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  • provisions of the Bombay Industrial Disputes Act, 1938.
  • s. 3(14) of the Bombay Industrial Disputes Act, 1938.
  • s. 49-A of the Bombay Industrial Disputes Act, 1938,
  • s. 26(1), and that sub-section
  • INDUSTRIAL DISPUTES ACT
  • s. 27. Section 30
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Citation Codes
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citation codes
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  • provisions of the Bombay Industrial Disputes Act, 1938.
  • s. 3(14) of the Bombay Industrial Disputes Act, 1938.
  • s. 49-A of the Bombay Industrial Disputes Act, 1938,
  • s. 26(1), and that sub-section
  • INDUSTRIAL DISPUTES ACT
  • s. 27. Section 30
Smart Summary

Structured Summary of the Opinion

Factual and Procedural Background

The Khandesh Spinning and Weaving Mills (the plaintiffs in the original suit) experienced a breakdown in machinery and the mills were closed from July 7, 1946 to September 1, 1946. Employees claimed compensation for the stoppage period. The Provincial Government referred the industrial dispute under section 49-A of the Bombay Industrial Disputes Act, 1938 to an arbitrator (Divan Bahadur Kamerkar), who issued an award on March 24, 1948 awarding compensation for 45 days at staggered rates (75% for the first 15 days and 50% for the remaining 30 days).

The mills challenged this award as illegal and ultra vires. The trial judge held that the arbitrator had acted in excess of his jurisdiction and granted relief to the plaintiffs (the mills). The mills (appellants before this Court) appealed against that decree and judgment. The appeal was heard and dismissed.

Legal Issues Presented

  1. Whether an arbitrator, appointed under s.49-A of the Bombay Industrial Disputes Act, 1938, had jurisdiction to award compensation or relief beyond what standing orders (settled under s.26(1) and given effect by s.26(8)) provided for temporary stoppages of work.
  2. Whether standing orders 16 and 17 (framed under Schedule I, item 7) preclude any liability on the employer other than that expressly provided therein for temporary stoppages (i.e., whether employees could claim compensation outside the standing orders).
  3. Whether recommendations/proposals communicated by the Government of Bombay (December 13, 1944 letter and related tripartite conference proposals) constituted a binding agreement that could alter or override settled standing orders between employer and employees.
  4. Whether a civil court has jurisdiction to review or set aside an award/orders of the Industrial Court or an arbitrator on the ground that the Industrial Court/arbitrator acted without or in excess of jurisdiction despite s.60 (which excludes questioning Industrial Court orders in civil/criminal courts).

Arguments of the Parties

Appellant's Arguments (as presented by Mr. Jhavery)

  • Standing order 17 deals only with wages to which a worker is entitled; it does not deal with compensation or other reliefs that an employee might claim — consequently, the arbitrator could consider compensation separate from wages.
  • Recommendations made by the Government of Bombay (following tripartite conferences and set out in the Commissioner of Labour's December 13, 1944 letter) constituted an agreement or at least a binding understanding that required employers to give relief to temporarily unemployed workers; those recommendations could be relied upon to support the award.

Arbitrator's Position / Respondents' Position (as described in the opinion)

  • The arbitrator accepted that under standing orders 16 and 17 employees were not entitled to payment as a matter of strict standing-order rights, but he considered that because the dispute was referred under s.49-A and because the definition of "industrial matter" in s.3(14) includes "all questions of what is fair and right", he could award relief based on what was fair and right (moral and humanitarian considerations) in the circumstances.
  • The arbitrator also took into account the Government of Bombay's proposals (the December 13, 1944 letter) and applied them by analogy, granting broader relief than those proposals expressly contemplated, because of the particular hardships at Jalgaon.

Table of Precedents Cited

Precedent Rule or Principle Cited For Application by the Court
Secretary of State v. Mask & Co. (Privy Council) Supported the proposition that civil Courts retain jurisdiction to examine cases where the statutory provisions creating a limited tribunal have not been complied with; exclusion of civil jurisdiction does not prevent civil review where the tribunal exceeded its jurisdiction. The Court relied on this authority to hold that s.60's exclusion must be strictly construed and does not prevent civil Courts from correcting decisions of the Industrial Court/arbitrator that are made without jurisdiction or in excess of statutory powers.
Province of Bombay v. Hormusji Manekji (Privy Council / Board of Trade; Lord Thankerton) Confirmed that civil Courts have jurisdiction to determine questions as to excess of statutory powers conferred on a limited tribunal, even where an exclusion clause exists; accepted as a proper concession that civil Courts may intervene when the tribunal has exceeded its statutory powers. The Court invoked this authority to support the conclusion that the arbitrator's award could be challenged in civil proceedings because it was in excess of the jurisdiction conferred by the statute.

