Case: The Prakash Cotton Mills (Private) Ltd. And Others Vs. The State Of Bombay (Now Maharashtra)

The brief facts necessary for present purposes are these. The appellant is a cotton textile mill statuted in Bombay. It is said that the appellant had been continuously making losses from 1950 to 1955. References were however made under S. 73-A of the Act by the Rashtriya Mill Mazdoor Sangh, Bombay, in respect of disputes relating to bonus for the years 1952 and 1953, which are said to be pending before the Industrial Court, Bombay. The case of the appellant before the Industrial Court was that as it had made losses there was no question of its paying any bonus for the years in dispute. It seems that at the same time there were cases relating to bonus of other mills pending before the Industrial Court and the appellant applied that its case should be dealt with seperately, and this prayer was acceded to. It seems that while the references were pending, an agreement was arrived at between the Mill-owners Association, Bombay and the Rashtriya Mill Mazdoor Sangh, Bombay, with respect to payment of bonus for the years 1952 to 1957 and the agreement was to come into force with respect to each mill when it was signed by each member mill of the Mill-owners Association. Clause (6) of that agreement provided for payment of bonus even where the profit made by a mill was not adequate to provide for all prior charges as per the Full Bench formula evolved by the Labour Appellate Tribunal in Mill-owners Association, Bombay v. Rashtriya Mill Mazdoor Sangh, (1950) 2 Lab LJ 1247   or even where a mill made actual loss, the minimum bonus being in either of these two cases 4.8 per cent. Of the basic wages earned during the year, subject to such mill being entitled to adjust the amount thus paid by it as the minimum bonus against any available surplus in any subsequent year or years under the provisions of the agreement. This agreement was registered and was made enforceable as an award against those mills which were parties thereto. The appellant however did not sign the agreement and therefore it was not enforced as an award by the Industrial Court against the appellant. Thereafter the Rashtriya Mill Mazdoor Sangh wrote to the Government of Bombay requesting that the said award should be enforced against the appellant in exercise of the powers vested in the Government by S. 114 (2) of the Act. After necessary action under S. 114 (2), the Government of Bombay issued a notification dated July 31, 1956, directing that the award made by the Industrial Court on March 13, 1956, for payment of bonus for the years 1952 and 1953  also for the years 1954 to 1957 be enforced against the appellant.2. This was followed by a writ petition by the appellant in the High Court challenging the constitutionality of S. 114 (2) and also challenging the power of the State Government to issue such a notification under that provision. The petition was however dismissed on October 9, 1956. There was then an appeal to a Division Bench of the High Court in which also the appellant failed. The appellant then applied for a certificate to enable it to file an appeal to this Court, which was granted and that is how the matter has come up before us.This appeal arises out of an application made by the appellants to the High Court at Bombay under Art. 226 of the Constitution for a writ directing the respondent, the State of Bombay, to forbear from acting upon or enforcing a certain notification issued by it under S. 114 (2) of the Bombay Industrial Relations Act, 1946. This order was sought on two grounds. The first ground was that S. 114 (2) was ultra vires, illegal and void. The second ground was that if it was not so, the notification had been issued in improper exercise of the powers conferred by that provision.11. The appellants are a cotton textile mill in Greater Bombay, a local area under the Act, and its directors and share-holders. Their application was dismissed by the High Court and hence the present appeal.12. It appears that certain references were pending since 1953 and 1954 under the Act in the Industrial Court between various cotton textile mills in Greater Bombay and their employees, in respect of disputes concerning bonus for the years 1952 and 1953. In these references the employees were represented by the Rashtriya Mill Mazdoor Sangh, a Representative Union of workmen in the cotton textile industry as defined in the Act and a union registered under it. The appellant mill was a party to these references. On March 1, 1956, while these references were pending, the Rashtriya Mill Mazdoor Sangh entered into an agreement with the Mill Owners Association, Bombay, of which fortyseven cotton textile mills including the appellant mill, were members, regarding the bonus to be paid to the employees of these mills for the years 1952 to 1957. This agreement was subsequently accepted individually by about forty-two of the mills who were members of the Association and parties to the references, and became binding on these mills. This agreement was later registered under the Act and filed in the pending references and an award was made by the Industrial Court on March 13, 1956, in terms of it, as between the mills who had individually accepted the agreement and their employees. The appellant mill did not accept the agreement and no award was made in the references concerning it and so far as it was concerned, the references remained pending.13. On July 31, 1956, the respondent made the order which is challenged in these proceedings. That order was in these terms :"Whereas the Rashtriya Mill Mazdoor Sangh, Bombay,..........is a party to an award dated the 13th March 1956..........And whereas the Government of Bombay, considers that the award should be made binding upon the employees specified in column 1 of the schedule hereto annexed and their employees.................,.And whereas the said employers and the Rashtriya Mill Mazdoor Sangh, Bombay, representing the said employees being the parties affected were heard ...........Now, therefore, in exercise of the powers conferred by sub-section (2) of section 114 of the said Act, the Government of Bombay hereby directs that the said award shall be binding on the employers specified in column 1 of the schedule hereto annexed and their employees in the matter of payment of bonus for the years specified against the employers in column 2 of the said schedule."14. The appellant mill was one of the employers mentioned in the schedule to the notification and the schedule further provided that the award would be binding on the appellant mill and its employees for the years 1952 to 1957, both inclusive. As a result of this notification the appellant mill became liable to pay bonus to its employees for the years mentioned, in terms of the award based on the agreement, to neither of which it was a party. The appellants contend that the appellant mill is not liable to pay bonus in law as laid down by this Court in Muir Mills Co. Ltd. v. Suti Mills Mazdoor Union, 1955-1 SCR 991   : ((S) A I R 1955 SC 170)   and by the Full Bench of the Labour Appellate Tribunal in (1950) 2 Lab LJ 1247 ( L A T I-Bom) as it has not made any profit for the period commencing from June 30, 1950 and ending on June 30, 1955.

