Civil Appeal No 712 F Of 1980
From the Judgment and order dated 20121978 of the Gujarat High Court in Special CA No 173 of 1975
VM Tarkunde Dr DY Chandrachud section Bharatari and PH Parekh for the Appellants
PS Poti MN Shroff KMM Khan and Mrs H Wahi for the Respondents
The Judgment of the Court was delivered by RANGANATH MISRA J
This appeal by special leave is directed against the judgment of the Gujarat High Court in a dispute centered round seniority of government employees in the Gujarat Sub ordinate Secretariat Service
The short facts necessary for disposal of the two contentions raised in this appeal are the following 613 On May 1 1960 the State of Bombay was bifurcated into two States Maharashtra and Gujarat
Prior to that date the six appellants in this appeal had joined Government service as Clerks cum typists
The Subordinate Secretariat Service was then divided into four grades i Clerk cum typist ii Junior Assistant iii Senior Assistant and iv Superintendent
Promotions were available from the lower tier to the upper one
When Gujarat became a separate State Government business in the Secretariat was divided into 9 departments separate in every respect so far as the Subordinate service was concerned
On October 12 1960 by a Government Resolution the cadre of Superintendents became a common one covering all the departments in the Secretariat
Until then seniority was being determined department wise and promotions had also been regulated on the same basis in all the four grades
Under the new arrangement promotion to the post of Superintendent was handled by the General Administration Department out of a common list of Senior Assistants
On September 25 1964 under another resolution of Government the grades of Junior Assistants and Senior Assistants were merged into a single one known as Assistants wef October 1 1964 and a common seniority list of Government servants working as Assistants was prepared
A quota system was introduced for recruitment of Assistants
At one state the ratio was 3 1 promotees being the smaller proportion and later it was changed to 2 1
On July 19 1969 a seniority list of Assistants was prepared on quota basis and taking into account continuous officiation in the cadre of Assistants
The list was assailed before the High Court
The court found by judgment dated March 9 1972 that promotees were in excess of the ratio and accordingly gave direction for a fresh list to be drawn up
On October 11 1974 Government resolved to have a common cadre of Clerk cum typist and promotion to the post of Assistant was provided therefrom
In 1975 the October Resolution of Government was challenged before the High Court by filing two writ petitions
In the meantime in 1977 a set of rules known as the Gujarat Subordinate Secretariat Service Seniority of Assistants Rules 1977 were framed under the proviso to Article 389 of the Constitution with retrospective effect from May 1 1960
Rule 4 of the Rules laid down the principle for determining seniority by providing that seniority among the promotees Assistants inter se shall be fixed on the basis of their length of service in the joint cadre of Clerk cum typist for all departments of the Secretariat as a whole
In December 1978 the two writ petitions were dismissed
The High Court held that the object of the Rules of 1977 was to equalise the chances of promotions to the selection cadre and since the rules took care of the promotee officers by ensuring non reversion the rules were indeed not retrospective
H 614 Several consequential dircctions were given
It is this judgment which is now under appeal
The main contention advanced by Mr Tarkunde in the appeal is that the rule regarding seniority is retrospective in operation and takes away the vested right of the appellants to prospects of promotions
In support of his submission he has relied upon three decisions of this Court namely Mervyn vs Collector of Customs Bombay  Ors  Roshan Lal Tandan vs Union of India   and State of Jammu  Kashmir vs Triloki Nath Khosa  ORS l 1
Each one of these is a decision of the Constitution Bench
We do not find that on facts any of these cases has any support to offer for the point in dispute
Mervyn s case was that of Appraisers of the Customs Department and challenge was to the validity of the rotational system in fixing the seniority of Principal Appraisers
The Court struck down the method used by Government in fixing the seniority of Principal Appraisers on a finding that there was denial of equality of opportunity
The dispute in this case is different from what came in Mervyn case for determination
This will be apparent when we presently deal with what exactly is the problem in the matter before us
Roshan Lal s case dealt with recruitment into one cadre from two sources
Even when recruitment from the two sources merged into one cadre favourable
treatment was given to recruits from one source regarding further promotion
The Court found this to be violative of Articles 14 and 16 of the Constitution
This again is not relevant for resolving the dispute in hand
Triloki Nath s case was dealing with the Engineering Service of Jammu  Kashmir
There was direct recruitment of decree holders in civil engineering as also by transfer of degree or diploma holders who had served as Supervisors for a period of not less than 5 years for recruitment to the cadre of Assistant Engineers
The relevant rule provided that recruitment to the post of Executive Engineers and above was to be made by promotion only and Assistant Engineers who possessed a degree in engineering alone were eligible for such promotion
This rule therefore disqualified diplomaholders for being promoted as Executive Engineers and they challenged the constitutionality of the rule by contending that it was discriminatory
The Court found that even after there was one cadre for the promotional post therefrom a higher qualification could be prescribed and those out of the common cadre who satisfied that requirement could be made eligible for promotion
As we have already pointed out in the instant case the State decided at stages to switch over to the common cadre in respect of all the four grades of the Subordinate Service
