Case: The Swadeshi Cotton Mills Co. Limited Vs. The State Of U. P. And Others(And Connected Appeals)

The appellants are certain industrial concerns. There were disputes between them and their workmen which were referred for adjudication to industrial tribunals alleged to have been set up under the general orders on March 15, 1951. Certain awards were passed which were taken in appeal by the present appellants to the Labour Appellate Tribunal and they failed there also. They then filed petitions under Art. 226 of the Constitution in the Allahabad High Court challenging the constitutionality of S. 3 of the Act and the validity of the two general orders passed on March, 15, 1951, by which industrial tribunals were set up. The High Court held that S. 3 of the Act was constitutional . It however held that the two general orders dated March 15, 1951, were invalid; but it went on to hold that orders of reference passed in these cases were special orders as envisaged under S. 3 of the Act and were therefore not invalid; in consequence it dismissed the petitions. The appellants then applied for and obtained certificates for leave to appeal; and that is how the matter has come up beforepreamble to that order was in theseexercise of the powers conferred by clauses (b), (c), (d) and (g) of S. 3 and S. 8 of the U. P. Industrial Disputes Act, 1947 (U. P. Act No. XXVIII of 1947), and in supersession of Government Order No. 781 (L)/XVIII dated March 10, 1948, the Governor is pleased to make the following order, and to direct, with reference to S. 19 of the said Act, that notice of this Order be given by publication in the Official Gazette."

Court's reasoning:
These observations have in our opinion nothing to do with such matters of detail as the place where a court or tribunal will sit or the qualifications of persons constituting the tribunal; they refer to more fundamental matters when the words "place" and "person" are used therein. The place there must mean the area to which the legislation would apply; and so far as that is concerned, the legislature has determined the area in this case to which S. 3 will apply, namely, the whole of the State of Uttar Pradesh. Similarly, the word "Person" used there refers to persons to whom legislation will apply and that has also been determined by the legislature in this case, namely, it will apply to employers and employees of industrial concerns. We have already said that the conditions under which the order will be passed have also been set out in the opening part of S. 3 and how the Government will act is also set out, namely, by referring any industrial dispute that may arise for conciliation or adjudication. As to the power of the industrial court that in our opinion is also provided by S. 3, namely, that an industrial court will adjudicate on the industrial dispute referred to it. Therefore all that was left to the Government to provide was to set up machinery by means of a general order which has the force of subordinate rules to carry out that legislative policy which has been enacted in broad details in S. 3 and has been formally enacted into a binding rule of conduct. We are therefore of opinion that S. 3 is not unconstitutional in any manner for there is no delegation of essentials of legislative function thereunder. All that has been left to the Government by that section is to provide by subordinate rules for carrying out the purpose of the legislation. We must therefore reject the contention that S. 3 is unconstitutional on the ground that it suffers from the vice of excessivethere is no doubt that S. 3 gives power to the State Government to make certain provisions by general or special order, if in its opinion, it is necessary or expedient so to do for securing public safety or convenience, or the maintenance of public order or supplies and services essential to the life of the community or for maintaining employment. The forming of such opinion is a condition precedent to the making of the order. The preamble to the second order also does not contain a recital that the State Government had formed such opinion before it made thepreamble to the second order also does not contain a recital that the State Government had formed such opinion before it made thethe State also filed no affidavit to show that the conditions precedent provided in Section 3 had been complied with, even though there was no recital thereof on the face of the order. We should have expected that even though the appellants did not file an affidavit; in support of their case on this aspect of the matter, the State would as a matter of precaution have filed an affidavit to indicate whether the conditions precedent set out in S. 3 had been complied with, considering that it was a general order which was being attacked under which a large number of adjudications must have taken place. The High Court has commented on his aspect of the matter and has said that the State Government did not file any affidavit in this connection to show that as a matter of fact the State Government was satisfied as required by S. 3 even though there was no recital of that satisfaction in the order itself. Taking into account, however, the importance of the matter, particularly as it must affect a large number of adjudications affecting a large number of employers