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Indian Sugar Mills Association v. Secretary To Government

Allahabad High Court

Sep 14, 1950

Judgment

Subsequent
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Structured Summary of the Provided Opinion

Factual and Procedural Background

The Indian Sugar Mills Association (the applicant), through its President Sri Hari Raj Swamp, filed an application under Article 226 of the Constitution seeking writs (mandamus, prohibition or other appropriate relief) to restrain the opposite parties from enforcing Notification No. 1425(ST).(II)/XVIII—13 (ST)-50 dated 5 July 1950.

The challenged notification arose after a dispute between labourers working in sugar mills and certain sugar factories in the Province. The State Government purported to appoint a Court of Enquiry under sections 6 and 10 of the Industrial Disputes Act, 1947 (Central Act) to inquire into issues such as bonus payable in the 1948–1949 crushing season, adjustment of bonus for 1947–1948 and payment of retaining allowance for the off-season.

Initially, a multi-member Court of Enquiry was notified (including Mr. Justice Bind Basni Prasad), but subsequent notifications made Mr. Justice Bind Basni Prasad the sole member and amended some terms regarding payment of bonus. The Court of Enquiry recommended payment of bonus and retaining allowance. The Government treated that report as material, accepted the recommendations generally, and issued Notification No. 1425 (ST)/XVIII—13 (ST)-50 dated 5 July 1950, directing payment under section 3 of the United Provinces Industrial Disputes Act (U.P. Act).

The Association challenged this notification before the Court under Article 226, contending among other things that the order was outside the scope of section 3 of the U.P. Act, that the section was ultra vires, and that the order affected fundamental rights under Articles 14 and 19 of the Constitution. The Government raised a preliminary objection that the application was not maintainable because the applicant's rights were not directly affected.

Legal Issues Presented

Whether the Indian Sugar Mills Association had locus standi (the legal right) to maintain the Article 226 application challenging the Government notification directing sugar mills to pay bonuses and retainer allowances.
Whether the Government's reliance on the Court of Enquiry's report and subsequent direction made under section 3 of the U.P. Act was legally permissible (including whether a Court of Enquiry report can be enforced as an award or used as the basis for a government order).
Whether section 3 of the U.P. Act (as used by the Government) was ultra vires and whether the impugned order violated Articles 14 and 19 of the Constitution.

Arguments of the Parties

Applicant's (Indian Sugar Mills Association) Arguments

Mr. Pathak (for the applicant) argued that the scheme of the Central Act contemplates different mechanisms — a Board of Conciliation (which cannot make awards), Industrial Tribunals (which can make awards), and Courts of Enquiry (appointed under section 6 to inquire into matters connected with industrial disputes). He emphasized that a Court of Enquiry's report is required to be published under section 17 but the Central Act provides no mechanism to enforce such a report as an award.
He contended that the Government's action in treating the Court of Enquiry's report as material and then making a direction under section 3 of the U.P. Act was improper (implying the Government could not convert a report into an enforceable award).
The applicant asserted the Association had the right to represent the member mills, relying on section 36 of the Central Act (which allows representation by an association of employers), and argued it could move the application on behalf of the mills because many member mills would be affected by the order.
It was also urged that any person can challenge an act or order as ultra vires, regardless of whether his interests are directly affected.

Respondent's (State / Government) Arguments

The learned Standing Counsel for the Government raised a preliminary objection that the application was not maintainable because it was not filed by a person whose rights were directly affected by the impugned order. The Association itself was not directed to make any payment and none of the specific mills against which the order was passed were parties to the application.
The Government (through submissions recorded by the Court) relied on the distinction that section 36 of the Central Act authorizes representation only in proceedings under the Central Act; the present proceedings were not under the Central Act and the U.P. Act did not grant the Association the right to represent the mills in these judicial proceedings.
The Government emphasized that the Association is a separate corporate entity (registered under the Trade Unions Act) and that the order requires payment by the sugar mills out of their own funds — not payment out of the Association's assets — so the Association's legal interest was not directly affected.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Commonwealth of Massachusetts v. Andrew W. Mellon (U.S. Supreme Court)	The principle that courts will interpose relief only where the rights of persons or property are involved and can be presented in a judicial proceeding; taxpayers or persons with a widely shared, indeterminate interest cannot maintain suits challenging public appropriations or expenditures because their interest is too remote and general.	The Court quoted and relied on this authority to support the proposition that a person or association whose interest is not directly and specifically affected should not be permitted to litigate an order like the impugned Government notification under Article 226. The decision was used to justify refusing standing to the applicant and to stress that Article 226 must be sparingly used.

