IN THE HIGH COURT OF JUDICATURE AT MADRAS Date: 12.12.2006 Coram THE HONOURABLE MR. A.P.SHAH, THE CHIEF JUSTICE and THE HONOURABLE MR. JUSTICE K. CHANDRU Writ Appeal No.1504/2006 and M.P.No.1 of 2006 --------- 1. The District Manager Bata India Limited C-171, III Phase Spencer Plaza, Anna Salai, Chennai-2. 2. Bata India Limited, 83, Industrial Second Subrub Yeshwantpur, Bangalore-560 022. 3. Bata India Limited Bata House, 418/02, Section 17, Gurgaon-Mehrouli Road, Gurgaon-122 002. .. Appellants Vs. 1. Deputy Commissioner of Labour I DMS Anna Salai, Chennai-6. 2. N. Padmanabhan Secretary, Chennai Zone, All India Bata Shop Manager Union, 24, 10th Avenue Ashok Pillar, Ashok Nagar, Chennai-83. .. Respondents PRAYER: Writ Appeal filed under Clause 15 of the Letters Patent against the order of the learned single Judge dated 14.9.2006 passed in Writ Petition No.32987 of 2006. To issue a writ of Mandamus directing the first respondent and to issue exemption order arbitrarily for keeping open the bata shops in Chennai Zone for seven days a week and to extend the working hours without hearing the petitioner and also direct the second, third and fourth respondents not to take https://hcservices.ecourts.gov.in/hcservices/ unilateral disciplinary actions including taking charge of the shops, against Shop Managers who are members of the Petitioner's Chennai Zone. ----------- For Appellants : Mr. A.L. Somayaji Senior counsel for Mr. S.Jayaraman For 1st respondent : Mr. Raja Kalifullah Government Pleader assisted by Mr.V.R.Thangavelu,Govt.Advocate For 2nd respondent : Mr.S. Badrinathan ----------- J U D G M E N T (Judgment of the Court was delivered by The Honourable The Chief Justice) Admit. Mr. Raja Kalifullah, learned Government Pleader waives service for the first respondent and Mr. S. Badrinathan, learned counsel waives service for the 2nd respondent. By consent, the writ appeal is taken up for hearing forthwith. 2. This writ appeal is directed against the order passed by the learned single Judge dated 14.9.2006 in W.P.No.32987 of 2006. The writ petition was filed by the second respondent herein for a direction to the Deputy Commissioner of Labour-I, Chennai, the first respondent herein, not to issue exemption order under the Tamil Nadu Shops and Establishment Act, 1947 (hereinafter referred to as ‘the Act’) in favour of the respondents 2 and 4 in the writ petition i.e., appellants herein, for keeping open the Bata shops in Chennai Zone for seven days a week and to extend the working hours without hearing the 2nd respondent Union and for a further direction to the appellants/respondents 2,3 and 4 in the writ petition, not to take unilateral disciplinary actions including taking charge of the shops, against the shop managers, who are members of the 2nd respondent union. By the impugned order, the learned single Judge directed the first respondent to conduct enquiry as contemplated in the provisions of the Act by giving opportunity to the petitioner as well as the respondents 2 to 4 and pass appropriate orders as per the Act, by considering the representation of the petitioner dated 6.8.2006 within a period of four weeks from the date of receipt of copy of the order, and in the mean time, pending on passing such order by the first respondent, respondents 2 to 4/ appellants were directed to maintain status quo as on date in respect of the https://hcservices.ecourts.gov.in/hcservices/ employees, in opening of the shops on holidays during the week. It is the admitted position that the appellants were not heard and the order was passed without notice to them. However, since the issue involved in the petition is pure question of law with regard to the power of the authority, both counsel agreed that instead of remitting the matter to the learned single Judge, the writ petition may be disposed of by this Bench. 3. Mr. A.L.Somayaji, learned senior counsel appearing for the appellants strenuously contended that under the provisions of Section 5 of the Act read with G.O.Ms. No.2943 dated 31.12.1980, the first respondent has the power to grant exemption to the appellants from declaring the weekly holiday as a working day for a period of one year at a time so long as the workmen or the staff are not deprived of one day as holiday in a week as per Section 11(2) of the Act. He submitted that there is no statutory obligation to hold a regular enquiry as observed by the learned single Judge. He submitted that the notification issued under Section 5 of the Act, exempting the shops from operation of the provisions of the Act, is a piece of conditional legislation and hence no one can insist on notice or hearing before it is legislated or allege non-application of mind. He submitted that it is open to the employer to organise the working hours and holidays without prejudice to the rights of the workmen and the direction given by the learned single Judge to the first respondent to conduct enquiry is not contemplated either under the Act or the Rules framed thereunder. 4. In reply, the learned counsel appearing for the 2nd respondent submitted that the orders issued by the first respondent from time to time were null and void as no opportunity of hearing was given to the employees while issuing impugned orders which had a direct pernicious and adverse effect on their civil rights and amounted to depriving them of their statutory rights under the Act. He submitted that implicit in Section 5 of the Act is the requirement for the competent authority to have a look at the rival contentions which may have to be put forward before the competent authority by the claimants of exemption on the one hand and their employees likely to be adversely affected by such exemptions on the other hand, before such power of exemption having pernicious civil consequences could be visited on the employees for whose benefit such welfare legislation has been enacted by the State Government. 