Case: Mumbai Kamgar Sabha, Bombay Vs. Messrs Abdulbhai Faizullabhai and Others

A narration of the skeletal facts, sufficient to get a hang of the four legal issues debated at the bar in this appeal, by special leave, will help direct the discussion a long a disciplined course, although the broader social arguments addressed have spilled over the banks of the juralDevi, a locality in the city of Bombay, is studded with small hardware businesses where pipes and fittings, nuts and bolts, tools and other small products, are made and/or sold. These establishments, well over a thousand, employ a considerable number of workmen in the neighbourhood of 5, 000, although each unit has (barring four), less than the statutory minimum of 20 workmen. This heavy density of undertakings and workers naturally produced an association of employers and a Union of workmen, each recognising the other, for the necessary convenience of collective bargaining. Apparently, these hardware merchants huddled together in the small area, were getting on well in their business and in their relations with their workmen, and this goodwill manifested itself inpayments to them of small amounts for a number of years prior to 1965, when troublerooted in goodness and grace, the annual repetition of these payments ripened, in the consciousness of the workers, into a sort ofsurprising when we see in our towns and temples a trek ofclaiming benevolence as of right fromand pilgrims, especially when this kindly disposition has been kept up over long years. The compassion of yesterday crystallises as the claim of today, and legal right begins as that which is humanistically right. Anyway, the hardware merchants of Nag Devi, made of sterner stuff, in the year 1965, abruptly declined to pay the goodwill sums of thepast and the frustrated workmen frowned on thi s stoppage by setting up a right to bonus averring considerable profits for the Industry (if one may conveniently use that expression for a collective coverage of the conglomeration of hardware establishments). The defiant denial and the consequent dispute resulted in the appointment of a Board of Arbitrators under s. 10A of the Industrial Disputes Act to arbitrate upon twelve demands put forward by the Mumbai Kamgar Sabha, Bombay (the Union which represents the bulk o f workers employed in the tiny, but numerous, establishments). The charter of demands included, inter alia, claim for 4 months wages as bonus for the year 1965. The arbitral board, however, rejected the demand for bonus. Thediscontinued these payments thereafter and the Unions insistence on bonus led to conciliation efforts. The Deputy Commissioner of Labour mediated but since his intervention did not melt the hardened mood of the employers, formal demands for payments of bonus were made by the Union and government was persuaded to refer the dispute for adjudication to an Industrial Tribunal. The Tribunal formulated two issues as arising from the statements of the parties and rendered his award dismissing the reference.At this stage, it may be useful to set out the terms of reference made under s. 10(1)(d) of the Industrial Disputes Act, 1947 (for short, the ID Act), for adjudication by theWhether the establishments (mentioned in the annexure) have been giving bonus to their workers till 1965 ? If so, how long before 1965 have the employers been giving bonus to their workmen ? And at what rate ?2. Whether payment of bonus by the employers to their workmen has become custom or usage or condition of service in these establishments ? If so, what should be the basis on which employers should make payment of bonus to their workmen for the years ending on any date in 1966, 1967 1968 and 1969narration of the skeletal facts, sufficient to get a hang of the four legal issues debated at the bar in this appeal, by special leave, will help direct the discussion a long a disciplined course, although the broader social arguments addressed have spilled over the banks of the jural, a locality in the city of Bombay, is studded with small hardware businesses where pipes and fittings, nuts and bolts, tools and other small products, are made and/or sold. These establishments, well over a thousand, employ a considerable number of workmen in the neighbourhood of 5, 000, although each unit has (barring four), less than the statutory minimum of 20 workmen. This heavy density of undertakings and workers naturally produced an association of employers and a Union of workmen, each recognising the other, for the necessary convenience of collective bargaining. Apparently, these hardware merchants huddled together in the small area, were getting on well in their business and in their relations with their workmen, and this goodwill manifested itself inpayments to them of small amounts for a number of years prior to 1965, when troubled in goodness and grace, the annual repetition of these payments ripened, in the consciousness of the workers, into a sort ofg when we see in our towns and temples a trek ofg benevolence as of right fromd pilgrims, especially when this kindly disposition has been kept up over long years. The compassion of yesterday crystallises as the claim of today, and legal right begins as that which is humanistically right. Anyway, the hardware merchants of Nag Devi, made of sterner stuff, in the year 1965, abruptly declined to pay the goodwill sums of thet and the frustrated workmen frowned on thi s stoppage by setting up a right to bonus averring considerable profits for the Industry (if one may conveniently use that expression for a collective coverage of the conglomeration of hardware establishments). The defiant denial and the consequent dispute resulted in the appointment of a Board of Arbitrators under s. 10A of the Industrial Disputes Act to arbitrate upon twelve demands put forward by the Mumbai Kamgar Sabha, Bombay (the Union which represents the bulk o f workers employed in the tiny, but numerous, establishments). The charter of demands included, inter alia, claim for 4 months wages as bonus for the year 1965. The arbitral board, however, rejected the demand for bonus. Thed these payments thereafter and the Unions insistence on bonus led to conciliation efforts. The Deputy Commissioner of Labour mediated but since his intervention did not melt the hardened mood of the employers, formal demands for payments of bonus were made by the Union and government was persuaded to refer the dispute for adjudication to an Industrial Tribunal.

