The special agree-probation, contravenes the Standinl! Order. p 1439.!:_/.jr adJ1t1or.a1 4 months of (bJ The terms o~ employment specified in the'St· · over the correspondmg terms in the contract of and!ng 9rdcr. would prevail · eo.forcement of the Standing Order. lf ri semce tn ~xiStencc on the tho Standing Order! will not survive an agre:m~~t agree'!lent Inconsistent with . J with th< Standing Order should atsd not prevail. ~~~~eo·~~~~-~~d inconsistent Agm Ekclric Supply Cu. Ltd. v. Shri Alladiu (1970j 1 s R JJtdla Ltd. v. Seco11d [lrdu.rtrial 'Tril>umr/ · W · 808. •·ery ~.J-.R. W. Etrtployt'mcrty · · Affalulbad rs rslrr · 1972 Urrion, "b II ti v. on S .Tlt~ir C. [1966) o. 1626. L I Workmatt, It 2 :i.C.R. v • .,.. Till' <--[ tm [1972) 2 498. Unill'll Erodt' 504, s El<'ctricity • • • Prorinus followed. 54 • . Di nd £s" 1 1 <·~""b [0 ]·tr1111till ro ". " '· ••011 .rEupdp/v tS 0e Bm11al, • Elec Ltd. Ct>. · MJs J. K. Couou Manufoclur~rs. L~d., Kurrpur , .. J. N. Tewari A.l. R. 1959 All. o39 and BaNmu Electrtc Light arrtl Pouw Co. J.:d. Belrlupura v. Guvtrllltltlrl of Uttar l'radtsh ami Othtrs. [1962] 1 L. L.J 14, overruled. ·

_ (c) ~ction 68 (1) of tbc U.P. Industrial Disputes A;t de~ls with ~ettle­ment .amved at by agr~m~t _between th~ employer nnd workmen otherwise than . m the course o~ con~tha!!on proceedtng. Sub·section · (2) provides that after th~ set!lement IS amved .a.t •• the parties to th_e settlement or any one of them may apply to the Coocil<ation Officer for reg<stration ot the settlemCilt. In the context of au !H. (3) the word •may' should be rc~d us 'shall". Suh-.ectjon (3) provides that while considering the question of the registration qf senlcmenl. the conciliation officer shall examine whether it is inexpedient to do so on public ground affecting social justice or whether the settlement bas ~n brought- about as result of collusion. fraud or misrcprescn•.ation. In the present case, the Conciliation Officer having had no say in the making of tbc special agr~ment· the consent of the employee is meaningless. 439F.:. 440A] ( 4) It is true that Labour Court may determine terms and conditions of employment which may be inconsistent with Standin~ Order; but in the proent· cnse,· the reference did not give any such jurisdiction to the Labour Court to determine the terms and conditions of employment of the wc.rkman.

[4408-c) (S) (a) The appellant did not plead in its written statement before the labour Court that the worlc. of the discharged emplo_yee WB;~ unsattsfactory during umati~factory the probationni-v work The period, argume11t nor did was it olso lead not a11~· ra1std ~VIde~ce tn the m Spec1:1l proo! of1 e~ve the that petition. since Thereforethe discharge , ' the appellant was occasioned cou }d not by be the unsau_sfactory perm< ' . "tt~d to raise the contentton ~[0 ]r ~44of 0E-FJ the employee the Labour Court should not have ordered re-tnstatemen ·· : . r d" 1h gc not only (b) -me· Labour Court may mterfcre With an o~d~r 5' t" ~c ;~t also when when it finds it that was it mode was arbitrary mala {.de or or capridous as measure or ~o of unreasonable£M& v<cllm<sa [10 ];_"- to as lead to the there was inference that it was not made bona fiJ~. I~ t~e h~~~~~oyee was unsatis!ac-no -plea :~nd no evidence to show that theJwor [0]d~hargc is arbitrary. [441A-BJ lory. rhe conclusion is obvious that the or er o . . W k and anotl<~r. [19631 2 L.L.J. TtJia Oil MiiiJ Companv Lid. v. Its or men Th Workmm and anorhu. 78 M fi f'rwrclr Eldn and Co. Pri~·att Ltd. '! · Bo':nbav v. V. . .Robt/lt>W }{ . /\.J.R. 1971 S.C. 2414 -and Air lndra Corporarwn, · · ~nd a11other, [19721 1 L .L.J. SOl. referred to. and hence the special agree· ~~lent. !The In q~;~tion contravention wherbe~ of it, was Standi'.'st v01d, Order not dec<dc • ~ l~w [44oc-D1