Court's Reasoning and Analysis

The Court proceeded in several analytic steps, following the arguments and the record:

Analysis of the nature of the Court of Enquiry and the role of its report:
The Court noted Mr. Pathak's contention that a Court of Enquiry appointed under the Central Act is an investigatory body whose report must be published under section 17 but is not provided for as an enforceable award under the Central Act. The Court observed, however, that the Government did not purport to enforce the Court of Enquiry's report as an award but treated the report as material and then made its own order under section 3 of the U.P. Act adopting those parts of the report it approved.
Examination of the preliminary objection on maintainability (locus standi):
The Court carefully examined whether the Indian Sugar Mills Association had a legal interest directly affected by the Government order. It observed that the notification directed sugar mills (not the Association) to make payments to workers from their own funds. None of the mills against whom the order was passed were parties to this application and the order did not direct any payment out of the Association's assets.
Interpretation of statutory provisions regarding representation:
The Court considered section 36 of the Central Act (which permits representation by officers of registered trade unions or associations of employers) but held that this provision applied only to proceedings under the Central Act. The present proceedings were not under the Central Act. The U.P. Act contained no provision empowering the Association to represent the mills in proceedings before the Court. The Association's registration under the Trade Unions Act made it a separate corporate entity able to sue and be sued in its own name, but that corporate separateness meant the Association could not be treated as the mills themselves or assumed to have the mills' rights.
Consideration of broader standing principles and the quoted precedent:
The Court referred to the U.S. Supreme Court decision in Commonwealth of Massachusetts v. Andrew W. Mellon to emphasize the general principle that courts will not entertain suits where the plaintiff's interest is too remote, indeterminate or shared with millions of others (e.g., a taxpayer's general interest). The Court explained that the reasoning in that case is even more applicable to proceedings under Article 226 because such proceedings are summary and coercive and not a substitute for ordinary actions with full trial rights and appeal mechanisms.

Relying on that principle and on its own concerns about the flood of Article 226 applications (which was affecting the Court's normal work), the Court held that Article 226 should be sparingly used and reserved for clear cases where a person's rights are seriously infringed and no other adequate remedy exists.
Conclusion on the preliminary point:
Applying these considerations, the Court concluded that the Association did not have the requisite legal interest directly affected by the impugned order and therefore lacked locus to maintain the Article 226 application. Because the maintainability objection was decisive, the Court did not decide the other substantive contentions (e.g., ultra vires or fundamental rights violations) on their merits.

Holding and Implications

Holding: The Court's final decision was to dismiss the application. The core ruling is that the applicant lacked the necessary legal interest to maintain the Article 226 petition.

DISPOSED OF: Application dismissed.

Implications:

The direct effect is that the Indian Sugar Mills Association's challenge to Notification No. 1425 (ST)/XVIII—13 (ST)-50 (5 July 1950) fails and the Government notification stands as against this applicant. The Court did not make any order binding the mills that were not parties to the proceedings.
The Court emphasized that Article 226 is not intended to provide a broad alternative redress mechanism for all aggrieved or interested persons; it should be used sparingly and in cases where a person's rights are directly and seriously affected and no adequate remedy exists. This reasoning was relied upon to refuse standing to the applicant.
No costs were awarded against the applicant because the preliminary objection was raised only after the applicant had completed its arguments.
The opinion does not purport to set out or establish a novel binding precedent beyond applying existing standing principles (including the cited U.S. authority) to refuse the petition; it confines its decision to denying maintainability for lack of direct interest.

Application dismissed.

Show all summary ...

By the court:— This is an application on behalf of the Indian Sugar Mills Association through its President Sri Hari Raj Swamp under Article 226 of the Constitution for the following reliefs:

“It is, therefore, prayed that this Court may be pleased to issue writs in the nature of mandamus. Prohibition, or such other writ or order as the Court may consider proper, restraining the opposite-parties from enforcing the notification No. 1425(ST).(II)/XVIII—13 (ST)-50, dated 5th July, 1950, or pass such other order as the Court may deem fit under the circumstances of the case.”

This relief is claimed mainly against the State of Uttar Pradesh and certain officers of the State as also against three Labour Federations. The U.P and Bihar Sugar Mills Workers' Federation. The U.P and Bihar Chine Mill Mazdoor Federation and the National Sugar Mill Workers' Federation.