Before common grades 615 had been formed promotion was granted departmentwise
When ultimately a common cadre came into existence and all that was done by 1974 it was realised that if seniority as given in the respective departments were taken as final for all purpose there would be prejudice
Undoubtedly the common cadre was for the purpose of increasing the efficiency by introducing a spirit of total competition by enlarging the field of choice for filling up the promotional posts and in the interest of discipline too
After a common cadre was formed the general feeling of dissatisfaction on account of disparity of seniority became apparent
The 1977 Rules were introduced in this background to ease the situation
The scheme of this rule protected the rank then held by every member of the service notwithstanding alteration of seniority on the new basis
This therefore made it clear that accrued benefits were not to be interfered with
To that extent the 1977 Rules were not retroactive
In spite of the protection of Rule regarding the post then held the Rules brought about a change in the inter se seniority by adopting the date of initial recruitment and the length of service became the basis for refixing seniority
Total length of service for such purpose is a well known concept and could not said to be arbitrary
Undoubtedly one of the consequences of the change in the basis was likely to effect prospects of promotion a matter in future
Two aspects have to be borne in mind while considering the challenge of the appellants to this situation
It was a historical necessity and the peculiar situation that arose out of Government s decision to create a common cadre with four grades in the entire Secretariat
We would like to point out with appropriate emphasis that there was no challenge to creation of the common cadre and certainly Government was competent to do so
The second aspect to be borne in mind is that rules of seniority are a matter for the employer to frame and even though prospects of promotion in future were likely to be prejudiced by introduction of a new set of rules to regulate seniority if the rules were made bona fide and to meet exigencies of the service no entertainable grievance could be made
If these are the tests to apply we do not think the appellants have indeed any grievance to make
In our view therefore the High Court rightly dismissed the contention and found that appellants were not entitled to relief Mr Tarkunde next urged about the quota
We find that the High Court has not dealt with the question
We do not propose to go into that aspect
We accordingly dismiss the appeal but leave parties to bear their own costs throughout
SL Appeal dismissed


Summary:
 Sometime during the period 1975 78 the first respondent Association managing the affairs of the Christian Medical College and Hospital at Vellore dismissed three of its employees from service and terminated the services of another employee who was on probation
When industrial disputes were raised in this behalf the State Government made two separate references to the Labour Court for adjudication one in respect of the three employees who had been dismissed and the other in respect of the employee whose services had been terminated
Questioning the validity of the reference the first respondent filed two Writ Petitions for quashing them and a third Writ Petition praying for a declaration that the provisions of the were unconstitutional and ultra vires and were inapplicable in entirety to the minority educational institutions protected by article 30l of the Constitution
The first Respondent pleaded that the hospital attached to the Christian Medical College formed an integral part of the college which was an educational institution established and administered by a minority and thus was also entitled to the protection of article 30l that the college and the hospital being minority institutions entitled to the protection of article 30l any industrial dispute arising between the management and employees of the college and the hospital could not be adjudicated upon under the provisions of the Act as such adjudication amounted to interference with the right of the minority to 547 administer the college and the hospital and that the Act was not applicable to educational institutions generally irrespective of their being minority institutions or not
The High Court held that the Christian Medical College Hospital which was attached to the Christian Medical College was an educational institution that even so it was an industry within the meaning of the expression industry  given in the Act and that even though the College and the hospital constituted an industry they together constituting an educational institution established and administered by a minority sections 9 A 10 11 A 12 and 33 of the Act would not be applicable to them by virtue of article 30l of the Constitution and accordingly quashed the reference made under section 10lc of the Act to the Labour Court
It was argued on behalf of the first respondent that the application of the provisions of the Act would result in the abridgment of the right of the management of minority educational institutions guaranteed under article 30l of the Constitution to administer such institutions inasmuch as the Labour Court or Tribunal might set aside an order of dismissal or removal of a workman passed by the management and reinstate him in service or make an order altering his conditions of service contrary to the agreement entered into with him and the minority educational institution would be exposed to constant and endless litigation
Reliance was placed in support of the above propositions on the decision of this Court in Ahmedabad St Xavier s College Society  Anr etc
vs State of Gujarat  Anr  wherein this Court held that certain provisions of the Gujarat University Act 1949 were violative of article 30l of the Constitution
Allowing the appeal  HELD The has been conceived and enacted with the object of bringing into existence a machinery for investigation and settlement of industrial disputes between employers and workmen in accordance with the principles accepted by the International Labour organisation and the United Nations Economic Social and Cultural organisation