Court's Reasoning and Analysis

The court analyzed the dispute primarily through the statutory scheme of the Bombay Industrial Disputes Act, 1938, especially the provisions governing standing orders (s.26(1) and s.26(8)), registration and effect of agreements altering standing orders (ss.30 and 32), and the statutory definition of "industrial matter" (s.3(14)).

Key points in the court's step-by-step analysis:

  1. Standing orders framed under s.26(1) and settled by the prescribed procedure (and given determinative effect by s.26(8)) establish the rights and liabilities of employers and employees for items listed in Schedule I (item 7 deals with temporary stoppages). Once settled, those standing orders are determinative and cannot be altered except by the statutory mechanism (e.g., review under s.27 or by registered agreement under s.30 followed by operation under s.32).
  2. The standing orders applicable in this case (order 16 and order 17) expressly permitted stoppage without notice and without compensation in lieu of notice for causes beyond the control of the company (order 16), and stated that operatives played off would be treated as temporarily unemployed and "will not be entitled to wages during such unemployment except to the extent mentioned in Order 16" (order 17). The court treated these provisions as excluding liability on the employer beyond what they expressly provided.
  3. The arbitrator acknowledged the standing orders' effect but considered that because the dispute was referred under s.49-A and because the statutory definition of "industrial matter" included "all questions of what is fair and right", he could award relief based on moral and humanitarian considerations even if not provided by the standing orders.
  4. The court rejected that approach: where standing orders have been properly framed and settled with regard to temporary stoppages, the arbitrator's jurisdiction is confined to determining liabilities flowing from those standing orders; he has no jurisdiction to impose liabilities outside their ambit.
  5. As to the Government of Bombay's December 13, 1944 letter and the tripartite recommendations, the court observed that the letter merely embodied proposals and a hope on the Government's part. Even if those proposals were treated as an agreement, they could not override or alter the settled standing orders unless the statutory machinery for altering standing orders (registration under s.30 and operation under s.32) had been followed. It was not suggested that any such agreement had been registered; therefore the letter could not assist the employees to create a liability outside the standing orders.
  6. On the question whether civil courts can review the arbitrator's decision despite s.60 (which excludes questioning Industrial Court orders in civil/criminal courts), the court held that s.60 must be strictly construed: exclusion of civil court jurisdiction does not prevent civil review where the tribunal acted without jurisdiction or in excess of its statutory powers. The court cited Privy Council authority to support that civil Courts retain jurisdiction in such circumstances.
  7. Applying these principles, the court concluded that the arbitrator acted contrary to the statute and in excess of his jurisdiction by imposing a liability which the standing orders and the Act did not permit. The trial judge was therefore correct in holding the award illegal and decreeing the plaintiffs' suit.

Holding and Implications

Holding:

APPEAL DISMISSED.

The court affirmed the trial judge's judgment that the arbitrator's award was illegal and in excess of his jurisdiction because it imposed a liability upon the employers beyond what the standing orders (settled under s.26) and the statute permitted. The trial judge's decree in favour of the plaintiffs (the mills) was therefore upheld.

Immediate consequences and implications:

  • The arbitrator's award ordering compensation for employees for the stoppage period was set aside as beyond jurisdiction; the employers are not liable under that award to pay compensation beyond what the standing orders provide.
  • The decision reinforces the principle — as applied in this case — that where standing orders have been properly framed and settled, they are determinative of rights and liabilities in relation to items covered (here, temporary stoppages), and a tribunal or arbitrator cannot impose liabilities outside those standing orders.
  • The court also affirmed that civil courts retain the power to examine and set aside awards/orders of limited statutory tribunals (such as the Industrial Court or arbitrator) when those bodies act without or in excess of jurisdiction, notwithstanding statutory exclusion clauses like s.60, which must be strictly construed.
  • The opinion urged, on humanitarian grounds, that the mills might nonetheless consider making an ex gratia payment to relieve workers' hardship; this was a moral appeal rather than a legal requirement.

Note: This summary is confined to the material contained in the provided opinion and does not add facts or sources beyond that text.

    Digambar Ramchandra v. Khandesh Spinning And Weaving Mills Company Ltd.