5. Before adverting to the rival contentions of the parties, we may briefly refer to the relevant provisions of the Act. The preamble of the Act shows that the Act has been enacted to provide for the regulation of conditions of work in shops, commercial establishments,restaurants, theatres and other establishments, and for certain other purposes. There was no enactment in this Province regulating the conditions of work of https://hcservices.ecourts.gov.in/hcservices/ employees in shops, commercial undertakings, restaurants etc. The Weekly Holidays Act, 1942, which has been brought into force in this Province from 1st January,1947 is limited in scope in that it provides only for the grant of holidays and does not contain provisions for various other matters affecting them such as hours of work, payment of wages, health and safety. It was therefore considered that there should be a comprehensive measure in this Province to regulate these matters on the lines of similar enactments in force in other Provinces. 6. Section 1(3) of the Act makes the provisions of the Act applicable to the City of Madras and all the Municipalities constituted under the Madras District Municipalities Act, 1920 as well as the areas within the jurisdiction of Panchayats which were classified by the State Government as Clause I Panchayats or major Panchayats. Section 2(6) defines "establishment" means a shop, commercial establishment, restaurant, eating house, residential hotel, theatre or any place of public amusement or entertainment and includes such establishment as the State Government may by notification declare to be an establishment for the purpose of the Act. Section 5 of the Act deals with the power of exemption which reads as under: Notwithstanding anything contained in Section 4 the (State) Government may, by notification apply all or any of the provisions of this Act to any class of persons or establishments mentioned in that Section, other than those mentioned in clauses (c) and (f) of sub-section(1), and modify or cancel any such notification. 7. Section 7 lays down that no shop shall on any day be opened earlier or closed later than such hours as may be fixed by the State Government by a general or special order in that behalf. Section 9 provides that subject to the provisions of the Act, no person employed in any shop shall be required or allowed to work therein for more than eight hours in any day and forty eight hours in any week. Section 11(1) provides that every shop shall remain entirely closed on one day of the week which day shall be specified by the shop-keeper in a notice permanently exhibited in a conspicuous place in the shop and the day so specified shall not be altered by the shop-keeper more often than once in three months. Section 11(2) provides that every person employed in a shop shall be allowed in each week a holiday of one whole day. Section 11(5) inter alia states that the weekly day on which a shop is closed in pursuance of requirement under sub-section (3) shall be specified by the shop-keeper in a notice permanently exhibited in a conspicuous place in the shop and shall not be altered by the shopkeeper more often than once in three months. 8. Section 14(1) of the Act provides that subject to the provisions of the Act, no person employed in any establishment shall be required or allowed to work for more than 8 hours in any https://hcservices.ecourts.gov.in/hcservices/ day and 48 hours in any week. But proviso to sub Section (1) provides that any such person may be allowed to work in such establishment in excess of the time limit fixed under this sub Section subject to payment of overtime wages provided the period of work including overtime work, does not exceed 10 hours in any day and in the aggregate 54 hours in any week. Section 14(2) lays down that no person employed in any establishment shall be required or allowed to work in such establishment for more than 4 hours in any day unless he has had an interval for rest of at least one hour. Section 48 of the Act provides that the State Government may, by notification, authorize any officer or authority subordinate to them, to exercise any one or more of the powers vested in them by or under this Act, except the power mentioned in Section 49, subject to such restrictions and conditions, if any, as may be specified in the notification. Pursuant to the powers under Section 48 the power of the State Government under the Act has been delegated to the first respondent i.e., the Deputy Commissioner of Labour – I vide G.O.Ms.No.2943, Labour and Employment dated 31.12.1980. 9. The short but important question which falls for our consideration is whether the competent authority in exercise of power under Section 5 to grant exemption is required to grant hearing to the employees likely to be affected by such exercise of power of exemption before issuing such orders? 10. The principle contention of Mr.Somayaji, is that the power exercised by the first respondent under Section 5 of the Act is a piece of conditional legislation and the employees or their union had no right to be heard before the same was issued by the competent authority. He referred to the decision of the Supreme Court in The Tulsipur Sugar and Co. Ltd. Vs. The Notified Area Committee, Tulsipur (AIR 1980 SC 882) wherein the Supreme Court has observed as follows: (AIR pp.886 & 887) “Para – 6:- The solution to the question raised before us principally depends upon the nature of the function that is performed by the State Government under Section 3 of the Act. If that function is judicial or quasi-judicial involving adjudication of the rights of any person resulting in civil consequences, it no doubt becomes necessary to follow the maxim audi alteram partem (hear the other side) before taking a decision. It is also true that in order to establish that a duty to act judicially applies to the performance of a particular function, it is no longer necessary to show that the function is