The Act is meant to be a counter vailing force to counteract the inequalities of bargaining power which is inherent in the employment relationship
The International Covenant on Economic Social and Cultural Rights 1966 which is a basic document declaring certain specific human rights in addition to proclaiming the right to work as a human right treats equitable conditions of work prohibition of forced labour provision for adequate remuneration the 548 right to a limitation of work hours to rest and leisure the right to form and join trade unions of ones  choice the right to strike etc
also as human rights
The Preamble of our Constitution says that our country is a socialist republic
Articles 41 and 42 provide that the State shall make effective provision for securing right to work just and humane conditions of work and for maternity relief
Article 43 states that the State shall endeavour to secure by suitable legislation or economic organisation or in any other way to all workers agricultural industrial or otherwise work a living wage conditions of work ensuring a decent standard of life and full enjoyment of leisure and social and cultural opportunities
These rights which are enforced through the several pieces of labour legislation in India have got to be applied to every workman irrespective of the character of the management
Even the management of a minority educational institution has got to respect these right and implement them
Due obedience to these laws would assist in the smooth working of the educational institutions and would facilitate their proper administration
If such laws are made inapplicable to minority educational institutions there is every likelihood of such institutions being subjected to maladministration
Merely because an impartial tribunal is entrusted with the duty of resolving disputes relating to employment unemployment security of work and other conditions of workmen it cannot be said that the right guaranteed under article 301 of the Constitution is violated
If a dispute is raised by an employee against the management of a minority educational institution such dispute will have necessarily to be resolved by providing appropriate machinery for that purpose
Laws are now passed by all the civilized countries providing for such a machinery
The Act with which we are concerned in this case is an Act which has been brought into force for resolving such industrial disputes
Sections 9A 10 11 A 12 and 33 of the Act cannot therefore be construed as interfering with the right guaranteed under article 301 of the Constitution
570D H 571A C E F 2
The Act is a social security measure intended to ensure welfare of labour and it falls within one or the other of the following entries in List III of the Seventh Schedule to the Constitution Entry 22 Trade Unions industrial and labour disputes Entry 23 Social security and social insurance employment and unemployment and Entry 24 Welfare of labour including conditions of work provident funds employer s liability workmen s compensation invalidity and old age pensions and maternity benefits
The Act generally applies to all industries irrespective of the religion or caste to which the parties belong
It applies to industries owned by the Central and the State Governments too
Any decision given by the Industrial Tribunal or a Labour Court under 549 the Act is subject to judicial review by the High Court under article 226 and an appeal to this Court under article 136 of the Constitution
The Labour Court the Industrial Tribunal the High Court and this Court while dealing with matters arising out of the Act have to deal with them objectively
The smooth running of an educational institution depends upon the employment of workmen who are not subjected to victimisation or any other kind of maltreatment
The conditions of service of workmen in all institutions including minority educational institutions have to be protected in the interest of the entire society and any unfair labour practice such as hiring and firing  termination or retrenchment of the service of a workmen on irrational grounds will have to be checked
The Act makes provisions in respect of these matters
The Act being a general law for prevention and settlement of industrial disputes cannot be construed as a law which directly interferes with the right of administration of a minority educational institution guaranteed under article 301 of the Constitution
The law is not enacted with the object of interfering with any such right
It clearly falls within the observation of Mathew J in Ahmedabad St Xavier s College Society  Ant
vs State of Gujarat  Anr
that regular tax measures economic regulations social welfare legislation wage and hour legislation and similar measures may of course have some effect upon the right under article 30l
But where the burden is the same as that borne by others engaged in different forms of activity the similar impact on the right seems clearly insufficient to constitute an abridgement
582A G Observations of Mathew J in Ahmedabad St Xavier s College Society  Anr
vs State of Gujarat  Anr
   relied nn 3
The decision in Ahmedabad St Xavier s College Society  Anr
vs State of Gujarat  Anr
is distinguishable from the present one
Clause b of the two sub sections of section 51 A of the Gujarat University Act 1949 conferred a blanket power on the Vice Chancellor or other officer authorised by him to approve or not any recommendation made by the management regarding the dismissal removal reduction in rank or termination of service of a workman
The said Act did not furnish any guidelines regarding the exercise of that power which was in the nature of a veto  power
