Citation Codes

Equivalent Citations

citation codes

Case Number

1242 of 1968

Attorney(S)

I.M.Nanavati

Judges

Acts

provisions of the Bombay Industrial Relations Act, 1946 (hereinafter referred to as the Act).
Sub-section (4) and (5) of Section 46. Under Section 3(18),
Industrial Court, Section 79(4)
Sub-Section (1) of Section 78
Sub-section (4) of Section 79
provisions of Section 79(4)
Indian Companies Act
Section 46(4) or (5),
Section 78(1)A(c).
Section 78(1)C,

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Smart Summary

Concise Structured Summary of the Opinion (Divan, J.)

Factual and Procedural Background

The petitioner is a public limited company (textile mill) registered under the Indian Companies Act and engaged in manufacturing cotton textiles. The respondent is a representative union registered under the Bombay Industrial Relations Act, 1946.

The Industrial Court issued an award on August 7, 1958 (Reference No. 18 of 1956) standardizing duties and wages of doffers in the Ahmedabad textile industry. On July 22, 1962, the parties entered into an agreement modifying the award as to doffers, effective July 30, 1962.

On March 9, 1965 the respondent Union filed an application before the Labour Court, Ahmedabad, alleging an illegal change under the Act: the petitioner-mills had asked doffers to oil machines, thereby failing to comply with the award as modified.

The Labour Court, by order dated June 23 (year appears in the text as 1968 in one place and 1967 in another), concluded that the agreement had not modified the award in respect of doffers. On appeal the Industrial Court, by order dated July 17 (year appears in the text as 1968 in some passages and 1960 in another), held that the agreement had modified the award and that the petitioner’s conduct constituted an illegal change.

Before the Industrial Court it was contended (by the petitioner) that the Labour Court application was barred by limitation under Section 79(4) of the Act because it was filed more than two years after the making of the alleged illegal change. The Industrial Court rejected that contention, treating the alleged illegal change as continuing or recurring and therefore not time-barred.

The petitioner filed the present Special Civil Application (SCA) challenging the Industrial Court’s order. The matter was heard by this Court ex parte because the respondent Union did not appear when the case was reached for hearing.

Legal Issues Presented

Whether an application complaining of the making of an illegal change is barred by the period of limitation in Section 79(4) of the Bombay Industrial Relations Act when the application is filed more than three months after the first making of the illegal change (viz., whether limitation begins to run from the first making of the illegal change).
Whether a continuing or recurring mode of an alleged illegal change prevents the application of the limitation period stipulated in Section 79(4) (i.e., whether each day of continuation creates a new triggering event for limitation).

Arguments of the Parties

Petitioner-Company's Arguments

The application filed by the Union before the Labour Court (in March 1965) was barred by limitation under Section 79(4) because the alleged illegal change first occurred earlier (the opinion refers to the illegal change occurring in the beginning of 1963).
Reliance was placed on the principle (as stated in an earlier Industrial Court decision cited in the record) that the period of limitation under Section 79(4) begins to run from the date on which the employer first failed to carry out the terms of the award.

The opinion records that the respondent Union did not appear to present arguments at the hearing before this Court.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Textile Labour Association v. Bharatkhand Textile Mfg. Co. Ltd. (Industrial Court, February 1961)	The period of limitation under Section 79(4) begins to run from the date on which the employer first failed to carry out the terms of the award.	The learned member of the Industrial Court in the present case was unwilling to follow that earlier decision. This Court considered that decision and its reasoning and ultimately adopted the view that limitation does begin from the first making of the illegal change; accordingly the present Court rejected the Industrial Court's differing view and held the application time-barred.

Court's Reasoning and Analysis

The Court confined its consideration to the limitation point under Section 79(4). Its analysis proceeded in these steps:

