Case: Rohtas Industries Limited and Another Vs. Rohtas Industries Staff Union and Others

1. We permit ourselves a few preliminary observations disturbingly induced by the not altogether untypical circumstances of these two appeals, before proceeding to state the facts, set out the submissions and decide the points2. Industrial law in India has not fully lived up to the current challenges of industrial life, both in the substantive norms or regulations binding the three parties the States, Management and Labour-and in the processual system which has baulked, by dawdling dysfunction, early finality and prompt remedy in a sensitive area where quick solution is of the very essence of real justice. The legislative and judicial processes have promises to keep if positive industrial peace, in tune with distributive economic justice and continuity of active production, were to be accomplished. The architects of these processes will, we hopefully expect, fabricate creative changes in the system, normative and adjectival3. The two appeals before us, passported by special leave under Art. 136, relate to an industrial dispute with its roots in 1948, meandering along truce union rivalry and the like, into strikes and settlements, the last of which led to an arbitration award in 1959 which, in turn, prompted two writ petitions before the High Court. After a spell of a few years they ripened into a judgment. Appeals to this Court followed and, after long gestation of six years for preparation of papers and a like period the cases are ready for final hearing or parturition, in all 12 years after the grant of leave. By this cumulative lapse of time the generation of workers who struck work two decades ago have themselves all but retired, the representative Union itself which sponsored the dispute has, the other side faintly states, ceased to command representative character, the Managements themselves have, out of many motives, disclaimed the intention to recover the huge sums awarded to them by the arbitrators and the only survival after death, as it were, is a die-hard litigation tied up to a few near-academic, but important, legal points for adjudication by the highest Bench! On this elegiac note we will enter the relevant area of facts and law since we must decide cases brought before us, however stale the lis.4. At this stage we may mention our strong feeling that where the superior courts, after hearing full arguments, are clearly inclined to, affirm the judgment under appeal for substantially similar reasons as have weighed with the lower Court, there is no need to give lengthy reasons for dismissing the appeal. Brevity, except in special cases, may well fill the bill where the fate is dismissal. On this score we are disposed to make short shrift of the appeals with stating but the necessary facts and focusing on the larger legal facets. Nevertheless, the significance and plurality of the points pressed have defeated condensation5. The facts:Two connected managements of industries in the same locality, who figure as appellants before us, had a running industrial dispute wit h their workers, which has had a long history moving in a zigzag course and sicklied over by alleged internecine trade-union strife. There were two trade unions which were perhaps of competitive strength and enjoying recognition. One of them , the Rohtas Industries Mazdoor Sangh (for short, the Mazdoor Sangh) was the representative union during the relevant period while the other, the Rohtas Industries Seva Sangh (for brevity, the Seva Sangh) is not a party before this Court and so we are not concerned with it except for the purpose of noticing its presence in the settlement of the dispute which starts the story so far as the litigation is concerned. There was a strike in the Industry (for our purposes this expression embraces both the appellants) which came to an end by virtue of a memorandum of agreement dated October 2, 1957, to which not merely the management but also the two registered unions aforementioned and the two unregistered unions which had a lesser following, were party. The terms of the said agreement provided inter alia that:The employees claim for wages and salaries for the period of strike and the companys claim for compensation for losses due to strike shall be submitted for arbitration of Sri J. N. Majumdar and Sri R. C. Mitter, ex-High Court Judges and Ex Members of the Labour Appellate Tribunal of India as joint arbitrators and their decisions on the two questions shall be final and binding on all the parties. (Clause 7 of agreement)This agreement was admittedly arrived at during conciliation proceedings contemplated by the Industrial Disputes Act, 1947 (for short, the Act) and the reference to arbitration spelt out in clause 7 directly and. admittedly fell under s. 10A of the Act6. It is apparent that the arbitrators were seized of two questions: (a) the claim of the workers for wages for the period of strike; and (b) the claim of the management for compensation for its losses flowing from the strike. The Board of arbitrators, two retired Judges of the Calcutta High Court-held extensive hearings spread over a year and a half, made a lengthy award marshalling the evidence, adducing the reasons, discussing the law and recording its decision