-l -l .

OvJL APPELLATE JURISDICTION: Civil Appeal No. 2375 of 1698.

Appeal by special leave from the award dated April 19, 1968 of the Labour Court II Lucknow in Adjudication Case No. 3 of 1967 L.C. (I), LucknowfAdiudication Case No. 184 of 1967 L.C. (11) Lucknow published in Uttar Pradesh Gazette dated August 10, 1968.

C. K. Daphtary, P. C. Bharatri and 0. S. Mathur, for the appellant.

S. C. Aggarwal and V.I. Francis, for the respondents.

The Judgment of the Court was delivc~·ed by

OWIVEDI, J.-The Wesetrn India Match Company Limited, Bareilly (hereinafter called the Company) is governed by the Industrial Employ-c ment {Standing Orders) Act, 1946 {hereinafter called the A~t). It appears that it has separate Standing Order for the Watch and Ward Staff· According to the Standing Order, there are five categories of workmen: {1) Pe.rmanent, (2) Probationer, {3} Substitute, (4) Temporary, and {5) Appreiitice. permanent workman is one "who has conwleted probationary period of two months as such and is employed on permanent post." probationer is workman "who is provisionally employed to fill permanent vacancy and has not completed two months seryice". {emphasis added)

The Company appointed one Prem Singh as watchman en Sep· tember 1 •. 1965. The l~tter of appointment states that he would be '.'on probation for period of six months." We shall hereafter refer to this contract of service as "special agreement." The period of probation expired on March 1, 1966, but he continued to serve on his post. On April 13, 1966 the Company passed an order extending the period of his probation by two months with r~trospective effect from March 1, 1966. Nine d~ys later on April 22, 1966, the Company passed this order: "the above watchman has been discharged with effect from 1-5-1966 for the reasons mentioned below:

effect from 1-5-1966 for the reasons mentioned below: . ( 1) probation period not !lpproved, services are no longer required by the Company."

This order gave rise to an industrial dispute. The dispute was referred for· adjudication by the Government of Uttar Pradesh to the Labour Court (II), Lucknow. The referring order was made on April, 9, 1968. The question referred to the Labour Court is :

"Whether the employers have terminated the services of the workman Shri Prem Singh, son of Shri Bhartu, Watch-man T. No. 247, with effect from 1-5-1966, legally and/or justifiably ? If not, to wnat relief is the workman concerned entitled·"

Prem Singh was represented before the Labour Court by . tbe Match~s Mazdoor Sangh, Bareilly. The case of the Sangh was that the employment of Prem Singh on probation for six months was in contravention of the Standing Order. It was maintained that on the

expiry of two months Prem Singh automatically became permanent w~kman. It ":as also said that during the entire period of his pro-ba~on Pre~ St~gh was never told by the Company that it was not satisfied With his work. According to the Company, the term of six months' probation was valid. It was. said that as his work was not found satidactory, he was discharged.

The Labour' Court has found th-m t~e dischrtrgc was neither mala fide nor an act of victimisation for trade union activities. However, tl)e Labour Court has s·~t aside the order of discharge and has directed his reinstatement with continuity of service and back wages. This is so, because it has taken the view that the t'!rm regcrding six monhs• probation was in contravention of the Standing Order and was invalid. It has held that on completing two months' probation Prem Singh automatically became permanent employee.