Statutory framework and definitions: The Court reviewed relevant statutory definitions (Section 3(8): "illegal change" as linked to Section 46(4) and (5); Section 3(18): "industrial matter"; and Section 46(5): failure to carry out the terms of an award or registered agreement is deemed an illegal change). It observed the powers of Labour Courts under Section 78 and the specific consequences under Section 106 for an illegal change.
Grammatical construction: The Court examined the text of Section 79(4) and concluded grammatically that the phrase "of the commencement" applies only to "the strike, lock-out, closure or stoppage" and does not attach to "the making of the illegal change."
Interpretation aided by provisos: The Court relied on the two provisos to Section 79(4). The second proviso (which removes penalty liability where the Labour Court admits the application after three months) indicates legislative intent that the limitation relates to the first making of the illegal change. The presence of a condonation mechanism (first proviso) and the penalty-exoneration (second proviso) together demonstrate that the Legislature intended a limitation period that runs from the initial occurrence of the illegal change, subject to discretionary condonation, rather than treating every continuing day as a fresh starting point for limitation.
Rejection of 'continuing/recurring change' approach: The Court specifically rejected the Industrial Court's view that a continuing or recurring illegal change means that limitation does not run (or runs anew each day). The Court reasoned that if the Industrial Court's approach were correct, virtually no application based on illegal change could ever be barred by limitation, contrary to the statutory scheme and the presence of the provisos.
Application to the facts: The Court accepted that the illegal change complained of occurred in the beginning of 1963 but the application was filed in March 1965—nearly two years later. Because the Labour Court had not been asked to exercise its condonation power under Section 79(4), the application was held to be barred by limitation.
Policy rationale: The Court noted the practical and policy consequence that, absent a sensible limitation starting point, an employer could face long-delayed liabilities (including withdrawal orders and pecuniary consequences) many years after the alleged change and after profits have been distributed, which the Legislature could not have intended.

Holding and Implications

The Special Civil Application is allowed; the orders of the Industrial Court and the Labour Court are quashed and set aside.

Direct effects on the parties:

The Court held that the application before the Labour Court was barred by limitation under Section 79(4) because it was not filed within the period measured from the first making of the alleged illegal change (the opinion identifies the alleged illegal change as occurring in the beginning of 1963 and the application as filed in March 1965).
The Labour Court did not exercise its power under Section 79(4) to condone the delay; accordingly the complaint could not proceed and the Industrial Court's contrary decision was quashed.
The Court issued a writ of certiorari quashing and setting aside the Industrial Court's order and the Labour Court's order. The opinion states there will be no order as to costs of the petition.

Broader implications and precedent value:

The Court's interpretation establishes (within the terms of this opinion) that limitation under Section 79(4) runs from the first making of the illegal change, subject to the Labour Court's discretionary power to condone delay under the first proviso. The Court explicitly rejected an interpretation that each day of continuation creates a fresh limitation period.
The opinion does not state that it is laying down any wider binding precedent beyond the statutory interpretation set out; the immediate legal consequence is the quashing of the subordinate orders and the dismissal of the time-barred complaint.

Note regarding dates in the source text: the opinion contains inconsistent year-dates in different paragraphs for the Labour Court's and Industrial Court's orders (for example, earlier paragraphs refer to Labour Court order dated June 23, 1968 and Industrial Court order dated July 17, 1968, whereas a later paragraph refers to those orders with different years). This summary reproduces the factual sequence and the Court's holdings as recorded in the provided opinion without reconciling those internal inconsistencies.

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The Nagri Mills Co. Ltd. v. The Textile Labour Association

Divan, J.

1. The petitioner herein a Public Limited Company registered under the Indian Companies Act and carries on, inter alia, the business of manufacturing cotton textiles. The respondent is a representative Union registered under the provisions of the Bombay Industrial Relations Act, 1946 (hereinafter referred to as the Act). On August 7, 1958, in Reference No. 18 of 1956, the Industrial Court gave its award regarding standardization of duties of different employees in the textile industry at Ahmedabad and the duties of doffers were standardized by this award and their wages were also standardized. Thereafter on July 22, 1962, an agreement was arrived at between the petitioners and the respondent Union and by this agreement, the award pertaining to the duties of doffers was modified; and under the terms of this agreement this modification of the award became effective from July 30, 1962. On March 9, 1965, the respondent Union filed an application before the Labour Court, Ahmedabad, complaining of an illegal change within the meaning of the Act alleged to have been committed by the petitioner Mills; and the allegation in the connection was that the petitioners had failed to comply with the terms of the award even as modified inasmuch as the doffers had been asked by the petitioner-Company to oil the machines on which they were working. By its order, dated June 23, 1968, the Labour Court came to the conclusion that the agreement of July 27, 1962, had not modified the award of August 7, 1958, in so far as the doffers were concerned. Against this decision there was an appeal to the Industrial Court and the Industrial Court held by its Order, dated July 17, 1968, that the agreement had modified the award and there was an illegal change inasmuch as the action of the petitioner in taking the work of oiling the machine from the doffer was in breach of the award as modified by the agreement. Before the Industrial Court, the contention was raised at the time of the hearing of the appeal that the application filed before the Labour Court on March 8, 1965, was barred by limitation as laid down in Section 79(4) of the Act as the application was filed after more than two years of the making of the illegal change. The Industrial Court considered the rival contentions of the parties and came to the conclusion that the application before the Labour Court was not barred by limitation. According to the Industrial Court, Section 79(4) would not apply to the making of an illegal change when the change continued from day to day. In the view of the Industrial Court, the mills Company was bound to carry out the terms of the award a few days before the filing of the application in 1965 and failure on the part of the mills Company at that time to carry out the terms of the award was an illegal change made by the mills Company at that time. As such the illegal change in respect of the terms of the award of the Industrial Court would be recurring change giving cause for relief on any day till the award is not terminated and so long as it is binding on the parties. The present Special Civil Application has been filed by the petitioner-Company challenging the order of the Industrial Court.