on the two vital issues. At the end of the detailed and reasoned record of conclusions, the award runs thus:Our award accordingly is:(1) That the workmen participating in the strike are not entitled to wages and salaries for the period of the strike(2) That the company do recover from the workmen participating in the strike, compensation assessed at Rs. 80, 000(rupees eighty thousand)(3) That the workmen jointly and severally do pay to the company one eighth of the total costs of the arbitration. In default of payment the company will be at liberty to recover the same in such manner as it thinks fit. Subject to this the parties do bear their respective costs.7. The workmen were deprived of their wages during the period of the. strike on the score that it was an illegal strike. Both sides seem to have accepted this finding after an unsuccessful challenge in the High Court and happily industrial peace is said to be prevailing currently. What did hurt the Mazdoor Sangh more and what the management did try to have and to hold as a bonanza was the second finding that the strikers, apart. from forfeiting wages, do pay compensation in the huge sum of Rs. 6, 90, 000/- in one case and Rs. 80, 000/- in the other, for the loss of profits suffered by the manufacturing business of the management, a pronouncement unusual even according to counsel for the appellant, although sustainable in law, according to him. For the workers this unique direction of industrial law is fraught with ominous consternation and dangerous detriment. The Mazdoor Sangh challenged the award as illegal and void by filing two writ petitions but the High Court quashed that part of the award which directed payment of compensation by the workers to the management and, as earlier pointed out , both sides have chosen to abide by the award in relation to the denial of wages during the strike period.

Reasoning: 9. (1)-(a) &(b)The expansive and extraordinary power of the High Courts under Art. 226 as wide as the amplitude of the language used indicates and so can affect any person-even a private individual-and be available for any (other) purpose even one for which another remedy may exist. The amendment to Art. 226 in 1963 inserting Art. 226(1A) reiterates the targets of the writ power as inclusive of any person by the expressive reference to the residence of such person. But it is one thing to affirm the jurisdiction, an other to authorise its free exercise like a bull in a China shop. This Court has spelt out wise and clear restraints on the use of this extra-ordinary remedy and High Courts will not go beyond those wholesome inhibitions except where the monstrosity of the situation or other exceptional circumstances cry for timely judicial interdict or mandate. The mentor of law is justice and a potent drug should be judiciously administered. Speaking in critical retrospect and portentous prospect, the writ power has, by and large, been the peoples sentinel on the qui vive and to cut back on or liquidate that power may cast a peril to human rights. We hold that the award here is not beyond the legal reach of Art. 226, although this power must be kept in severely judicious leash.10. Many rulings of the High Courts, pro and con, were cited before us to show that an award under s. 10A of the Act is insulated from interference under Art. 226 but we respectfully agree with the observations of Gajendragadkar J., (as he then was) in Engineering Mazdoor Sabha v. Hind Cycles Ltd([1963] Supp. I S.C.R. 625.) which nail the argument against the existence of jurisdiction. The learned Judge clarified at p. 640:Article 226 under which a writ of certiorari can be issued in an appropriate case, is, in a sense, wider than Art. 136, because the power conferred on the High Courts to issue certain writs is not conditioned or limited by the requirement that the said writs can be issued only against the orders of Courts or Tribunals. Under Art. 226(1), an appropriate writ can be issued to any person or authority, including in appropriate cases any Government, within the territories prescribed. Therefore even if the arbitrator appointed under section 10A is not a Tribunal under Art. 136 in a proper cases, a writ may lie against his award under Art. 226. (p. 640)11. We agree that the position of an arbitrator under s. 10A of the Act (as it then stood) vis a vis Art. 227 might have been different. Today, however, such an arbitrator has power to bind even those who are not parties to the reference or agreement and the whole exercise under s. 10A as well as the source of the force of the award on publication derive from the statute. It is legitimate to regard such an arbitrator now as part of the methodology of the sovereigns dispensation of justice, thus falling within the rainbow of statutory tribunals amenable to judicial review. This observation made en passant by us is induced by the discussion at the bar and turns on the amendments to s. 10A and cognate provisions like s. 23, by Act XXXVI of 1964.That depends. We will examine the grounds on which the High Court has, in the present case, excised a portion of the award as illegal, keeping in mind the settled rules governing judicial review of private arbitrators awards. Suffice it to say, an award under s. 10A is not only not