Court's reasoning:
The core question about the policy of the Parliament that was agitated in that case turned on the availability of the Industrial Disputes Act as an independent method of claiming profit bonus de hors the Bonus Act and the Court took the view that it would be subversive of the scheme of the Act to allow an invasion from the flank in that manner. The following observations strengthen thisParliament could not have intended to exempt these establishments from the burden of bonus payable under the Act and yet have left the door open for their employees to raise industrial disputes and get bonus under the Full Bench formula which it has rejected by laying down a different statutory formula in the Act. For instance, is it to be contemplated that though the Act by s. 32 exempts institutions such as the Universities or the Indian Red Cross Society or hospitals, or any of the establishments set out in cl. (ix) of that section, they would still be liable to pay bonus if the employees of those institutions were to raise a dispute under the Industrial Disputes Act and claim bonus in accordance with the Full Bench Formula. The legislature would in that case be giving exemption by one hand and taking it away by the other, thus frustrating the very object of s. 32. Where, on the other hand, , Parliament intended to retain a previous provision of law under which bonus was payable, or was being paid it has expressly saved such provision. Thus, under s. 35 the Coal Mines Provident Fund and Bonus Schemes Act, 1946 and any scheme made there under are saved. If, therefore, Parliament wanted to retain the right to claim bonus by w ay of industrial adjudication for those who are either excluded or exempted from the Act, it would have made an express saving provision to that effect as it has done for employees in Coaldiscerning and concrete an alysis of the scheme of the Act and the reasoning of the Court leaves us in no doubt that it leaves untouched customaryplea of constructive res judicata is based on the might and ought doctrine. Shri Pais argument is that before the Arbitration Board no case of customary or contract bonus was urged for the year 1965 and so, in later years, such a ground is barred by the general principles of res judicata. Sections 10A, 18 and 19(3) of the Industrial Disputes Act were pressed before us to demonstrate the prior award was binding on the workers and reading it in the light of Pandurang the bar was spelt out. It is clear law, so long as the above ruling stands, that industrial litigation is no exception to the general principle underlying the doctrine of res judicata. We do entertain doubt about the extension of the sophisticated doctrine of constructive res judicata to industrial law which is governed by special methodology of conciliation, adjudication and considerations of peaceful industrial relations, where collective bargaining and pragmatic justice claim precedence over formalised rules of decision based on individual contests, specific causes of action and findings on particular issues, but we are convinced that Pandurang(1) does not apply at all to our case. There overtime wages were claimed earlier under the Factories Act and the case was rejected by the Tribunal. After this rebuff, a like claim was repeated but sustaining it on the Bombay Shops and Establishments Act. This new ground to support the same claim was held to be barred because the workmen could and ought to have raised the issue that the Factories Act failing, the Shops Act was available to them to back up their demand. The fallacy in invoking this decision lies in the fact that as early as 1950 there was a binding award of the Industrial Tribunal relating to the claim, which had not been put an end to, and so this Court took the view that so long as that award stood, the same claim under a different guise (the Shops Act) could be subversive of the rule of res judicata. The decisive circumstance which distinguishes that case is contained in the observation:"If the worker s are dissatisfied with any of the items in respect of which their claim has been rejected it is open to them to raise a fresh industrialis to say, if a fresh dispute had been raised, after terminating the prior award, no bar of res judicata could have been urged. Here, the Arbitration Board dealt with one dispute; the Industrial Tribunal, with a fresh dispute. The Board enquired into one cause of action based on profit bonus; the Tribunal was called upon by the terms of reference, to go into a different claim. This basic difference was lost sight of by the Tribunal and so he slipped into an error. The dangers of constructive res judicata in the area of suits vis a vis writ petitions under Art. 226 and as between proceedings under Art. 226 and Art. 32 are such as to warrant a closer study. To an extent the Law Commission of India in its Report(1) has touched on this topic. Industrial disputes are an a fortioriis not by Court litigation alone. Industrial peace best flourishes wheremechanisms come into cheerful play before tensions develop or disputes brew. Speaking generally, alternatives to the longish litigativ e process is a joyous challenge to the Indian activist jurist and no field is in need of the role of avoidance as a means of ending ordisputes as industrial life. Litigation, whoever wins or loses, is often the funeral of both. We are a developing country and need techniques of maximising mediatory methodology as potent processes even where litigation has erupted. This socially compulsive impulse prompted the setting in motion of aeffort by the senior counsel on both sides, with helpful promptings from the Bench, to advise their clients into a conciliatory mood. Should we have at all hinted to the advocates to resolve by negotiation or stick to our traditional function of litigative adjudication? In certain spheres, judicious irreverence to judicialised argumentation is a better homage to justice ! Regrettably, the exercise proved futile and we have to follow up our conclusions with necessary directions.The findings we have reached may now be formally set down. We hold that the Bonus Act (as it stood in 1965) does not bar claims to customary bonus or those based on conditions of service. Secondly we repel the plea of res judicata. There is no merit in the view that the Industrial Tribunal has no jurisdiction to try the dispute referred to it. We set aside the award and direct the Tribunal to decide on the merits theof the dispute referred to it by the State Government.