and workmen, we asked the State Government if it desired to file an affidavit before us even at this stage. Thereupon the State Government filed an affidavit sworn by the Secretary to Government, Labour Department. The affidavit says that the drafts of G. O. No. 615 and the consequential order G. O. No. 671 passed on March 15, 1951, were put up before the then Labour Minister. The said notifications were issued only after all the aspects of the matter were fully considered by the State Government and it had satisfied itself that it was necessary and expedient to issue the same for the purpose of securing public convenience, and maintenance of public order and supplies and services essential to the community and for the maintenance of employment. We accept this affidavit and it follows therefore that the satisfaction required as a condition precedent for the issue of an order under S. 3 of the Act was in fact there before the order No. 615 was passed on March 15, 1951, followed by the consequential order No. 671 of the sameto this contention there can be no dispute.The power to pass an order under S. 3 arises as soon as the necessary opinion required thereunder is formed. This opinion is naturally formed before the order is made. If therefore such an opinion was formed and an order was passed thereafter, the subsequent order would be a valid exercise of the power conferred by the section. The fact that in the notification which is made thereafter to publish the order, the formation of the opinion is not recited will not take away the power to make the order which had already arise and led to the making of the order. The validity of the order therefore does not depend upon the recital of the formation of the opinion in the order but upon the actual formation of the opinion and the making of the order in consequence. It would therefore follow that if by inadvertence or otherwise the recital of the formation of the opinion is not mentioned in the preamble to the order the defect can be remedied by showing by other evidence in proceedings where challenge is made to the validity of the order, that in fact that order was made after such opinion had been formed and was thus a valid exercise of the power conferred by the law. The only exception to this course would be where the statute requires that there should be a recital in the order itself before it can be validly made.10. There is no doubt that where a statute requires that certain delegated power may be exercised on fulfilment of certain conditions precedent, it is most desirable that the exercise should be prefaced with a recital showing that the condition had been fulfilled. But it has been held in a number of cases dealing with executive orders that even if there is some lacuna of this kind, the order does not become ab initio invalid and the defect can be made good by filing an affidavit later on to show that the condition precedent was satisfied.We see no difficulty in following this principle in the case of those orders also which are in the nature of subordinate legislation. Whether orders are executive or in the nature of subordinate legislation their validity depends on certain conditions precedent being satisfied. If those conditions precedent are not recited on the face of the order and the fulfilment of the conditions precedent can be established to the satisfaction of the court in the case of executive orders we do not see why that can not be made good in the same way in the case of orders in the nature of subordinate legislation. We cannot accept the extreme argument of Shri Aggarwala that the mere fact that the order has been passed is sufficient to raise the presumption that conditions precedent have been satisfied, even though there is no recital in the order to that effect. Such a presumption in our opinion can only be raised when there is a recital in the order to that effect. In the absence of such recital if the order is challenged on the ground that in fact there was no satisfaction, the authority passing the order will have to satisfy the court by other means that the conditions precedent were satisfied before the order was passed. We are equally not impressed by Shri Pathaks argument that if the recital is not there, the public or courts and tribunals will not know that the order was validly passed and therefore it is not necessary that there must be a recital on the face of the order in such a case before it can be held to be legal. The presumption as to the regularity of public acts would apply in such a case; but as soon as the order is challenged and it is said that it was passed without the conditions precedent being satisfied the burden would be on the authority to satisfy by other means (in the absence of recital in the order itself) that the conditions precedent had been complied with. The difference between a case where a general order contains a recital on the face of it and one where it does not contain such a recital is that in the latter case the burden is thrown on the authority making the order to satisfy the court by other means that the conditions precedent were fulfilled, but in the former case the court will presume the regularity of the order including the fulfilment of the conditions precedent; and then it will be for the party challenging the legality