analytically of a judicial character or involves the determination of a lis inter parties; though a presumption that natural justice must be observed will arise more readily where there is an express duty to decide only after conducting a hearing or https://hcservices.ecourts.gov.in/hcservices/ inquiry or where the decision is one entailing the determination of disputed questions of law and fact. Para – 8: We are concerned in the present case with the power of the State Government to make a declaration constituting a geographical area into a town area under Section 3 of the Act which does not require the State Government to make such declaration after giving notice of its intention so to do to the members of the public and inviting their representations regarding such action. The power of the State Government to make a declaration under Section 3 of the Act is legislative in character because the application of the rest of the provisions of the Act to the geographical area which is declared as a town area is dependent upon such declaration. Section 3 of the Act is in the nature of a conditional legislation. Dealing with the nature of functions of a non-judicial authority, Prof.S.A. De Smith in Judicial Review of Administrative Action (Third Edition) observes at page 163 :- ‘However, the analytical classification of a function may be a conclusive factor in excluding the operation of the audi alteram partem rule. It is generally assumed that in English law the making of a subordinate legislative instrument need not be preceded by notice or hearing unless the parent Act so provides’”. 11. Mr.Somayaji, also drew our attention to the judgment of the Supreme Court in Kerala State Eelericity Board Vs. Indian Aluminium Co. Ltd., AIR 1976 SC 1031 wherein the legislation dealing with control of essential articles was assailed. Thereunder, the executive was empowered to pick up commodities for being treated as essential articles and made subject to the legislation. Exception was taken to this power conferred upon the executive. The majority of the Court speaking through Mr. Justice Alagiriswami held as follows: (AIR p.1048) ".... we are of the opinion that the power conferred by the Kerala Act is a case of conditional legislation as contemplated in the above decision. The various types of powers that can be exercised under that Act are enumerated in it. Only the articles with reference to which those powers are to https://hcservices.ecourts.gov.in/hcservices/ be exercised is left to be determined by the executive. That will vary from time to time; at one time salt may be an essential article, at another time rice may be an essential article and on a third occasion match boxes." 12. Mr. Somayaji, next referred to the decision of the Constitution Bench of Supreme Court in Hamdard Dawakhanna (Wakf) Lal Kuan, Delhi and Another Vs. Union of India and Others, 1960 (2) SCR 671 wherein Kapur, J., speaking for the Constitution Bench has made the following observations at page 695 of the Report: " .... the distinction between conditional legislation and delegated legislation is this that in the former the delegate's power is that of determining when a legislative declared rule of conduct shall become effective: Hampton and Co., vs U.S. 276 U.S.394 and the latter involves delegation of rule making power which constitutionally may be exercised by the administrative agent. This means that the legislature having laid down the broad principles of its policy in the legislation can then leave the details to be supplied by the administrative authority. In other words by delegated legislation the delegate completes the legislation by supplying details within the limits prescribed by the statute and in the case of conditional legislation power of legislation is exercised by the legislature conditionally, leaving to the discretion of an external authority the time and manner of carrying its legislation into effect as also the determination of the area to which it is to extend:(The Queen vs Burah 1878 App. Cas 889; Russell vs The Queen 1882 7 App. Cas.829, 835, King Emperor vs Venorialal Sarma, 1944 L.R. 721,.57;Sardar Inder Singh Vs State of Rajasthan, 1957 SCR 605. Thus when the delegate is given the power of making rules and regulations in order to fill in the details to carry out and subserve the purposes of the legislation the manner in which the requirements of the statute are to be met and the rights therein created to be enjoyed it is an exercise of delegated legislation. But when the legislation is complete in itself and the legislature has itself made the law and the only function left to the delegate is to apply the law to an area or to determine the time and manner of carrying it into effect, it is conditional legislation." 13. Mr. Somayaji, also referred to the decision of a Division Bench of Bombay High Court in Transport and Dock Workers' Union Vs. Food Corporation of India reported in 1986 Lab https://hcservices.ecourts.gov.in/hcservices/ IC 1393. The Bombay High Court following the Tulsipur Sugar Company case and Kerala State Electricity Board case held that exercise of power of exemption under Section 4 of Bombay Shops and Establishments Act, 1948 is a piece of conditional legislation and hence the employees cannot insist on notice or hearing before it is legislated or alleged non application of mind. The Court held that there is nothing in Section 4 to compel the inference that a notice and hearing were required, once it is held that the notification constituted conditional legislation. 