    Chagla, C.J:—

    There was a breakdown in the machinery of the Khandesh Spinning and Weaving Mills company who are the plaintiffs in the suit from which this appeal arises and the mills had to be temporarily closed from July 7, 1946, up to September 1, 1946. The employees of the company claimed that they were entitled to be paid compensation during the period of the stoppage of the mills. On December 28, 1946, the Provincial Government referred the industrial dispute between the employees of the company and the company to arbitration under s. 49-A of the Bombay Industrial Disputes Act, 1938, and the arbitrator Divan Bahadur Kamerkar gave his award on March 24, 1948. By this award he awarded that the employees should be paid compensation for 45 days at the rate of 75 per cent, for the first 15 days and 50 per cent, for the remaining 30 days. It is this award which has been challenged by the mills as being illegal and ultra vires. The learned Judge who heard the suit came to the conclusion that the arbitrator had acted in excess of his jurisdiction and gave relief to the plaintiffs. It is from that decree and judgment of the learned Judge that the appellants have come in appeal before us.

    In order to understand the contentions raised by Mr. Jhavery before us, it is necessary to look at some of the provisions of the Bombay Industrial Disputes Act, 1938. That Act provides for Standing Orders being framed in accordance with the procedure laid down in s. 26(1), and that sub-section provides that:

    “Every employer in respect of any industry or occupation to which this section has been made applicable shall within two months from the date of such application submit to the Commissioner of Labour for approval in such manner as may be prescribed standing orders regulating the relations between him and his employees with regard to all industrial matters mentioned in Schedule I.”

    Therefore an obligation is cast upon the employer to frame standing orders with regard to all industrial matters mentioned in schedule I. Then the section provides for the settling of these standing orders and after the standing orders are settled their effect is laid down in sub-s. (8), and the effect is that these standing orders shall be determinative of the relations between the employer and his employees in the industry or occupation concerned in regard to all industrial matters mentioned in sch. I and shall not be liable to be altered for a period of six months from the date on which they come into operation except on a review by the Industrial Court under s. 27. Section 30 also provides for an agreement regarding change in the standing orders, and such an agreement has got to be registered with the Registrar, and when it is registered, under s. 32 the agreement comes into operation from the date stated in the agreement, or if no date is stated therein, from the date on which it is recorded by the Registrar. Turning to sch. I, the item we are concerned with is item 7 which provides for temporary stoppages of work and rights and liabilities of employers and employees arising therefrom. Therefore under s. 26(1) standing orders have to be framed determining the rights and liabilities of employers and employees arising from temporary stoppages of work, and once the standing orders have been framed, these standing orders under sub-s. (8) of s. 26 are determinative of the relations between the employer and the employees. Therefore it is clear that the only liability which an employer has with regard to any payment that he may be called upon to make to his employee in respect of temporary stoppage of work is the liability which is determined by the standing orders framed under s. 26(1). When we turn to the standing orders which have been framed under item 7 of sch. I, they are standing orders 16 and 17, and standing order 16 provides that the company may, at any time or times, in the event of a fire, catastrophe, breakdown of machinery or stoppage of the power supply, epidemic, civil commotion or other cause, whether of a like nature or not, beyond the control of the company, stop any machine or machines or department or departments, wholly or partially, for any period or periods, without notice and without compensation in lieu of notice. Therefore the power is given under this standing order to the company to stop for any period or periods, wholly or partially, any department or departments, without being under any liability to give notice to the employees or without the liability of paying compensation in lieu of notice. Then the second part of standing order 16 deals with the situation with which we are not concerned. That deals with a case where there is a stoppage during working hours, and it provides for certain rights of the employees depending upon for what period they were detained while there was a stoppage. Then we come to standing order 17 which provides that:

    “Any operative played off under Order 16 will not be considered as dismissed from service, but as temporarily unemployed, and will not be entitled to wages during such unemployment except to the extent mentioned in Order 16. All operatives played off will be given prior rights to reinstatement on the resumption of normal work, provided they present themselves for work when normal working is resumed.”

    Therefore under this standing order an employee who ceases to do work by reason of a temporary breakdown does not cease to be in service of the company, but during the period of unemployment he is not entitled to any wages. The contention put forward by Mr. Jhavery is that standing order 17 deals only with wages to which a worker is entitled. It does not deal with any compensation or any other relief to which the worker may be entitled. In my opinion, no liability can be imposed upon the employer other than the liability expressly mentioned under standing orders 16 and 17. Therefore if the employee contends that he is entitled to any relief or any compensation, he must satisfy the Industrial Court that such relief or such compensation arises from the standing orders which have been framed under s. 26 and which are determinative of the liability of the employer. There can be no liability upon the employer outside the ambit of the standing orders.