2. After this Special Civil Application was filed, rule was issued by this Court and it was served on the respondent Union. The matter was placed on board before us sometime back and on two different occasions we adjourned the matter so that the respresentative Union or somebody on its behalf could come and put forward its point of view before us. Mr. Nanavati on behalf of the petitioner-Company informs us that one of the office-bearers of the respondent Union was intimated about this particular matter being on the daily board for hearing and final disposal before this Bench. In spite of such intimation having been given to the respondent Union about 10 days back, today when matter reached hearing before us, nobody has come to put forward the point of view of the respondent Union and we have heard the matter ex-parte and in the absence of the respondent Union.

3. It appears from the order of the Industrial Court, Ex. "C" to the petition, that in February 1961, the Industrial Court, Gujarat, had held in the matter of Textile Labour Association v. Bharatkhand Textile Mfg. Co. Ltd. that the period of limitation under Section 79(4) would begin to run from the date on which the employer for the first time failed to carry out the terms of the award. The learned member of the Industrial Court, who heard the matter in the instant case, felt after carefully considering the award that he would not be able to follow that earlier decision of the Industrial Court. The point of limitation under Section 79(4) is the only point which has been urged before us by Mr. Nanavati and we will confine our judgment only to that aspect of the matter.

4. Under Section 3(8), illegal change means an illegal change within the meaning of Sub-section (4) and (5) of Section 46. Under Section 3(18), "industrial matter" means any matter relating to employment, work, wages, hours of work, privileges, rights or duties of employers or employees or the mode, term and conditions of employment. Under Section 3(8), "change" means an alteration in an industrial matter. There fore, an alteration in any matter relating to employment, wages and hours of work or duties of employees would amount to a change. If the change is an illegal change within the meaning of Section 46(4) or (5), appropriate proceedings can be started. Section 46(5) is in these terms:

Failure to carry out the terms of any settlement, award, registered agreement or effective order or decision of a Wage Board, a Court or the Industrial Court affecting industrial matters shall be deemed to be an illegal change.

If any employer makes an illegal change, then under Section 78, an application can be made to the Labour Ctourtarri the rxwers of a Labour Court have teen laid & Court shall have the power to decide whethera strike, lock-out, closure, stoppage or any change is illegal under this Act Under Section 78(1)C, a Labour Court shall have power to require any employer to withdraw any change which is held by it to be illegal. What is material for our purposes is Section 79(4); and at the relevant time i.e., when the application was made, that section stood as follows:

An application in respect of a matter falling under Clause (c) of paragraph A of Sub-Section (1) of Section 78 shall be made within three months of the commencement of the strike, lock-out, closure or stoppage or of the making of the illegal change, as the case may be:

Provided that the Labour Court may, for sufficient reasons, admit any application for a declaration that a change is illegal under this Act, after the expiry of three months from the date on which such change was made:

Provided further that when an application is admitted after the expiry of three months under the proceeding proviso the employer who made the change shall not be liable to the penalty provided under Section 106.

Under Section 106 of the Act, any employer who makes an illegal change shall, on conviction, be punishable with fine which may on conviction, be punishable with fine which may extend to Rs. 5000/-; and the Court convicting any person under Sub-section (1) or (2) may direct such person to pay such compensation as it may determine to any employee directly and adversely affected by the change in issue.