Shri Daphtary, counsel for the Company, has submitted that the Labour Court has gone beyond the terms of reference. It is pointed out that the Government Order of reference does not expressly em-power the Labour Court to decide whether the teim regarding six months' probati~n was .valid or invalid. In our view, the Labour Court has not travelled beyond the terms of reference. It was called upon to decide whether the order of discharge was legal and/or iusti-. tied. The validity or invalidity of the discharge obviously depended on the validity or invalidity of the term regarding six months' proba·-tion: If this term was invalid the order of discharge also. would obvious~ ly be invalid.

The next submission of .Shri Daphtary is that the special agreement is not inconsistent with ~e Standing Order. According to the Standing Order, workman shal). not be kept on probation for more than two months .. If he has worked during these two months to the .satisfaction of the Company, he becomes permanent. But as result of special agreemeri ·., even though he has worked during these two mont!.s to the. satisfaction of the Company, he will not be permanent workrnaf!. • While the Standing Order says : "Confirm him on the expiry of two months'', the special agreement says: ''No, wait till the expiry of six months." There is thus confi.ict between them. They cannot co-exist. So ~e are of opinion that the special agreement is inconsistent with the standing Order to the extent of the additional four Il)Onths' probation.

The terms of employment- specified in the Standing Order would prevail over the corresponding terms in the contract of service in exia ·stence on the enforcement of the Standing Order. It was in effect so held in the Agra Electric Supply Co. Ltd. v. Shri Alladin. ([1]) Avery India Ltd. v. Second Industrial Tribunal West Benga/.(2) and th~ ·united Provi~s Electric Supply Co. Ltd. Allahabad v. Their Wor~· men. (II). While the Standing Orders are in force, it is not permissible to· the employer to seek statutory modification of them so that there may be one set of Standing Orders for some employees and another

(I) [1970] 1 S. C. "R.. 808

(2) A. T. R. 1972 S. C. 1926

(3) [19721 2 S. C. C- 54

43S SUPREME COURT REPORTS

set ~or the rest of the employees. Jn Salem Erode Electricity Distri-butwu Company Ltd. v. Salem Erode Electricity Distribution Co. Ltd. Employees Union(l), Gajendragadkar C. J. said:

:' (T)here is no scope for having two separate Standing Orders lll respect to any one of them. Taketh~ case of classification of workmen. It is inconceivable that there can be two sepa-rate Standing Orders in respect of this matter. What we have said about classification is equally true about each one of the other said clauses; and so, the conclusion appears to be irresistible that the object of the Act is to certify Standing Orders in respect of the matters covered by he Schedule; and having regard to these matters, Standing Orders so certified 1;:,;ould be uniform and would apply to all wotkmen alike who ~re employed in any industrial e~tabliShment·"

·· It -prior agreement, inconsistent with the Standing Orders will not survive, an agreement posterior to and inconsistent with the Stand-ing Order should als{} not prevail. Again, as the employer cannot enforce two s~ts of . Standing Orders governing the classification of workmen, it is also not open to him to enforce · simultaneously tbe S'tanding Order regulating the classification of workmen and special ·agreement between him an and individual workman c;ettling his cate· gorisation.

In view of the decisions of this Court cited earlier, the decisions in M/s ./_ K. Cotton Manufacturers Ltd. Kanpur v. J. N. Tewari(2) and the Bo11wras Electric Light and Power Co. Ltd. Berhlupura v. Goverir ment of Uttar Pradesh and others([3 ]) no longer lay down good law. They take the view that notwithstanding the Standing Orders it is ·open to the employer to conclude an agreement with. an individual workman which may be inconsistent with the Standing. Orders. These decisions are overruled. · ·