    Now, what the learned arbitrator did was, he accepted the position that under standing orders 16 and 17 the employees were not entitled to any payment from the company. But he took the view that as the industrial dispute was referred to him by Government under s. 49-A, he had jurisdiction to consider not only the standing orders but what was fair and right as between the employer and the employee and to give relief on moral and humanitarian considerations. Now, the learned arbitrator came to that conclusion in view of the definition of “Industrial matter” appearing in s. 3(14) of the Bombay Industrial Disputes Act, 1938. In the first place, we look at the definition of “Industrial disputes” which means any dispute or difference between an employer and employee or between employers and employees or between employees and employees and which is connected with any industrial matter. An Industrial matter is defined as any matter relating to work, pay, wages, reward, hours, privileges, rights or duties of employers or employees, or the mode, terms and conditions of employment or non-employment; and then the definition goes on to mention four instances which according to the statute are included in the definition of industrial matter, and the fourth is “all questions of what is fair and right in relation to any industrial matter having regard to the interest of the person immediately concerned and of the community as a whole”; and the view that the learned arbitrator took was that as he was arbitrating upon an industrial dispute it was open to him to consider all questions of what was fair and right in relation to any industrial matter, and the industrial matter which he thought was before him was the unemployment of the employees of the Mills. New, perhaps it would have been open to the arbitrator to have considered the claims of the employees from this wider angle if the Industrial Disputes Act did not control his jurisdiction effectively by laying down what the liability of the employers was as far as temporary stoppage of work was concerned. If there had been no standing order, if the relationship of the employer and employee had not been determined with regard to temporary stoppages of work, the arbitrator would have been within his jurisdiction in taking into consideration all questions of what was fair and right in awarding any sum as payable by the employer to the employee. But, as I have pointed out earlier, once the standing orders have been framed and settled, and they were framed and settled with regard to temporary stoppages of work, then the only liability which the arbitrator had jurisdiction to determine was the liability flowing from and arising out of the standing orders which had been settled. He had no jurisdiction to determine any liability outside the standing orders.

    Mr. Jhavery has relied on certain recommendations made by the Government of Bombay and which were agreed to at a tripartite conference between the Government, employers and employees and which according to Mr. Jhavery constituted an agreement of a binding nature. Now, these recommendations were made on December 13, 1944, by a letter written from the Commissioner of Labour to the agents of the Khandesh Spinning and Weaving Mills Co. Ltd. It is pointed out that there was a general agreement at a second triparite conference that workers who had been temporarily thrown out of employment owing to shortage of coal and similar reasons should be given relief, and the letter goes on to say that the Government of India Mills had accordingly forwarded the accompanying proposals and the Government of Bombay hoped that employers would give effect to these proposals. The Government of Bombay further considered that where such stoppage had occurred and relief was not given a demand for relief would be a fit subject for adjudication; and then the proposals are set out and it is clearly stated that the proposals relate only to short term unemployment during the period of war, due to shortage of coal or raw materials or changes in line of production of which adequate notice could not be given, and then the proposals set out what is the relief that should be given. In the first place these proposals do not directly relate to the temporary stoppage in this case which was due to the breakdown of the machinery. It is not the case contemplated by these particular proposals. But assuming that the proposals did really relate to this type of stoppage also, it is difficult to understand how it could be contended that these proposals constituted an agreement which is binding as between the mills and their employees. Apart from the fact that this letter merely embodies certain proposals and merely contains a hope on the part of Bombay Government, even assuming that they have constituted an agreement in law, this, is my opinion, cannot alter, or change, or override the standing orders settled according to s. 26 of the Act. As I have pointed out, the Act lays down the machinery according to which the standing orders can be altered, and till that machinery is resorted to and the procedure followed as laid down in the Act, the standing orders cannot be altered. It is not suggested by Mr. Jhavery that any agreement was registered as required by s. 30 and therefore s. 32 never came into operation. In my opinion, therefore, this particular letter written by the Government of Bombay cannot in any way assist the employees. The learned arbitrator took into consideration this letter and by analogy applied it to the particular case he was considering and really gave effect to the proposals of Government in wider terms than Government itself intended, because in his opinion the peculiar circumstances prevailing at Jalgaon required a wider relief than contemplated by Government in their letter of December 13, 1944. In my opinion if the arbitrator had jurisdiction at all to give relief beyond the relief contemplated by the standing orders, then certainly he had the right to look at this letter as indicative of the measure of relief that should be given to the workers of the Khandesh Mills. But, as in my opinion, the arbitrator had no jurisdiction at all to give any relief which was outside the ambit of the standing orders, the question is irrelevant as to whether he had the right to look at the Government proposals and to act in accordance with those proposals.