Some dispute had arisen between the labourers working in sugar mills and certain sugar factories in this Province and the Government purported to appoint a Court of Enquiry under sections 6 and 10 of the Industrial Disputes Act, 1947, (Act XIV of 1947), which for the sake of brevity may be called the Central Act. The matters which were referred to it for report were, to put it shortly, bonus payable to the workmen in the crushing season of 1948-1949, adjustments of bonus paid in 1947-1948 and payment of retaining allowance for the off season. The other matters about leave, etc. are no longer in dispute and need not be referred to.

In the first notification No. 167 (ST)/XVIII, Labour Department, Government of the United Provinces, dated Lucknow 11th January, 1950, the Court of Enquiry consisted of the Hon'ble Mr. Justice Bind Basni Prasad, a learned Judge of this Court as Chairman and Sarvasri Hari Har Nath Shastri and D.R Narang as members. By a notification No. 217(ST)/XVIII, Labour Department, Government of the United Provinces, dated Lucknow, 13th January, 1950, the names of the other two gentlemen of the Court of Enquiry were removed and Mr. Justice Bind Basni Prasad became the sole member of the Court of Enquiry. Certain amendments were also made by a notification No. 192(ST)/XVIII, Labour Department, Government of the United Provinces, dated Lucknow, 12th January, 1950, about the question of payment of bonus. It is not necessary to set them out in detail.

Mr. Pathak has urged that the scheme of the Central Act contemplates the appointment of a Board of Conciliation which brings the two parties together and tries to settle the matter amicably. The Board of Conciliation has no power to give an award against the washes of the parties. That there is also a provision for appointment of an Industrial Tribunal which can make an award. That a Court of Enquiry can be appointed under section 6 only to enquire into any matter appearing to be connected with or relating to an industrial dispute. The report of the Court of Enquiry has to be published, under section 17 of the Act but there is no provision in the Central Act for its enforcement as an award. Prima facie, without expressing any definite opinion, this argument appears to have considerable substance. We may, however, point out that in the order, which is being challenged in these proceedings, the Government did not purport to enforce this report as an award but treated it merely as material on which it based its conclusions' and adopted only so much of it as it approved and then purported to make an order of its own under section 3 of the United Provinces Industrial Disputes Act (No. XXVIII of 1947). This Act, for the sake of brevity, has been hereafter mentioned as the U.P Act.

The order complained against is in notification No. 1425 (ST)/XVIII—13 (ST)-50, Labour Department, Government of Uttar Pradesh, dated Lucknow, 5th July, 1950. In this notification it is mentioned that the Court of Enquiry had recommended the payment to the workers of bonus and retaining allowance and the same had been generally accepted by the State Government and the Governor, therefore, in exercise of the powers conferred by section 3 of the U.P Act was pleased to direct payment of bonuses and retainer allowance as detailed in that order. These payments are to be made by the sugar mills to their respective workers. Mr. Pathak's contentions are that this order is wholly illegal as being outside the scope of section 3 of the U.P Act, that section 3 of the Act is ultra vires and further that the order affects the fundamental rights under Articles 14 and 19 of the Constitution.

A preliminary objection was, however, raised on behalf of the Government by the learned Standing Counsel that this application is not maintainable as it has not been filed by a person whose rights have been directly affected. It is, therefore, said that this application should fail on that preliminary point and it is not necessary to go into other points.