invulnerable but more sensitively susceptible to the writ lancet being a quasi-statutory bodys decision. Admittedly, such an award can be upset if an apparent error of law stains its face. The distinction, in this area, between a private award and one under s. 10A is fine, but real. However it makes slight practical difference in the present case; in other cases it may. The further grounds for invalidating an award need not be considered as enough unto the day is the evil thereofThus, we arrive at a consideration of the appellants second submission, perhaps the most significant in the case, that the High Court had no legitimate justification to jettison the compensation portion of the award. Even here, we may state that counsel for the appellants, right at the outset, mollified possible judicial apprehensions springing from striking workers being held liable for loss of managements profits during the strike period by the assurance that his clients were inclined to abandon realisation of the entire compensation, even if this Court up held that part of the award in reversal of the judgment of the High Court a generous realism. He fought a battle for principle, not pecunia. We record this welcome fact and proceed on that footing.16. Let us put the proposition more expressively and explicitly. What is important is a question of law arising on the face of the facts found and F its resolution ex facie of sub silentio. The arbitrator may not state the law as such. Even then such cute silence confers no greater or subtler immunity on the award than plain speech. The need for a speaking order, where considerable numbers are affected in their substantial rights, may well be a facet of natural justice or fair procedure, although, in this case, we do not have to go so far. If, as here, you find an erroneous law as the necessary buckle between the facts found and the conclusions recorded, the award bears its condemnation on its bosom. Not a reference in a narrative but a clear legal nexus between the facts and the finding. The law sets no premium on juggling with drafting the award or hiding the legal error by blanking out. The inscrutable face of the sphinx has no better title to invulnerability than a speaking face which is a candid index of the mind. We may, by way aside, express hopefully the view that a minimal judici alisation by statement, laconic or lengthy, of the essential law that guides the decision, is not only reasonable and desirable but has, over the ages, been observed by arbitrators and quasi-judicial tribunals as a norm of processual justice. We do not dilate on this part of the argument as we are satisfied that be the test the deeply embedded rules to issue certiorari or the traditional grounds to set aside an arbitration award thin partition do their bounds divide on the facts and circumstances of the present case.The basic facts found by the arbitrators are beyond dispute and admit of a brief statement. We summarise the fact situation succinctly and fairly when we state that according to the ar bitrators, the strike in question was in violation of s. 24 of the Act and therefore illegal. This illegal strike animated by inter-union power struggle, inflicted losses on the management by forced closure. The loss flowing from the strike was liable to be recompensed by award of damages. In this 2chain of reasoning is necessarily involved the question of law as to whether an illegal strike causing loss of profit is a delict justifying award of damages. The arbitrators held, yes. We hold this to be an unhappy error of law-loudly obtrusive on the face of the award. We may as well set out, for the sake of assurance, the simple steps in the logic of the arbitrators best expressed in their own words which we excerpt:(a) It is argued that strike is a legitimate weapon in the hands of workmen for redressal of their grievances and if they are made liable for loss on account of strike then the basic idea of strike as a means for having the grievances redressed will be taken away. The fallacy in this argument is that it presupposes the strike not to be illegal and unjustified. In the pre sent case we found the strike to be otherwise. The workmen have got no right of getting their grievances redressed by resorting to illegal means which is an offence(b) It has been argued that the claim for compensation is not an industrial dispute as defined in the Industrial Disputes Act. Considering the issue of compensation in a water-tight compartment the argument might appear to be attractive. But, in our opinion, in this case the claim for compensation by the company is a consequence flowing from an admitted industrial J dispute, which in this case is whether the strike was illegal and/or unjustified and as against the condition of service as laid down in the certified standing order on which point our finding has been against the workmen.18. The award of the Tribunal, in its totality, is quite prolix the reasons stated in arguing out its conclusions many and thus it is just to state that in the present case the arbitrators- two retired Judges of the Calcutta High Court-have made a sufficiently speaking award both t on facts and on law. They have referred to the strike being illegal with specific reference to the provisions of the Act, but faulted