Secondly section 52 A of the said Act which required the disputes between the governing body and any member of the teaching staff other academic and non teaching staff of an affiliated college or recognized or approved institution connected with the conditions of service of such member to be referred to a Tribunal of Arbitration consisting of one nominated by the governing body of the college 550 or as the case may be of the recognised or approved institution one member nominated by the member of the staff involved in the dispute and an Umpire approved by the Vice Chancellor was held to be an unconstitutional interference with the right guaranteed under article 301 of the Constitution as it was likely to involve the minority educational institutions in a series of arbitration proceedings and the power vested in the Vice Chancellor to nominate an Umpire to decide all disputes between the governing body and the members of the staff connected with the letter s conditions of service would make virtually the Vice Chancellor the person who would have the ultimate voice in the decision of the Tribunal of Arbitration
There was also no check on the question whether the dispute was one which deserved to be considered by the Tribunal of Arbitration
In the instant case there is no room for such contingency to arise
A reference under the Act has to be made by the Government either when both parties request the Government to refer an industrial dispute for adjudication or only when it is satisfied that there exists an industrial dispute
When an industrial dispute exists or is apprehended the conciliation officer should first consider whether it can be settled after hearing both the parties and it is only when his efforts to bring about a settlement fail and he makes a report accordingly to the appropriate Government the Government is called upon to take a decision on the question whether the case is a fit one for reference to the Industrial Tribunal or the Labour Court
It is only when a reference is made by the Government the Industrial Tribunal or the Labour Court gets jurisdiction to decide a case
It cannot therefore be said that each and every dispute raised by a workman would automatically end up in a reference to the Industrial Tribunal or the Labour Court
Secondly the circumstances in which the Industrial Tribunal or the Labour Court may set aside the decision arrived at by the management in the course of a domestic enquiry held by the management into an act of misconduct of a workman are evolved by a series of judicial decisions
The powers of an industrial tribunal to interfere in cases of dismissal of a workman by the management are not unlimited and the Tribunal does not act as a court of appeal and substitute its own judgment for that of the management
It will interfere a where there is want of good faith b when there is victimisation or unfair labour practice c when the management has been guilty of the basic error or violation of the principles of natural justice and d when on the materials before the Court the finding is completely baseless or perverse
It cannot therefore be said that the Industrial Tribunal or the Labour Court will function arbitrarily and interfere with every decision of the management as regards dismissal or discharge of a workman arrived at in a disciplinary enquiry
The power exercisable by 551 the Industrial Tribunal or the Labour Court cannot therefore be equated with the power of veto  conferred on the Vice Chancellor under clb of either of the two sub sections of section 51 A of the Gujarat University Act 1949
As already stated the decision of the Industrial Tribunal or the Labour Court is open to judicial review by the High Court and by this Court on appeal
Section ll A which confers the power on the Industrial Tribunal or the Labour Court to substitute a lesser punishment in lieu of the order of discharge or dismissal passed by the management cannot be considered as conferring an arbitrary power on the Industrial Tribunal or the Labour Court
The power under section ll A has to be exercised judicially and the Industrial Tribunal or the Labour Court is expected to interfere with the decision of a management under section ll A only when it is satisfied that the punishment imposed by the management is highly disproportionate to the degree of guilt of the workman concerned
The Industrial Tribunal or the Labour Court has to give reasons for its decision which again would be subject to judicial review by the High Court and this Court
565C H 566A H 567A Ahmedabad St Xavier s College Society  Anr
vs State of Gujarat  Anr
   distinguished
Indian Iron  Steel Co Ltd  Anr
vs Their Workmen   Lilly Kurian vs Sr
Lewina  ORS   Mrs Y Theclamma vs Union of India ORS   Frank Anthony Public School Employees Association vs Union of India  ORS  and All Saints High School Hyderabad etc
vs Government of Andhra Pradesh  ORS
   referred to
In this context it is interesting to note that the right to enter into a contract flowing from the right to liberty guaranteed by the Fourteenth Amendment to the Constitution of the United States of America which was considered to be an absolute right at one stage is no longer construed as a bar on the legislature making a law imposing restrictions on the managements in order to advance the welfare of the labour
It is now settled in the United States of America that neither the contract  clause not the due process  clause had the effect of overriding the power of the state to establish all regulations that are reasonably necessary to secure the health safety good order comfort or general welfare of the community and that this power can neither be abdicated nor bargained away and is inalienable even by express grant and that all contract and property or other vested rights are held subject to its fair exercise
In view of the change in the attitude of the Court laws 552 regulating hours of labour labour in mines employment of children in hazardous occupation payment of wages minimum wages laws workmen s compensation laws and collective bargaining have been upheld in recent years
Similarly the right to religious freedom and the right to free speech guaranteed by the First Amendment to the Constitution of the United States of America though they appear to be absolute have been construed to be subject to regulation by the State in exercise of its legitimate police Powers
572C 573C E 577C Allgeyer vs Louisiana   Coppage vs Kansas 236 USl Lochner vs New York   Adair vs United States   Lincoln Federal Labour Union vs North Western Inn  Metal Co   Reynolds vs United States   and Whitney vs California
274 US 357 referred to