14. The learned counsel for the 2nd respondent, however, submitted that the judgment of the Bombay High Court is no longer good law, in view of the subsequent judgment of the Supreme Court in State of Tamil Nadu Vs. Sabanayagam and Others, 1998 (1) LLJ 214. This is a landmark judgment where the Supreme Court extensively considered the nature, distinction and scope of conditional and delegated legislation in the field of administrative law. The question before the Bench was whether the impugned notifications exempting the Tamil Nadu State Housing Board under Section 36 of the Payment of Bonus Act, 1965 were void for the reason that no hearing was given to those employees who were affected by it. The Supreme Court concluded after elaborate discussion that the High Court's decision that the impugned notifications under Section 36 were null and void had to be upheld not on the ground that hearing personal or otherwise was not given to the employees but on the ground that the procedure for exercise of powers of conditional legislation was admittedly not followed by the appellant State while passing the impugned orders of exemption in favour of Housing Board. In that case, the State of Tamil Nadu granted exemption in favour of the Housing Board under Section 36 of the Payment of Bonus Act. In the writ petitions filed by the employees of the Housing Board, this Court took the view that the Housing Board is not entitled on the facts of the case to earn statutory exemption under Section 32(v)(c) of the Payment of Bonus Act and the orders of exemption issued by the State of Tamil Nadu in exercise of its powers under Section 36 of the said Act in favour of the Housing Board for the relevant years, were not legally sustainable. This Court also held that in any case the State of Tamil Nadu had no authority to retrospectively grant exemption under Section 36 of the Act for the earlier accounting years. Consequently, the Housing Board was directed to make payment of statutory bonus to the employees from accounting year 1978-1979 onwards. The contention of the Housing Board before the Supreme Court was that the power under Section 36 of the Act is a conditional legislation and the employees were not entitled to any prior notice or hearing. 15. The Supreme Court after a detailed analysis of various reported decisions has observed that the conditional legislation can be broadly classified into three categories. The first https://hcservices.ecourts.gov.in/hcservices/ category is when the Legislature has completed its task of enacting a statute, the entire superstructure of the legislation is ready but its future applicability to a given area is left to the subjective satisfaction of the delegate who being satisfied about the conditions indicating that the time is ripe for applying the machinery of the said Act to a given area exercises that power as a delegate of the parent legislative body. When the Act itself is complete and is enacted to be uniformly applied in future to all those who are to be covered by the sweep of the Act, the Legislature can be said to have completed its task. All that it leaves to the delegate is to apply the same uniformly to a given area indicated by the parent Legislature itself but at an appropriate time. This would be an act of pure and simple conditional legislation depending upon the subjective satisfaction of the delegate as to when the said Act enacted and completed by the parent Legislature is to be made effective. As the parent Legislature itself has laid down a binding course of conduct to be followed by all and sundry to be covered by the sweep of the legislation and as it has to act as a binding rule of conduct within that sweep and on the basis of which all their future actions are to be controlled and guided, it can easily be visualised that if the parent Legislature while it enacted such law was not required to hear the parties likely to be affected by the operation of the Act, its delegate exercising an extremely limited and almost ministerial function as an agent of the principal Legislature applying the Act to the area at an appropriate time is also not supposed and required to hear all those who are likely to be affected in future by the binding code of conduct uniformly laid down to be followed by all within the sweep of the Act as enacted by the parent Legislature. The maxim of audi alteram partem does not become applicable to the case by necessary implication. 16. The Supreme Court then pointed out that there may be second category of conditional legislations wherein the delegate has to decide whether and under what circumstances a completed Act of the parent legislature which has already come into force is to be partially withdrawn from operation in a given area or in given cases so as not to be applicable to a given class of persons who are otherwise admittedly governed by the Act. When such a power by way of conditional legislation is to be exercised by the delegate a question may arise as to how the said power can be exercised. In such an eventuality if the satisfaction regarding the existence of condition precedent to the exercise of such power depends upon pure subjective satisfaction of the delegate and if such an exercise is not required to be based on the prima facie proof of factual data for and against such an exercise and if such an exercise is to uniformly apply in future to a given common class of subjects to be governed by such an exercise and when such an exercise is not to be confined to individual cases only, then even in such category of cases while exercising conditional legislative powers the delegate may not be required to have an objective https://hcservices.ecourts.gov.in/hcservices/ assessment after considering rival versions on the data placed before it for being taken into consideration by it in exercise of such power of conditional legislation. In the aforesaid first two categories of cases delegate who exercises conditional legislation acting on its pure subjective satisfaction regarding existence of conditions precedent for exercise of such power may not be required to hear parties likely to be affected by the exercise of such power. But there may be a third category of cases wherein the exercise of conditional legislation would depend upon satisfaction of the delegate on objective facts placed by one class