them selves in law by upholding a case for compensation as axiomatic, necessarily based on a rule of common law i.e., English common law. The rule of common law thus necessarily arising on the face of the award is a clear question of law.21. Even when there are mixed motives, liability will depend on ascertaining which is the predominant object or the true motive or the real purpose of the defendant. Mere combination or action, even if it be by illegal strike, may be far away from a conspiracy in the - sense of the law because in all such cases, except in conceivably exceptional instances, the object or motive is to advance the workers interests or to steal a march over a rival union but never or rarely to destroy or damage the industry. It is difficult to fancy workers who live by working in the industry combining to kill the goose that lays the golden eggs. The inevitable by-product of combination for cessation of work may be loss to the management but the obvious intendment of such a collective bargaining strategy is to force the employer to accept the demand of the workers for betterment of their lot or redressal of injustice, not to inflict damage on the boss. In short, it is far too recondite for an employer to urge that a strike, albeit illegal, was motivated by destruction of the industry. A scorched earth policy may, in critical times of a war, be reluctantly adopted by a people, but such an imputed motive is largely imaginary in strike situations. However, we are clear in our minds that if some individuals destroy the plant or damage the machinery willfully to cause loss to the employer, such individuals will be liable for the injury so caused. Sabotage is no weapon in workers legal armoury.23. It is absolutely plain that the tort of conspiracy necessarily involves advertence to and affirmation of the object of the combination being the infliction of damage or distraction on the plaintiff. The strike may be illegal but if t he object is to bring the employer to terms with the employees or to bully the rival trade union into submission, there cannot be an actionable combination in tort. In the present case, it is unfortunate that the arbitrators simply did not investigate or pass upon the object of the strike. If the strike is illegal, the tort of conspiracy is made out, appears to be the proposition of law writ tersely into the award. On the other hand, it is freely conceded by counsel for the appellant that t he object was inter-union rivalry. There is thus a clear lapse in the law on the part of the arbitrators manifest. , on the face of the award.25. We may as well suggest that, to silence possible mischief flowing from the confused state of t he law and remembering how dangerous J it would be if long, protracted, but technically illegal strikes were to be followed by claims by managements for compensation for loss of profits, a legislative reform and re-statement of the law were under taken at a time when the State is anxious for industrial harmony consistent with workers welfare, This rather longish discussion has become necessary because the problem is serious and sensitive and the law is somewhat slippery even in En gland. We are convinced that the award is bad because the error of law is patent26. The High Court has touched upon another fatal frailty in the ten ability of the award of compensation for the loss of profits flowing from the illegal strike. We express our concurrence with the High Court that the sole and whole foundation of the award of compensation by the arbitrators, ignoring the casual reference to an ulterior , motive of inter-union rivalry, is squarely the illegality of the strike, The workers went on strike claiming payment of bonus as crystalized by the earlier settlement (d/2-10-1957). There thus arose an industrial dispute within Section 2(k) of the Act. Since conciliation proceedings were pending the strike was ipso jure illegal (Section 23 and 24). The consequence, near or remote, of this combined cessation of work caused loss to the management. Therefore the strikers were liable in damage to make good the loss. Such is the logic of the award.27. It is common case that the demands covered by the strike and the wages during the period of the strike constitute an industrial dispute within the sense of s. 2(k), of the Act. Section 23, read with Section 24, it is agreed by both sides, make t he strike in question illegal. An illegal strike is a creation of the Act. As we have pointed out earlier, the compensation claimed and awarded is a direct reparation for the loss of profits of the employer caused by the illegal strike. If so, it is contended by the respondents, the remedy for the illegal strike and its fall- out has to be sought within the statute and not de hors it. If this stand of the workers is right, the remedy indicated in Section 26 of the Act, viz., prosecution for starting and continuing an illegal strike, is the designated statutory remedy. No other relief outside the Act can be claimed on general principles of jurisprudence. The result is that the relief of compensation by proceedings in arbitration is contrary to law and bad.29. Since the Act which creates rights and remedies has to be considered as one homogeneous whole, it has to be regarded uno flatu, in one