of the order to show that the recital was not correct and that the conditions precedent were not in fact complies with by the authority:(see the observations of Spens, C. J. in Emperor V. Sibnath Banerjee, 1944 FCR 1 at p. 42 : (AIR 1943 FC 75 at p. 92) which were approved by the Privy Council in Emperor v. Sibnath Banerjee 1945 FCR 195 at pp. 216-17: (AIR 1945 PC 156   at p. 161). Nor are we impressed with the contention of Shri Pathak that conditions become a part of legislative process and therefore where they are not complied with the subordinate legislation is illegal and the defect cannot be cured by an affidavit later. It is true that such power may have to be exercised subject to certain conditions precedent but that does not assimilate the action of the subordinate executive authority to something like a legislative procedure, which must be followed before a bill becomes a law. Our conclusion therefore is that where certain conditions precedent have to be satisfied before a subordinate authority can pass an order (be it executive or of the character of subordinate legislation), it is not necessary that the satisfaction of those conditions must be recited in the order itself, unless the statute requires it, though, as we have already remarked, it is not desirable that it should be so, for in that case the presumption that the conditions were satisfied would immediately arise and burden would be thrown on the person challenging the fact of satisfaction to show that what is recited is not correct. But even where the recital is not there on the face of the order, the order will not become illegal ab initio and only a further burden is thrown on the authority passing the order of satisfy the court by other means that the conditions precedent were complied with. In the present case this has been done by the filing of an affidavit before us. We are therefore of opinion that the defect in the two orders of March, 15, 1951, has been cured and it is clear that they were passed after the State Government was satisfied as required under S. 3 of the Act. Therefore Government Orders Nos. 615 and 671 of March 15, 1951, with which we are concerned in the present appeals are valid under S. 3 of thefirst case to which reference may be made is Wichita Railroad and Light Co. v. Public Utilities Commission of State of Kansas. (1922) 67 Law Ed 124. That was a case of a Commission which had to give a hearing and a finding that they were unreasonable before contract rates with a public utility company could be changed. After referring to S. 13 of the Act under consideration, the U. S. S. C. held that"a valid order of the Commission under the act must contain a finding of fact after hearing and investigation, upon which the order is founded, and that, for lack of such a finding, the order in this case was void."It rejected the argument that the lack of express finding might be supplied by implication and by reference to the averments of the petition invoking the action of the Commission and rested its decision on the principle that an express finding of unreasonableness by the Commission was indispensable under the statutes of the State. This case in our opinion is based on the provision of the statute concerned which required such a finding to be stated in the order and is no authority for the proposition that an express recital is necessary in the order in every case before a delegate can exercise the power delegated to it.13. The next case is Mahler v. Eby, (1924) 68 Law Ed 549. That was a case dealing with deportation of aliens. The statute provided for deportation if the Secretary (Labour) after hearing finds that such aliens were undesirable residents of United States. But the Service made no express finding so far as the warrant for deportation disclosed it. Nor was the defect in the warrant of deportation supplied before the court. The court held that the finding was made a condition precedent to deportation and it was essential that where an executive is exercising delegated legislative power he should substantially comply with all the statutory requirements in its exercise, and that, if his making a finding is a condition precedent to this act, the fulfilment of that condition should appear in the record of the act, and reliance was placed on the case of (1922) 67 Law Ed 124. This again was a case of a hearing and a finding required by the statute to be stated in the order and must therefore be distinguished from a case of the nature before us. It may however be added that the court did not discharge the deportees and gave a reasonable time to the Secretary Labour to correct and perfect his finding on the evidence produced at the original hearing or to initiate another proceeding against them.14. The last case is Panama Refining Co v. A. D. Ryan, (1935) 79 Law Ed 446. In that case S. 9 (c) of the National Industrial Recovery Act of 1933 was itself struck down on the ground of excessive delegation though it was further held that the executive order contained no finding and no statement of the ground of the Presidents action in enacting the prohibition. This case in our opinion is not in point so far as the matter before us is concerned, for there the section itself was struck down and in consequence the executive order passed thereunder was bound to fall.