' In the sunny days of the market economy theory people sincerely believed that' the economic law of demand .and· supply in the labour ·market would settle mutually beneficial bargain between the employer and the workman. Such b~\rgain, they took it for granted, would secure fair terms and conditions of employment to the workman. This Jaw they venerated as natural law. They had an abiding faith in · the verity of this law. But the experience of the working of this law over long period has belied their faith. Later generations discovet¢ that the workman did not possess adequate bargaining strength to r,erure fair terms and conditions of service. When . the workmen also made this disco..-ery, they organised themselves in trade unions and insisted on collective bargaining with the employer. The advent of trade union and collective bargaining created new problems of maintaining indus-rial peace and production for the society. It was therefore considered that the society ha~ also an interest in the settlement of the terms ~ employment of industrial labour. While formerly there were two parties at the negotiating table the employer and the workman, it is now (1) [1966] 2 S. C_.R. 498 at p. 504. (2) A. T. R. 1959 All. 639 (3) [1962] l L. L. J. 14.

_WESTERN INDIA MATCH ~. v. -WORKMEN (Dwivtdi j,) 439--

A:- . thought that there should also qe present third-party the State as; representinb . the interest of the society. · The Act gives effect to this i new. thinking,· By. s.4 the Officer ¢rtifying the Standing Order is. directed to adjlldi.cate upon ''the fairness or. reasonableness, of the. provisions of the Standing Order. The Certifying Officer is the statutory, representative of the society. It seems to us that while adjudging the fairness or reasonableness of any ·Standing Order, the Certifying B:~ Officer. Should ~nsider a.n4 weigh the social interest in the· claims of the employer and ·the. se<;ial interest in the· demands of the workmen. -Se¢on 10 proyides the· mode of modifjlng. the Standing- Orders· The. ·emptoyer or the. workman. may apply_ to the Certifying Officer in the, ~bed manner for the modifica.Uon of the Standing Otders. Section. '13 (2l,provides that an employer who does. any act ·in _contravention of. the Standing .Order shall be punishable with .fine which. may extend m· ~ one fmndred rupees. It also provides for the imposition of further. fine' in the case of continuing offence. The fine may extend to twenty-; five rupees for every day after the first during whith the offence-· -~tinues.· _ · . '~ ,-Th~ special agreement, in so far as it' provides for 'additional fou'r .months of probation, is an act in contravention of the Standing Order~ ·· we· have already held that. It plainly follows from s~tions 4, 10 and :_13(2) that the inconsistent part of the special agreement cannot pre·._ -vail over the Standing Order-. As long as. the Standing Order is in force, it is binding on the Comp~y as well as ,the workme~ To uphol~ the special agreement would mean giving go by to the Acts principle ot th•ee-party participation in the settlement of terJIL'\ of employment. SO we are of opinion that the inconsistent part of the special agreement. · j is· indfective and unenforceable. · ·· '

· ·· -. ~ ---It is_poin~ ~ton behalf ot the eompany thai ~.1s o£ the .indus-· trial Disputes Act provides that any settlement between the employer~ aad the· workman is· binding on them. It is said that accordingly the special agreement in the present case would be binding on Pr~_ Singq.: .. · lt.is not necessary to co~true s.18 in this case because it is governed' by ~e provisions of the Uttar Pradesh Industrial Disputes Act. Section: · 6B ( 1) of this Act . deals with settlement arrived at by agreement between· the enj.ploy_er and workmen otherwise than in the course of conciliation proceeding, SUb-section (2) thereof provides that after the' settlement is ~ived at, the parties to the settleme1;1t or any one of-them •may• apply to the Conciliation Officer of .the_ area concerned for • the. ret;istration of the settlement· Sub-section (3) is important. It pro-\'ipes that while considering the question of the registration of settle-· ment. the Conciliation Officer shall examine whether it is inexpedient to· do' so on public ground ~eetiog social justice or whether the settle-' ment has been brought about as result of colbersion, fraud or misrepre sentation. We think that the word 'may' in su~tion (2) should be read as 'shall' in the context of sub-section (3). If social justice is to 11: be ensured and if collusion, fraud or misrepresentation is to be eJi-minated, it is necessary that every privately negotiated settlement should be submitted for registration to the Co~ciliation Officer. It may re observed that the U. P. Act also insists on tbe . thre~ party

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{ 1974] 1 s.~ ..