Reasoning:
4. We do not think it necessary for purposes of the present appeal to consider the constitutionality of S. 114 (2), for we have come to the conclusion that the notification is bad because it goes beyond the powers conferred on the State Government by thatfirst limitation arises out of the subject-matter of the agreement etc., to be extended. Suppose the agreement etc., deal with (let us say) the wages of a certain type of workmen in a certain mill. Suppose that the agreement etc., are extended to another mill where that type of workmen does not exist. Obviously the agreement cannot be extended in these circumstances and the power of the State Government is thus limited by the subject-matter of the agreement etc.6. The second limitation which again is obvious arises from the provisions of law. The proviso to S. 114 (2) shows that before exercising its power under the said section the Government can refer the matter to an Industrial Court and there can be no doubt that an Industrial Court cannot and will not advise anything against the law. Section 95-A makes the determination of any question of law in any order, decision, award or declaration passed or made, by the Full Bench of the Industrial Court under the regulations made under S. 92 binding in all proceedings under the Act. What is done under S. 114 (2) is also a proceeding under the Act after notice to the parties affected. The State Government is thus bound by any decision on a question of law while proceeding under S. 114 (2). The policy of the Act underlying S. 95-A therefore leads to the conclusion that the exercise of power conferred by S. 114 (2) has to be in conformity with the industrial law laid down by the Full Bench of the Industrial Court and also by any decision of this Court. The State Government therefore when it passes an order under S. 114 (2) must have full regard to the law as laid down by the legislature and by the decisions of this Court and cannot pass an order under S. 114 (2) which is against such law. Besides, S. 114 (2) places a registered agreement, a settlement, a submission and an award on the same footing and so if an award has to conform to S. 95-A as it must so must the other three mentioned therein. Therefore, when the State Government acts under S. 114 (2) it can only do as between the parties before it what a labour court, an Industrial Court or a wage board can in law do under the Act. We do not think that S. 114 (2) authorities the State Government to act against the law as laid down by the legislature or by this Court. Section 114 (2) therefore appears to be speedy remedy (dispensing with all appeals provided under the Act) by which the State Government may direct that the terms and conditions of employment in the matter of wages, hours of work and so on may be the same in a particular industry or occupation in a particular area as may have been settled between a representative union and other employers in that area and as could if necessary be enforced through an award in a case to which the representative union was a party. There can be no doubt, however that the State Government cannot do under S. 114 (2) what an adjudicator has no power to award under the provisions of the Act. Therefore, as we read S. 114 (2) we cannot escape the conclusion that the State Governments power to make a direction under that section is co-terminous with the power of an adjudicator (be it a labor court, an Industrial Court or a wage board under the Act) to make an award thereunder, and the State Government cannot under S. 114 (2) do what an adjudicator cannot do under the Act.By this notification the State Government has directed that the award dated March 13, 1956, made by the Industrial Court shall be binding on the appellant and its employees in the matter of payment of bonus for the years 1952 to 1957 (both inclusive). It is not in dispute that the said award was based on an agreement between the Mill-owners Association, Bombay and the Rashtriya Mill Mazdoor Sangh, Bombay. The said agreement provided that it would have to be signed by each member mill of the Mill-owners Association before it would be binding on it and again it is not in dispute that the appellant mill though it is a member of the Mill-owners Association never signed it. Further cl. (6) of the agreement provided for payment of minimum bonus even in cases where there was no adequate profit to provide for all prior charges as per the Full-Bench formula and also in cases where a mill had made actual loss on the years working, subject to a proviso as to adjustment. Thus by the direction given in the impugned notification the appellant is subjected to payment of bonus even where it has not made adequate profit to provide for all prior charges or has in fact made aagreement in the present case directed to be enforced by the impugned notification is similar in terms and as held in New Menekchowk case, AIR 1961 SC 867   it could not be enforced by industrial adjudication against the will of any of the parties. The power of the State Government under S. 114 (2) being co-terminous with the power the an adjudicator under the Act, such an agreement cannot therefore be directed to be enforced against the will of the appellant even under S. 114 (2) inasmuch as by doing so the State Government would be going beyond the powers conferred on it by that section. The impugned notification therefore must be held to be bad inasmuch as it goes beyond the powers conferred on the State Government under S. 114 (2) and must therefore be struck down.