breath, as it were. On this doctrinal basis, the remedy for the illegal strike (a concept which is the creature not of the common law but of Section 24 of the Act) has to be sought exclusively in Section 26 of the Act. The claim for compensation and the award thereof in arbitral proceedings is invalid on its face on its face we say because this jurisdictional point has been considered by the arbitrators and decided by committing an ex-facie legal error.30. It was argued, and with force in our view, that the question of compensation by workers to the management was wholly extraneous to the Act and therefore, outside the jurisdiction of a voluntary reference of industrial dispute under Section 10 A. While we are not called upon to pronounce conclusively on the contention, since we have ex pressed our concurrence with the High Court on other grounds, we rest content with briefly sketching the reasoning and its apparent tenability. The scheme of the Act, if we may silhouette it, is to codify the law bearing on industrial dispute. The jurisdictional essence of proceedings under the Act is the presence of an industrial dispute. Strikes and lock-outs stem from such disputes. The machinery for settlement of such disputes at various stages is provided for by the act. The statutory imprimatur is given to settlement and awards, and norms of discipline during the pendency of proceedings are set down in the Act. The proscriptions stipulated, as for example the prohibition of a strike, are followed by penalties, if breached. Summary procedures for adjudication as to whether conditions of service etc., of employees have been changed during the s pendency of proceedings, special provision for recovery of money due to workers from employers and other related regulations, are also written into the Act. Against this backdrop, we have to see whether a claim by an employer from his workmen of compensation . consequent on any conduct of theirs, comes within the purview of the Act. Suffice it to say that a reference to arbitration under Section 10 A is restricted to existing or apprehended industrial disputes. Be it noted that we are not concerned with a private arbitration but a statutory one governed by the Industrial Disputes Act, deriving its validity, enforceability and protective mantle during the pendency of the proceedings, from 10 A. No industrial dispute, no valid arbitral reference. Once we grasp this truth, the rest of the logic is simple. What is the industrial dispute in the present case? Everything that overflows such disputes spills into areas where the arbitrator deriving authority under Section 10 A has no jurisdiction. The consent of the parties cannot create arbitral jurisdiction under the Act. In this perspective, the claim for compensation can be a lawful subject for arbitration only if it can be accommodated by the definition of industrial dispute in Section 2 (k) . Undoubtedly this expression must receive a wide collnotation, calculated as it is to produce industrial peace. Indeed, the legislation substitutes for free bargaining between the parties a binding award; but what disputes or differences fall within the scope of the Act? This matter fell for the consideration of the Federal Court in Western India Automobile Association([1949] I L. L. J. 245.). Without launching on a long discussion, we may state that compensation for loss of business is not a dispute or difference between employers 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. We are unable to imagine a tort liability or compensation claim based on loss of business being regarded as an industrial dispute as defined in the Act, having regard to the language used, the setting and purpose of the statute and the industrial flavour of the dispute as one between the management and workmen.31. In this context, we are strengthened in our conclusion by the provisions of Section 33C which provides for speedy recovery of money due to a workman from an employer under a settlement or an award, but not for the converse case of money due to an employer from workmen. There is no provision in the Act which contemplates a claim for money by an employer from the workmen.- And indeed, it may be a little startling to find such a provision, having regard to workmen being the weaker section and Part IV of the Constitution being loaded in their favour. The new light shed by the benign clauses of Part IV must illumine even pre-Independence statutes in the interpretative process. As yet, and hopefully, claims by employers against workmen on ground of tortious liability have not found a place in the pharmacopoeia of Indian Industrial Law. However, as earlier stated, we do not pronounce finally as it is not necessary32. There was argument at the bar that the High Court was in error in relying on s. 18 of the Trade Unions Act, 1926 to rebuff the claim for compensation. We have listened to the arguments of Shri B.C. Ghosh in support of the view of the High Court, understood on a wider basis. Nevertheless, we do not wish to rest our judgment on that ground. Counsel for the appellants cited some decisions to show that an award falling outside the orbit of the Indian Arbitration Act can be enforced by action in court. We do not think the problem so posed arises in the instant case.