. 4;·10 SUPREME COUlt.T REPORTS

p~icipation in the settlement of terms of employment. In the ·(~suit, lhe Company cannot enforce the special agreement on the· pretext that Prem Singh had voluntarily agreed to. it. The conciliation officer having had no say in the making of this agreement, the - consent of . Prem Singh is meaningless. _ - · ·.

. It is then said that· the Standing Order can be-modified in suitable ~e by the Labour Co~.- In this connectio~ reliance is p~ on the Management of Bangalore Woollen, Cotton and Silk Mills Co. Ltd. v •. The Workmen(l), It is true that the Labour Court may determine. term;;· and conditions of ·e~oym.ent which may-be inconsistent with the Standjng O:der. But in the present case the referene did not .gi\·~ · jurisdiction to the Labour Court to determine terms · and condit~ons of employment of Prem Singh. The reference direaed the Labour Court~ to decide whether the discharge of Prem Singh from service as legal · justifiable. · · · Shri . Agarwala has argued that the Standing Order is ·a law and aCcordingly the special agreement in contravention of it is . void In . support of his argument he has relied on nllOlber of decisions of this Court · Shri Daphtary has argued to the conttary , arid has relied on some other decisions. In the view that we have taken earlier, it is not necessary -to consider- this question.· Accordingly, _we do not refer to the authonties cited before us. . . . · ·. ·· . , ,:

. Another contenti9n of · Shri Daphtary is that in the circumstances' · of this case the Labour. Court should not have made an order for rtinstatement of Prem Singh. Stress is laid on the assertion in the order . · of discharge that his work during the entire probationary period was not satisfactory. In support of his argumentShri Dapbtary has relied on the Hindustan Steel Ltd. Rourkela v. Roy (A.K. and others)(%). ' ·· This d.:cision does not assist him, for in the case before us the Com· pany did not plead in its written statement filed befcre the Labour Court that the work of Prem Singh was unsatisfactory during the probationary . period, nor did it lead any evidence in proof of _his unsatisfactory work. P The argument does not appear to have been raised in the Special Leave Petition also. Accordingly, it is not possible to permit this argu~ ment to be raised now. (See Binny Ltd. v. Their Workmen, (3) and , tlie Management _of Panitole Tea "Estate v~ The Workmen(•).

·In-the end, Shri DaphtarY has urged that as the Labour CO~ ha! f.Oun4 that the discharge of Prem Singh from service was neither mala fide nor measure of victimisation, he should not have been reinstated •. to service. Reliance is placed on the Tata Oil Mills Company-Ltd •. v. Its Workmen and another(5)~ Mfs'Vranci& Elein and Co. PriVate Ltd. v. The Workmen and another([8]) and the Ai,...Jndia Corporation, Bombay v. V. A. Rebellow and another([1]). It is settled law now that. the.

_ (l) [19681 I S. C. R. 581 (2) [1970] 1 L L. J. 228 -(J) [1972] 1 L. L. J. 478 (4) (1971]3S.C;R~--774 15) [19631 2 L. L. J. 78 ~ (6) A. r: R. 1971 S.C. 2414 {7) (1972] 1 L. L:J. 501. . --~

Labour Court may interfere with the order of discharge where it is satisfied that it was made mala fide or was measure of victimisation or unfair lab;:,ur practice. It has also been held by this Court that the Labour Court may interfere with the order of discharge if it finds that · the order is arbitrary or capricious· or so unreasonable as to lead to the inference that it is not made bona fide. As there was no plea and no evidence to show that the work of Prem Singh was unsatisfactory, the conclusion is obvious that the order of discharge is arbitrary. According-I ly, the Labour Court could interfere and make an order of reinstate, ment.

There is no force hi this appeal and accordingly it is dismissed with costs. V.P.S. Appeal dismi.ssed.