    The only other point that has been agitated at the Bar is whether we can sit in judgment on the decision of the learned arbitrator and whether the award can be challenged in any litigation in this Court. For that purpose, our attention is drawn to s. 60 of the Act which provides that no order passed by the Industrial Court shall be called in question in any civil or criminal Court. It is perfectly clear that the order contemplated by this section is an order with jurisdiction. Any order passed by the Industrial Court which is without jurisdiction or which is in excess of the jurisdiction conferred upon it by statute can always be questioned in a civil Court. It must be remembered that s. 60 excludes jurisdiction of civil Courts and it must be strictly construed. It also sets up a special Court of limited jurisdiction, and Courts of limited jurisdiction must be confined to the functions and powers which are conferred upon them by the statute which creates the Courts. Therefore if the Industrial Court acts contrary to the provisions of law which creates it or if it acts in excess of its statutory powers, a civil Court can always correct the decision of the Industrial Court. The proposition which I have just stated has the support of so high an authority as the Privy Council. In Secretary of State v. Mask & Co. their Lordships expressed the opinion that it was well settled law that even if jurisdiction of the civil Court was excluded, the civil Courts have jurisdiction to examine into cases where the provisions of the Act have not been complied with; and again in Province of Bombay v. Hormusji Manekji Lord Thankerton delivering the judgment of the Board referred to a concession made by Sir Cyril Radcliffe for the appellant there and considered that concession was a proper concession, viz. that the civil Courts have jurisdiction to determine a question as to excess of the statutory powers conferred and by the Code. In my opinion, the learned arbitrator in making the award and in imposing the liability upon the employers has acted contrary to the clear provisions of the law and has also acted in excess of his jurisdiction because he has imposed a liability upon the employers which the law did not permit him to impose. Therefore, in my opinion, the learned Judge was right in coming to the conclusion that the award was illegal and decreeing the plaintiffs' suit.

    The appeal, therefore, fails and must be dismissed.

    Before we part with this matter I should like to say that although technically the appellants have failed and the Khandesh Mills have succeeded, we sincerely hope that the Khandesh Mills will take a humane and sympathetic view of the situation. The arbitrator has pointed out the serious conditions that existed at Jalgaon at the time when there was stoppage of work. He has drawn attention to the index figure and the high cost of living and it was much higher than in Bombay. It is indeed hard for the workers of the Khandesh Mills to be put out of work, without any fault of theirs, for so long a time as 55 days. It is not for us to say what Khandesh Spinning and Weaving Mills Company should do, but we confidently hope that in the interest of their employees they will make a payment to the workers ex gratia which would be worthy of the mills and such as to relieve the hardship of the workers.

    Bhagwati, J.:—I agree. I would only like to add a few words of my own. The standing orders having been framed providing for the temporary stoppages work and rights and liabilities of employers and employees arising therefrom, the provisions therein contained were determinative of the rights and liabilities of the parties. Even though the arbitrator had jurisdiction to go into the industrial dispute which was referred to him, he could only do what was fair and right in relation to the industrial matter, and in no event could it be said that in deciding the question of what was fair and right he could go beyond the provisions of the standing orders which had been framed in this behalf in accordance with the proper procedure. Under the circumstances of the case as they obtained, there was no change in the standing orders and there was no justification for the arbitrator to go beyond the terms of the standing orders. Having held that under the terms of the standing orders the employees were not entitled to any relief by way of compensation they had asked for, he had clearly no jurisdiction to go Weaving beyond the terms thereof and award what according to his own opinion was fair and right having regard to the Government recommendations which have been already referred to in the judgment of my Lord the Chief Justice.

    I need add nothing more and agree with the order which has been made in the judgment just delivered.

    Attorneys for appellants: Gokhale, Kale & Co.

    Attorneys for respondents: Ambubai & Diwanji.

    Appeal dismissed.
    A.J.P
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    Digambar Ramchandra v. Khandesh Spinning And Weaving Mills Company Ltd.
    (Sep 7, 1949)