5. It is clear on a grammatical construction of Section 79(4) that words "of the commencement" occurring immediately after the words "three months" apply only to the strike, lock-out, closure or stoppage and the words of the "commencement" do not go with the making of an illegal change which is provided for in the later part of Sub-section (4).

6. The question then arises as to what is the meaning to be atributed to the words "within three months of the making of the illegal change," which are material words for the purposes of this judgment. The first proviso to Sub-section (4) of Section 79 provides:

The second proviso to this sub section gives a clue to the intent of the Legislature regarding the period of limitation prescribed because under that proviso when an application is admitted after the expiry of three months, the employer is exonerated from all liability to the penalty provided under Section 106, if the application is admitted after the delay in filling the application had been condoned under the first proviso by the Labour Court. Therefore, it is clear that the Legislature has intended that so far as the period of limitation regarding applications complaining of the making of an illegal change is concerned, the applications should be filed within three months of the first making of the illegal change and this concept regarding the making of illegal change was within the contemplation of the Legislature when it prescribed the period of limitation under Section 79(4). With respect to the learned member of the Industrial Tribunal, he has, lost sight of the second proviso to Section 79(4). Moreover, if the reasoning of the learned member of the Industrial Court in the instant case were correct, it is difficult to envisage any case when the application complaining of making of an illegal change would be barred by limitation. The Legislature does contemplate that the period of limitation under Section 79(4) is to apply to applications complaining of illegal change. According to the learned member of the Industrial Court, illegal change in respect of the terms of the award would be regarding change giving cause for relief on any day so long as the award is not terminated and so long as the award is binding on the parties. If that were the intent of the Legislature, it would never have provided in the manner it has done in the second proviso to Section 79(4) and if that were the interpretation of the words : "of the making of illegal change" occuring in Section 79(4), it would not have provided for any limitation at all because it is difficult to conceive of any possible case, on the reasoning of the Industrial Court in the instant case, which would be barred by limitation so far as the making of an illegal change is concerned.

7. Under these circumstances, we have come to the conclusion that the reasoning of the learned Member of the Industrial Court as regards the period of limitation applicable to the application was wrong. It is clear that the illgeal change complained of in the application took place sometime in the beginning of 1963 and the application was filed in March 1965 before the Labour Court. Therefore, the application was filed nearly two years after the illegal change was made, as alleged, by the petitioner-Company. Under these circumstances, it is clear on the interpretation that we have placed on Section 79(4) of the Act that the application was barred by limitation. The Labour Court does not appear to have been called upon to exercise its power under the provisions of Section 79(4) to condone the delay in filing of the application and, therefore, the application must be held to have been barred by limitation.

7.1 Under these circumstances, the decision of the Industrial Court in the present case was clearly wrong and the application must be clearly held to be barred by limitation.

8. We may also mention in support of the conclusion that we have come that under Section 78(1)(c), the Labour Court has the power to withdraw any change which is held by it to be illegal when disposing of an application under Section 78(1)A(c). If no period of limitation were to apply to an illegal change it is quite likely that an employer would be called upon to meet pecuniary liabilities arising out of the order of withdrawal of any change which is found to be illegal by the Court several years after the profits of the period when the illegal change commenced have been ascertained and distributed in the case of Public Limited Companies. It could never have been in the contemplation of the Legislature that such far-reaching consequences should be allowed to continue just because an application has not been made within a prescribed time after the illegal change was first made. In the instant case, the illegal change is said to be failure to carry out the terms of the award as modified by the agreement and the illegal change can be said to have been made when the failure first occurred; and that is the meaning that we are putting on Section 79(4) of the Act.

The result, therefore, is that the order of the Industrial Court, dated July 17, 1960, discloses an error apparent on the face of the record and, therefore, it must be quashed and set aside. We, therefore, issue a Writ of Certiorari quashing and setting aside the order passed by the Industrial Court on July 17, 1968 and by the Labour Court on June 23,1967. This Special Civil Application is, there for, allowed arid the rule is made absolute. There will be no order as to costs of this petition.

The Nagri Mills Co. Ltd. v. The Textile Labour Association

Concise Structured Summary of the Opinion (Divan, J.)

Factual and Procedural Background

Legal Issues Presented

Arguments of the Parties

Petitioner-Company's Arguments

Table of Precedents Cited

Court's Reasoning and Analysis

Holding and Implications

The Nagri Mills Co. Ltd. v. The Textile Labour Association

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