The application has been filed by the Indian Sugar Mills Association. We have already said that the order passed by the Governor was against the Sugar Mills. There is no order that any payment be made to work men by the applicant. None of the mills against whom the order was passed is a party to this application. Reliance was placed by learned counsel for the applicant on section 36 of the Central Act as giving the Association the right to represent the mills. The section, however, provides that a workmen who is a party to an industrial dispute is entitled to be represented in any proceeding under that Act by an officer of a registered trade union and also that any employer who is a party to an industrial dispute shall be entitled to be represented in any such proceedings by an officer of an association of employers. It is clear that this section only refers to proceedings under the Central Act. The proceedings before us are not proceedings under the Central Act. There is no provision in the U.P Act, 1947-1948 under which it can be said that the Indian Sugar Mills Association has been given the right to represent the mills. The rules and regulations of the Indian Sugar Mills Association have been placed before us. Learned counsel is not able to point out any provision in these rules or in any Act which gives the Association the right to represent the Sugar Mills in any legal proceedings before the Court or to move an application on their behalf. Without any such express authorization it cannot be held that the Association has the right to move this application on behalf of the Sugar Mills, nor can any order passed in these proceedings bind the mills. It has been urged by learned counsel that Article 226 of the Constitution does not provide who shall file the application for the appropriate order under that Article. It is true that this Article makes no mention as to who shall apply for an appropriate order and reliance is placed on the well recognized practice in England that writs for habeas corpus for wrongful detention need not be moved by the person detained or on his behalf and may be moved by anybody. Freedom of person being the most cherished right under the British Constitution, the Courts take cognizance of the fact that a person has been illegally detained whatever the way in which the fact has been brought to their notice. In this Court, however, on two previous occasions application made by strangers, without instructions from those detained, were rejected on that ground. We do not want to express any opinion whether those orders were right or wrong, but other writs, directions or orders, cannot be placed on the same footing as a writ of habeas corpus and every one of the several million persons of this State cannot be given the right to come up and agitate and re-agitate against an act or order like the one in question when he cannot show that his rights are directly, affected by that order. The applicant association has been registered under section 4 of the Trade Unions. Act (Act No. XVI of 1926). Under section 13 of the Act every registered Trade Union is a body corporate by the name under which it is registered and it has a perpetual succession to a common seal with power to acquire and hold both movable and immovable property. It can enter into contracts and can sue and be sued in its own name. The applicant is thus a distinct and separate person from the various mills which are members of it and the order complained against is not an order directing any payment out of the assets of the applicant. Neither the bonus nor the retainer allowance has to be paid out of movable or immovable property of the Indian Sugar Association but has to be paid by the sugar mills out of their own separate funds.

It has been urged by learned counsel for the applicant that, though the amount may not be payable out of the property of the Association, yet inasmuch as the payments have to be made out of the funds of the sugar mills, a large number of which are members of the Association, the Association has the right to move the application on their behalf. We have already said that it is the interest of the applicant which must be directly affected by the statute eft the order complained against and the applicant cannot claim that its interests are directly affected.

The further argument is that any person, whether his interests are directly affected or not, can file an application challenging any Act of the Legislature or the order of the Government on the ground that it is ultra vires. In this connection we cannot do better than quote the decision of the learned Judges of the Supreme Court of the United States in Commonwealth of Massachusetts v. Andrew W. Mellon. Mr. Justice Sutherland, who delivered the opinion of the Court quoted with approval the remarks of Mr. Justice Thompson with whom Mr. Justice Story concurred, which were as follows:—

“It is only where the rights of persons or property are involved, and when such rights can be presented under some judicial form of proceedings, that courts of justice can interpose relief.”

Dealing with the question whether a single tax-payer can challenge the enforcement of a Federal Appropriation Act on the ground that it was invalid and would increase the burden of his taxes, the learned Judge observed:

“His interest in the moneys of the Treasury—partly realised from taxation and partly from other sources—is shared with millions of others; is comparatively minute and indeterminable; and the effect upon future taxation of any payment out of the funds so remote, fluctuating, and uncertain that no basis is afforded for an appeal to the preventive powers of a court of equity…. If one tax-payer may champion and litigate such a cause, then every other tax-payer may do the same, not only in respect to the statute here under review, but also in respect of every other appropriation act and statute whose administration requires the outlay of public money, and whose validity may be questioned. The bare suggestion of such a result, with its attendant inconveniences, goes far to sustain the conclusion which we have reached, that a suit of this character cannot be maintained.”

Those remarks are with reference to a suit. They are much more applicable to proceedings under Article 226 which are of a summary and of a coercive nature without providing for a normal trial or a right of appeal except in those cases where a substantial question of interpretation of the constitution arises. This Court is being flooded with applications under Article 226 of the Constitution which is seriously affecting the normal work of the Court. We feel that the time has come when we may point out that Article 226 of the Constitution was not intended to provide an alternative method of redress to the normal process of a decision in an action brought in the usual courts established by law. The powers under this Article should be sparingly used and only in those clear cases where the rights of a person have been seriously infringed and he has no other adequate and specific remedy available to him.

Having carefully considered the matter we are of the opinion that the applicant has no such legal interest in the matters affected by the order of Government as would entitle it to apply for the writ, order or direction that it claims. The application fails and is dismissed. As the preliminary objection was, however, not raised till after the arguments had been concluded on behalf of the applicant, we make no order as to costs.